10 - Issuance of Certificates of Obligation Series 2020Item No. 10
TO: City Council
FROM: Gene Anderson, Interim City Manager and Finance Director
SUBJECT: ISSUANCE & SALE OF CITY OF PARIS COMBINATION TAX AND
SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2020
DATE: January 7, 2020
BACKGROUND: The citizens of Paris voted to increase the hotel occupancy tax from 7% to
9%. The City will issue certificates of obligation to fund various capital improvements at Love
Civic Center. The increased revenues from the hotel occupancy tax will be used to make the debt
payments on the certificates of obligation which are to be sold in January 2020. Because of the
small size of the 2020 certificates of obligation issue ($1.5 million), the City is seeking private
placement of the certificates through a bid process as a cost savings measure. Using this method,
the City will not have to pay for a bond rating or issue an official statement on the bonds. The
certificates will have a 10 year payoff schedule.
STATUS OF ISSUE: Bids were received January 10, 2020 at the Dallas offices of Samco
Capital Markets, Inc. A summary of those bids will be provided at the council meeting. An
ordinance has been prepared authorizing the issuance of these certificates and approving all other
matters incident to the certificate issuance.
BUDGET: Cost of the certificate issuance will be paid from the certificate proceeds with the
Lamar County Chamber of Commerce reimbursing that cost to the City. This reimbursement will
be deposited into the construction fund established for the Civic Center upgrade.
RECOMMENDATION: Move to adopt an ordinance authorizing the issuance and sale of the
City of Paris, Texas Combination Tax and Surplus Revenue Certificates of Obligation, Series
2020 and approving all matters incident thereto.
ORDINANCE NO.
ORDINANCE
OF THE CITY OF PARIS, TEXAS
AUTHORIZING THE ISSUANCE OF
CITY OF PARIS, TEXAS
COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2020
TABLE OF CONTENTS
Section 1. Recitals, Amount and Purpose of the Certificates.........................................................1
Section2. Designation, Date, Denominations, Numbers, Maturities of Certificates and Interest
Rates.....................................................................................................................................2
Section 3. Characteristics of the Certificate....................................................................................2
Section4. Form of Certificate.........................................................................................................5
Section 5. Interest and Sinking Fund............................................................................................11
Section 6. Surplus Revenues.........................................................................................................11
Section 7. Defeasance of Certificates............................................................................................12
Section 8. Damaged, Mutilated, Lost, Stolen, or Destroyed Certificates......................................13
Section9. Custody, Approval, and Registration of Certificates; Bond Counsel's Opinion and
Engagement; Attorney General Filing Fee; Other Procedures and Agreements ................14
Section 10. Covenants Regarding Tax Exemption of Interest on the Certificates ........................15
Section 11. Sale of the Certificates...............................................................................................17
Section 12. Allocation of Certificate Proceeds.............................................................................17
Section 13. Disposition of Project................................................................................................18
Section 14. Interest Earnings on Certificate Proceeds; Appropriation.........................................18
Section 15. Construction Fund......................................................................................................18
Section 16. No Rule 15c2-12 Undertaking; Provision of Financial Information .........................18
Section 17. Method of Amendment..............................................................................................19
Section 18. Default and Remedies................................................................................................20
Section19. Severability................................................................................................................21
Section 20. Continued Perfection of Security Interest..................................................................21
Section 21. Inconsistent Provisions..............................................................................................22
Section 22. Governing Law..........................................................................................................22
Section23. Effective Date............................................................................................................22
ORDINANCE
AUTHORIZING THE ISSUANCE AND SALE OF CITY OF PARIS, TEXAS
COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION,
SERIES 2020; LEVYING AN ANNUAL AD VALOREM TAX FOR THE PAYMENT OF
SAID CERTIFICATES AND PROVIDING OTHER SECURITY; APPROVING A PAYING
AGENT/REGISTRAR AGREEMENT; ENGAGING BOND COUNSEL; AND ENACTING
OTHER PR s J'I N w O THE B
THE STATE OF TEXAS §
LAMAR COUNTY §
CITY OF PARIS §
WHEREAS, the City Council of the City of Paris, Texas (the "Issuer") deems it advisable
to issue Certificates of Obligation in the principal amount of $1,500,000 for the purpose of paying
all or a portion of the Issuer's contractual obligations incurred in connection with (i) the renovation,
repair and other improvement of the Issuer's Love Civic Center and (ii) paying legal, fiscal and
engineering fees in connection with such 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, Local Government Code,
as amended, and Chapter 1502, Government Code, as amended; and
WHEREAS, the City Council has heretofore passed 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 a newspaper of general circulation in the
Issuer, said newspaper being a "newspaper" as defined in Section 2051.044, Texas Government
Code and posted on the City's website, in accordance with Section 271.049, Texas Local
Government Code; and
WHEREAS, to the time of adoption of this Ordinance, the Issuer received no petition from
the qualified electors of the Issuer protesting the issuance of such Certificates of Obligation; and
WHEREAS, during the preceding three years, the Issuer has not submitted a bond
proposition to authorize the issuance of bonds for the same purpose for which the Certificates are
hereby being issued and which proposition was disapproved by voters; and
WHEREAS, it is considered to be to the best interest of the Issuer that said interest bearing
Certificates of Obligation be issued.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS:
Section 1. RECITALS, AMOUNT AND PURPOSE OF THE CERTIFICATES. 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 certificates of the Issuer are hereby authorized to be issued
and delivered in the aggregate principal amount of $1,500,000 for the purpose of paying all or a
portion of the Issuer's contractual obligations incurred in connection with (i) the renovation, repair
and other improvement of the Issuer's Love Civic Center and (ii) paying legal, fiscal and engineering
fees in connection with such project (the "Project").
Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, MATURITIES OF
CERTIFICATES AND INTEREST RATES. Each certificate issued pursuant to this Ordinance shall
be designated: "CITY OF PARIS, TEXAS COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATE OF OBLIGATION, SERIES 2019," and there shall be issued, sold, and delivered
hereunder one fully registered certificate, without interest coupons, dated January 1, 2020, in the
denomination and principal amount of $1,500,000 or the remaining principal amount of the
outstanding Certificate of this series if an exchange of a Certificate is made after a reduction in the
principal amount of the series, either by a payment of a scheduled installment of principal or as a
result of redemption of part of the Certificate prior to the maturity date, numbered R-1, with any
certificate issued in replacement thereof being in the denomination of the full principal amount of
the series of which the certificate is issued (the "Authorized Denomination"). Certificates issued
in exchange for Certificate R-1 shall be numbered consecutively from R-2 upward. Each Certificate
issued in accordance with this Ordinance shall be payable in installments to the registered owner
thereof, or to the registered assignee of said Certificate (in each case, the "Registered Owner").
Principal of said Certificate shall mature and be payable in installments on the dates and in the
amounts stated in the FORM OF CERTIFICATE set forth in this Ordinance. The Certificate shall
bear interest on the unpaid balance of the principal amount thereof from the date of delivery to the
scheduled due date, or date of prepayment or redemption prior to the scheduled due date, of the
principal installments of the Certificate at the rates per annum specified in the FORM OF
CERTIFICATE set forth in this Ordinance, with such interest being payable in the manner provided
and on the dates stated in the FORM OF CERTIFICATE set forth in this Ordinance.
The term "Certificate" as used in this Ordinance shall mean and include collectively the
certificate initially issued and delivered pursuant to this Ordinance and any substitute certificate
exchanged therefor, as well as any other substitute or replacement certificate issued pursuant hereto,
and the term "Certificate" shall mean any such certificate.
Section 3. CHARACTERISTICS OF THE CERTIFICATE.
(a) Restration. The Issuer shall keep or cause to be kept at the principal corporate trust
office of in__a..... . . ,._._._....... .... _,_.._(the "Paying Agent/Registrar"), books or records
for the registration of the transfer and exchange of the Certificate (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 registrations of transfers and exchanges under such reasonable
regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar
shall make such registrations, transfers and exchanges as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the Registered
Owner of each Certificate to which payments with respect to the Certificate 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. The Issuer shall pay
the Paying Agent/Registrar's standard or customary fees and charges for making such registration,
transfer, exchange and delivery of a substitute Certificate. Registration of assignments, transfers and
exchanges of a Certificate shall be made in the manner provided and with the effect stated in the
FORM OF CERTIFICATE set forth in this Ordinance. Each substitute Certificate shall bear a letter
and/or number to distinguish it from each other Certificate.
(b) Transfer and Exchange, Authentication. Except as provided in Section 3(f) of this
Ordinance, an authorized representative of the Paying Agent/Registrar shall, before the delivery of
any such Certificate, date and manually sign said Certificate, and no such Certificate shall be
deemed to be issued or outstanding unless such Certificate is so authenticated. The Paying
Agent/Registrar promptly shall cancel any Certificate surrendered for exchange. 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 of any
Certificate or portion thereof, and the Paying Agent/Registrar shall provide for the printing,
execution, and delivery of a substitute Certificate in the manner prescribed herein. Pursuant to
Chapter 1201, Government Code, as amended, the duty of transfer of a Certificate as aforesaid is
hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Certificate, the
exchanged Certificate shall be valid, incontestable, and enforceable in the same manner and with
the same effect as the Certificate that initially was issued and delivered pursuant to this Ordinance,
approved by the Attorney General and registered by the Comptroller of Public Accounts. The
Certificate may be transferred in whole, but not in part.
(c) Pa Lijent of Certificate 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 Certificate,
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 Certificate, shall
properly and accurately record all payments on the Certificate on the Registration Books, and shall
keep proper records of all exchanges of Certificates, and all replacements of Certificates, as provided
in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date,
and for thirty (3 0) 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. Notwithstanding the foregoing, any such nonpayment
of interest shall constitute an Event of Default as defined in Section 18 of this Ordinance. Notice
of the past due interest 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 the Registered Owner appearing
on the Registration Books at the close of business on the last business day next preceding the date
of mailing of such notice.
(d) In General. The Certificate (i) shall be issued in fully registered form, without interest
coupons, with the principal of and interest on such Certificate to be payable only to the Registered
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Owner thereof, (ii) may and shall be prepaid or redeemed prior to its scheduled maturity (notice of
which shall be given to the Paying Agent/Registrar by the Issuer at least 30 days prior to any such
redemption date), (iii) may be exchanged for another Certificate, (iv) may be transferred and
assigned in whole but not in part, (v) shall have the characteristics, (vi) shall be signed, sealed,
executed and authenticated, (vii) the principal of and interest on the Certificate shall be payable, and
(viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain duties
and responsibilities with respect to the Certificate, all as provided, and in the manner and to the
effect as required or indicated, in the FORM OF CERTIFICATE set forth in this Ordinance.
