HomeMy WebLinkAboutOrdinance 2931
ORDINANCE NO. 2931
AN ORDINANCE AUTHORIZING THE ISSUANCE OF "CITY OF NORTH
RICHLAND HILLS, TEXAS, TAX AND WATERWORKS AND SEWER
SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION,
SERIES 2007"; SPECIFYING THE TERMS AND FEATURES OF SAID
CERTIFICATES; PROVIDING FOR THE PAYMENT OF SAID CERTIFICATES
BY THE LEVY OF AN AD VALOREM TAX UPON ALL TAXABLE PROPERTY
WITHIN THE CITY AND A LIMITED PLEDGE OF THE NET REVENUES FROM
THE OPERATION OF THE CITY'S WATERWORKS AND SEWER SYSTEM;
AND RESOLVING OTHER MATTERS INCIDENT AND RELATING TO THE
ISSUANCE, PAYMENT, SECURITY, SALE AND DELIVERY OF SAID
CERTIFICATES, INCLUDING THE APPROVAL AND EXECUTION OF A
PAYING AGENT/REGISTRAR AGREEMENT AND A PURCHASE
AGREEMENT AND THE APPROVAL AND DISTRIBUTION OF AN OFFICIAL
STATEMENT; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, notice of the City Council's intention to issue certificates of obligation in the
maximum principal amount of $1,285,000 for the purpose of paying contractual obligations to be
incurred for (i) constructing, improving and equipping NRH20 water park, (ii) purchasing
equipment for fire service and public works, including vehicles related thereto, and (iii)
professional services rendered in relation to such projects and the financing thereof; has been
duly published in the Fort Worth Star Telegram, a newspaper hereby found and determined to
be of general circulation in the City of North Richland Hills, Texas, on March 29, 2007 and
April 5, 2007, the date of the first publication of such notice being not less than fifteen (15) days
prior to the tentative date stated therein for the passage of the ordinance authorizing the
issuance of such certificates; and
WHEREAS, no petition protesting the issuance of the certificates of obligation and
bearing valid petition signatures of at least 5% of the qualified electors of the City has been
presented to or filed with the Mayor, City Secretary or any other official of the City on or prior to
the date of the passage of this Ordinance; and
WHEREAS, the City Council hereby finds and determines that the certificates of
obligation described in the aforesaid notice should be issued and sold at this time in the amount
and manner as hereinafter provided; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND
HILLS, TEXAS:
SECTION 1: Authorization, Desiqnation, Principal Amount. Pumose. Certificates of
obligation of the City shall be and are hereby authorized to be issued in the aggregate principal
amount of $1 ,285,000, to be designated and bear the title "CITY OF NORTH RICHlAND HillS,
TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2007" (hereinafter referred to as the "Certificates"),
for the purpose of paying contractual obligations to be incurred for (i) constructing, improving
and equipping NRH20 water park, (ii) purchasing equipment for fire service and public works,
including vehicles related thereto, and (iii) professional services rendered in relation to such
projects and the financing thereof; pursuant to authority conferred by and in conformity with the
Ordinance No. 2931
Page 1 of 38
Constitution and laws of the State of Texas, including V.T.C.A., Local Government Code,
Subchapter C of Chapter 271, as amended.
SECTION 2: Fully Reqistered Obliqations - Authorized Denominations - Stated
Maturities - Date. The Certificates are issuable in fully registered form only; shall be dated
April 15, 2007 (the "Certificate Date") and shall be in denominations of $5,000 or any integral
multiple thereof (within a Stated Maturity) and the Certificates shall become due and payable on
February 15 in each of the years and in principal amounts (the "Stated Maturities") and bear
interest at the per annum rate(s) in accordance with the following schedule:
Year of Principal Interest
Stated Maturity Amount ($) Rate(s) (%)
2008 75,000 4.00%
2009 75,000 4.00%
2013 300,000 3.70%
2017 285,000 3.85%
2022 275,000 4.00%
2027 275,000 4.75%
The Certificates shall bear interest on the unpaid principal amounts from the Certificate
Date at the rates per annum shown above in this Section (calculated on the basis of a 360-day
year of twelve 30-day months), and such interest shall be payable on February 15 and August
15 in each year, commencing February 15, 2008, until maturity or prior redemption.
