12&13-LOW-COST WATER SYSTEM IMPROVEMENTSItem Nos. 12 & 13
memo�andum
TO: Mayor & City Council
FROM: John Godwin, City Manager
SUBJECT: LOW-COST WATER SYSTEM IMPROVEMENTS
DATE: January 4, 2013
BACKGROUND: On November 26 and again on December 10 the city council discussed the
advantages and disadvantages of selling certificates of obligation in a private sale to the Texas
Water Development Board. By so doing, we will save an average of almost $70,000 annually
over the next twenty years, and be able to replace ten of our very worst water lines. The council
unanimously agreed in December to move forward as recommended and the sale of COs was
duly advertised.
STATUS OF ISSUE: By law we are now required to have the council act on two additional
agenda items. The first simply formally authorizes the issuance and sale of $2.9 million in very
low interest certificates of obligation, very much like other municipal debt issues. The second
item is a resolution authorizing the execution of a loan forgiveness agreement with the TWDB,
by which we will receive an additional $500,778 for water line replacement that we do not have
to repay. Engineering for several water lines is underway now; actual construction should begin
as early as August 2013.
BUDGET: Cost of debt service will be approximately $160,000 per year in future Utility Fund
budgets.
RECOMMENDATIONS: 1) Adopt an ordinance authorizing the issuance and sale of $2.9
million in City of Paris Combination T� and Surplus Revenue Certificates of Obligation, Series
2013 for water system improvements and approving all matters incident thereto; and 2) Approve
a resolution authorizing a Loan Forgiveness Agreement with the Texas Water Development
Board for costs of drinking water system improvements.
ORDINANCE OF THE CITY OF PARIS, TEXAS
Adopted January 14, 2013
AUTHORIZING THE ISSUANCE OF
$2,900,000
CITY OF PARIS, TEXAS
COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
SERIES 2013
FOR SALE TO THE
TEXAS WATER DEVELOPMENT BOARD
PURSUANT TO THE
DRINKING WATER STATE REVOLVING FUND
TABLE OF CONTENTS
Section 1. Recitals, Amount and Purpose of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Designation, Date, Denominations, Numbers and Maturities of the Certificates .... 2
Section 3. Characteristics of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4. Form of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Interest and Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6. Pledge of Surplus Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7. Defeasance of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8. Damaged, Mutilated, Lost, Stolen, or Destroyed Certificates . . . . . . . . . . . . . . . . . . 17
Section 9. Custody, Approval and Registration of Certificates; Bond Counsel's Opinion.
CUS[P Numbers; Attorney General Review Fee; and Contingent Insurance Prov�s�on,
ifObtained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10. Covenants Regarding Tax Exemption of Interest on the Certificates ........... 18
Section l 1. Method of Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 12. Sale of Certificates of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 13. Construction Fund ..................................................22
Section 14. Investments; Collateralization of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 15. Surplus Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 17. Compliance with the Texas Water Development Board's Rules and Regulations . 23
Section 18. Allocation of Certificate Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 19. Disposition of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 20. Interest Earnings on Certificate Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 21. Compliance with Rule 15c2-12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 22. Public Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 23. Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 24. Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 25. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 26. Remedies for Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 27. Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 28. Severability .......................................................29
Exhibit A Form of Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
i
ORDINANCE
AUTHORIZING THE ISSUANCE OF CITY OF PARIS, TEXAS COMBINATION TAX
AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2013, IN THE
PRINCIPAL AMOUNT OF $2,900,000 AND AWARDING THE SALE OF SUCH
CERTIFICATES OF OBLIGATION TO THE TEXAS WATER DEVELOPMENT BOARD
STATE OF TEXAS
COUNTY OF LAMAR
CITY OF PARIS
WHEREAS, the City Council of the City of Paris, Texas (the "Issuer") deems it advisable
to issue certificates of obligation (the "Certificates of Obligation" or the "Certificates") in the
amount of $2,900,000 to provide funds to pay costs of improving the Issuer's potable water
distribution system, to-wit: water line replacements forthe Issuer's potable water distribution system
and to pay legal, fiscal, engineering and architectural 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, Texas Local Government
Code, as amended, and Chapter l 502, Government Code, as amended; and
WHEREAS, the City Council has heretofore passed a resolution authorizing and directing
the City Clerk to give notice of intention to issue the Certifcates 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 § 2051.044, Texas Government Code, as
amended; and
WHEREAS, the Issuer received no petition from the qualified electors ofthe City protesting
the issuance of such Certificates of Obligation; and
WHEREAS, it is considered to be to the best interest of the City that said 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 Obligation of the City of Paris, Texas are
hereby authorized to be issued and delivered in the aggregate principal amount of $2,900,000 to
provide funds to pay costs of improving the Issuer's potable water distribution system, to-wit: water
line replacements for the Issuer's potable water distribution system and to pay legal, fiscal,
engineering and architectural fees in connection with such project (the "Project").
Section 2. DESIGNATION, DATE, DENOMINATIONS,NUMBERS AND MATURITIES
OF THE CERTIFICATES. Each Certificate of Obligation issued pursuant to this Ordinance shall
be designated: "CITY OF PARIS, TEXAS, COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATE OF OBLIGATION, SERIES 2013" and initially there shall be issued, sold and
delivered hereunder one fully registered certificate, without interest coupons, dated February 1,
2013, in the aggregate principal amount stated above and in the denominations hereinafter stated,
numbered T-1, with certificates issued in replacement thereof being in the denominations and
principal amounts hereinafter stated and numbered consecutively from R-1 upward, payable to the
respective Registered Owners thereof (with the initial certificate being made payable to the initial
purchaser as described in Section 12 hereo�, or to the registered assignee or assignees of said
certificate or any portion or portions thereof (in each case, the "Registered Owner"). The
Certificates of Obligation shall mature on June 15 in the years and in the principal amounts and
interest rates set forth below. Interest on each Certificate shall accrue on the basis ofa 360-day year
consisting of twelve 30-day months from the date of initial delivery or the most recent interest
payment date to which interest has been paid or provided far at the per annum rates of interest,
payable semiannually on June 15 and December 15 of each year until the principal amount shall
have been paid or provision for such payment shall have been made, commencing June 15, 2013,
as follows:
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Principal
Amount
150,000
150,000
150,000
150,000
150,000
145,000
145,000
150,000
150,000
l 50,000
Interest
Rate
0.00%
0.00
0.00
0.00
0.00
0.00
0.12
0.35
0.56
0.75
Year
2024
2025
2026
2027
2028
2029
2030
2031
2032
Principal
Amount
150,000
150,000
155,000
155,000
155,000
160,000
160,000
l 60,000
165,000
lnterest
Rate
0.89%
0.98
1.07
1.14
1.21
1.27
1.33
1.39
1.45
Section 3. CHARACTERISTICS OF THE CERTIFICATES. (a) Re�istration, Transfer,
Conversion and Exchange; Authentication. The Issuer shall keep or cause to be kept at the corporate
trust office of The Bank of New York Mellon Trust Company, N.A., in Dallas, Texas (the "Paying
Agent/Registrar"), books or records for the registration of the transfer, conversion and exchange 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
registrations oftransfers, conversions and exchanges under such reasonable regulations as the Issuer
and Paying AgentJRegistrar may prescribe; and the Paying Agent/Registrar shall make such
registrations, transfers, conversions and exchanges as herein provided. The Paying Agent/Registrar
shall obtain and record in the Registration Books the address of the 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. The Issuer shall pay
the Paying Agent/Registrar's standard or customary fees and charges for making such registration,
transfer, conversion, exchange and delivery of a substitute Certificate or Certificates. Registration
of assignments, transfers, conversions and exchanges of Certificates of Obligation 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 of Obligation shall bear a letter and/or number to distinguish
it from each other Certificate.