(e) Paying_Agent/Registrar. The Issuer covenants with the Registered Owner of the
Certificate that at all times while the Certificate is outstanding the Issuer will provide a competent
and legally qualified bank, trust company, financial institution, or other entity to act as and perform
the services of Paying Agent/Registrar for the Certificate 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 20 days written notice to the Paying Agent/Registrar,
to be effective not later than 15 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 Certificate, 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 the Registered Owner of the
Certificate, by United States mail, first-class postage prepaid, which notice also shall give the
address of the new Paying Agent/Registrar. By accepting the position and performing as such, each
Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a
certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar.
(f) Authentication of Certif sates. Except as provided below, no Certificate shall be valid
or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and
until there appears thereon the Paying Agent/Registrar's Authentication Certificate substantially in
the form provided in this Ordinance, duly authenticated by manual execution of the Paying
Agent/Registrar. It shall not be required that the same authorized representative of the Paying
Agent/Registrar sign the Certificate of Paying Agent/Registrar on the Certificate. In lieu of the
executed Certificate of Paying Agent/Registrar described above, the Initial Certificate delivered on
the closing date shall have attached thereto the Comptroller's Registration Certificate substantially
in the form provided in this Ordinance, manually executed by the Comptroller of Public Accounts
of the State of Texas or by his duly authorized agent, which certificate shall be evidence that the
Initial Certificate has been duly approved by the Attorney General of the State of Texas and that it
is a valid and binding obligation of the Issuer, and has been registered by the Comptroller.
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(g) Cancellationmmm, of mm Initial Certificate. On the closing date, one initial Certificate
representing the entire principal amount of the Certificate, payable in stated installments to the
purchaser designated in Section 10 or its designee, executed by manual or facsimile signature of the
Mayor and City Secretary of the Issuer, approved by the Attorney General of Texas, and registered
and manually signed by the Comptroller of Public Accounts of the State of Texas, and with the date
of delivery inserted thereon by the Paying Agent/Registrar, will be delivered to such purchaser or
its designee.
(h) Limitations on Certificate Form and Transfer. The Certificate or any certificate issued
in exchange therefore shall be issued in physical form in the Authorized Denomination, and maybe
transferred in whole, but not in part, and provided further that the Certificate may only be transferred
to: (i) an affiliate of the Bank; (ii) a "Bank" as defined in Section 3(a)(2) of the Securities Act of
1933 as amended (the "Securities Act"); (iii) an "Accredited Investor" as defined in Regulation D
under the Securities Act; or (iv) a "Qualified Institutional Buyer" as defined in Rule 144A under the
Securities Act. The Certificate shall not be made subject to a book -entry system of registration or
transfer. The Certificate shall not receive a CUSIP number.
Section 4. FORM OF CERTIFICATE. The form of the Certificate, including the form of
Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form of
Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached
to the Certificate initially issued and delivered pursuant to this Ordinance, shall be, respectively,
substantially as follows, with such appropriate variations, omissions or insertions as are permitted
or required by this Ordinance.
(a) [Form of Certificate]
NO. R- UNITED STATES OF AMERICA PRINCIPAL
STATE OF TEXAS AMOUNT
CITY OF PARIS, TEXAS $
COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATE OF OBLIGATION
SERIES 2020
Interest Rate Delivery Date
% per annum 320
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DOLLARS
THE CITY OF PARIS, TEXAS (the "Issuer"), being a political subdivision of the State of
Texas, for value received, promises to pay, from the sources described herein, to the registered
owner specified above, or registered assigns, the principal amount specified above, and to pay
interest thereon, from the Delivery Date set forth above, on the balance of said principal amount
from time to time remaining unpaid, at the interest rate per annum set forth above. The unpaid
principal of this Certificate shall finally mature on June 15, 2030, but shall be paid in installments
on the dates and in the amounts set forth in the table below:
Principal
PaIjBgDt Date Installment
June 15, 2021
June 15, 2022
June 15, 2023
June 15, 2024
June 15, 2025
June 15, 2026
June 15, 2027
June 15, 2028
June 15, 2029
June 15, 2030
THE PRINCIPAL OF AND INTEREST ON THIS CERTIFICATE are payable in lawful
money of the United States of America, without exchange or collection charges. The Issuer shall
pay interest on this Certificate on June 15, 2020 and on each December 15 and June 15 thereafter
to the date of maturity or redemption prior to maturity. The last principal installment and interest
payment of this Certificate shall be paid to the registered owner hereof upon presentation and
surrender of this Certificate at maturity, or upon the date fixed for its redemption prior to maturity,
at the principal office of in , which is the "Paying Agent/Registrar"
for this Certificate. The payment of all other principal installments of and interest on this Certificate
shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and
interest payment date by check or draft, dated as of such principal and interest payment date, drawn
by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the
Certificate Ordinance to be on deposit with the Paying Agent/Registrar for such purpose as
hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar by United
States mail, first-class postage prepaid, on each such interest payment date, to the registered owner
hereof, at its address as it appeared on the last business day of the month next preceding each such
date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as
hereinafter described. In addition, principal and interest may be paid 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 in connection with the final installment of principal of
this Certificate or upon redemption of this Certificate in whole at the option of the Issuer prior to
maturity as provided herein shall be paid to the registered owner upon presentation and surrender
of this Certificate for payment at the principal corporate trust office of the Paying Agent/Registrar.
The Issuer covenants with the registered owner of this Certificate that on or before each principal
payment date and interest payment date for this Certificate it will make available to the Paying
Agent/Registrar, from the "Interest and Sinking Fund" created by the Certificate Ordinance, the
amounts required to provide for the payment, in immediately available funds, of all principal of and
interest on the Certificate, when due.