SECTION 3: Terms of Payment - Payinq AgenUReqistrar. The principal of, premium, if
any, and the interest on the Certificates, due and payable by reason of maturity, redemption or
otherwise, shall be payable only to the registered owners or holders of the Certificates
(hereinafter called the "Holders") appearing on the registration and transfer books maintained by
the Paying AgenURegistrar and the payment thereof shall be in any coin or currency of the
United States of America which, at the time of payment, is legal tender for the payment of public
and private debts, and shall be without exchange or collection charges to the Holders.
The selection and appointment of The Bank of New York Trust Company, N.A., Dallas,
Texas to serve as Paying AgenURegistrar for the Certificates is hereby approved and confirmed.
Books and records relating to the registration, payment, transfer and exchange of the
Certificates (the "Security Register") shall at all times be kept and maintained on behalf of the
City by the Paying AgenURegistrar, as provided herein and in accordance with the terms and
provisions of a "Paying AgenURegistrar Agreement", substantially in the form attached hereto as
Exhibit A, and such reasonable rules and regulations as the Paying AgenURegistrar and the City
may prescribe. The Mayor and City Secretary are authorized to execute and deliver such
Agreement in connection with the delivery of the Certificates. The City covenants to maintain
and provide a Paying AgenURegistrar at all times until the Certificates are paid and discharged,
and any successor Paying AgenURegistrar shall be a bank, including a commercial bank, at
which principal of the Bonds is payable, or trust company organized under the laws of the State
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of Texas or other entity duly qualified and legally authorized to serve as and perform the duties
and services of Paying AgenURegistrar for the Certificates. Upon any change in the Paying
AgenURegistrar for the Certificates, the City agrees to promptly cause a written notice thereof to
be sent to each Holder by United States Mail, first class postage prepaid, which notice shall also
give the address of the new Paying AgenURegistrar.
Principal of and premium, if any, on the Certificates shall be payable at the Stated
Maturities or upon prior redemption thereof only upon presentation and surrender of the
Certificates to the Paying AgenURegistrar at its designated offices in Dallas, Texas, or such
office as may be designated for such purpose by the Paying AgenURegistrar or any successor
to its functions (the "Designated PaymenUTransfer Office"). Interest on the Certificates shall be
paid to the Holders whose names appear in the Security Register at the close of business on
the Record Date (the last business day of the month next preceding each interest payment
date) and shall be paid by the Paying AgenURegistrar (i) by check sent United States Mail, first
class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by
such other method, acceptable to the Paying AgenURegistrar, requested by, and at the risk and
expense of, the Holder. If the date for the payment of the principal of or interest on the
Certificates shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in
the city where the Designated PaymenUTransfer Office of the Paying AgenURegistrar is located
are authorized by law or executive order to close, then the date for such payment shall be the
next succeeding day which is not such a Saturday, Sunday, legal holiday, or day when 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.
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 AgenU Registrar, if and when funds for the payment of such interest
have been received from the City. 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 (5) business days prior to the Special Record Date by United States
Mail, first class postage prepaid, to the address of each Holder appearing on the Security
Register at the close of business on the last business next preceding the date of mailing of such
notice.
SECTION 4: Redemption.
(a) Optional Redemption. The Certificates having Stated Maturities on and after
February 15, 2018 shall be subject to redemption prior to maturity, at the option of the City, in
whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a
Stated Maturity by lot by the Paying AgenURegistrar), on February 15, 2017, or on any date
thereafter at the redemption price of par plus accrued interest to the date of redemption.
At least forty-five (45) days prior to a redemption date for the Certificates (unless a
shorter notification period shall be satisfactory to the Paying AgenURegistrar), the City shall
notify the Paying AgenURegistrar of the decision to redeem Certificates, the principal amount of
each Stated Maturity to be redeemed, and the date of redemption therefor. The decision of the
City to exercise the right to redeem Certificates shall be entered in the minutes of the governing
body of the City.