Except as provided in Section 3(c) of this Ordinance, an authorized representative of the
Paying Agent/Registrar shall, before the delivery of any such Certificate of Obligation, date and
manually sign said Certificate, and no such Certifcate of Obligation shall be deemed to be issued
or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall
cancel all paid Certificates and Certificates surrendered for conversion and 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 of Obligation or portion thereof, and the Paying Agent/Registrar shall provide for the
printing, execution, and delivery ofthe substitute Certificates of Obligation in the manner prescribed
herein, and the Certificates of Obligation shall be printed or typed on paper of customary weight and
strength. Pursuant to Chapter 1201, Texas Government Code, as amended, the duty of conversion
and exchange of Certificates of Obligation as aforesaid is hereby imposed upon the Paying
Agent/Registrar and, upon the execution of said Certifcate of Obligation, the converted and
exchanged Certificate shall be valid, incontestable, and enforceable in the same manner and with
the same effect as the Certificates of Obligation that initially were issued and delivered pursuant to
this Ordinance, approved by the Attorney General and registered by the Texas Comptroller of Public
Accounts. �
(b) Pa�ment of Certificates 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,
all as provided in this Ordinance. The Paying AgendRegistrar shall keep proper records of all
payments made by the Issuer and the Paying Agent/Registrar with respect to the Certificates, and
of all conversions and 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 (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 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 each 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.
3
(c) In General. The Certifcates (i) shall be issued in fully registered form, without
interest coupons, with the principal of and interest on such Certificates to be payable only to the
Registered Owners thereof, (ii) may be redeemed prior to their scheduled maturities (notice ofwhich
shall be given to the Paying Agent/Registrar by the Issuer at least 50 days prior to any such
redemption date), (iii) may be converted and exchanged for other Certificates, (iv) may be
transferred and assigned, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and
authenticated, (vii) the principal of and interest on the Certificates shall be payable, and (viii) shall
be administered and the Paying AgendRegistrar and the Issuer shall have certain duties and
responsibilities with respect to the Certificates, 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. The
Certificate initially 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 issued in
conversion of and exchange for any Certificate or Certificates issued under this Ordinance the
Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION
CERTIFICATE, in the form set forth in the FORM OF CERTIFICATE.
(d) Book-Entry Onlv Svstem. The Certificates issued in exchange for the Certificate
initially issued to the initial purchaser specifred herein shall be initially issued in the form of a
separate single fully registered Certificate for each of the maturities thereo£ Upon initial issuance,
the ownership of each such Certificate shall be registered in the name of Cede & Co., as nominee
of The Depository Trust Company, New York, New York ("DTC"), and except as provided in
subsection (� hereof, all of the outstanding Certificates shall be registered in the name of Cede &
Co., as nominee of DTC.
With respect to Certificates 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 securities
brokers and dealers, banks, trust companies, clearing corporations and certain other organizations
on whose behalf DTC was created ("DTC Participant") to hold securities to facilitate the clearance
and settlement of securities transactions among DTC Participants or to any person on behalf of
whom such a DTC Participant holds an interest in the Certificates. Without limitingthe 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, (ii) the delivery to any DTC
Participant or any other person, other than a Registered Owner of Certificates, as shown on the
Registration Books, of any notice with respect to the Certificates, or (iii) the payment to any DTC
Participant or any other person, other than a Registered Owner of Certificates, as shown in the
Registration Books of any amount with respect to principal of or interest on the Certificates.
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 is
registered in the Registration Books as the absolute owner of such Certificate for the purpose of
payment of principal and interest with respect to such Certificate, for the purpose of registering
transfers with respect to such Certificate, and for all other purposes whatsoever. The Paying
Agent/Registrar shall pay all principal of and interest on the Certificates only to or upon the order
ofthe Registered 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 and
interest on the Certificates to the extent of the sum or sums so paid. No person other than a
Registered Owner, as shown in the Registration Books, shall receive a Certificate evidencing the
obligation ofthe Issuerto make payments ofprincipal and interest pursuant to this Ordinance. Upon
delivery by D1'C 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 (hereinafter defined), the words "Cede & Co." in this Ordinance shall
refer to such new nominee of DTC.
(e) Successor Securities Depository; Transfers Outside Book-Entr�nlv S s�. In the
event that the Issuer determines that DTC is incapable of discharging its responsibilities described
herein and in the representations letter of the [ssuer to DTC or that it is in the best interest of the
beneficial owners of the Certificates that they be able to obtain certificated Certificates, the Issuer
shall (i) appoint a successor securities depository, qualifed to act as such under Section l 7A of the
Securities and Exchange Act of ] 934, as amended, notify DTC and DTC Participants of the
appointment of such successor securities depository and transfer one or more separate Certificates
to such successor securities depository or (ii) notify DTC and DTC Participants of the availability
through DTC of Certificates and transfer one or more separate certificated Certificates to DTC
Participants having Certificates credited to their DTC accounts; provided that while the Texas Water
Development Board (the "Board") is the holder of the Certificates, the DTC services shall not be
discontinued by the Issuer until the Issuer has received the written consent thereto ofthe Board. In
such event, the Certificates 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 Registered Owners transferring
or exchanging Certificates shall designate, in accordance with the provisions of this Ordinance.