IF THE DATE for the payment of the principal of or interest on this Certificate shall be a
Saturday, Sunday, a legal holiday or a day on which banking institutions in the city where the
principal corporate trust office of 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 that 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 is dated as of January 1, 2020, authorized in accordance with the
Constitution and laws of the State of Texas in the principal amount of $1,500,000 for the purpose
of paying all or a portion of the Issuer's contractual obligations incurred in connection with (i) the
renovation, repair and other improvement of the Issuer's Love Civic Center and (ii) paying legal,
fiscal and engineering fees in connection with such project.
[ON ANY DATE, the principal installments of this Certificate may be redeemed prior to
their scheduled payment dates, at the option of the Issuer, with funds derived from any available and
lawful source, as a whole, or in part, and, if in part, the particular principal installments or portions
thereof, to be redeemed shall be selected and designated by the Issuer, at a redemption price equal
to the principal amount to be redeemed plus accrued interest to the date fixed for redemption.
AT LEAST 30 days prior to the date fixed for any optional redemption of the Certificate or
portions thereof prior to final maturity a written notice of such redemption shall be sent by the Issuer
to the Registered Owner by United States mail, first-class postage prepaid; provided, however, that
the failure of the Registered Owner 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 this Certificate. 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 Certificate or
portions thereof which are to be so redeemed. If such written notice of redemption is sent and if due
provision for such payment is made, all as provided above, the Certificate or portions thereof which
are to be so redeemed thereby automatically shall be treated as redeemed prior to its scheduled
payment date, and shall not bear interest after the date fixed for redemption, and shall not be
regarded as being outstanding except for the right of the Registered Owner to receive the redemption
price from the Paying Agent/Registrar out of the funds provided for such payment.
UPON THE PREPAYMENT or partial redemption of this Certificate, the Paying
Agent/Registrar, shall note in the Prepayment Record appearing on this Certificate the amount of
such prepayment, the date said payment was made and the remaining unpaid principal balance of
this Certificate and shall then have said entry signed by an authorized official of the Paying
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Agent/Registrar. The Paying Agent/Registrar shall also record such information in the Certificate
Registration Books, and the Paying Agent/Registrar shall also record in the Certificate Registration
Books all payments of principal installments on such Certificate when made on their respective due
dates.]
THIS CERTIFICATE is issuable in the form of one fully -registered Certificate without
coupons in the denomination of $1,500,000 or the remaining principal amount of the outstanding
Certificate of this series if an exchange of a Certificate is made after a reduction in the principal
amount of the series, either by a payment of a scheduled installment of principal or as a result of
redemption of part of the Certificate prior to the maturity date. This Certificate may be transferred
or exchanged in whole, but not in part, as provided in the Certificate Ordinance, only upon the
registration books kept for that purpose at the above-mentioned office of the Paying Agent/Registrar
upon surrender of this Certificate together with a written instrument of transfer or authorization for
exchange satisfactory to the Paying Agent/Registrar and duly executed by the registered owner or
his duly authorized attorney, and thereupon a new Certificate of the same maturity and in the same
aggregate principal amount shall be issued by the Paying Agent/Registrar to the transferee in
exchange therefor as provided in the Certificate Ordinance, and upon payment of the charges therein
prescribed. The Issuer and the Paying Agent/Registrar may deem and treat the person in whose
name this Certificate is registered as the absolute owner hereof for the purpose of receiving payment
of, or on account of, the principal or redemption price hereof and interest due hereon and for all
other purposes. The Paying Agent/Registrar shall not be required to make any such transfer 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)
within 30 days prior to a redemption date.
IN THE EVENT any Paying Agent/Registrar for this Certificate is changed by the Issuer,
resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Certificate Ordinance
that it promptly will appoint a competent and legally qualified substitute therefor, and cause written
notice thereof to be mailed to the registered owner of the Certificate.
THIS CERTIFICATE shall not be valid or become obligatory for any purpose or be entitled
to any security or benefit under the Certificate Ordinance until the Certificate of Authentication shall
have been executed by the Paying Agent/Registrar or the Comptroller's Registration Certificate
hereon shall have been executed by the Texas Comptroller of Public Accounts.
IT IS HEREBY certified, recited, and covenanted that this Certificate 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 have been performed, existed, and been done in accordance with law; that this Certificate
is a general obligation of said Issuer, issued on the full faith and credit thereof; and that annual ad
valorem taxes sufficient to provide for the payment of the interest on and principal of this
Certificate, as such interest comes due and such principal matures, have been levied and ordered to
be levied against all taxable property in said Issuer, and have been pledged for such payment, within
the limit prescribed by law, and that this Certificate is additionally secured by and payable from a
pledge of the revenues of the Issuer's combined Waterworks and Sewer Systems 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 obligations (now or hereafter
outstanding) that are payable from all or part of said revenues, all as provided in the Certificate
Ordinance.
THE ISSUER HAS RESERVED THE RIGHT to amend the Certificate Ordinance as
provided therein, and under some (but not all) circumstances amendments thereto must be approved
by the registered owner of the Certificate.
BY BECOMING the registered owner of this Certificate, the registered owner thereby
acknowledges all of the terms and provisions of the Certificate Ordinance, agrees to be bound by
such terms and provisions, acknowledges that the Certificate 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 and the Certificate Ordinance constitute a
contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the
manual or facsimile signature of the Mayor (or in the absence thereof, by the Mayor Pro -tem) of the
Issuer and countersigned with the manual or facsimile signature of the City Secretary of said Issuer,
and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this
Certificate.
