05-13-02-Ordinance-Issuing Certificates of Obligation Series 2002 Street Repairs-05/20/2002Ordinance 05-13-02
ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF CITY OF SANGER, TEXAS
COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2002,
IN THE PRINCIPAL AMOUNT OF $2,360,000, APPROVING AN OFFICIAL STATEMENT,
MAKING PROVISIONS FOR THE PAYMENT AND SECURITY THEREOF AND
ORDAINING OTHER MATTERS RELATING THERETO
THE STATE OF TEXAS
COUNTY OF DENTON
CITY OF SANGER
WHEREAS, the City deems it advisable to give notice of intention to issue Combination Tax and
Revenue Certificates of Obligation for paying all or a portion of the City's contractual obligations for the
purpose of constructing and improving City streets, and for paying legal, fiscal, and engineering fees in
connection with this project; and
WHEREAS, the Certificates of Obligation hereinafter authorized and designated are to be issued
and delivered for cash pursuant to Subchapter C of Chapter 271 of the Local Government Code, and
Chapter 1502, Texas Government Code; and
WHEREAS, the City Council has heretofore, on the 29th day of April, 2002, adopted a resolution
authorizing and directing the City Secretary to give notice of intention to issue Certificates of Obligation;
and
WHEREAS, said notice has been duly published in the Sanger Courier, which is a newspaper of
general circulation in said City, in its issues of May 9, 2002 and May 16, 2002; and
WHEREAS, said notice has been duly published in the Denton Records -Chronicle, which is a
newspaper of general circulation in said City, in its issue of May 3, 2002; and
WHEREAS, the City received no petition from the qualified electors of the City protesting the
issuance of such Certificates of Obligation.
WHEREAS, the meeting was open to the public and public notice of the time, place and purpose
of said meeting was given pursuant to Chapter 551, Texas Government Code.
THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SANGER:
Section 1. RECITALS; AMOUNT AND PURPOSE OF THE CERTIFICATES OF
OBLIGATION. The recitals set forth in the preamble hereof are incorporated herein and shall have the
same force and effect as if set forth in this Section. The certificate of obligation or certificates of obligation
of the City of Sanger (the "Issuer") are hereby authorized to be issued and delivered in the aggregate
principal amount of $2,360,000 for paying all or a portion of the City's contractual obligations for the
purpose of constructing and improving City streets, and for paying legal, fiscal, and engineering fees in
connection with this project.
Section 2. DESIGNATION OF THE CERTIFICATES OF OBLIGATION. Each
certificate of obligation issued pursuant to this Ordinance shall be designated: "CITY OF SANGER,
TEXAS COMBINATION TAX AND REVENUE CERTIFICATE OF OBLIGATION, SERIES 2002,
and initially there shall be issued, sold, and delivered hereunder a single fully registered certificate of
obligation, without interest coupons, payable in installments of principal (the "Initial Certificate of
Obligation'), but the Initial Certificate of Obligation may be assigned and transferred and/or converted into
and exchanged for a like aggregate principal amount of fully registered certificates of obligation, without
interest coupons, having serial maturities, and in the denomination or denominations of $5,000 or any
integral multiple of $5,000, all in the manner hereinafter provided. The term "Certificates of Obligation" as
used in this Ordinance shall mean and include collectively the Initial Certificate of Obligation and all
substitute certificates of obligation exchanged therefor, as well as all other substitute certificates of obligation
and replacement certificates of obligation issued pursuant hereto, and the term "Certificate of Obligation"
shall mean any of the Certificates of Obligation.
Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL
REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL CERTIFICATE OF
OBLIGATION. (a) The Initial Certificate of Obligation is hereby authorized to be issued, sold, and
delivered hereunder as a single fully registered Certificate of Obligation, without interest coupons, dated
June 1, 2002, in the denomination and aggregate principal amount of $2,360,000, numbered R 1, payable
in annual installments of principal to the initial registered owner thereof, to -wit: ,
or to the registered assignee or assignees of said Certificate of Obligation or any portion or portions thereof
(in each case, the "registered owner"), with the annual installments of principal of the Initial Certificate of
Obligation to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the
FORM OF INITIAL CERTIFICATE OF OBLIGATION set forth in this Ordinance.
(b) The Initial Certificate of Obligation (i) may be prepaid or redeemed prior to the respective
scheduled due dates of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be
converted and exchanged for other Certificates of Obligation, (iv) shall have the characteristics, and (v)
shall be signed and sealed, and the principal of and interest on the Initial Certificate of Obligation shall be
payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL
CERTIFICATE OF OBLIGATION set forth in this Ordinance.
Section 4. INTEREST. The unpaid principal balance of the Initial Certificate of Obligation
shall bear interest from the date of the Initial Certificate of Obligation, and will be calculated on the basis
of a 360-day year of twelve 30-day months to the respective scheduled due dates, or to the respective
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dates of prepayment or redemption, of the installments of principal of the Initial Certificate of Obligation,
and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the
FORM OF INITIAL CERTIFICATE OF OBLIGATION set forth in this Ordinance.
Section 5. FORM OF INITIAL CERTIFICATE OF OBLIGATION. The form of the Initial
Certificate of Obligation, including the form of Registration Certificate of the Comptroller of Public
Accounts of the State of Texas to be endorsed on the Initial Certificate of Obligation, shall be substantially
as follows:
NO. R-1
FORM OF INITIAL CERTIFICATE OF OBLIGATION
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF SANGER, TEXAS
COMBINATION TAX AND REVENUE
CERTIFICATE OF OBLIGATION
SERIES 2002
$2,360,000
CITY OF SANGER, in DENTON COUNTY (the "Issuer"), being a political subdivision of the
State of Texas, hereby promises to pay to
or to the registered assignee or assignees of this Certificate of Obligation or any portion or portions hereof
(in each case, the "registered owner") the aggregate principal amount of
TWO MILLION THREE HUNDRED SIXTY THOUSAND DOLLARS
in annual installments of principal due and payable on September 1 in each of the years, and in the
respective principal amounts, as set forth in the following schedule:
1/em1_ u 0 10 /, 0 : u• 110MI
2003
40,000
2013
120,000
2004
75,000
2014
125,000
2005
80,000
2015
130,000
2006
85,000
2016
135,000
2007
85,000
2017
145,000
2008
90,000
2018
150,000
2009
95,000
2019
160,000
2010
100,000
2020
170,000
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2011 105,000 2021 175,000
2012 110,000 2022 185,000
and to pay interest, from the date of this Certificate of Obligation hereinafter stated, on the balance of each
such installment of principal, respectively, from time to time remaining unpaid, at the rates as follows:
maturity 2003,
%
maturity 2013,
%
maturity 2004,
%
maturity 2014,
%
maturity 2005,
%
maturity 2015,
%
maturity 2006,
%
maturity 2016,
%
maturity 2007,
%
maturity 2017,
%
maturity 2008,
%
maturity 2018,
%
maturity 2009,
%
maturity 2019,
%
maturity 2010,
%
maturity 2020,
%
maturity 2011,
%
maturity 2021,
%
maturity 2012,
%
maturity 2022,
%
with said interest being payable on March 1, 2003 and semiannually on each September 1 and March 1,
hereafter while this Certificate of Obligation or any portion hereof is outstanding and unpaid.
THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Certificate of
Obligation are payable in lawful money of the United States of America, without exchange or collection
charges. The installments of principal and the interest on this Certificate of Obligation are payable to the
registered owner hereof through the services of THE BANK OF NEW YORK TRUST COMPANY OF
FLORIDA, N.A., DALLAS, TEXAS, which is the "Paying Agent/Registrar" for this Certificate of
Obligation. Payment of all principal of and interest on this Certificate of Obligation shall be made by the
Paying Agent/Registrar to the registered owner hereof on each principal and/or interest payment date by
check or draft, dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from,
funds of the Issuer required by the ordinance authorizing the issuance of this Certificate of Obligation (the
"Certificate of Obligation Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose
as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar by United
States mail, lust -class postage prepaid, on each such principal and/or interest payment date, to the
registered owner hereof, at the address of the registered owner, as it appeared on the 15th day of the
month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying
Agent/Registrar, as hereinafter described, or by such other method acceptable to Paying Agent/Registrar
requested by, and at the risk and expense of, the registered owner. The Issuer covenants with the
registered owner of this Certificate of Obligation that on or before each principal and/or interest payment
date for this Certificate of Obligation it will make available to the Paying Agent/Registrar, from the "Interest
and Sinking Fund" created by the Certificate of Obligation Ordinance, the amounts required to provide for
the payment, in immediately available funds, of all principal of and interest on this Certificate of Obligation,
when due.
IF THE DATE for the payment of the principal of or interest on this Certificate of Obligation shall
be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying
Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment
shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which
banking institutions are authorized to close; and payment on such date shall have the same force and effect
as if made on the original date payment was due.
THIS CERTIFICATE OF OBLIGATION has been authorized in accordance with the
Constitution and laws of the State of Texas, in the principal amount of $2,360,000, for paying all or a
portion of the City's contractual obligations for the purpose of constructing and improving City streets, and
for paying legal, fiscal, and engineering fees in connection with this project.