(� Pavments to Cede & Co. Notwithstanding any other provision of this Ordinance to
the contrary, so long as any Certificate is registered in the name of Cede & Co., as nominee of DTC,
all payments with respect to principal of and interest on such Certificate and all notices with respect
to such Certificate shall be made and given, respectively, in the manner provided in the
representations letter of the Issuer to DTC.
(g) Successor Payin�gents. The Issuer covenants with the Registered Owners of the
Certificates that at all times while the Certificates are outstanding the Issuer will provide a
competent and legally qualified bank, trust company, financial institution, or other entity having
trust powers to act as and perform the services of Paying Agent/Registrar for the Certificates 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 50 days written
notice to the Paying Agent/Registrar, to be effective not later than 30 days prior to the next principal
payment 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
thereo�, along with all other pertinent books and records relating to the Certificates, to the new
Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying
Agent/Registrar, the I ssuer promptly will cause a written notice thereof to be sent by the new Paying
Agent/Registrar to each Registered Owner of the Certificates, 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.
(h) Cancellation of Initial Certificates. On the closing date, one initial Certificate
representing the entire principal amount of the Certificates, payable in stated installments to the
purchaser designated in Section 12 or its designee, executed by manual or facsimile signature of the
Mayor or the Mayor Pro-tem and City Clerk 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, will be delivered to such purchaser or its designee. Upon payment for the initial Certificates,
the Paying Agent/Registrar shall cancel the initial Certificate and deliver to the Depository Trust
Company on behalf of such purchaser one registered definitive Certificate for each year of maturity
of the Certificates, in the aggregate principal amount of all of the Certificates for such maturity.
(i) Conditional Notice of Redemption. With respect to any optional redemption of the
Certifcates, unless certain prerequisites to such redemption required by the Ordinance have been
met and moneys sufficient to pay the principal of and premium, if any, and interest on the
Certificates to be redeemed shall have been received by the Paying Agent prior to the giving of such
notice of redemption, such notice shall state that said redemption may, at the option of the Issuer,
be conditional upon the satisfaction of such prerequisites and receipt of such moneys by the Paying
Agent/Registrar on or prior to the date fixed for such redemption, or upon any prerequisite set forth
in such notice of redemption. If a conditional notice of redemption is given and such prerequisites
to the redemption and sufficient moneys are not received, such notice shall be of no force and effect,
the Issuer shall not redeem such Certificates and the Paying Agent/Registrar shall give notice, in the
manner in which the notice of redemption was given, to the effect that the Certificates have not been
redeemed.
Section 4. FORM OF CERTIFICATES. The form of the Certificates, including the form
of Paying Agent/Registrar's Authentication Certifcate, 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 Certificates 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
STATE OF TEXAS
CITY OF PARIS, TEXAS COMBINATION TAX
AND SURPLUS REVENUE
CERT[FICATE OF OBLIGATION , SERIES 2013
Interest Rate
%
REGISTERED OWNER:
PRINCIPAL AMOUNT:
Dated Date
February 1, 2013
Maturity Date
June l5,
PRINCIPAL
AMOUNT
$
CUSIP No.
DOLLARS
ON THE MATURITY DATE specified above, the City of Paris, in Lamar County, Texas
(the "[ssuer"), being a political subdivision and municipal corporation of the State of Texas, hereby
promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called
the "Registered Owner"), on the Maturity Date specified above, the Principal Amount specified
above. The Issuer promises to pay interest on the unpaid principal amount hereof (calculated on the
basis of a 360-day year of twelve 30-day months) from the date of delivery hereof (which date
appears in the Delivery Certificate endorsed on this Certificate) at the Interest Rate per annum
specified above. Interest is payable on June I5, 2013 and semiannually on each December 15 and
June 15 thereafter to the Maturity Date specified above, or the date of redemption prior to maturity;
except, if this Certificate is required to be authenticated and the date of its authentication is later than
the first Record Date, 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 but
on or before the next following interest payment date, in which case such principal amount shall bear
interest from such next following interest payment date; provided, however, that if on the date of
authentication hereofthe interest on the Certificate or Certificates forwhich this Certificate is being
exchanged is due but has not been paid, then this Certificate shall bear interest from the date to
which such interest has been paid in full.
THE PRINCIPAL OF AND ANY INTEREST ON this Certificate are payable in lawful
money of the United States of America, without exchange or collection charges. The principal 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 corporate
trust office of The Bank of New York Mellon Trust Company, N.A., in Dallas, Texas, which is the
"Paying Agent/Registrar" for this Certificate. The payment of interest on this Certificate shall be
made by the Paying Agent/Registrar to the Registered Owner hereof on each interest payment date
by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on,
and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of
this Certificate (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 day of the month
preceding each such date (the "Record Date") on the Registration Books kept by the Paying
Agent/Registrar, as hereinafter described. In addition, interest may be paid by such other method,
acceptable to the Texas Water Development Board, or such other Registered Owner, requested by,
and at the risk and expense of, the Registered Owner; provided, however, that if this Certificate of
Obligation is owned by the Texas Water Development Board, principal and interest will be paid by
wire transfer or other method acceptable to the Texas Water Development Board, and there will be
no charge. In the event of a non-payment of interest on a scheduled payment date, and for 30 days
thereafter, a new record date for such interest payment (a "Special Record Date") will be established
by the Paying Agent/Registrar, if and when funds for the payment of such interest have been
received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of
the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five
business days prior to the Special Record Date by United States mail, first-class postage prepaid,
to the address of each owner of a Certificate appearing on the Registration Books at the close of
business on the last business day next preceding the date of mailing of such notice.
ANY ACCRUED INTEREST due at maturity or upon the redemption of this Certificate
prior to maturity as provided herein shall be paid to the Registered Owner upon presentation and
surrender of this Certificate for redemption and payment at the 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, interest payment date, and accrued 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 Certificates, 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
designated 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 one of a series of Certificates dated as of February l, 2013,
authorized in accordance with the Constitution and laws of the State of Texas in the principal
amount of $2,900,000 to provide funds to provide funds to pay costs of improving the Issuer's
potable water distribution system, to-wit: water line replacements for the Issuer's potable water
distribution system and to pay legal, fiscal, engineering and architectural fees in connection with
such project.