Ordinance No. 2931
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(b) Mandatory Redemption. The Certificates having Stated Maturities of February 15,
2013, February 15, 2017, February 15, 2022 and February 15, 2027 (the "Term Certificates")
shall be subject to mandatory redemption in part prior to maturity at the redemption price of par
and accrued interest to the date of redemption on the respective dates and in principal amounts
as follows:
Term Certificates due February 15. 2013
Redemption Date Principal Amount
February 15, 2010 $75,000
February 15, 2011 $75,000
February 15, 2012 $75,000
February 15, 2013 $75,000 (maturity)
Term Certificates due February 15, 2022
Redemption Date Principal Amount
February 15, 2018 $55,000
February 15, 2019 $55,000
February 15, 2020 $55,000
February 15, 2021 $55,000
February 15, 2022 $55,000 (maturity)
Term Certificates due February 15. 2017
Redemption Date Principal Amount
February 15, 2014 $75,000
February 15, 2015 $75,000
February 15, 2016 $70,000
February 15, 2017 $65,000 (maturity)
Term Certificates due February 15, 2027
Redemption Date Principal Amount
February 15, 2023 $55,000
February 15, 2024 $55,000
February 15, 2025 $55,000
February 15, 2026 $55,000
February 15, 2027 $55,000 (maturity)
Approximately forty-five (45) days prior to each mandatory redemption date for the Term
Certificates, the Paying AgenURegistrar shall select by lot the numbers of the Term Certificates
within the applicable Stated Maturity to be redeemed on the next following February 15 from
moneys set aside for that purpose in the Certificate Fund (as hereinafter defined). Any Term
Certificate not selected for prior redemption shall be paid on the date of their Stated Maturity.
The principal amount of the Term Certificates for a Stated Maturity required to be
redeemed on a mandatory redemption date may be reduced, at the option of the City, by the
principal amount of Term Certificates of like Stated Maturity which, at least 50 days prior to the
mandatory redemption date, (1) shall have been acquired by the City at a price not exceeding
the principal amount of such Term Certificates plus accrued interest to the date of purchase
thereof, and delivered to the Paying AgenURegistrar for cancellation or (2) shall have been
redeemed pursuant to the optional redemption provisions set forth in paragraph(a) of this
Section and not theretofore credited against a mandatory redemption requirement.
(c) Selection of Certificates for Redemption. If less than all Outstanding Certificates
of the same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/
Registrar shall treat such Certificates as representing the number of Certificates Outstanding
which is obtained by dividing the principal amount of such Certificates by $5,000 and shall
select the Certificates to be redeemed within such Stated Maturity by lot.
(d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date
for the Certificates, a notice of redemption shall be sent by United States Mail, first class
postage prepaid, in the name of the City and at the City's expense, to each Holder of a
Certificate to be redeemed in whole or in part at the address of the Holder appearing on the
Security Register at the close of business on the business day next preceding the date of
mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to
have been duly given irrespective of whether received by the Holder.
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All notices of redemption shall (i) specify the date of redemption for the Certificates,
(ii) identify the Certificates to be redeemed and, in the case of a portion of the principal amount
to be redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price,
(iv) state that the Certificates, or the portion of the principal amount thereof to be redeemed,
shall become due and payable on the redemption date specified and the interest thereon, or on
the portion of the principal amount thereof to be redeemed, shall cease to accrue from and after
the redemption date, provided moneys sufficient for the payment of such Certificate (or the
principal amount thereof to be redeemed) at the then applicable redemption price are held for
the purpose of such payment by the Paying AgenURegistrar and (v) specify that payment of the
redemption price for the Certificates, or the principal amount thereof to be redeemed, shall be
made at the Designated PaymenUTransfer Office of the Paying AgenURegistrar only upon
presentation and surrender of the Certificates. If a Certificate is subject by its terms to prior
redemption and has been called for redemption and notice of redemption has been duly given
as hereinabove provided, such Certificate (or the principal amount thereof to be redeemed) shall
become due and payable and interest thereon shall cease to accrue from and after the
redemption date therefor.