ON SEPTEMBER 1, 2012, or any date thereafter, the unpaid installments of principal of this
Certificate of Obligation may be prepaid or redeemed prior to their scheduled due dates, at the option of
the Issuer, with funds derived from any available source, as a whole, or in part, and, if in part, the Issuer
shall select and designate the maturity, or maturities, and the amount that is to be redeemed, and if less than
a whole maturity is to be called, the Issuer shall direct the Paying Agent/Registrar to call by lot (provided
that a portion of this Certificate of Obligation maybe redeemed only in an integral multiple of $5,000), at
the redemption price of the principal amount, plus accrued interest to the date fixed for prepayment or
redemption.
AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice
of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner
hereof. By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer
with the Paying Agent/Registrar for the payment of the required prepayment or redemption price for this
Certificate of Obligation or the portion hereof which is to be so prepaid or redeemed, plus accrued interest
thereon to the date fixed for prepayment or redemption. If such written notice of prepayment or
redemption is given, and if due provision for such payment is made, all as provided above, this Certificate
of Obligation, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be
treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date
fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right
of the registered owner to receive the prepayment or redemption price plus accrued interest to the date
fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such
payment. The Paying Agent/Registrar shall record in the Registration Books all such prepayments or
redemptions of principal of this Certificate of Obligation or any portion hereof.
THIS CERTIFICATE OF OBLIGATION, to the extent of the unpaid or unredeemed principal
balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be
assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the
Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for this Certificate of Obligation,
upon the terms and conditions set forth in the Certificate of Obligation Ordinance. Among other
requirements for such transfer, this Certificate of Obligation must be presented and surrendered to the
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Paying Agent/Registrar for cancellation, together with proper instruments of assignment, in form and with
guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial
registered owner of this Certificate of Obligation, or any portion or portions hereof in any integral multiple
of $5,000, to the assignee or assignees in whose name or names this Certificate of Obligation or any such
portion or portions hereof is or are to be transferred and registered. Any instrument or instruments of
assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this
Certificate of Obligation or any such portion or portions hereof by the initial registered owner hereof. A
new certificate of obligation or certificates of obligation payable to such assignee or assignees (which then
will be the new registered owner or owners of such new certificate of obligation or certificates of obligation)
or to the initial registered owner as to any portion of this Certificate of Obligation which is not being
assigned and transferred by the initial registered owner, shall be delivered by the Paying AgentRRegistrar
in conversion of and exchange for this Certificate of Obligation or any portion or portions hereof, but solely
in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this
Certificate of Obligation or any portion hereof. The registered owner of this Certificate of Obligation shall
be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all
purposes, including payment and discharge of liability upon this Certificate of Obligation to the extent of
such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the
contrary.
AS PROVIDED above and in the Certificate of Obligation Ordinance, this Certificate of
Obligation, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and
exchanged for a like aggregate principal amount of fully registered certificates of obligation, without interest
coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner
hereof, or to the initial registered owner as to any portion of this Certificate of Obligation which is not being
assigned and transferred by the initial registered owner, in any denomination or denominations in any
integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute certificate of
obligation issued in exchange for any portion of this Certificate of Obligation shall have a single stated
principal maturity date), upon surrender of this Certificate of Obligation to the Paying Agent/Registrar for
cancellation, all in accordance with the form and procedures set forth in the Certificate of Obligation
Ordinance. If this Certificate of Obligation or any portion hereof is assigned and transferred or converted
each certificate of obligation issued in exchange for any portion hereof shall have a single stated principal
maturity date corresponding to the due date of the installment of principal of this Certificate of Obligation
or portion hereof for which the substitute certificate of obligation is being exchanged, and shall bear interest
at the rate applicable to and borne by such installment of principal or portion thereof. Such certificates of
obligation, respectively, shall be subject to redemption prior to maturity on the same dates and for the same
prices as the corresponding installment of principal of this Certificate of Obligation or portion hereof for
whichthey are being exchanged. No such certificate of obligation shall be payable in installments, but shall
have only one stated principal maturity date. AS PROVIDED IN THE CERTIFICATE OF
OBLIGATION ORDINANCE, THIS CERTIFICATE OF OBLIGATION IN ITS PRESENT FORM
MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more
assignees, but the certificates of obligation issued and delivered in exchange for this Certificate of Obligation
or any portion hereof may be assigned, transferred and converted, subsequently, as provided in the
Certificate of Obligation Ordinance. The Issuer shall pay the Paying Agent/Registrar's standard or
customary fees and charges for transferring, converting, and exchanging this Certificate of Obligation or any
portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or
governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be
required to make any such assignment, conversion, or exchange (i) during the period commencing with the
close of business on any Record Date and ending with the opening of business on the next following
principal or interest payment date, or, (ii) with respect to any Certificate of Obligation or portion thereof
called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption
date.
IN THE EVENT any Paying Agent/Registrar for this Certificate of Obligation is changed by the
Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Certificate of Obligation
Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly
will cause written notice thereof to be mailed to the registered owner of this Certificate of Obligation.
IT IS HEREBY certified, recited, and covenanted that this Certificate of Obligation has been duly
and validly authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper
to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this
Certificate of Obligation have been performed, existed, and been done in accordance with law; that this
Certificate of Obligation is a general obligation of the Issuer, issued on the full faith and credit thereof; and
that ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate
of Obligation, as such interest and principal come due, have been levied and ordered to be levied against
all taxable property in the Issuer, and have been pledged for such payment, within the limit prescribed by
law, and that this Certificate of Obligation, is additionally secured by and payable from the limited surplus
revenues of the Issuer's Utility System, being the Issuer's Waterworks, Sewer and Electric System,
remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve,
and other requirements in connection with all of the Issuer's revenue bonds or other obligations (now or
hereafter outstanding), which are payable from all or any part of the Net Revenues of the Issuer's Utility
System.
THE ISSUER HAS RESERVED THE RIGHT to amend the Certificate of Obligation Ordinance
as provided therein, and under some (but not all) circumstances amendments thereto must be approved
by the registered owners of a majority in aggregate principal amount of the outstanding Certificates of
Obligation.
BY BECOMING the registered owner of this Certificate of Obligation, the registered owner
thereby acknowledges all of the terms and provisions of the Certificate of Obligation Ordinance, agrees
to be bound by such terms and provisions, acknowledges that the Certificate of Obligation Ordinance is
duly recorded and available for inspection in the official minutes and records of the governing body of the
Issuer, and agrees that the terms and provisions of this Certificate of Obligation and the Certificate of
Obligation Ordinance constitute a contract between the registered owner hereof and the Issuer.
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IN WITNESS WHEREOF, the Issuer has caused this Certificate of Obligation to be signed with
the manual or facsimile signature of the Mayor of the Issuer, countersigned with the manual or facsimile
signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly
impressed, or placed in facsimile, on this Certificate of Obligation to be dated June 1, 2002,
City Secretary
CITY SEAL
Mayor
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE
REGISTER NO.
I hereby certify that this Certificate of Obligation has been examined, certified as to validity, and
approved by the Attorney General of the State of Texas, and that this Certificate of Obligation has been
registered by the Comptroller of Public Accounts of the State of Texas.
Witness my signature and seal this
Comptroller of Public Accounts of the State of Texas
(COMPTROLLER'S SEAL)
Section 6. ADDITIONAL CHARACTERISTICS OF THE CERTIFICATES OF
OBLIGATION. Registration and Transfer. (a) The Issuer shall keep or cause to be kept at the principal
corporate trust office of THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA, N.A.,
DALLAS, TEXAS, (the "Paying Agent/Registrar") books or records of the registration and transfer of the
Certificates of Obligation (the "Registration Books"), and the Issuer hereby appoints the Paying
Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers
and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe;
and the Paying Agent/Registrar shall make such transfers and registrations as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of
each Certificate of Obligation to which payments with respect to the Certificates of Obligation shall be
mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying
Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments
shall not be mailed unless such notice has been given. The Issuer shall have the right to inspect the
Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying
Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall
not permit their inspection by any other entity. Registration of each Certificate of Obligation may be
transferred in the Registration Books only upon presentation and surrender of such Certificate of Obligation
to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written
instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/
Registrar, (i) evidencing the assignment of the Certificate of Obligation, or any portion thereof in any integral
multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to
have the Certificate of Obligation or any such portion thereof registered in the name of such assignee or
assignees. Upon the assignment and transfer of any Certificate of Obligation or any portion thereof, a new
substitute Certificate of Obligation or Certificates of Obligation shall be issued in conversion and exchange
therefor in the manner herein provided. The Initial Certificate of Obligation, to the extent of the unpaid or
unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner
thereofonce only, and to one or more assignees designated in writing by the initial registered owner thereof.