Janice Ellis, City Clerk
(SEAL)
(b) [Form of Prepayment Record]
Steven J. Clifford, M.D., Mayor
PREPAYMENT RECORD
Principal
Prepayment
(amount and Remaining Name and Title
Date of installment(s) to Principal of Authorized
Payment which payment is Balance Officer making
applied) Entry
Signature of
Authorized Officer
(c) [Form of Paying Agent/Registrar's Authentication Certificate]
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Certificate 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 has been issued under the provisions of the
Certificate Ordinance described in the text of this Certificate; and that this Certificate has been
issued in replacement of, or in exchange for, a Certificate that 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:
Paying Agent/Registrar
By:
Authorized Representative
(d) [Form of Assignment]
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
Please insert Social Security or Taxpayer Identification Number of Transferee
(Please print or typewrite name and address, including zip code, of Transferee.)
the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney, to register the transfer ofthe within
Certificate on the books kept for registration thereof, with full power of substitution in the premises.
Dated:
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Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a securities transfer
NOTICE: The signature above must
correspond with the name of the registered
owner as it appears upon the front of this
association recognized signature guarantee Certificate in every particular, without
program. alteration or enlargement or any change
whatsoever.
(e) [Form of Registration Certificate of the Comptroller of Public Accounts]
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Certificate has been examined, certified as to validity and approved
by the Attorney General of the State of Texas, and that this Certificate has been registered by the
Comptroller of Public Accounts of the State of Texas.
Witness my signature and seal this .... .......... ....IT IT
Comptroller of Public Accounts of the State of Texas
(COMPTROLLER'S SEAL)
Section 5. INTEREST AND SINKING FUND. A special "Interest and Sinking Fund" is
hereby created and shall be established and maintained by the Issuer at an official depository bank
of the Issuer. Said 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. All amounts received from the sale of the Certificates as accrued interest, if any, and
ad valorem taxes levied and collected for and on account of the Certificates shall be deposited, as
collected, to the credit of said Interest and Sinking Fund. During each year while any of the
Certificates are outstanding and unpaid, the governing body of the Issuer shall compute and ascertain
a rate and amount of ad valorem tax that will be sufficient to raise and produce the money required
to pay the interest on the Certificates as such interest comes due, and to provide and maintain a
sinking fund adequate to pay the principal of the Certificates as such principal matures (but never
less than 2% of the original amount of the Certificates as a sinking fund each year); and said tax
shall be based on the latest approved tax rolls of the Issuer, with full allowances 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 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
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Certificates, as such interest comes due and such principal matures, are hereby pledged for such
payment, within the limit prescribed by law.
Section 6. SURPLUS REVENUES. The Certificates are additionally secured by and
payable from a pledge of the revenues of the Issuer's combined Waterworks and Sewer Systems
remaining after payment of all operation and maintenance expenses thereof (the "Net Revenues"),
and all debt service, reserve and other requirements in connection with all of the Issuer's revenue
obligations (now or hereafter outstanding) that are payable from all or part of the Net Revenues of
the Issuer's Waterworks and Sewer Systems, constituting "Surplus Revenues." The Issuer shall
deposit such Surplus Revenues to the credit of the Interest and Sinking Fund created pursuant to
Section 5, to the extent necessary to pay the principal and interest on the Certificates.
Notwithstanding the requirements of Section 5, if Surplus Revenues are actually on 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 that otherwise would have been required to be levied pursuant
to Section 5 may be reduced to the extent and by the amount of the Surplus Revenues then on
deposit in the Interest and Sinking Fund. The Issuer reserves the right, without condition or
limitation, to issue other obligations secured in whole or in part by a parity lien on and pledge of the
Surplus Revenues, for any purpose permitted by law.
Section 7. DEFEASANCE OF CERTIFICATES. (a) Any Certificate and the interest
thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Certificate")
within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section
7, when payment of the principal of such Certificate, 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
dateby 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 shall have become due and payable. At such time as
a Certificate shall be deemed to be a Defeased Certificate hereunder, as aforesaid, such Certificate
and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of,
the ad valorem taxes or revenues herein levied and pledged as provided in this Ordinance, and such
principal and interest shall be payable solely from such money or Defeasance Securities, and
thereafter the Issuer will have no further responsibility with respect to amounts available to the
Paying Agent/Registrar (or other financial institution permitted by applicable law) for the payment
of such Defeased Certificates, including any insufficiency therein caused by the failure of the Paying
Agent/Registrar (or other financial institution permitted by applicable law) to receive payment when
due on the Defeasance Securities. Notwithstanding any other provision of this Ordinance to the
contrary, it is hereby provided that any determination not to redeem Defeased Certificates that is
made in conjunction with the payment arrangements specified in subsection 7(a)(i) or (ii) shall not
be irrevocable, provided that: (1) in the proceedings providing for such payment arrangements, the
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Issuer expressly reserves the right to call the Defeased Certificates for redemption; (2) gives notice
of the reservation of that right to the owners of the Defeased Certificates 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 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 required for the payment of the Certificates 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 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 7(a)(i) or (ii). All income from such Defeasance Securities received by the Paying
Agent/Registrar that is not required for the payment of the Defeased Certificates, 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 any securities and obligations now or
hereafter authorized by Texas law that are eligible to refund, defease or otherwise discharge
obligations such as the Certificates.