ON June 15, 2023, or on any date thereafter, the Certificates having stated maturities on and
after December 15, 2023, may be redeemed prior to their scheduled maturities, 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 Issuer shall, in inverse order of maturity, 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 a Certificate may be
redeemed only in an integral multiple of $5,000), at the redemption price of the principal amount
thereof, plus accrued interest to the date fixed for redemption.
AT LEAST 30 days prior to the date fixed for any redemption of Certificates 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, at least 30 days prior to the date
fixed for any such redemption, to the Registered Owner of each Certificate to be redeemed at its
address as it appeared on the 45th day prior to such redemption date; 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 any 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 Certificates or
portions thereof that 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 Certificates or portions thereof that
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 ofthe Registered Owner to receive the redemption
price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of
any Certificate shall be redeemed, a substitute Certificate or Certiiicates 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 Certiiicate Ordinance.
ALL CERTiFICATES OF THIS SERIES are issuable solely as fully registered certificates,
without interest coupons, in the denomination of any integral multiple of $5,000. As provided in
the Certificate Ordinance, this Certificate may, at the request of the Registered Owner or the
assignee or assignees hereof, be assigned, transferred, converted into and exchanged for a like
aggregate principal amount of fully registered certificates, without interest coupons, payable to the
appropriate Registered Owner, assignee or assignees, as the case may be, having the same
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 to the Paying Agent/Registrar for cancellation, all in accordance with the form and
procedures set forth in the Certificate Ordinance. Among other requirements for such assignment
and transfer, this Certificate 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 AgendRegistrar, evidencing assignment of this Certificate 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 or any such portion or portions hereof is or are to be registered. The form of
Assignment printed or endorsed on this Certificate may be executed by the Registered Owner to
evidence the assignment hereof, but such method is not exclusive, and other instruments of
assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of
this Certificate or any portion or portions hereof from time to time by the Registered Owner. The
Paying Agent/Registrar's reasonable standard or customary fees and charges for assigning,
transferring, converting and exchanging any Certificate or portion thereofwill be paid by the Issuer.
In any circumstance, any taxes or governmental charges required to be paid with respect thereto
shall be paid by the one requesting such assignment, transfer, conversion or exchange, as a condition
precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to
make any such transfer, 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 or any 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 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 Owners of the Certificates.
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; thatthis Certificate
is a general obligation of the 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 the 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 Waterworks and Sewer System (the "System") described
below, to wit: the Surplus Revenues of the System, which are the revenues of the System that remain
(i) afterpayment of all operation and maintenance expenses thereof (constituting the "Net Revenues"
of the System) and (ii) after payment of 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 the Net Revenues, all as provided in the Certificate Ordinance.
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 ofthe governing body ofthe 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 Mayar of the Issuer and countersigned with the manual or
facsimile signature of the City Clerk of the Issuer, and has caused the official seal of the lssuer to
be duly impressed, or placed in facsimile, on this Certificate.
10
(si,�nature) (si n� a, ture)
City Clerk Mayor
(SEAL)
(b) [Form of Delivery Certificate]
DELIVERY CERTIFICATE
This Certificate of Obligation was delivered to and paid for by the Purchaser thereof on
(c) [Form of Paying Agent/Registrar's Authentication Certificate]
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIF[CATE
(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 ofthe Certificate
Ordinance described in the text of this Certificate; and that this Certificate has been issued in
conversion or replacement of, or in exchange for, a certificate, certificates, or a portion of a
certificate or certificates of a series that originally was approved by the Attorney General ofthe State
of Texas and registered by the Comptroller of Public Accounts of the State of Texas.
Dated:
(d) [Form of Assignment]
The Bank ofNew York Mellon Trust Company, N.A.,
Dallas, Texas
Paying Agent/Registrar
By:
Authorized Representative
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
Please insert Social Security or Taxpayer ldentification Number of Transferee
m
(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 registerthe transfer ofthe within
Certificate on the books kept for registration thereof, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a securities transfer
association recognized signature guarantee
program.
NOTICE: The signature above must
correspond with the name of the Registered
Owner as it appears upon the front of this
Certificate in every particular, without
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
Comptroller of Public Accounts of the State of TeXas
(COMPTROLLER'S SEAL)
(� [Initial Certificate Insertions]
(i) The initial Certificate shall be in the form set forth is paragraph (a) of this Section, except
that:
A. immediately under the name of the Certificate, the headings "Interest Rate" and
"Maturity Date" shall both be completed with the words "As shown below" and "CUSIP
No. " shall be deleted.
B. the first paragraph shall be deleted and the following wiil be inserted:
12
"THE CITY OF PARIS, TEXAS, in Lamar County, Texas (the "Issuer"), being a political
subdivision and municipal corporation of the State of Texas, hereby promises to pay to the
Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"),
on June ] 5 in each of the years, in the principal installments and bearing interest at the per annum
rates set forth in the following schedule:
Years Principal Installments Interest Rates
(Information from Section 2 to be inserted)
The Issuer promises to pay interest on the unpaid principal amount hereof (calculated on the basis
of a 360-day year of twelve 30-day months) from the date of delivery hereof (which date appears
in the Delivery Certificate endorsed on this Certificate) at the respective Interest Rate per annum
specified above. Interest is payable on June 15, 2013 and semiannually on each December 15 and
June 15 thereafter to the date of payment of the principal installment specified above, or the date of
redemption prior to maturity; except, that if this Certificate is required to be authenticated and the
date of its authentication is later than the first Record Date (hereinafter defined), 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 but on or before the next following
interest payment date, in which case such principal amount shall bear interest from such next
following interest payment date; provided, however, that if on the date of authentication hereof the
interest on the Certificate or Certificates for which this Certificate is being exchanged is due but has
not been paid, then this Certificate shall bear interest from the date to which such interest has been
paid in full."
C. The Initial Certificate shall be numbered "T-1 ".
Section 5. INTEREST AND SINKING FUND. A special "Interest and Sinking Fund" has
been 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 shall be
deposited upon receipt to the Interest and Sinking Fund, and all 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
l3
for the payment of the interest on and principal of the Certificates, as such interest comes due and
such principal matures, are hereby pledged for such payment, within the limit prescribed by law.