All Certificates of Obligation issued and delivered in conversion of and exchange for the Initial Certificate
of Obligation shall be in any denomination or denominations of any integral multiple of $5,000 (subject to
the requirement hereinafter stated that each substitute Certificate of Obligation shall have a single stated
principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE CERTIFICATE
OF OBLIGATION set forth in this Ordinance, and shall have the characteristics, and may be assigned,
transferred, and converted as hereinafter provided. If the Initial Certificate of Obligation or any portion
thereof is assigned and transferred or converted the Initial Certificate of Obligation must be surrendered
to the Paying Agent/Registrar for cancellation, and each Certificate of Obligation issued in exchange for any
portion of the Initial Certificate of Obligation shall have a single stated principal maturity date, and shall not
be payable in installments; and each such Certificate of Obligation shall have a principal maturity date
corresponding to the due date of the installment of principal or portion thereof for which the substitute
Certificate of Obligation is being exchanged; and each such Certificate of Obligation shall bear interest at
the single rate applicable to and borne by such installment of principal or portion thereof for which it is being
exchanged. If only a portion of the Initial Certificate of Obligation is assigned and transferred, there shall
be delivered to and registered in the name of the initial registered owner substitute Certificates of Obligation
in exchange for the unassigned balance of the Initial Certificate of Obligation in the same manner as if the
initial registered owner were the assignee thereof. Ifany Certificate of Obligation or portion thereof other
than the Initial Certificate of Obligation is assigned and transferred or converted each Certificate of
Obligation issued in exchange therefor shall have the same principal maturity date and bear interest at the
same rate as the Certificate of Obligation for which it is exchanged. A form of assignment shall be printed
or endorsed on each Certificate of Obligation, excepting the Initial Certificate of Obligation, which shall be
executed by the registered owner or its duly authorized attorney or representative to evidence an
assignment thereof. Upon surrender of any Certificates of Obligation or any portion or portions thereof
for transfer of registration, an authorized representative of the Paying Agent/Registrar shall make such
transfer in the Registration Books, and shall deliver a new fully registered substitute Certificate of Obligation
or Certificates of Obligation, having the characteristics herein described, payable to such assignee or
assignees (which then will be the registered owner or owners of such new Certificate of Obligation or
E
Certificates of Obligation), or to the previous registered owner in case only a portion of a Certificate of
Obligation is being assigned and transferred, all in conversion of and exchange for said assigned Certificate
of obligation or Certificates of Obligation or any portion or portions thereof, in the same form and manner,
and with the same effect, as provided in Section 6(d), below, for the conversion and exchange of
Certificates of Obligation by any registered owner of a Certificate of Obligation. The Issuer shall pay the
Paying Agent/Registrar's standard or customary fees and charges for making such transfer and delivery of
a substitute Certificate of Obligation or Certificates of Obligation, but the one requesting such transfer shall
pay any taxes or other governmental charges required to be paid with respect thereto. The Paying
Agent/Registrar shall not be required to make transfers of registration of any Certificate of Obligation or
any portion thereof (i) during the period commencing with the close of business on any Record Date and
ending with the opening of business on the next following principal or interest payment date, or, (ii) with
respect to any Certificate of obligation or any portion thereof called for redemption prior to maturity, within
45 days prior to its redemption date.
(b) Ownership of Certificates of Obligation The entity in whose name any Certificate of
Obligation shall be registered in the Registration Books at any time shall be deemed and treated as the
absolute owner thereof for all purposes of this Ordinance, whether or not such Certificate of Obligation
shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the
contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any such
Certificate of Obligation shall be made only to such registered owner. All such payments shall be valid and
effectual to satisfy and discharge the liability upon such Certificate of Obligation to the extent of the sum
or sums so paid.
(c) Payment of Certificates of Obligation and Interest. The Issuer hereby further appoints the
Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Certificates
of Obligation, and to act as its agent to convert and exchange or replace Certificates of Obligation, all as
provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made
by the Issuer and the Paying Agent/Registrar with respect to the Certificates of Obligation, and of all
conversions and exchanges of Certificates of Obligation, and all replacements of Certificates of Obligation,
as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment
date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record
Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest
have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date
ofthe past due interest (which shall be fifteen (15) days after the Special Record Date) shall be sent at least
five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid,
to the address of each Bondholder appearing on the Security Register at the close of business on the 15th
day next preceding the date of mailing of such notice.
(d) Conversion and Exchaneg or Replacement; Authentication Each Certificate of Obligation
issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal
balance or principal amount thereof, may, upon surrender of such Certificate of Obligation at the principal
corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed
by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or
representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option
of the registered owner or such assignee or assignees, as appropriate, be converted into and exchanged
for fully registered certificates of obligation, without interest coupons, in the form prescribed in the FORM
OF SUBSTITUTE CERTIFICATE OF OBLIGATION set forth in this Ordinance, in the denomination
of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each
substitute Certificate of Obligation shall have a single stated maturity date), as requested in writing by such
registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or
unredeemed principal balance or principal amount of any Certificate of Obligation or Certificates of
Obligation so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the
case may be. If the Initial Certificate of Obligation is assigned and transferred or converted each substitute
Certificate of Obligation issued in exchange for any portion of the Initial Certificate of Obligation shall have
a single stated principal maturity date, and shall not be payable in installments; and each such Certificate
of Obligation shall have a principal maturity date corresponding to the due date of the installment of
principal or portion thereof for which the substitute Certificate of Obligation is being exchanged; and each
such Certificate of Obligation shall bear interest at the single rate applicable to and borne by such
installment of principal or portion thereof for which it is being exchanged. If a portion of any Certificate of
Obligation (other than the Initial Certificate of Obligation) shall be redeemed prior to its scheduled maturity
as provided herein, a substitute Certificate of Obligation or Certificates of Obligation having the same
maturity -date, bearing interest at the same rate, in the denomination or denominations of any integral multiple
of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the
unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation.
If any Certificate of Obligation or portion thereof (other than the Initial Certificate of Obligation) is assigned
and transferred or converted, each Certificate of Obligation issued in exchange therefor shall have the same
principal maturity date and bear interest at the same rate as the Certificate of Obligation for which it is being
exchanged. Each substitute Certificate of Obligation shall bear a letter and/or number to distinguish it from
each other Certificate of Obligation. The Paying Agent/Registrar shall convert and exchange or replace
Certificates of Obligation as provided herein, and each fully registered certificate of obligation delivered in
conversion of and exchange for or replacement of any Certificate of Obligation or portion thereof as
permitted or required by any provision of this Ordinance shall constitute one of the Certificates of
Obligation for all purposes of this Ordinance, and may again be converted and exchanged or replaced.
It is specifically provided that any Certificate of Obligation authenticated in conversion of and exchange for
or replacement of another Certificate of Obligation on or prior to the first scheduled Record Date for the
Initial Certificate of Obligation shall bear interest from the date of the Initial Certificate of Obligation, but
each substitute Certificate of Obligation so authenticated after such first scheduled Record Date shall bear
interest from the interest payment date next preceding the date on which such substitute Certificate of
Obligation was so authenticated, unless such Certificate of Obligation is authenticated after any Record
Date but on or before the next following interest payment date, in which case it shall bear interest from such
next following interest payment date; provided, however, that if at the time of delivery of any substitute
Certificate of Obligation the interest on the Certificate of Obligation for which it is being exchanged is due
11
but has not been paid, then such Certificate of Obligation shall bear interest from the date to which such
interest has been paid in full. THE INITIAL CERTIFICATE OF OBLIGATION issued and delivered
pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying
Agent/Registrar, but on each substitute Certificate of Obligation issued in conversion of and exchange for
or replacement of any Certificate of Obligation or Certificates of Obligation issued under this Ordinance
there shall be printed a certificate, in the form substantially as follows:
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Certificate of Obligation has been issued under the provisions of the
Certificate of Obligation Ordinance described on the face of this Certificate of Obligation; and that this
Certificate of Obligation has been issued in conversion of and exchange for or replacement of a certificate
of obligation, certificates of obligation, or a portion of a certificate of obligation or certificates of obligation
of an issue which originally was approved by the Attorney General of the State of Texas and registered by
the Comptroller of Public Accounts of the State of Texas.
THE BANK OF NEW YORK TRUST COMPANY OF
FLORIDA, N.A.
Paying Agent/Registrar
Dated By
Authorized Representative
An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Certificate
of Obligation, date and manually sign the above Certificate, and no such Certificate of Obligation shall be
deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar
promptly shall cancel all Certificates of Obligation surrendered for conversion and exchange or
replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the governing
body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange
or replacement of any Certificate of Obligation or portion thereof, and the Paying Agent/Registrar shall
provide for the printing, execution, and delivery of the substitute Certificates of Obligation in the manner
prescribed herein, and said Certificates of Obligation shall be of type composition printed on paper with
lithographed or steel engraved borders of customary weight and strength. Pursuant to Chapter 1201,
Texas Government Code, the duty of conversion and exchange or replacement of Certificates of Obligation
as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above
Paying Agent/Regish&s Authentication Certificate, the converted and exchanged or replaced Certificate
ofObligation shall be valid, incontestable, and enforceable in the same manner and with the same effect as
the Initial Certificate of Obligation which originally was issued pursuant to this Ordinance, approved by the
Attorney General, and registered by the Comptroller of Public Accounts. The Issuer shall pay the Paying
Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any
Certificate of Obligation or any portion thereof, but the one requesting any such transfer, conversion, and
12
exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a
condition precedent to the exercise of such privilege of conversion and exchange. The Paying
Agent/Registrar shall not be required to make any such conversion and exchange or replacement of
Certificates of Obligation or any portion thereof (i) during the period commencing with the close of business
on any Record Date and ending with the opening of business on the next following principal or interest
payment date, or, (ii) withrespect to any Certificate of Obligation or portion thereof called for redemption
prior to maturity, within 45 days prior to its redemption date.