(d) Until all Defeased Certificates shall have become due and payable, the Paying
Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Certificates
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 a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such
amount of Certificates by such random method as it deems fair and appropriate.
Section 8. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
CERTIFICATES.
(a) Replacement Certificates. In the event any outstanding Certificate is damaged,
mutilated, lost, stolen or destroyed, the Paying Agent/Registrar shall cause to be printed, executed
and delivered, a new certificate of the same principal amount, maturity and interest rate, as the
damaged, mutilated, lost, stolen or destroyed Certificate, in replacement for such Certificate in the
manner hereinafter provided.
(b) Almlication for Replacement Certificates. Application for replacement of damaged,
mutilated, lost, stolen or destroyed Certificates shall be made by the registered owner thereof to the
Paying Agent/Registrar. In every case of loss, theft or destruction of a Certificate, the registered
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owner applying for a replacement certificate 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, 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, as
the case may be. In every case of damage or mutilation of a Certificate, the registered owner shall
surrender to the Paying Agent/Registrar for cancellation the Certificate so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in
the event any such Certificate shall have matured, and no default has occurred that is then continuing
in the payment of the principal of, redemption premium, if any, or interest on the Certificate, the
Issuer may authorize the payment of the same (without surrender thereof except in the case of a
damaged or mutilated Certificate) instead of issuing a replacement Certificate, provided security or
indemnity is furnished as above provided in this Section.
i Re jlacement Certificates. Prior to the issuance of any
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replacement certificate, the Paying Agent/Registrar shall charge the registered owner of such
Certificate with all legal, printing, and other expenses in connection therewith. Every replacement
certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate
is lost, stolen or destroyed shall constitute a contractual obligation of the Issuer whether or not the
lost, stolen or destroyed Certificate 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 duly issued under this Ordinance.
(e) Authority for Issuin 1 Replacement Certificates. In accordance with Subchapter D
of Chapter 1201, Government Code, this Section 8 of this Ordinance shall constitute authority for
the issuance of any such replacement certificate without necessity of further action by the governing
body of the Issuer or any other body or person, and the duty of the replacement of such certificates
is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar
shall authenticate and deliver such Certificates in the form and manner and with the effect, as
provided in Section 3(a) of this Ordinance for Certificates issued in conversion and exchange for
other Certificates.
Section 9. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES; BOND
COUNSEL'S OPINION AND ENGAGEMENT; ATTORNEY GENERAL FILING FEE; OTHER
PROCEDURES AND AGREEMENTS. (a) The Mayor of the Issuer is hereby authorized to have
control of the Certificates initially issued and delivered hereunder and all necessary records and
proceedings pertaining to the Certificates pending their delivery and their investigation,
examination, and approval by the Attorney General of the State of Texas, and their registration by
the Comptroller of Public Accounts of the State of Texas. Upon registration of the Certificates said
Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall
manually sign the Comptroller's Registration Certificate attached to such Certificates, and the seal
of said Comptroller shall be impressed, or placed in facsimile, on such Certificate. The approving
legal opinion of the Issuer's Bond Counsel may, at the option of the Issuer, be printed on the
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Certificates issued and delivered under this Ordinance, but such opinion, if so printed, shall have no
legal effect, and shall be solely for the convenience and information of the Registered Owner.
(b) The Mayor, City Manager, Finance Director, City Secretary and all other officers,
employees and agents of the Issuer, and each of them, shall be and they are hereby expressly
authorized, empowered and directed from time to time and at any time to do and perform all such
acts and things and to execute, acknowledge and deliver in the name and on behalf of the Issuer a
Paying Agent/Registrar Agreement with the Paying Agent/Registrar and all other instruments,
whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms
and provisions of this Ordinance, the Certificates and the sale of the Certificates. In case any officer
whose signature shall appear on any Certificate shall cease to be such officer before the delivery of
such Certificate, such signature shall nevertheless be valid and sufficient for all purposes the same
as if such officer had remained in office until such delivery.
(c) The obligation of the initial purchaser to accept delivery of the Certificates is subject
to the initial purchaser being furnished with the final, approving opinion of McCall, Parkhurst &
Horton L.L.P., bond counsel to the Issuer, which opinion shall be dated as of and delivered on the
date of initial delivery of the Certificates to the initial purchaser. The engagement of such firm as
bond counsel to the Issuer in connection with issuance, sale and delivery of the Certificates is hereby
approved and confirmed. The execution and delivery of an engagement letter between the Issuer
and such firm, with respect to such services as bond counsel, is hereby authorized in such form as
may be approved by the Mayor of the Issuer and the Mayor is hereby authorized to execute such
engagement letter.
(d) In accordance with the provisions of Section 1202.004, Tex. Gov't Code Ann., in
connection with the submission of the Certificates by the Attorney General of Texas for review and
approval, a statutory fee (an amount equal to 0.1% principal amount of the Certificates, subject to
a minimum of $750 and a maximum of $9,500) is required to be paid to the Attorney General upon
the submission of the transcript of proceedings for the Certificates. The Issuer hereby authorizes
and directs that a check in the amount of the Attorney General filing fee for the Certificates, made
payable to the "Texas Attorney General," be promptly furnished to the Issuer's Bond Counsel, for
payment to the Attorney General in connection with his review of the Certificates.