SECTION 5: Reqistration - Transfer - Exchanqe of Certificates - Predecessor
Certificates. The Paying AgenURegistrar shall obtain, record and maintain in the Security
Register the name and address of each and every owner of the Certificates issued under and
pursuant to the provisions of this Ordinance, or if appropriate, the nominee thereof. Any
Certificate may be transferred or exchanged for Certificates of other authorized denominations
by the Holder, in person or by his duly authorized agent, upon surrender of such Certificate to
the Paying AgenURegistrar for cancellation, accompanied by a written instrument of transfer or
request for exchange duly executed by the Holder or by his duly authorized agent, in form
satisfactory to the Paying AgenURegistrar.
Upon surrender of any Certificate (other than the Initial Certificate(s) authorized in
Section 8 hereof) for transfer at the Designated PaymenUTransfer Office of the Paying
AgenURegistrar, the Paying AgenURegistrar shall register and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of authorized denominations
and having the same Stated Maturity and of a like aggregate principal amount as the Certificate
or Certificates surrendered for transfer.
At the option of the Holder, Certificates (other than the Initial Certificate(s) authorized in
Section 8 hereof) may be exchanged for other Certificates of authorized denominations and
having the same Stated Maturity, bearing the same rate of interest and of like aggregate
principal amount as the Certificates surrendered for exchange, upon surrender of the
Certificates to be exchanged at the Designated PaymenUTransfer Office of the Paying
Agent/Registrar. Whenever any Certificates are surrendered for exchange, the Paying
AgenURegistrar shall register and deliver new Certificates to the Holder requesting the
exchange.
All Certificates issued in any transfer or exchange of Certificates shall be delivered to the
Holders at the Designated PaymenUTransfer Office of the Paying AgenURegistrar or sent by
United States Mail, first class postage prepaid, to the Holders, and, upon the registration and
delivery thereof, the same shall be the valid obligations of the City, evidencing the same
obligation to pay, and entitled to the same benefits under this Ordinance, as the Certificates
surrendered in such transfer or exchange.
Ordinance No. 2931
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All transfers or exchanges of Certificates pursuant to this Section shall be made without
expense or service charge to the Holder, except as otherwise herein provided, and except that
the Paying AgenURegistrar shall require payment by the Holder requesting such transfer or
exchange of any tax or other governmental charges required to be paid with respect to such
transfer or exchange.
Certificates cancelled by reason of an exchange or transfer pursuant to the provisions
hereof are hereby defined to be "Predecessor Certificates," evidencing all or a portion, as the
case may be, of the same obligation to pay evidenced by the new Certificate or Certificates
registered and delivered in the exchange or transfer therefor. Additionally, the term
"Predecessor Certificates" shall include any mutilated, lost, destroyed, or stolen Certificate for
which a replacement Certificate has been issued, registered and delivered in lieu thereof
pursuant to the provisions of Section 19 hereof and such new replacement Certificate shall be
deemed to evidence the same obligation as the mutilated, lost, destroyed or stolen Certificate.
Neither the City nor the Paying AgenURegistrar shall be required to issue or transfer to
an assignee of a Holder any Certificate called for redemption, in whole or in part, within 45 days
of the date fixed for the redemption of such Certificate; provided, however, such limitation on
transferability shall not be applicable to an exchange by the Holder of the unredeemed balance
of a Certificate called for redemption in part.
SECTION 6: Book-Entry-Only Transfers and Transactions. Notwithstanding the
provisions contained in Sections 3, 4 and 5 hereof relating to the payment, and
transfer/exchange of the Certificates, the City hereby approves and authorizes the use of "Book-
Entry-Only" securities clearance, settlement and transfer system provided by The Depository
Trust Company ("DTC"), a limited purpose trust company organized under the laws of the State
of New York, in accordance with the operational arrangements referenced in the Blanket Issuer
Letter of Representations by and between the City and DTC (the "Depository Agreement").