Section 6. PLEDGE OF SURPLUS REVENUES. (a) The Certificates, together with other
obligations of the Issuer, are additionally secured by a pledge of the revenues of the Issuer's
Waterworks and Sewer System (the "System") that remain (i) after payment of all operation and
maintenance expenses of the System (constituting the "Net Revenues" of the System) and (ii) after
payment of 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 the Net Revenues (such
revenues, constituting the "Surplus Revenues" of the System). The Surplus Revenues are hereby
pledged to secure the payment of the Certificates. The Issuer shall maintain sufficient rates and
charges for the payment of System operations and, if Surplus Revenues are used in lieu of ad
valorem taxes for the payment of the debt service requirements of System debt, such rates and
charges shall produce sufficient Surplus Revenues therefor. If Surplus Revenues are required for
the payment of debt service on the Certificates, the Issuer shall deposit 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.
(b) Notwithstanding the requirements of Section 5, if Surplus Revenues or other lawfully
available funds of the [ssuer 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
which otherwise would have been required to be levied pursuant to Section 5 may be reduced to the
extent and by the amount of the revenues then on deposit in the Interest and Sinking Fund.
(c) Notwithstanding the requirements of Section 5 and Section 6(b), if Surplus Revenues
and/or other lawfully available funds of the Issuer are not 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, but there
are budgeted for collection revenues ("Budgeted Revenues") in sufficient amounts to pay the
principal and interest coming due on the Certificates in any year, then, subject to the reyuirements
set forth below, the amount of taxes which otherwise would have been required to be levied pursuant
to Section 5 may be reduced to the extent and by the amount ofthe Budgeted Revenues. In the event
that Budgeted Revenues are to be used to pay principal and interest coming due on the Certificates
in any year, the Issuer:
(i) shall transfer and deposit in the Interest and Sinking Fund each month an amount of
not less than 1/ 12th of the annual debt service on the Certificates until the amount on deposit
in the Interest and Sinking Fund equals the amount required for annual debt service on the
Certificates; further, the Issuer shall not transfer any funds from the Issuer's Waterworks and
Sewer System Fund to any fund other than the Interest and Sinking Fund until such time as an
amount equal to the annual debt service on the Certificates for the then current fiscal year has
been deposited in the Interest and Sinking Fund; and, provided further that transfers may be
made from the Waterworks and Sewer System Fund to an interest and sinking fund, debt
service reserve fund, contingency fund or other fund or account established for the benefit of
any revenue obligations of the Issuer that are secured by a pledge of the Net Revenues (which
14
transfers shall be made in accordance with the provisions of the Ordinance pursuant to which
such obligations were issued or incurred) and to any other interest and sinking fund established
for the benefit of any revenue obligations of the Issuer that are secured by a pledge of the
Surplus Revenues (and any such transfers shall be made on a pro rata basis as the transfers
made for the benefit of the Certificates);
(ii) shall establish, adopt and maintain an annual budget that provides for either the
monthly deposit of sufficient Surplus Revenues and/or tax revenues, the monthly deposit of
any other legally available funds on hand at the time of the adoption of the annual budget, or
a combination thereof, into the Interest and Sinking Fund forthe repayment ofthe Certificates;
and
(iii) shall at all times maintain and collect sufficient System rates and charges in
conjunction with any other legally available funds that, after payment ofthe costs ofoperating
and maintaining the System, produce revenues in an amount not less than 1.10 times debt
service requirements of all outstanding System revenue obligations of the Issuer and other
obligations of the Issuer which are secured in whole or in part by a pledge of revenues of the
System, for which the Issuer is budgeting the repayment of such obligations from the revenues
of the System, or the Issuer shall prepare and provide documentation to any holder of a
Certificate who requests same, which evidences the levy of an ad valorem tax rate dedicated
to the Interest and Sinking Fund, in conjunction with any other legally available funds except
System rates and charges, sufficient for the repayment of System debt service requirements.
Section 7. DEFEASANCE OF CERTIFICATES. (A) Any Certificate of Obligation 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, 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 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 shall have become due
and payable. At such time as a Certificate of Obligation shall be deemed to be a Defeased
Certificate 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 or the pledge of the Surplus Revenues 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 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
t5
providing for such payment arrangements, the 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 also be invested in Defeasance Securities, maturing in the amounts and times as herein-
before 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 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 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 which 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 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.
(� In the event that the Issuer establishes a defeasance escrow for the Certifcates in
accordance with Section 7, written notice thereof shall be promptly given to the Texas Water
Development Board.
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) Apalication for Replacement Certifcates. Application for replacement of damaged,
mutilated, lost, stolen or destroyed Certificates shall be made by the Registered Owner thereof to
16
the Paying Agent/Registrar. 1 n every case of loss, theft or destruction of a Certificate, the Registered
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.
(d) Char�e for Issuing Replacement Certificates. Prior to the issuance of any 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 Issuing Replacement Certificates. In accordance with Chapter 1201, Texas
Government Code, as amended, 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 far
other Certificates.
Section 9. CUSTODY, APPROVAL AND REG[STRATION OF CERTIFICATES; BOND
COUNSEL'S OPINION; CUS1P NUMBERS; ATTORNEY GENERAL REVIEW FEE; AND
CONTINGENT INSURANCE PROV[SION, IF OBTAINED. (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 Camptroller shall be impressed, or placed in facsimile, on such
17
Certificate. 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 Certificates issued and delivered under
this Ordinance, but neither shall have any legal effect, and shall be solely for the convenience and
information ofthe Registered Owners ofthe Certificates. In addition, ifbond insurance is obtained,
the Certificates may bear an appropriate legend as provided by the insurer. The officers, employees
and agents of the lssuer, and each of them, shall be and each is expressly authorized, empowered
and directed from time to time and at any time to do and perform all acts and things and to execute,
acknowledge and deliver in the name and under the corporate seal and on behalf of the Issuer all
certificates, financing statements, instruments, agreements and other papers, whether or not herein
mentioned, as they may determine to be necessary or desirable in order to carry out the terms and
provisions of this Ordinance. In the absence of the Mayor, the Mayor Pro-tem is directed to sign
as Mayor on behalf of the Issuer.
(b) ln 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 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)
ls
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;
(� to refrain from using any portion of the proceeds ofthe 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,
(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 l 0 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) and, to the extent
applicable, section 149(d) of the Code (relating to advance refundings);
(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) an amount that is at least eyual to 90 percent
of the "Excess Earnings," within the meaning of section 148(� 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 l48(� of the
Code; and
(i) to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day
of the second calendar month after the close of the calendar quarter in which the Certificates are
issued, an information statement concerning the Certificates, all under and in accordance with
section 149(e) of the Code and the applicable Treasury Regulations promulgated thereunder.