(e) In General All Certificates of Obligation issued in conversion and exchange or replacement
of any other Certificate of Obligation or portion thereof, (i) shall be issued in fully registered form, without
interest coupons, with the principal of and interest on such Certificates of Obligation to be payable only to
the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be
transferred and assigned, (iv) may be converted and exchanged for other Certificates of Obligation, (v) shall
have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the
Certificates of Obligation shall be payable, all as provided, and in the manner required or indicated, in the
FORM OF SUBSTITUTE CERTIFICATE OF OBLIGATION set forth in this Ordinance.
(f) Payment of Fees and Charges. The Issuer hereby covenants with the registered owners of the
Certificates of Obligation that it will (i) pay the standard or customary fees and charges of the Paying
Agent/Registrar for its services with respect to the payment of the principal of and interest on the
Certificates of Obligation, when due, and (ii) pay the fees and charges of the Paying Agent/Registrar for
services with respect to the transfer of registration of Certificates of Obligation, and with respect to the
conversion and exchange of Certificates of Obligation solely to the extent above provided in this Ordinance.
(g) Substitute Paying Agent/Registrar. The Issuer covenants with the registered owners of the
Certificates of Obligation that at all times while the Certificates of Obligation are outstanding the Issuer will
provide a competent and legally qualified bank, trust company, financial institution, or other agency to act
as and perform the services of Paying Agent/Registrar for the Certificates of Obligation under this
Ordinance, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to, and
may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the
Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment
date after such notice. In the. event that the entity at any time acting as Paying Agent/Registrar (or its
successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the
Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company,
financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any
change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and
deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating
to the Certificates of Obligation, to the new Paying Agent/Registrar designated and appointed by the Issuer.
Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to
be sent by the new Paying Agent/Registrar to each registered owner of the Certificates of Obligation, by
United States mail, fast -class postage prepaid, which notice also shall give the address of the new Paying
13
Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be
deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be
delivered to each Paying Agent/Registrar.
(h) Book -Entry Only System The Certificates of Obligation issued in exchange for the Certificates
of Obligation initially issued to the purchaser specified herein shall be initially issued in the form of a separate
single fully registered Certificate of Obligation for each ofthe maturities thereof. Upon initial issuance, the
ownership of each such Certificate of Obligation shall be registered in the name of Cede & Co., as nominee
ofDepository Trust Company of New York ("DTC"), and except as provided in subsection (f) hereof, all
of the outstanding Certificates of Obligation shall be registered in the name of Cede & Co., as nominee of
DTC.
With respect to Certificates of Obligation registered in the name of Cede & Co., as nominee of
DTC, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation to any DTC
Participant or to any person on behalf of whom such a DTC Participant holds an interest on the Certificates
of Obligation. Without limiting the immediately preceding sentence, the Issuer and the Paying
Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of
DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Certificates of
Obligation, (ii) the delivery to any DTC Participant or any other person, other than a Certificate of
Obligation holder, as shown on the Registration Books, of any notice with respect to the Certificates of
Obligation, including any notice of redemption, or (iii) the payment to any DTC Participant or any other
person, other than a Certificate of Obligation holder, as shown in the Registration Books of any amount
with respect to principal of, premium, if any, or interest on, as the case may be, the Certificates of
Obligation. Notwithstanding any other provision of this Ordinance to the contrary, the Issuer and the
Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Certificate
of Obligation is registered in the Registration Books as the absolute owner of such Certificate of Obligation
for the purpose of payment of principal, premium, if any, and interest, as the case may be, with respect to
such Certificate of Obligation, for the purpose of giving notices of redemption and other matters with
respect to such Certificate of Obligation, for the purpose of registering transfers with respect to such
Certificate of Obligation, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all
principal of, premium, if any, and interest on the Certificates ofObligation only to or upon the order of the
respective owners, as shown in the Registration Books as provided in this Ordinance, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and
discharge the Issuer's obligations with respect to payment of principal of, premium, if any, and interest on,
or as the case may be, the Certificates of Obligation to the extent of the sum or sums so paid. No person
other than an owner, as shown in the Registration Books, shall receive a Certificate of Obligation certificate
evidencing the obligation of the Issuer to make payments of principal, premium, if any, and interest, as the
case may be, pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written
notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and
subject to the provisions in this Ordinance with respect to interest checks being mailed to the registered
owner at the close of business on the Record Date, the word "Cede & Co." in this Ordinance shall refer
14
to such new nominee of DTC.
(i) Successor Securities DepositM. Transfers Outside Book -Entry Only System. In the event that
the Issuer or the Paying Agent/Registrar determines that DTC is incapable of discharging its responsibilities
described herein and in the representation letter of the Issuer to DTC and that it is in the best interest of the
beneficial owners of the Certificates of Obligation that they be able to obtain certificated Certificates of
Obligation, the Issuer or the Paying Agent/Registrar shall (i) appoint a successor securities depository,
qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended,
notify DTC and DTC Participants of the appointment of such successor securities depository and transfer
one or more separate Certificates of Obligation to such successor securities depository or (ii) notify DTC
and DTC Participants of the availability through DTC of Certificates of Obligation and transfer one or more
separate Certificates of Obligation to DTC Participants having Certificates of Obligation credited to their
DTC accounts. In such event, the Certificates of Obligation shall no longer be restricted to being registered
in the Registration Books in the name of Cede & Co., as nominee of DTC, but may be registered in the
name of the successor securities depository, or its nominee, or in whatever name or names Certificate of
Obligationholders transferring or exchanging Certificates of Obligation shall designate, in accordance with
the provisions of this Ordinance.
0) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the
contrary, so long as any Certificate of Obligation is registered in the name of Cede & Co., as nominee of
DTC, all payments with respect to principal of, premium, if any, and interest on, or as the case may be,
such Certificate of Obligation and all notices with respect to such Certificate of Obligation shall be made
and given, respectively, in the manner provided in the representation letter of the Issuer to DTC.
Section 7. FORM OF SUBSTITUTE CERTIFICATES OF OBLIGATION. The form of
all Certificates of Obligation issued in conversion and exchange or replacement of any other Certificate of
Obligation or portion thereof, including the form of Paying Agent/Registrar's Certificate to be printed on
each of such Certificates of Obligation, and the Form of Assignment to be printed on each of the
Certificates of Obligation, shall be, respectively, substantially as follows, with such appropriate variations,
omissions, or insertions as are permitted or required by this Ordinance.
15
NO.
PRINCIPAL AMOUNT
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF SANGER, TEXAS
COMBINATION TAX AND REVENUE
CERTIFICATE OF OBLIGATION
SERIES 2002
INTEREST MATURITY DATE OF CUSIP
RATE DATE ORIGINAL ISSUE NO
June 1, 2002
ON THE MATURITY DATE specified above, the CITY OF SANGER (the "Issuer") in
DENTON COUNTY, being a political subdivision of the State of Texas, hereby promises to pay to
or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal
amount of
and to pay interest thereon from June 1, 2002 to the maturity date specified above, or the date of
redemption prior to maturity, at the interest rate per annum specified above with interest being payable on
March 1, 2003, and semiannually on each September 1 and March 1 thereafter; except that if the date of
authentication of this Certificate of Obligation is later than February 15, 2003, such principal amount shall
bear interest from the interest payment date next preceding the date of authentication, unless such date of
authentication is after any Record Date (hereinafter defined) but on or before the next following interest
payment daze, in which case such principal amount shall bear interest from such next following interest
payment date.
THE PRINCIPAL OF AND INTEREST ON this Certificate of Obligation are payable in lawful
money of the United States of America, without exchange or collection charges. The principal of this
Certificate of Obligation shall be paid to the registered owner hereof upon presentation and surrender of
this Certificate of Obligation at maturity or upon the date fixed for its redemption prior to maturity, at the
principal corporate trust office of THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA,
N.A., DALLAS, TEXAS, which is the "Paying Agent/Registrar" for this Certificate of Obligation. The
16
payment of interest on this Certificate of Obligation shall be made by the Paying Agent/Registrar to the
registered owner hereof on the interest payment date by check or draft, dated as of such interest payment
date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the
Ordinance authorizing the issuance of the Certificates of Obligation (the "Certificate of Obligation
Ordinance") to be on deposit with the Paying Agent/ Registrar for such purpose as hereinafter provided;
and such check or draft shall be sent by the Paying Agent/Registrar by United States mail, first-class
postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the
registered owner, as it appeared on the 15th day of the month next preceding such date (the 'Record
Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described, or by such
other method acceptable to the Paying Agent/Registrar requested by, and at the risk and expense of, the
registered owner. Any accrued interest due upon the redemption of this Certificate of Obligation prior to
maturity as provided herein shall be paid to the registered owner at the principal corporate trust office of
the Paying Agent/Registrar upon presentation and surrender of this Certificate of Obligation for redemption
and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants
with the registered owner of this Certificate of Obligation that on or before each principal payment date,
interest payment date, and accrued interest payment date for this Certificate of Obligation, it will make
available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Certificate of
Obligation Ordinance, the amounts required to provide for the payment, in immediately available funds, of
all principal of and interest on the Certificates of Obligation, when due.