Pursuant to the Depository Agreement and the rules of DTC, the Certificates shall be
deposited with DTC who shall hold said Certificates for its participants (the "DTC Participants").
While the Certificates are held by DTC under the Depository Agreement, the Holder of the
Certificates on the Security Register for all purposes, including payment and notices, shall be
Cede & Co., as nominee of DTC, notwithstanding the ownership of each actual purchaser or
owner of each Certificate (the "Beneficial Owners") being recorded in the records of DTC and
DTC Participants.
In the event DTC determines to discontinue serving as securities depository for the
Certificates or otherwise ceases to provide book-entry clearance and settlement of securities
transactions in general or the City determines that DTC is incapable of properly discharging its
duties as securities depository for the Certificates, the City covenants and agrees with the
Holders of the Certificates to cause Certificates to be printed in definitive form and issued and
delivered to DTC Participants and Beneficial Owners, as the case may be. Thereafter, the
Certificates in definitive form shall be assigned, transferred and exchanged on the Security
Register maintained by the Paying AgenURegistrar and payment of such Certificates shall be
made in accordance with the provisions of Sections 3, 4 and 5 hereof.
SECTION 7: Execution - Reqistration. The Certificates shall be executed on behalf of
the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the
City Secretary. The signature of said officers on the Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals who are or were the proper
Ordinance No. 2931
Page 6 of 38
officers of the City on the Certificate Date shall be deemed to be duly executed on behalf of the
City, notwithstanding that one or more of the individuals executing the same shall cease to be
such officer at the time of delivery of the Certificates to the initial purchaser(s) and with respect
to Certificates delivered in subsequent exchanges and transfers, all as authorized and provided
in V.T.C.A., Government Code, Chapter 1201, as amended.
No Certificate shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Certificate either a certificate of
registration substantially in the form provided in Section 9(c), manually executed by the
Comptroller of Public Accounts of the State of Texas, or his duly authorized agent, or a
certificate of registration substantially in the form provided in Section 9(d), manually executed by
an authorized officer, employee or representative of the Paying AgenURegistrar, and either such
certificate duly signed upon any Certificate shall be conclusive evidence, and the only evidence,
that such Certificate has been duly certified, registered and delivered.
SECTION 8: Initial Certificate(s). The Certificates herein authorized shall be initially
issued either (i) as a single fully registered certificate in the total principal amount stated in
Section 1 hereof with principal installments to become due and payable as provided in Section 2
hereof and numbered T-1, or (ii) as multiple fully registered certificates, being one certificate for
each year of maturity in the applicable principal amount and denomination and to be numbered
consecutively from T-1 and upward (hereinafter called the "Initial Certificate(s)") and, in either
case, the Initial Certificate(s) shall be registered in the name of the initial purchaser(s) or the
designee thereof. The Initial Certificate(s) shall be the Certificates submitted to the Office of the
Attorney General of the State of Texas for approval, certified and registered by the Office of the
Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser(s).
Any time after the delivery of the Initial Certificate(s), the Paying AgenURegistrar, pursuant to
written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial
Certificate(s) delivered hereunder and exchange therefor definitive Certificates of authorized
denominations, Stated Maturities, principal amounts and bearing applicable interest rates for
transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to
and in accordance with such written instructions from the initial purchaser(s), or the designee
thereof, and such other information and documentation as the Paying AgenURegistrar may
reasonably require.
SECTION 9: Forms.
(a) Forms Generally. The Certificates, the Registration Certificate of the Comptroller
of Public Accounts of the State of Texas, the Registration Certificate of Paying AgenURegistrar,
and the form of Assignment to be printed on each of the Certificates, shall be substantially in the
forms set forth in this Section with such appropriate insertions, omissions, substitutions, and
other variations as are permitted or required by this Ordinance and may have such letters,
numbers, or other marks of identification (including identifying numbers and letters of the
Committee on Uniform Securities Identification Procedures of the American Bankers
Association) and such legends and endorsements (including insurance legends in the event the
Certificates, or any maturities thereof, are purchased with insurance and any reproduction of an
opinion of counsel) thereon as may, consistently herewith, be established by the City or
determined by the officers executing such Certificates as evidenced by their execution. Any
portion of the text of any Certificates may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the certificate.