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.
19
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 l03 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 or the Mayor Pro-tem 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.
The Issuer incorporates herein the representations to be made by it in the Federal Tax
Certificate related to the Certificates of Obligation.
Section 11. 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 arder to (i) cure any
ambiguity, defect or omission in this Ordinance that does not materially adversely affectthe 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
materially adversely affect the interests of the holders.
(b) Except as provided in paragraph (a) above, the holders of Certificates aggregating in
principal amount 51 % of the aggregate principal amount ofthen outstanding Certificates 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,
20
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 so as to:
(1) Make any change in the maturity of any of the outstanding Certificates;
(2) Reduce the rate of interest borne by any of the outstanding Certificates;
(3) Reduce the amount of the principal of, or redemption premium, if any, payable on
any outstanding Certificates;
(4) Modify the terms of payment of principal or of interest or redemption premium on
outstanding Certificates or any of them or impose any condition with respect to such
payment; or
(5) Change the minimum percentage of the principal amount of the Certificates
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 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 iile at the office of the Issuer for inspection by all holders of such Certificates.
(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 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) 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 ofthe Issuer and all holders
of such affected Certificates shall thereafter be determined, exercised, and enforced, subject in all
respects to such amendment.
(� Any consent given by the holder of a Certificate pursuantto the provisions ofthis Section
shall be irrevocable for a period of six months from the date ofthe publication ofthe 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 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
2l
aggregate principal amount ofthe affected �ertificates then outstanding, have, prior to the attempted
revocation, consented to and approved the amendment.
For the purposes of establishing ownership of the Certificates, the Issuer shal I rely solely upon
the registration of the ownership of such Certificates on the registration books kept by the Paying
Agent/Registrar.
(g) Notwithstanding any provision of this Section 11, there shall be no modification of this
Ordinance without the written consent of the Texas Water Development Board (while it is a
Registered Owner of the Certificates).
Section 12. SALE OF CERTIFICATES OF OBLIGATION. The Certificates of Obligation
are hereby sold and shall be delivered to the Texas Water Development Board for cash for the
principal amount thereof, less an origination fee of2.25°/o ofthe principal amount ofthe Certificates.
In accordance with its Resolution No. 12-81, the Texas Water Development Board will purchase the
Certificates in accordance with its pre-design funding option basis, with an amount approved by the
Texas Water Development Board to be deposited to the Construction Fund authorized by Section
13 hereof (the "Construction Fund") upon initial delivery of the Certificates, and the balance of the
proceeds to be deposited to the Escrow Account authorized by Section 24 hereof until authorized
for transfer to the Construction Fund by the Texas Water Development Board.
Section 13. CONSTRUCTION FUND. There shall be established by the Issuer a separate
fund to be designated the "Series 2013 CO Construction Fund" (the "Construction Fund") to be held
by the I ssuer's depository bank, and upon the delivery of the purchase price for the Certificates, the
proceeds from the sale of the Certificates shall be deposited into the Construction Fund. The costs
of issuance of the Certificates, which include legal, fiscal and engineering fees, may be paid from
the Construction Fund. The cost of the construction of the Project will be paid from this
Construction Fund upon direction of the City Council of the Issuer. All interest and profits from
investments made with moneys in the Construction Fund shall remain on deposit in the Construction
Fund as a part thereof. After completion of the payment of all costs of the Project, any residue
remaining in the Construction Fund shall be applied in accordance with Section 16 hereof.
Section 14. INVESTMENTS; COLLATERALIZATION OF PROCEEDS. Proceeds of the
Certificates shall be held at a designated state depository institution or other properly chartered and
authorized institution in accordance with the Public Funds Investment Act, Chapter 2256,
Government Code (the "PFIA"), and the Public Funds Collateral Act, Chapter 2257, Government
Code, (the "PFCA"). Money in any fund established pursuant to this Ordinance may, at the option
of the Issuer, be invested in eligible investments described in the PFIA, consistent with the
investment policy of the Issuer, as approved by the City Council ofthe Issuer. All investments shall
be made in such manner as will, in the opinion of the Issuer, permit the money required to be
expended from any fund to be available at the proper time or times as expected to be needed. Any
uninvested, uninsured proceeds of the Certifcates shall be subject to the PFCA.
22
Section l5. SURPLUS PROCEEDS. The Issuer shall use any surplus proceeds from the
Certificates of Obligation remaining after completion of the Project for the following purposes as
approved by the Texas Water Development Board's Executive Administrator (the "Executive
Administrator"): (1) to redeem, in inverse annual order, the Certificates owned by the Texas Water
Development Board; (2) to deposit into the Interest and Sinking Fund for the payment of interest
or principal on the Certificates owned by the Texas Water Development Board; or (3) to the extent
not inconsistent with the notice of intent to issue the Certificates and this Ordinance, to pay eligible
project costs as authorized by the Executive Administrator.
Section 16. EFFECTIVE DATE. In accordance with the provisions of Texas Government
Code, Section 1201.028, this Ordinance shall be effective immediately upon its adoption by the City
Council of the Issuer.
Section 17. COMPLIANCE WITH THE TEXAS WATER DEVELOPMENT BOARD'S
RULES AND REGULATIONS. The provisions of this Section shall apply so long as the
Certificates, or any of them, are owned by the Texas Water Development Board.
(a) Annual Audit Reportin�. The Issuer shall provide the Texas Water Development Board
with an annual report prepared in accordance with generally accepted auditing standards by a
certified public accountant or licensed public accountant, to be submitted without charge within 120
days of the close of each fiscal year.
(b) Covenant to Abide with Rules. The Issuer will abide with all applicable laws of the State
of Texas and Rules of the Texas Water Development Board relating to the loan of funds evidenced
by the Certificates and the Project for which the Certificates are issued, sold and delivered.
(c) Water Conservation Program. The Issuer agrees and covenants that it will implement an
approved water conservation program in accordance with 3l TAC 371.71.
(d) Records and Accounts. The Issuer agrees and covenants that it will maintain current,
accurate and complete records and accounts regarding the System in accordance with 31 TAC
371.71.
(e) Environmental Determinations. The Issuer agrees and covenants that it will comply with
any special conditions of the environmental determination of the Executive Administrator in
accordance with 31 TAC 371.71.