IF THE DATE for the payment of the principal of or interest on this Certificate of Obligation shall
be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying
Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment
shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which
banking institutions are authorized to close; and payment on such date shall have the same force and effect
as if made on the original date payment was due.
THIS CERTIFICATE OF OBLIGATION is one of an issue of Certificates of Obligation initially
dated June 1, 2002, authorized in accordance with the Constitution and laws of the State of Texas in the
original principal amount of $2,360,000, for constructing and improving City streets, and for paying legal,
fiscal, and engineering fees in connection with this project.
ON SEPTEMBER 1, 2012, or any date thereafter, the Certificates of Obligation of this Series may
be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any
available source, as a whole, or in part, and, if in part, the maturity or maturities of Certificates of Obligation
and the amounts thereof, to be redeemed shall be selected and designated by the Issuer, and the Issuer shall
direct the Paying AgendRegistrar to call by lot Certificates of Obligation, or portions thereof within such
maturities and in such principal amounts, for redemption (provided that a portion of this Certificate of
Obligation may be redeemed only in an integral multiple of $5,000), at the prepayment or redemption price
of the principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption.
17
AT LEAST 30 days prior to the date fixed for any redemption of Certificates of Obligation or
portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying
Agent/Registrar by United States mail, first-class postage prepaid, not less than 30 days prior to the date
fixed for any such redemption, to the registered owner of each Certificate of Obligation to be redeemed
at its address as it appeared on the 45th day prior to such redemption date; provided, however, that the
failure to receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the
validity or effectiveness of the proceedings for the redemption of any Certificate of Obligation, and it is
hereby specifically provided that the mailing of such notice as required above shall be the only notice
actually required in connection with or as a prerequisite to the redemption of any Certificates of Obligation
or portions thereof. By the date fixed for any such redemption due provision shall be made with the Paying
Agent/Registrar for the payment of the required redemption price for the Certificates of Obligation or
portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for
redemption. If such written notice of redemption is mailed and if due provision for such payment is made,
all as provided above, the Certificates of Obligation or portions thereof which are to be so redeemed
thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not
bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except
for the right of the registered owner to receive the redemption price plus accrued interest from the Paying
Agent/Registrar out of the funds provided for such payment. If a portion of any Certificate of Obligation
shall be redeemed a substitute Certificate of Obligation or Certificates of Obligation having the same
maturity date, bearing interest at the same rate, in any denomination or denominations in any integral
multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal
to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for
cancellation, at the expense of the Issuer, all as provided in the Certificate of Obligation Ordinance.
THIS CERTIFICATE OF OBLIGATION OR ANY PORTION OR PORTIONS HEREOF IN
ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the
Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for
the Certificates of Obligation, upon the terms and conditions set forth in the Certificate of Obligation
Ordinance. Among other requirements for such assignment and transfer, this Certificate of Obligation must
be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of
assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing
assignment of this Certificate of Obligation or any portion or portions hereof in any integral multiple of
$5,000 to the assignee or assignees in whose name or names this Certificate of Obligation or any such
portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or
endorsed on this Certificate of Obligation shall be executed by the registered owner or its duly authorized
attorney or representative to evidence the assignment hereof. A new Certificate of Obligation or
Certificates of Obligation payable to such assignee or assignees (which then will be the new registered
owner or owners of such new Certificate of Obligation or Certificates of Obligation), or to the previous
registered owner in the case of the assignment and transfer of only a portion of this Certificate of Obligation,
may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Certificate of
Obligation, all in the form and manner as provided in the next paragraph hereof for the conversion and
18
exchange of other Certificates of Obligation. The Issuer shall pay the Paying Agent/Registrar's standard
or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any
taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar
shall not be required to make transfers of registration of this Certificate of Obligation or any portion hereof
(i) during the period commencing with the close of business on any Record Date and ending with the
opening of business on the next following principal or interest payment date, or, (ii) with respect to any
Certificate of Obligation or any portion thereof called for redemption prior to maturity, within 45 days prior
to its redemption date. The registered owner ofthis Certificate of Obligation shall be deemed and treated
by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including
payment and discharge of liability upon this Certificate of Obligation to the extent of such payment, and the
Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary.
ALL CERTIFICATES OF OBLIGATION OF THIS SERIES are issuable solely as fully
registered certificates of obligation, without interest coupons, in the denomination of any integral multiple
of $5,000. As provided in the Certificate of Obligation Ordinance, this Certificate of Obligation, or any
unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof,
be converted into and exchanged for a like aggregate principal amount of fully registered Certificates of
Obligation, without interest coupons, payable to the appropriate registered owner, assignee, or assignees,
as the case may be, having the same maturity date, and bearing interest at the same rate, in any
denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate
registered owner, assignee, or assignees, as the case may be, upon surrender of this Certificate of
Obligation to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures
set forth in the Certificate of Obligation Ordinance. The Issuer shall pay the Paying Agent/Registrar's
standard or customary fees and charges for transferring, converting, and exchanging any Certificate of
Obligation or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay
any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the
exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required
to make any such conversion and exchange (i) during the period commencing with the close of business
on any Record Date and ending with the opening of business on the next following principal or interest
payment date, or, (ii) with respect to any Certificate of Obligation or portion thereof called for redemption
prior to maturity, within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent/Registrar for the Certificates of Obligation is changed by the
Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Certificate of Obligation
Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly
will cause written notice thereof to be mailed to the registered owners of the Certificates of Obligation.
IT IS HEREBY certified, recited, and covenanted that this Certificate of Obligation has been duly
and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be
performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Certificate
of Obligation have been performed, existed, and been done in accordance with law; that this Certificate
19
of Obligation is a general obligation of the Issuer, issued on the full faith and credit thereof, and that ad
valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate of
Obligation, as such interest and principal come due, have been levied and ordered to be levied against all
taxable property in the Issuer, and have been pledged for such payment, within the limit prescribed by law,
and that this Certificate of Obligation, is additionally secured by and payable from the limited surplus
revenues of the Issuer's Utility System, being the Issuer's Waterworks, Sewer and Electric System,
remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve,
and other requirements in connection with all of the Issuer's revenue bonds or other obligations (now or
hereafter outstanding), which are payable from all or any part of the Net Revenues of the Issuer's Utility
System.
THE ISSUER HAS RESERVED THE RIGHT to amend the Certificate of Obligation Ordinance
as provided therein, and under some (but not all) circumstances amendments thereto must be approved
by the registered owners of a majority in aggregate principal amount of the outstanding Certificates of
Obligation.
BY BECOMING the registered owner of this Certificate of Obligation, the registered owner
thereby acknowledges all of the terms and provisions of the Certificate of Obligation Ordinance, agrees
to be bound by such terms and provisions, acknowledges that the Certificate of Obligation Ordinance is
duly recorded and available for inspection in the official minutes and records of the governing body of the
Issuer, and agrees that the terms and provisions of this Certificate of Obligation and the Certificate of
Obligation Ordinance constitute a contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Certificate of Obligation to be signed with
the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile
signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly
impres;d, or placed in facsimile, on this Certificate of Obligation.
Cep tr1*tary Mayor
IS
ALfa
°F OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
I',4 PAYINGAGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Certificate of Obligation is not accompanied by an executed
Registration Certificate of the Comptroller of Public Accounts of the State of Texas)
It is hereby certified that this Certificate of Obligation has been issued under the provisions of the
Certificate of Obligation Ordinance described on the face of this Certificate of Obligation; and that this
Certificate of Obligation has been issued in conversion ofand exchange for or replacement of a certificate
of obligation, certificates of obligation, or a portion of a certificate of obligation or certificates of obligation
of an issue which originally was approved by the Attorney General of the State of Texas and registered by
the Comptroller of Public Accounts of the State of Texas.
Dated The Bank of New York Trust Company of Florida, N.A.
Paying Agent/Registrar
:A
Authorized Representative
FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Certificate of Obligation, or
duly authorized representative or attorney thereof, hereby assigns this Certificate of Obligation to
(Assignee's Social Security or Tax (Print or type Assignee's Name and Address Including
Payer Identification Number) Zip Code)
and hereby irrevocably constitutes and appoints
attorney, to transfer the registration of this Certificate of Obligation on the Paying Agent/Registrar's
Registration Books with full power of substitution in the premises.
Dated
NOTICE: This signature must be guaranteed
by a member of the New York Stock
Exchange or a commercial bank or trust
company.
21
NOTICE: This signature must correspond with
the name of the Registered Owner appearing on
the face of this Certificate of Obligation in every
particular without alteration or enlargement or any
change whatsoever.