Ordinance No. 2931
Page 7 of 38
The definitive Certificates and the Initial Certificate(s) shall be printed, lithographed,
engraved, typewritten, photocopied or otherwise reproduced in any other similar manner, all as
determined by the officers executing such Certificates as evidenced by their execution.
(b)
Form of Certificates.
REGISTERED
NO._
REGISTERED
$
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF NORTH RICHLAND HILLS, TEXAS,
TAX AND WATERWORKS AND SEWER SYSTEM
(LIMITED PLEDGE) REVENUE
CERTIFICATE OF OBLIGATION,
SERIES 2007
Certificate Date:
April 15, 2007
Interest Rate:
Stated Maturity:
CUSIP NO:
Registered Owner:
Principal Amount:
DOLLARS
The City of North Richland Hills (hereinafter referred to as the "City"), a body corporate
and municipal corporation in the County of Tarrant, State of Texas, for value received,
acknowledges itself indebted to and hereby promises to pay to the Registered Owner named
above, or the registered assigns thereof, on the Stated Maturity date specified above the
Principal Amount hereinabove stated (or so much thereof as shall not have been paid upon prior
redemption) and to pay interest on the unpaid principal amount hereof from the interest payment
date next preceding the "Registration Date" of this Certificate appearing below (unless this
Certificate bears a "Registration Date" as of an interest payment date, in which case it shall bear
interest from such date, or unless the "Registration Date" of this Certificate is prior to the initial
interest payment date in which case it shall bear interest from the Certificate Date) at the per
annum rate of interest specified above computed on the basis of a 360-day year of twelve 30-
day months; such interest being payable on February 15 and August 15 in each year,
commencing February 15, 2008, until maturity or prior redemption. Principal of this Certificate is
payable at its Stated Maturity or upon its prior redemption to the registered owner hereof, upon
presentation and surrender, at the Designated PaymenUTransfer Office of the Paying
AgenURegistrar executing the registration certificate appearing hereon, or its successor;
provided, however, while this Certificate is registered to Cede & Co., the payment of principal
upon a partial redemption of the principal amount hereof may be accomplished without
presentation and surrender of this Certificate. Interest is payable to the registered owner of this
Certificate (or one or more Predecessor Certificates, as defined in the Ordinance hereinafter
referenced) whose name appears on the "Security Register" maintained by the Paying
AgenURegistrar at the close of business on the "Record Date", which is the last business day of
the month next preceding each interest payment date, and interest shall be paid by the Paying
AgenURegistrar by check sent United States Mail, first class postage prepaid, to the address of
Ordinance No. 2931
Page 8 of 38
the registered owner recorded in the Security Register or by such other method, acceptable to
the Paying AgenURegistrar, requested by, and at the risk and expense of, the registered owner.
If the date for the payment of the principal of or interest on the Certificates shall be a Saturday,
Sunday, a legal holiday, or a day when banking institutions in the city where the Designated
PaymenUTransfer Office of the Paying AgenURegistrar is located are authorized by law or
executive order to close, then the date for such payment shall be the next succeeding day which
is not such a Saturday, Sunday, legal holiday, or day when 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. All payments of principal of, premium, if any, and interest on this
Certificate shall be without exchange or collection charges to the owner hereof and in any coin
or currency of the United States of America which at the time of payment is legal tender for the
payment of public and private debts.
This Certificate is one of the series specified in its title issued in the aggregate principal
amount of $1,285,000 (herein referred to as the "Certificates") for the purpose of paying
contractual obligations to be incurred for (i) constructing, improving and equipping NRH20 water
park, (ii) purchasing equipment for fire service and public works, including vehicles related
thereto, and (iii) professional services rendered in relation to such projects and the financing
thereof; under and in strict conformity with the Constitution and laws of the State of Texas,
particularly V.T.C.A., Local Government Code, Subchapter C of Chapter 271, as amended, and
pursuant to an Ordinance adopted by the City Council of the City (herein referred to as the
"Ordinance").