(� Prohibition on Use of Proceeds. The Issuer covenants and agrees that none of the proceeds
of the Certificates will be expended on costs incurred or to be incurred relating to the sampling,
testing, removing or disposing of potentially contaminated soils and/or media at the project site.
(g) Indemnification. The Issuer further agrees, to the extent permitted by law, to indemnify,
hold harmless and protect the Texas Water Development Board from any and all claims or causes
of action or damages to the person or property of third parties arising from the sampling, analysis,
23
transport, storage, treatment, removal and off-site disposition of any contaminated sewage sludge,
contaminated sediments and/or contaminated media that may be generated by the Issuer, its
contractors, consultants, agents, officials and employees as a result of activities relating to the
Project.
(h) Convevance of Obli at�ns. Prior to any action by the Issuer to convey its obligations
under the Certificates to another entity, if permitted by law, the conveyance and the assumption of
such obligations must be approved by the Texas Water Development Board. The Issuer shall notify
the Executive Administrator prior to taking any actions to alter its legal status in any manner, such
a sale-transfer-merger with another retail public utility.
(i) Davis-Bacon Act Com�liance. All laborers and mechanics employed by contractors and
subcontractors for the Project who are paid from proceeds of the Certificates on deposit in the
Construction Fund shall be paid wages at rates not less than those prevailing on projects of a similar
character in the locality of the Issuer in accordance with the federal Davis-Bacon Act and the U.S.
Department of Labor's implementing regulations pertaining thereto.
(j) Federal Fundin� Accountabilitv and Transparencv Act. The Issuer shall provide the Texas
Water Development Board with all information reyuired by the Federal Funding Accountability and
Transparency Act of 2006, Pub. L. 109-282.
(k) DUNS and CCR. The Issuer shall obtain a Data Information Numbering System (DUNS)
Number and shall register with the Central Contractor Registration (CCR), and maintain current
registration at all times during which the Certifcates are outstanding.
(1) Timel�Expenditures. All proceeds of the Certificates will be timely and expeditiously
used, as required by applicable federal statutes and U.S. Environmental Protection Agency
regulations, and the Issuer shall adhere to a project construction schedule acceptable to the
Executive Administrator that facilitates timely use of funds and project completion.
(m) As-Built Plans. The Issuer shall provide to the Texas Water Development Board a full
and complete set of "as-built" plans relating to the Project, promptly upon completion ofthe Project.
(n) Final Accountin�. Upon completion of the Project, the Issuer shall render a final
accounting of the cost of the Project to the Texas Water Development Board. If the total cost of the
Project, as finally completed, is less than originally estimated, so that the proper share of the
participation by the Texas Water Development Board in the Project is reduced, such surplus
proceeds shall be used in accordance with Section 15 hereof.
(o) Insurance. Insurance coverage be obtained and maintained by the Issuer in an amount
sufficient to protect the interest of the Texas Water Development Board in the Project.
Section 18. ALLOCATION OF CERTIFICATE PROCEEDS. The Issuer covenants to
account for the expenditure of sale proceeds and investment earnings to be used for the construction
24
and acquisition ofthe 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 on the Certificates, if any.
Section 19. DISPOSITION OF PROJECT. The Issuer covenants that the Project will not be
sold or otherwise disposed in a transaction resulting in the receipt by the 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. 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 a legal opinion that such failure to comply will not adversely affect the excludability for
federal income tax proposes from gross income of the interest on the Certificates, if any.
Section 20. [NTEREST EARNINGS ON CERTIFICATE PROCEEDS. Interest earnings
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 used as directed in Section 15.
It is further provided, however, that any interest earnings on Certificate proceeds that are reyuired
to be rebated to the United States of America pursuant to Section l 0 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.
Section 21. COMPLIANCE WITH RULE 15c2-12. (a) Annual Re,ports. (i) The Issuer shall
provide annually to the MSRB, within six months after the end of each fiscal year ending in or after
2012, financial information and operating data with respect to the lssuer of the general type included
in the Issuer's application to the Texas Water Development Board (the "Application") to the extent
that such information is customarily prepared by the City and is publicly available. Any financial
statements so to be provided shall be (1) prepared in accordance with the accounting principles
described in the notes to the financial statements filed with the Texas Water Development Board as
part of the Application, or such other accounting principles as the lssuer may be required to employ
from time to time pursuant to state law or regulation, and (2) audited, if the Issuer commissions an
audit of such statements and the audit is completed within the period during which they must be
provided. Ifthe audit of such financial statements is not complete within such period, then the Issuer
shall provide unaudited financial information by the required time and will provide audited financial
statements for the applicable fiscal year to the MSRB, when and if the audit report on such
25
statements become available. Such information shall be transmitted electronically to the MSRB,
in such format and accompanied by such identifying information as prescribed by the MSRB.
(ii) If the Issuer changes its fiscal year, it will notify the MSRB 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 the MSRB or filed with the SEC.
(b) Event Notices.
(i) The Issuer shall notify the MSRB in an electronic format as prescribed by the MSRB,
in a timely manner (but not in excess of ten business days after the occurrence of the event)
of any of the following events with respect to the Bonds, if such event is material within the
meaning of the federal securities laws:
1. Non-payment related defaults;
2. Modifications to rights of Bondholders;
3. Bond calis;
4. Release, substitution, or sale of property securing repayment of the Bonds;
5. The consummation of a merger, consolidation, or acquisition involving an
obligated person or the sale of all or substantially all of the assets of the
obligated person, other than in the ordinary course of business, the entry into
a definitive agreement to undertake such an action or the termination of a
definitive agreement relating to any such actions, other than pursuant to its
terms;
6. Appointment of a successor or additional trustee or the change of name of a
trustee.
(ii) The Issuer shall notify the MSRB in an electronic format as prescribed by the MSRB,
in a timely manner (but not in excess of ten business days after the occurrence of the event)
of any of the fol lowing events with respect to the Bonds, without regard to whether such event
is considered material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Unscheduled draws on debt service reserves reflecting fnancial difficulties;
3. Unscheduled draws on credit enhancements reflecting financial difficulties;
4. Substitution of credit or liquidity providers, or their failure to perform;
5. Adverse tax opinions or the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed [ssue
(IRS Form 5701—TEB) or other material notices or determinations with
26
respect to the tax-exempt status of the Bonds, or other events affecting the
tax-exempt status of the Bonds;
6. tender offers;
7. Defeasances;
8. Rating changes;
9. Bankruptcy, insolvency, receivership or similar event of an obligated person
(which is considered to occur when any of the following occur: the
appointment of a receiver, fiscal agent, or similar officer for the Issuer in a
proceeding under the United States Bankruptcy Code or in any other
proceeding under state or federal law in which a court or governmental
authority has assumed jurisdiction over substantially all of the assets or
business of the Issuer, or if such jurisdiction has been assumed by leaving the
existing governing body and officials or officers in possession but subject to
the supervision and orders of a court or governmental authority, or the entry
of an order confrming a plan of reorganization, arrangement, or liquidation
by a court or governmental authority having supervision or jurisdiction over
substantially all of the assets or business of the Issuer).