Section 8. TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund")
is hereby created solely for the benefit of the Certificates of Obligation, and the Interest and Sinking Fund
shall be established and maintained by the Issuer at an official depository bank of the Issuer. The Interest
and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer, and shall
be used only for paying the interest on and principal of the Certificates of Obligation. All ad valorem taxes
levied and collected for and on account of the Certificates of Obligation, together with any premium
received from the sale of the Certificates of Obligation, shall be deposited, as collected, to the credit of
the Interest and Sinking Fund. During each year while any of the Certificates of Obligation or interest
thereon are outstanding and unpaid, the governing body of the Issuer shall compute and ascertain a rate
and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the
interest on the Certificates of Obligation as such interest comes due, and to provide and maintain a sinking
fund adequate to pay the principal of its Certificates of Obligation as such principal matures (but never less
than 2% of the original principal amount of the Certificates of Obligation as a sinking fund each year).
Said tax shall be based on the latest approved tax rolls of the Issuer, with full allowance being made
for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby
levied, and is hereby ordered to be levied, against all taxable property in the Issuer for each year while any
of the Certificates of Obligation or interest thereon are outstanding and unpaid; and said tax shall be
assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking
Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of the
Certificates of Obligation, as such interest comes due and such principal matures, are hereby pledged for
such payment, within the limit prescribed by law.
Article 1208, Government Code, applies to the issuance of the Certificates of Obligation and the
pledge of the taxes and Surplus Revenues granted by the Issuer under this Section and Section 9,
respectively, and is therefore valid, effective, and perfected. Should Texas law be amended at any time
while the Certificates of Obligation are outstanding and unpaid, the result of such amendment being that the
pledge of the taxes and Surplus Revenues granted by the Issuer under this Section and Section 9,
respectively, is to be subject to the filing requirements of Chapter 9, Business & Commerce Code, in order
to preserve to the registered owners ofthe Certificates of Obligation a security interest in said pledge, the
Issuer agrees to take such measures as it determines are reasonable and necessary under Texas law to
comply with the applicable provisions of Chapter 9, Business & Commerce Code and enable a filing of
a security interest in said pledge to occur.
Section 9. REVENUES. That said Certificates of Obligation, are additionally secured by and
shall be payable from and secured by the collection of the limited surplus revenues of the Issuer's Utility
System, being the Issuer's Waterworks, Sewer and Electric System, after payment of all expenses of
operation and maintenance thereof, and all debt service, reserve, and other requirements in connection with
all of the Issuer's revenue bonds or other obligations (now or hereafter outstanding), which are payable
from all or any part of the Net Revenues of the Issuer's Utility System, being the Issuer's Waterworks,
Sewer and Electric Systemwith such amount not to exceed $1,000, constituting "Surplus Revenues". The
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Issuer shall deposit such Surplus Revenues to the credit of the Interest and Sinking Fund created pursuant
to Section 8, to the extent necessary to pay the principal and interest on the Certificates of Obligation.
Notwithstanding the requirements of Section 8, if Surplus Revenues or other lawfully available funds are
actually on deposit or budgeted for deposit in the Interest and Sinking Fund in advance of the time when
ad valorem taxes are scheduled to be levied for any year, then the amount of taxes which otherwise would
have been required to be levied pursuant to Section 8 may be reduced to the extent and by the amount of
the revenues then on deposit in the Interest and Sinking Fund or budgeted for deposit therein.
Section 10. TRANSFER. That the Mayor and the City Secretary are hereby ordered to do
any and all things necessary to accomplish the transfer of monies to the Interest and Sinking Fund of this
issue in ample time to pay such items of principal and interest.
Section 11. DEFEASANCE OF CERTIFICATES OF OBLIGATION. (a) Any Certificate
of Obligation and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a
"Defeased Certificate of Obligation") within the meaning of this Ordinance, except to the extent provided
in subsection (d) of this Section, when payment of the principal of such Certificate of Obligation, plus
interest thereon to the due date (whether such due date be by reason of maturity or otherwise) either (i)
shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been
provided for on or before such due date by irrevocably depositing with or making available to the Paying
Agent/Registrar in accordance with an escrow agreement or other instrument (the "Future Escrow
Agreement") for such payment (1) lawful money of the United States of America sufficient to make such
payment or (2) Defeasance Securities that mature as to principal and interest in such amounts and at such
times as will insure the availability, without reinvestment, of sufficient money to provide for such payment,
and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the
payment of its services until all Defeased Certificates of Obligation shall have become due and payable.
At such time as a Certificate of Obligation shall be deemed to be a Defeased Certificate of Obligation
hereunder, as aforesaid, such Certificate of Obligation and the interest thereon shall no longer be secured
by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided
in this Ordinance, and such principal and interest shall be payable solely from such money or Defeasance
Securities. Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that
any determination not to redeem Defeased Certificates of Obligation that is made in conjunction with the
payment arrangements specified in subsection I I(a)(i) or (ii) shall not be irrevocable, provided that; (1) in
the proceedings providing for such payment arrangements, the Issuer expressly reserves the right to call
the Defeased Certificates of Obligation for redemption; (2) gives notice of the reservation of that right to
the owners of the Defeased Certificate of Obligations immediately following the making of the payment
arrangements; and (3) directs that notice of the reservation be included in any redemption notices that it
authorizes.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the
Issuer also be invested in Defeasance Securities, maturing in the amounts and times as hereinbefore set
forth, and all income from such Defeasance Securities received by the Paying Agent/Registrar that is not
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required for the payment of the Certificates of Obligation and interest thereon, with respect to which such
money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the
Issuer. Any Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held
for the payment of Defeased Certificates of Obligation may contain provisions permitting the investment
or reinvestment of such moneys in Defeasance Securities or the substitution of other Defeasance Securities
upon the satisfaction of the requirements specified in subsection I l(a)(i) or (h). All income from such
Defeasance Securities received by the Paying Agent/Registrar which is not required for the payment of the
Defeased Certificates of Obligation, with respect to which such money has been so deposited, shall be
remitted to the Issuer or deposited as directed in writing by the Issuer.
(c) The term "Defeasance Securities" means (i) direct, noncallable obligations of the United States
of America, including obligations that are unconditionally guaranteed by the United States of America, (ii)
noncallable obligations of an agency or instrumentality of the United States of America, including obligations
that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the
purchase thereof are rated as to investment quality by a nationally recognized investment rating firm not less
than AAA or its equivalent, and (iii) noncallable obligations of a state or an agency or a county,
municipality, or other political subdivision of a state that have been refunded and that, on the date the
governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements
are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or
its equivalent.
(d) Until all Defeased Certificates of Obligation shall have become due and payable, the Paying
Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Certificates of
Obligation the same as if they had not been defeased, and the Issuer shall make proper arrangements to
provide and pay for such services as required by this Ordinance.
(e) In the event that the Issuer elects to defease less than all of the principal amount of
Certificates of Obligation of a maturity, the Paying Agent/Registrar shall select, or cause to be selected,
such amount of Certificates of Obligation by such random method as it deems fair and appropriate.
Section 12. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
CERTIFICATES OF OBLIGATION. (a) Replacement Certificates of Obligation In the event any
outstanding Certificate of Obligation is damaged, mutilated, lost, stolen, or destroyed, the Paying
Agent/Registrar shall cause to be printed, executed, and delivered, a new certificate of obligation of the
same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed
Certificate of Obligation, in replacement for such Certificate of Obligation in the manner hereinafter
provided.
(b) Application for Replacement Certificates of Obligation. Application for replacement of
damaged, mutilated, lost, stolen, or destroyed Certificates of Obligation shall be made by the registered
owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Certificate of
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Obligation, the registered owner applying for a replacement certificate of obligation shall furnish to the
Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save
each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or
destruction of a Certificate of Obligation, the registered owner shall furnish to the Issuer and to the Paying
Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Certificate of
Obligation, as the case may be. In every case of damage or mutilation of a Certificate of Obligation, the
registered owner shall surrender to the Paying Agent/Registrar for cancellation the Certificate of Obligation
so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event
any such Certificate of Obligation shall have matured, and no default has occurred which is then continuing
in the payment of the principal of, redemption premium, if any, or interest on the Certificate of Obligation,
the Issuer may authorize the payment of the same (without surrender thereof except in the case of a
damaged or mutilated Certificate of Obligation) instead of issuing a replacement Certificate of Obligation,
provided security or indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Certificates of Obligation Prior to the issuance of any
replacement certificate of obligation, the Paying Agent/Registrar shall charge the registered owner of such
Certificate of Obligation with all legal, printing, and other expenses in connection therewith Every
replacement certificate of obligation issued pursuant to the provisions of this Section by virtue of the fact
that any Certificate of Obligation is lost, stolen, or destroyed shall constitute a contractual obligation of the
Issuer whether or not the lost, stolen, or destroyed Certificate of Obligation shall be found at any time, or
be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and
proportionately with any and all other Certificates of Obligation duly issued under this Ordinance.
(e) Authority for Issuing Replacement Certificates of Obligation In accordance with Chapter
1201, Texas Government Code, this Section 12 of this Ordinance shall constitute authority for the issuance
of any such replacement certificate of obligation without necessity of further action by the governing body
ofthe Issuer or any other body or person, and the duty of the replacement of such certificates of obligation
is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall
authenticate and deliver such Certificates of Obligation in the form and manner and with the effect, as
provided in Section 6(d) of this Ordinance for Certificates of Obligation issued in conversion and exchange
for other Certificates of Obligation.