The Certificates maturing on dates hereinafter identified (the "Term Certificates") are
subject to mandatory redemption prior to maturity with funds on deposit in the Certificate Fund
established and maintained for the payment thereof in the Ordinance, and shall be redeemed in
part prior to maturity at the price of par and accrued interest thereon to the mandatory
redemption date on the respective dates and in principal amounts as follows:
Term Certificates due February 15, 2013
Redemption Date Principal Amount
February 15, 2010 $75,000
February 15, 2011 $75,000
February 15, 2012 $75,000
February 15, 2013 $75,000 (maturity)
Term Certificates due February 15. 2022
Redemption Date Principal Amount
February 15, 2018 $55,000
February 15, 2019 $55,000
February 15, 2020 $55,000
February 15, 2021 $55,000
February 15, 2022 $55,000 (maturity)
Term Certificates due February 15, 2017
Redemption Date Principal Amount
February 15, 2014 $75,000
February 15, 2015 $75,000
February 15, 2016 $70,000
February 15, 2017 $65,000 (maturity)
Term Certificates due February 15, 2027
Redemption Date Principal Amount
February 15, 2023 $55,000
February 15, 2024 $55,000
February 15, 2025 $55,000
February 15, 2026 $55,000
February 15, 2027 $55,000 (maturity)
The particular Term Certificates of a stated maturity to be redeemed on each redemption
date shall be chosen by lot by the Paying AgenURegistrar; provided, however, that the principal
amount of Term Certificates for a stated maturity required to be redeemed on a mandatory
redemption date may be reduced, at the option of the City, by the principal amount of Term
Ordinance No. 2931
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Certificates of like stated maturity which, at least 50 days prior to the mandatory redemption
date, (1) shall have been acquired by the City at a price not exceeding the principal amount of
such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to
the Paying AgenURegistrar for cancellation or (2) shall have been redeemed pursuant to the
optional redemption provisions appearing below and not theretofore credited against a
mandatory redemption requirement.
The Certificates maturing on and after February 15, 2018 may be redeemed prior to their
Stated Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or
any integral multiple thereof (and if within a Stated Maturity by lot by the Paying
AgenURegistrar), on February 15, 2017 or on any date thereafter, at the redemption price of par,
together with accrued interest to the date of redemption.
At least thirty (30) days prior to a redemption date, the City shall cause a written notice
of such redemption to be sent by United States Mail, first class postage prepaid, to the
registered owners of each Certificate to be redeemed at the address shown on the Security
Register and subject to the terms and provisions relating thereto contained in the Ordinance. If
a Certificate (or any portion of its principal sum) shall have been duly called for redemption and
notice of such redemption duly given, then upon the redemption date such Certificate (or the
portion of its principal sum to be redeemed) shall become due and payable, and, if moneys for
the payment of the redemption price and the interest accrued on the principal amount to be
redeemed to the date of redemption are held for the purpose of such payment by the Paying
AgenURegistrar, interest shall cease to accrue and be payable from and after the redemption
date on the principal amount redeemed.
In the event a portion of the principal amount of a Certificate is to be redeemed and the
registered owner is someone other than Cede & Co., payment of the redemption price of such
principal amount shall be made to the registered owner only upon presentation and surrender of
such Certificate to the Designated PaymenUTransfer Office of the Paying AgenURegistrar, and a
new Certificate or Certificates of like maturity and interest rate in any authorized denominations
provided by the Ordinance for the then unredeemed balance of the principal sum thereof will be
issued to the registered owner, without charge. If a Certificate is selected for redemption, in
whole or in part, the City and the Paying Agent/Registrar shall not be required to transfer such
Certificate to an assignee of the registered owner within forty-five (45) days of the redemption
date therefor; provided, however, such limitation on transferability shall not be applicable to an
exchange by the registered owner of the unredeemed balance of a Certificate redeemed in part.