Section 10. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE
CERTIFICATES. The Issuer covenants to take any action necessary to assure, or refrain from any
action that would adversely affect, the treatment of the Certificates as Obligations described in
section 103 of the Code, the interest on which is not includable in the "gross income" of the holder
for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of
the Certificates (less amounts deposited to a reserve fund, if any) are used for any "private
business use," as defined in section 141(b)(6) of the Code or, if more than 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
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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, 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 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" that 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 that is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Certificates (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 that would otherwise result in the
Certificates being treated as "private activity bonds" within the meaning of section 141(b)
of the Code;
(e) to refrain from taking any action that would result in the Certificates 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, directly
or indirectly, to acquire or to replace funds that were used, directly or indirectly, to acquire
investment property (as defined in section 148(b)(2) of the Code) that produces a materially
higher yield over the term of the Certificates, other than investment property acquired with
(1) proceeds of the Certificates invested for a reasonable temporary
period of 3 years or less or, in the case of a refunding bond, for a period of 90 days
or less until such proceeds are needed for the purpose for which the bonds are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning
of section 1.148-1(b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of the
Certificates;
(g) to otherwise restrict the use of the proceeds of the Certificates or amounts
treated as proceeds of the Certificates, as may be necessary, so that the Certificates do not
otherwise contravene the requirements of section 148 of the Code (relating to arbitrage);
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(h) to refrain from using the proceeds of the Certificates or proceeds of any prior
bonds to pay debt service on another issue more than 90 days after the date of issue of the
Certificates in contravention of the requirements of section 149(d) of the Code (relating to
advance refundings); and
(i) 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) 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 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.
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 certificateholders.
The Rebate Fund is established for the additional purpose of compliance with section 148 of the
Code.
For 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
bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date
of issuance of the Certificates. 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 that modify or expand provisions of the Code, as applicable to the
Certificates, 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 under
section 103 of the Code. In the event that regulations or rulings are hereafter promulgated that
impose additional requirements applicable to the Certificates, the Issuer agrees to comply with the
additional requirements to the extent necessary, in the opinion of nationally recognized bond
counsel, to preserve the exemption from federal income taxation of interest on the Certificates under
section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs
the Mayor to execute any documents, certificates or reports required by the Code and to make such
elections, on behalf of the Issuer, that may be permitted by the Code as are consistent with the
purpose for the issuance of the Certificates.
Section 11. SALE OF THE CERTIFICATES. The Certificate is hereby initially sold and
shall be delivered to (the "Purchaser"), for cash for the par value thereof,
pursuant to the private placement agreement dated the date of the final passage of this Ordinance
which the Mayor is hereby authorized to execute and deliver. The Certificate shall initially be
registered in the name of the Purchaser. It is hereby officially found, determined, and declared that
the terms of this sale are the most advantageous reasonably obtainable.
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Section 12. ALLOCATION OF CERTIFICATE PROCEEDS. The Issuer covenants to
account for the expenditure of sale proceeds and investment earnings to be used for the construction
and acquisition of the Project on its books and records by allocating proceeds to expenditures within
18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed.
The foregoing notwithstanding, the Issuer shall not expend proceeds of the sale of the Certificates
or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the
delivery of the Certificates, or (2) the date the Certificates are retired, unless the Issuer obtains an
opinion of nationally -recognized bond counsel that such expenditure will not adversely affect the
status, for federal income tax purposes, of the Certificates or the interest thereon. 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 13. DISPOSITION OF PROJECT. The Issuer covenants that the Project will not
be sold or otherwise disposed of in a transaction resulting in the receipt by the Issuer of cash or other
compensation, unless any action taken in connection with such disposition will not adversely affect
the tax-exempt status of the Certificates. For purpose of the foregoing, the Issuer may rely on an
opinion of nationally -recognized bond counsel that the action taken in connection with such sale or
other disposition will not adversely affect the tax-exempt status of the Certificates. 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 14. INTEREST EARNINGS ON CERTIFICATE PROCEEDS; APPROPRIATION.
(a) Interest earnings, if any, derived from the investment of proceeds from the sale of the
Certificates shall be used along with other certificate proceeds for the Project; provided that after
completion of such purpose, 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 any interest
earnings on certificate proceeds that are required to be rebated to the United States of America
pursuant to Section 10 hereof in order to prevent the Certificates from being arbitrage bonds shall
be so rebated and not considered as interest earnings for the purposes of this Section.
(b) To pay principal and interest coming due on the Certificates on June 15, 2020, there
is hereby appropriated from current funds on hand, which are hereby certified to be on hand and
available for such purpose, an amount sufficient to pay such debt service, and such amount shall be
used for no other purpose.
Section 15. CONSTRUCTION FUND. The Issuer hereby creates and establishes and shall
maintain on the books of the Issuer a separate fund to be entitled the "Series 2020 Combination Tax
and Surplus Revenue Certificate of Obligation Construction Fund" for use by the Issuer for payment
of all lawful costs associated with the acquisition and construction of the Project as hereinbefore
provided. Upon payment of all such costs, any moneys remaining on deposit in said Fund shall be
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transferred to the Interest and Sinking Fund. Amounts so deposited to the Interest and Sinking Fund
shall be used in the manner described in Section 5 of this Ordinance.
Section 16. NO RULE 15c2-12 UNDERTAKING; PROVISION OF FINANCIAL
INFORMATION. (a) The offering of the Certificate is exempt from Rule 15c2-12 of the Securities
and Exchange Commission (the "Rule") by virtue of the private placement exemption set forth in
the Rule. The Issuer is not, therefore, obligated pursuant to the Rule to provide any on-going
disclosure relating to the Issuer or the Certificate.