Section 13. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES OF
OBLIGATION; BOND COUNSEL'S OPINION; CUSIP NUMBERS AND CONTINGENT
INSURANCE PROVISION, IF OBTAINED. The Mayor of the Issuer is hereby authorized to have
control of the Initial Certificate of Obligation issued hereunder and all necessary records and proceedings
pertaining to the Initial Certificate of Obligation pending its delivery and its investigation, examination, and
approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public
Accounts of the State of Texas. Upon registration of the Initial Certificate of Obligation said Comptroller
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of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the
Comptroller's Registration Certificate on the Initial Certificate of Obligation, and the seal of said
Comptroller shall be impressed, or placed in facsimile, on the Initial Certificate of Obligation. The
approving legal opinion of the Issuer's bond counsel and the assigned CUSIP numbers may, at the option
of the Issuer, be printed on the Initial Certificate of Obligation or on any Certificates of Obligation issued
and delivered in conversion of and exchange or replacement of any Certificate of Obligation, but neither
shall have any legal effect, and shall be solely for the convenience and information of the registered owners
of the Certificates of Obligation. In addition, if bond insurance is obtained, the Certificates of Obligation
may bear an appropriate legend as provided by the insurer.
Section 14. COVENANTS REGARDING TAX EXEMPTION. The Issuer covenants to
refrain from taking any action which would adversely affect, and to take any required action to ensure, the
treatment of the Certificates of Obligation as obligations described in Section 103 of the Internal Revenue
Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of
the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of the Certificates
of Obligation or the projects financed therewith (less amounts deposited to a reserve fund, if any) or the
projects financed therewith are used for any "private business use," as defined in Section 141(b)(6) of the
Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such
amounts, whether or not received by the Issuer, with respect to such private business use, do not, under
the terms of this Ordinance, or any underlying arrangement, directly or indirectly, secure or provide for the
payment of more than 10 percent of the debt service on the Certificates of Obligation, in contravention of
Section 141(b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use" described in
subsection (a) hereof exceeds 5 percent of the proceeds of the Certificates of Obligation or the projects
financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5
percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning
of Section 141(b)(3) of the Code, to the governmental use;
(c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or
5 percent of the proceeds of the Certificates of Obligation (less amounts deposited into a reserve fund, if
any) is directly or indirectly used to finance loans to persons, other than state or local governmental units,
in contravention of Section 141(c) of the Code;
(d) to refrain from taking any action which would otherwise result in the Certificates of Obligation
being treated as "private activity Certificates of Obligation" within the meaning of Section 141(b) of the
Code;
(e) to refrain from taking any action that would result in the Certificates of Obligation being
"federally guaranteed" within the meaning of Section 149(b) of the Code;
(f) to refrain from using any portion of the proceeds of the Certificates of Obligation, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment
property (as defined in Section 148(b)(2) of the Code) which produces a materially higher yield over the
term of the Certificates of Obligation, other than investment property acquired with --
(1) proceeds of the Certificates of Obligation invested for a reasonable temporary period
of 3 years or less or, in the case of a refunding Certificate of Obligation, for a period of 30 days
or less until such proceeds are needed for the purpose for which the Certificates of Obligation are
issued,
(2) amounts invested in a bona fide debt service fund, within the meaning of Section
1.148-1(b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement fund to the
extent such amounts do not exceed 10 percent of the proceeds of the Certificates of Obligation;
(g) to otherwise restrict the use of the proceeds of the Certificates of Obligation or amounts treated
as proceeds of the Certificates of Obligation, as may be necessary, so that the Certificates of Obligation
do not otherwise contravene the requirements of Section 148 of the Code (relating to arbitrage) and, to
the extent applicable, Section 149(d) of the Code (relating to advance refundings); and
(h) to pay to the United States of America at least once during each five-year period (beginning
on the date of delivery of the Certificates of Obligation) an amount that is at least equal to 90 percent of
the "Excess Earnings," within the meaning of Section 148(f) of the Code and to pay to the United States
of America, not later than 60 days after the Certificates of Obligation have been paid in full, 100 percent
of the amount then required to be paid as a result of Excess Earnings under Section 148(f) of the Code.
For the purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds"
includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding
Certificates of Obligation, transferred proceeds (if any) and proceeds of the refunded Certificates of
Obligation expended prior to the date of issuance of the Certificates of Obligation. It is the understanding
of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any
regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event
that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as
applicable to the Certificates of Obligation, the Issuer will not be required to comply with any covenant
contained herein to the extent that such failure to comply, in the opinion of nationally -recognized bond
counsel, will not adversely affect the exemption from federal income taxation of interest on the Certificates
of Obligation under Section 103 of the Code. In the event that regulations or rulings are hereafter
27
promulgated which impose additional requirements which are applicable to the Certificates of Obligation,
the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of
nationally -recognized bon counsel, to preserve the exemption from federal income taxation of interest on
the Certificates of Obligation under Section 103 of the Code. In furtherance of such intention, the Issuer
hereby authorizes and directs the Mayor of the Issuer to execute any documents, certificates or reports
required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the
Code as are consistent with the purpose for the issuance of the Certificates of Obligation.
In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established
by the Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the
claim of any other person, including without limitation the Certificate of Obligation holders. The Rebate
Fund is established for the additional purposes of compliance with Section 148 of the Code.
Section 15. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FORTHE
PROJECT. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings
to be used for the purposes described in Section 1 of this Ordinance (the "Project") on its books and
records in accordance with the requirements of the Internal Revenue Code. The Issuer recognizes that in
order for the proceeds to be considered used for the reimbursement of costs, the proceeds must be
allocated to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2)
the Project is completed; but in no event later than three years after the date on which the original
expenditure is paid. The foregoing notwithstanding, the Issuer recognizes that in order for proceeds to be
expended under the Internal Revenue Code, the sale proceeds or investment earnings must be expended
no more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Certificates of
Obligation, or (2) the date the Certificates of Obligation are retired. The Issuer agrees to obtain the advice
ofnationally-recognized bond counsel if such expenditure fails to comply with the foregoing to assure that
such expenditure will not adversely affect the tax-exempt status of the Certificates of Obligation. For
purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that
such failure to comply will not adversely affect the excludability for federal income tax purposes from gross
income of the interest.
Section 16. DESIGNATION AS QUALIFIED TAX-EXEMPT OBLIGATIONS. The Issuer
hereby designates the Certificates as "qualified tax-exempt obligations" as defined in Section 265(b)(3) of
the Code. In furtherance of such designation, the Issuer represents, covenants and warrants the following:
(a) that during the calendar year in which the Certificates are issued, the Issuer (including any subordinate
entities) has not designated nor will designate obligations, which when aggregated with the Certificates, will
result in more than $10,000,000 of "qualified tax-exempt obligations" being issued; and (b) that the Issuer
reasonably anticipates that the amount of tax-exempt obligations issued, during the calendar year in which
the Certificates are issued, by the Issuer (or any subordinate entities) will not exceed $10,000,000.
Section 17. DISPOSITION OF PROJECT. The Issuer covenants that the property
constituting the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the
28
Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally -recognized bond
counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Certificates
ofObligation. For purposes of the foregoing, the portion of the property comprising personal property and
disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other
compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it
obtains an opinion that such failure to comply will not adversely affect the excludability for federal income
tax purposes from gross income of the interest.
Section 18. CONTINUING DISCLOSURE. (a) Annual Reports. (i) The Issuer shall provide
annually to any SID, within six months after the end of each fiscal year ending in or after 2002, financial
information and operating data with respect to the Issuer of the general type described in Exhibit A. Any
financial statements so to be provided shall be prepared in accordance with the accounting principles
described in Exhibit A thereto, or such other accounting principles as the Issuer may be required to employ
from time to time pursuant to state law or regulation, and audited, if the Issuer commissions an audit of such
statements and the audit is completed within the period during which they must be provided. If the audit
of such financial statements is not complete within such period, then the Issuer shall provide audited financial
statements for the applicable fiscal year to each any SID, when and if the audit report on such statements
become available.
(ii) If the Issuer changes its fiscal year, it will notify any SID of the change (and of the date of the
new fiscal year end) prior to the next date by which the Issuer otherwise would be required to provide
financial information and operating data pursuant to this Section. The financial information and operating
data to be provided pursuant to this Section may be set forth in full in one or more documents or may be
included by specific reference to any document (including an official statement or other offering document,
if it is available from the MSRB) that theretofore has been provided to any SID or filed with the SEC.
(b) Material Event Notices. The Issuer shall notify any SID or the MSRB, in a timely manner, of
any of the following events with respect to the Certificates, if such event is material within the meaning of
the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Certificates.
7. Modifications to rights of holders of the Certificates;
8. Certificate calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Certificates
and
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11. Rating changes.
The Issuer shall notify any SID or the MSRB, in a timely manner, of any failure by the Issuer to provide
financial information or operating data in accordance with subsection (a) of this Section by the time required
by such subsection.