The Issuer shall notify 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 Bonds within the meaning of the Rule, except that
the Issuer in any event will give the notice required by Subsection (b) hereof of any Bond calls and
defeasance that cause the Issuer to no longer be such an "obligated person".
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The 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 Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE 1SSUER BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART
FROM ANY BREACH BY THE ISSUER, WHETHERNEGLIGENT OR WITHOUT FAULT ON
ITS PART. OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND
f►�l
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 Bonds in
the primary offering of the Bonds in compliance with the Rule, taking into account any amendments
or interpretations of the Rule since such offering as well as such changed circumstances and
(2) either (a) the registered owners of a majority in aggregate principal amount (or any greater
amount reyuired by any other provision of this Ordinance that authorizes such an amendment) of
the outstanding Bonds consent to such amendment or (b) a person that is unaffiliated with the Issuer
(such as nationally recognized bond counsel) determined that such amendment will not materially
impair the interest of the registered owners and beneficial owners of the Bonds. If the Issuer so
amends the provisions of this 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 ofthe Rule or a court of final jurisdiction enters judgment that such provisions ofthe 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 Bonds in the primary offering of the Bonds.
(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 or any successor to its
functions under the Rule.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
Section 22. PUBLIC NOTICE. It is hereby officially found and determined that public notice
of the time, place and purpose of said meeting was given, all as reyuired by Chapter SSI, Texas
Government Code, and that no petition was received from the qualified electors of the Issuer
protesting the issuance of the Certificates.
28
Section 23. ESCROW AGREEMENT. The Mayor is hereby authorized and directed to
execute and deliver an Escrow Agreement substantially in the form attached hereto as Exhibit A,
with such changes as may be approved by the Mayor, such approval to be evidenced by her
execution thereof.
Section 24. ESCROW ACCOUNT. An escrow account is hereby authorized to be created
pursuant to the Escrow Agreement referred to in Section 24. Proceeds of the Certificates shall be
deposited to the escrow account and disbursed to the Construction Fund created pursuant to Section
13 upon the authorized release of moneys from the escrow account in accordance with the Escrow
Agreement.
Section 25. 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 (an "Event of Default"):
(i) the failure to make payment of the principal of or interest on any of the Certificates 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 Owners, including, but not limited to, their prospect ar 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 any Registered Owner to the Issuer.
Section 26. REMEDI ES FOR DEFAULT. (a) Upon the happening of any Event of Default,
then and in every case, any 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 Owners 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 Owners
hereunder or any combination of such remedies.
(b) It is provided that all such proceedings shall be instituted and maintained for the equal
benefit of all Owners of Certificates then outstanding.
Section 27. REMEDIES NOT EXCLUSIVE. (a) 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 Certificates 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 Certificates shall not be available as a remedy under this Ordinance.
(b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver
of any other available remedy.
29
(c) By accepting the delivery of a Certificate authorized under this Ordinance, such 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, employees or trustees of the Issuer or the City Commission.
Section 28. SEVERABILITY. If any provision of this Ordinance or the application thereof
to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application
thereof to other circumstances shall nevertheless be valid, and this governing body hereby declares
that this Ordinance would have been enacted without such invalid provision.
------------------------
[cZ�]
EXHIBIT A
FORM OF ESCROW AGREEMENT
A-1
RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT WITH
LOAN FORGIVENESS; AND RESOLVING OTHER MATTERS RELATING TO THE SUBJECT
THE STATE OF TEXAS §
COUNTY OF LAMAR §
CITY OF PARIS §
WHEREAS, the City of Paris, Texas (the "City") has received approval from the Texas Water
Development Board ("TWDB") for financial assistance from TWDB to the City in the amount of $3,400,778
(the °Loan") , consisting of the City's Combination Tax and Surplus Revenue Certificates of Obligation,
Series 2013, in the amount of $2,900,000 (the "Certificates"), and loan fargiveness in the amount of
$500.778;
WHEREAS, TWDB has presented to the City a Loan Agreement with Loan Forgiveness (the "Loan
Forgiveness Agreement") in connection with the Loan, in which the City agrees to certain conditions with
respect to the Loan;
W HEREAS, this City Council hereby finds and determines that it is a public benefit to and in the best
interests of the City and its residents to enter into the Loan Forgiveness Agreement in order to obtain the Loan
to fund needed improvements and additions to the City's potable water distribution system; and
WHEREAS, it is officially found, determined and declared that the meeting at which this Resolution
has been adopted was open to the public, and public notice of the date, hour, place and subject of said
meeting, including this Resolution, was given, all as required by the applicable provisions of Chapter SS l,
Texas Government Code; Now, Therefore
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS:
1. 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.
2. The Loan Forgiveness Agreement, in substantially the form presented at this meeting, is
hereby approved and the Mayor of the City is hereby authorized and directed to execute and deliver the Loan
Forgiveness Agreement. The Escrow Agreement relating to the Loan Forgiveness Agreement between the
Issuer and the escrow agent named therein (the "Escrow Agent"), substantially in the form and content
presented at this meeting, is hereby approved and the Mayor or the City Manager is hereby authorized and
directed to execute the Escrow Agreement on behalf of the Ciry, and the City Clerk is authorized to attest the
signature thereon. The Escrow Agent named in the Escrow Agreement is hereby appointed as the Escrow
Agent pursuant to such Escrow Agreement.
3. The Mayor, Mayor Pratem, City Manager and City Clerk of the City, and each ofthem, 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 take such actions and to execute and deliver in the name and
on behalf of the City 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 Resolution.
4. This Resolution shall become effective immediately upon adoption.
DULY PASSED AND APPROVED by the City Council of the City of Paris, Texas, on January 13, 2013.
City Clerk
City of Paris, Texas
Mayor
City of Paris, Texas
(CITY SEAL)