(b) In consideration for the purchase of the Certificate by the Purchaser, the Issuer agrees
to provide the Purchaser with its most recent audited annual financial statements and any other
publically available financial information regarding the Issuer that the Purchaser may reasonably
request from time to time.
Section 17. 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 the Registered Owner, 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, (iv) 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 (v) 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 Registered Owner 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 the Registered Owner, nothing herein
contained shall permit or be construed to permit amendment of the terms and conditions of this
Ordinance or in the Certificate so as to:
(1) Make any change in the maturity of the Certificate;
(2) Reduce the rate of interest borne by the Certificate;
(3) Reduce the amount of the principal of, or redemption premium, if any, payable
on the Certificate;
(4) Modify the terms of payment of principal or of interest or redemption premium
on the Certificate or impose any condition with respect to such payment;
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(5) Change the requirement with respect to Registered Owner consent to such
amendment; or
(6) Adversely affect any rights or security of the Registered Owner.
(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 the Registered Owner of the Certificate a copy of the proposed
amendment.
(d) Whenever at any time within one year from the date of mailing of such notice the Issuer
shall receive an instrument or instruments executed by the Registered Owner of the Certificate,
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) Upon the 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 the
Registered Owner of the Certificate shall thereafter be determined, exercised, and enforced, subject
in all respects to such amendment.
(f) Any consent given by the Registered Owner of the Certificate pursuant to the provisions
of this Section shall be irrevocable for a period of six months from the date of the ailing of the notice
provided for in this Section, and shall be conclusive and binding upon all future holders of the same
Certificate during such period. Such consent may be revoked at any time after six months from the
date of the mailing of said notice by the Registered Owner, or by a successor in title, by filing notice
with the Issuer.
For the purposes of establishing ownership of the Certificate, the Issuer shall rely solely upon
the registration of the ownership of such Certificate on the registration books kept by the Paying
Agent/Registrar.
Section 18. DEFAULT AND REMEDIES.
(a) Events of Default,. Each of the following occurrences or events for the purpose of this
Ordinance is hereby declared to be an Event of Default:
(i) the failure to make payment of the principal of or interest on the Certificate when
the same becomes due and payable; or
(ii) default in the performance or observance of any other covenant, agreement or
obligation of the Issuer, the failure to perform which materially, adversely affects the rights
of the Registered Owner of the Certificate, including, but not limited to, their prospect or
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ability to be repaid in accordance with this Ordinance, and the continuation thereof for a
period of 60 days after notice of such default is given by the Registered Owner to the Issuer.
(b) Remedies for Default. Upon the happening of any Event of Default, then and in every
case, the Registered Owner or an authorized representative thereof, including, but not limited to, a
trustee or trustees therefor, may proceed against the Issuer for the purpose of protecting and
enforcing the rights of the Registered Owner under this Ordinance, by mandamus or other suit,
action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief
permitted by law, including the specific performance of any covenant or agreement contained herein,
or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the
Registered Owner hereunder or any combination of such remedies.
(c) Remedies Not Exclusive.
(i) No remedy herein conferred or reserved is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or under the Certificate or now or
hereafter existing at law or in equity; provided, however, that notwithstanding any other
provision of this Ordinance, the right to accelerate the debt evidenced by the Certificate shall
not be available as a remedy under this Ordinance.
(ii) The exercise of any remedy herein conferred or reserved shall not be deemed a
waiver of any other available remedy.
(iii) By accepting the delivery of a Certificate authorized under this Ordinance, the
Registered Owner agrees that the certifications required to effectuate any covenants or
representations contained in this Ordinance do not and shall never constitute or give rise to
a personal or pecuniary liability or charge against the officers or employees of the Issuer or
the members of the City Council.
Section 19. SEVERABILITY. If any section, article, paragraph, sentence, clause, phrase
or word in this Ordinance, or application thereof to any persons or circumstances is held invalid or
unconstitutional by a court of competent jurisdiction, such holding shall not affect the validity of the
remaining portion of this Ordinance, despite such invalidity, which remaining portions shall remain
in full force and effect.
Section 20. CONTINUED PERFECTION OF SECURITY INTEREST. Chapter 1208,
Government Code, applies to the issuance of the Certificates and the pledge of the ad valorem taxes
granted by the Issuer under Section 5 of this Ordinance and the pledge of the Surplus Revenues
under Section 6 of this Ordinance, and such pledge is therefore valid, effective, and perfected. If
Texas law is amended at any time while the Certificates are outstanding and unpaid such that the
pledge of the taxes granted by the Issuer under Section 5 of this Ordinance or the pledge of the
Surplus Revenues under Section 6 of this Ordinance is to be subject to the filing requirements of
Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of the
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Certificates the perfection of the security interest in said pledges, 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 to perfect the
security interest in said pledges to occur.
Section 21. INCONSISTENT PROVISIONS. All indentures, ordinances or resolutions, or
parts thereof, that are in conflict or inconsistent with any provision of this Ordinance are hereby
repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain
controlling as to the matters contained herein.
Section 22. GOVERNING LAW. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
Section 23. EFFECTIVE DATE. In accordance with the provisions of V.T.C.A.,
Government Code, Section 1201.028, this Ordinance shall be effective immediately upon its
adoption by the City Council.
ATTEST:
Janice Ellis, City Clerk
APPROVED AS TO FORM:
Stephanie H. Harris, City Attorney
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Steven J. Clifford, M.D., Mayor