(c) Limitations. Disclaimers, and Amendments. (i) The Issuer shall be obligated to observe and
perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains
an "obligated person" with respect to the Certificates within the meaning of the Rule, except that the Issuer
in any event will give notice of any deposit made in accordance with this Ordinance or applicable law that
causes Certificates no longer to be outstanding.
(ii) The provisions of this Section are for the sole benefit of the holders and beneficial owners of
the Certificates, and nothing in this Section, express or implied, shall give any benefit or any legal or
equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only
the financial information, operating data, financial statements, and notices which it has expressly agreed to
provide pursuant to this Section and does not hereby undertake to provide any other information that may
be relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects
or hereby undertake to update any information provided in accordance with this Section or otherwise,
except as expressly provided herein. The Issuer does not make any representation or warranty concerning
such information or its usefulness to a decision to invest in or sell Certificates at any future date.
(iii) UNDERNO CIRCUMSTANCES SHALL THE ISSUERBE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY Certificate OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE
ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
(iv) No default by the Issuer in observing or performing its obligations under this Section shall
comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer
under federal and state securities laws.
(v) The provisions of this Section may be amended by the Issuer from time to time to adapt to
changed circumstances that arise from a change in legal requirements, a change in law, or a change in the
identity, nature, status, or type of operations of the Issuer, but only if (1) the provisions of this Section, as
so amended, would have permitted an underwriter to purchase or sell Certificates in the primary offering
of the Certificates in compliance with the Rule, taking into account any amendments or interpretations of
the Rule since such offering as well as such changed circumstances and (2) either (a) the holders of a
9
majority in aggregate principal amount (or any greater amount required by any other provision of this
Ordinance that authorizes such an amendment) of the Outstanding Certificates consent to such amendment
or (b) a person that is unaffiliated with the Issuer (such as bond counsel) determined that such amendment
will not materially impair the interest of the holders and beneficial owners of the Certificates. If the Issuer
so amends the provisions ofthis Section, it shall include with any amended financial information or operating
data next provided in accordance with subsection (a) of this Section an explanation, in narrative form, of
the reason for the amendment and of the impact of any change in the type of financial information or
operating data so provided. The Issuer may also amend or repeal the provisions of this continuing
disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final
jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the
provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Certificates
in the primary offering of the Certificates.
(d) Definitions. As used in this Section, the following terms have the meanings ascribed to such
terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department, officer, or
agency thereof as, and determined by the SEC or its staff to be, a state information depository
within the meaning of the Rule from time to time.
Section 19. SALE OF CERTIFICATES OF OBLIGATIONS; OFFICIAL STATEMENT. The
Initial Certificate is hereby sold and shall be delivered to for cash for
the par value thereofand accrued interest thereon to date of delivery (accrued interest to be deposited into
the Interest and Sinking Fund), plus a premium of $ (premium to be deposited into the
Interest and Sinking Fund). It is hereby officially found, determined, and declared that the Initial
Certificate has been sold at public sale to the bidder offering the lowest interest cost, after receiving sealed
bids pursuant to an Official Notice of Sale and Bidding Instructions and Preliminary Official Statement
dated May 10, 2002, prepared and distributed in connection with the sale of the Initial Certificate. Said
Official Notice of Sale and Bidding Instructions and Official Statement, and any addenda, supplement, or
amendment thereto have been and are hereby approved by the governing body of the Issuer, and their use
in the offer and sale of the Certificates is hereby approved. It is further officially found, determined, and
declared that the statements and representations contained in said Official Notice of Sale and Official
Statement are true and correct in all material respects, to the best knowledge and belief of the governing
body of the Issuer.
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Section 20. INTEREST EARNINGS ON CERTIFICATES OF OBLIGATION
PROCEEDS. The earnings derived from the investment of proceeds from the sale of the Certificates of
Obligation shall be used along with other Certificate of Obligation proceeds as described in Section 1
hereof; provided that after completion of such project, if any of such interest earnings remain on hand, such
interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however, that
interest earnings on the Certificates of Obligation proceeds which are required to be rebated to the United
States of America pursuant to Section 14 hereof in Ordinance to prevent the Certificates of Obligation from
being arbitrage Certificates of Obligation shall be so rebated and not considered as interest earnings for the
purpose of this Section.
Section 21. METHOD OF AMENDMENT, The Issuer hereby reserves the right to amend this
Ordinance subject to the following terms and conditions, to -wit:
(a) The Issuer may from time to time, without the consent of any holder, except as otherwise
required by paragraph (b) below, amend or supplement this Ordinance in order to (i) cure any ambiguity,
defect or omission in this Ordinance that does not materially adversely affect the interests of the holders,
(ii) grant additional rights or security for the benefit of the holders, (iii) add events of default as shall not be
inconsistent with the provisions of this Ordinance and that shall not materially adversely affect the interests
of the holders, (v) qualify this Ordinance under the Trust Indenture Act of 1939, as amended, or
corresponding provisions of federal laws from time to time in effect, or (iv) make such other provisions in
regard to matters or questions arising under this Ordinance as shall not be inconsistent with the provisions
of this Ordinance and that shall not in the opinion of the Issuer's Bond Counsel materially adversely affect
the interests of the holders.
(b) Except as provided in paragraph (a) above, the holders of Certificates of Obligation
aggregating in principal amount 51% of the aggregate principal amount of then outstanding Certificates of
Obligation that are the subject of a proposed amendment shall have the right from time to time to approve
any amendment hereto that may be deemed necessary or desirable by the Issuer; provided, however, that
without the consent of 100% of the holders in aggregate principal amount of the then outstanding
Certificates of Obligation, nothing herein contained shall permit or be construed to permit amendment of
the terms and conditions of this Ordinance or in any of the Certificates of Obligation so as to:
(1) Make any change in the maturity of any of the outstanding Certificates of
Obligation;
(2) Reduce the rate of interest borne by any of the outstanding Certificates of
Obligation;
(3) Reduce the amount of the principal of, or redemption premium, if any, payable on
any outstanding Certificates of Obligation;
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(4) Modify the terms of payment of principal or of interest or redemption premium on
outstanding Certificates of Obligation or any of them or impose any condition with respect
to such payment; or
(5) Change the minimum percentage of the principal amount of any series of
Certificates of Obligation necessary for consent to such amendment.
(c) If at any time the Issuer shall desire to amend this Ordinance under this Section, the Issuer
shall send by U.S. mail to each registered owner of the affected Certificates of Obligation a copy of the
proposed amendment and cause notice of the proposed amendment to be published at least once in a
financial publication published in The City of New York, New York or in the State of Texas. Such
published notice shall briefly set forth the nature of the proposed amendment and shall state that a copy
thereof is on file at the office of the Issuer for inspection by all holders of such Certificates of Obligation.
(d) Whenever at any time within one year from the date of publication of such notice the Issuer
shall receive an instrument or instruments executed by the holders of at least 51 % in aggregate principal
amount of all of the Certificates of Obligation then outstanding that are required for the amendment, which
instrument or instruments shall refer to the proposed amendment and that shall specifically consent to and
approve such amendment, the Issuer may adopt the amendment in substantially the same form.
(e) Uponthe adoption of any amendatory Ordinance pursuant to the provisions of this Section,
this Ordinance shall be deemed to be modified and amended in accordance with such amendatory
Ordinance, and the respective rights, duties, and obligations of the Issuer and all holders of such affected
Certificates of Obligation shall thereafter be determined, exercised, and enforced, subject in all respects
to such amendment.
(f) Any consent given by the holder of a Certificate of Obligation pursuant to the provisions
of this Section shall be irrevocable for a period of six months from the date of the publication of the notice
provided for in this Section, and shall be conclusive and binding upon all future holders of the same
Certificate of Obligation during such period. Such consent may be revoked at any time after six months
from the date of the publication of said notice by the holder who gave such consent, or by a successor in
title, by filing notice with the Issuer, but such revocation shall not be effective if the holders of 51% in
aggregate principal amount of the affected Certificates of Obligation then outstanding, have, prior to the
attempted revocation, consented to and approved the amendment.
(g) For the purposes of establishing ownership of the Certificates of Obligation, the Issuer shall
rely solely upon the registration of the ownership of such Certificates of Obligation on the registration books
kept by the Paying Agent/Registrar.
Section 22. INSURANCE. The Issuer approves the insurance ofthe Certificates of Obligation
by and the payment of such premium and covenant to comply with all
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of the terms of the insurance commitment, a copy of which is attached hereto as Exhibit B and is hereby
adopted by this Ordinance.
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 18 of this Ordinance.
I. Annual Financial Statements and Operating Data
The financial information and operating data with respect to the Issuer to be provided annually in
accordance with such Section are as specified, all quantitative financial information and operating data with
respect to the Issuer of the general type included in the Official Statement that is customarily prepared and
publicly available. The information to be updated includes (1) the annual audited financial statements of the
City and (2) information which is customarily prepared and publicly available regarding property valuation,
tax rates and tax collections. information regarding the System.
H. Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in the
notes to the financial statements referred to in paragraph 1 above.
"R li i
INSURANCE COMMITMENT
The Insurance Commitment is omitted at this point, as it appears elsewhere in this transcript.