The Certificates are payable from the proceeds of an ad valorem tax levied, within the
limitations prescribed by law, upon all taxable property in the City and from a limited pledge of
the Net Revenues (as defined in the Ordinance) of the City's combined Waterworks and
Sanitary Sewer System (the "System"), such pledge of the Net Revenues for the payment of the
Certificates being limited to an amount not in excess of $1,000 and, together with a parity
pledge securing the payment of the Previously Issued Certificates, being junior and subordinate
to the lien on and pledge of such Net Revenues securing the payment of "Prior Lien
Obligations" (as defined in the Ordinance) now outstanding and hereafter issued by the City. In
the Ordinance, the City reserves and retains the right to issue Prior Lien Obligations without
limitation as to principal amount but subject to any applicable terms, conditions or restrictions
under law or otherwise.
Ordinance No. 2931
Page 10 of 38
Reference is hereby made to the Ordinance, a copy of which is on file in the Designated
PaymenUTransfer Office of the Paying AgenURegistrar, and to all the provisions of which the
owner or holder of this Certificate by the acceptance hereof hereby assents, for definitions of
terms; the description of and the nature and extent of the tax levied for the payment of the
Certificates; the nature and extent of the pledge of the Net Revenues securing the payment of
the Certificates; the terms and conditions relating to the transfer or exchange of this Certificate;
the conditions upon which the Ordinance may be amended or supplemented with or without the
consent of the Holders; the rights, duties, and obligations of the City and the Paying
AgenURegistrar; the terms and provisions upon which the tax levy and the pledge of the Net
Revenues and covenants made in the Ordinance may be discharged at or prior to the maturity
of this Certificate, and this Certificate deemed to be no longer Outstanding thereunder; and for
the other terms and provisions contained therein. Capitalized terms used herein have the
meanings assigned in the Ordinance.
This Certificate, subject to certain limitations contained in the Ordinance, may be
transferred on the Security Register only upon its presentation and surrender at the Designated
PaymenUTransfer Office of the Paying AgenURegistrar, with the Assignment hereon duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the
Paying AgenURegistrar duly executed by, the registered owner hereof, or his duly authorized
agent. When a transfer on the Security Register occurs, one or more new fully registered
Certificates of the same Stated Maturity, of authorized denominations, bearing the same rate of
interest, and of the same aggregate principal amount will be issued by the Paying
AgenURegistrar to the designated transferee or transferees.
The City and the Paying AgenURegistrar, and any agent of either, shall treat the
registered owner whose name appears on the Security Register (i) on the Record Date as the
owner entitled to payment of interest hereon, (ii) on the date of surrender of this Certificate as
the owner entitled to payment of principal hereof at its Stated Maturity or its redemption, in
whole or in part, and (iii) on any other date as the owner for all other purposes, and neither the
City nor the Paying AgenURegistrar, or any agent of either, shall be affected by notice to the
contrary. In the event of 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 AgenURegistrar, if and when funds for the payment of such interest
have been received from the City. 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 (5) business days prior to the Special Record Date by United States
Mail, first class postage prepaid, to the address of each Holder appearing on the Security
Register at the close of business on the last business day next preceding the date of mailing of
such notice.
It is hereby certified, recited, represented and declared that the City is a body corporate
and political subdivision duly organized and legally existing under and by virtue of the
Constitution and laws of the State of Texas; that the issuance of the Certificates is duly
authorized by law; that all acts, conditions and things required to exist and be done precedent to
and in the issuance of the Certificates to render the same lawful and valid obligations of the City
have been properly done, have happened and have been performed in regular and due time,
form and manner as required by the Constitution and laws of the State of Texas, and the
Ordinance; that the Certificates do not exceed any Constitutional or statutory limitation; and that
due provision has been made for the payment of the principal of and interest on the Certificates
as aforestated. In case any provision in this Certificate shall be invalid, illegal, or unenforceable,
the validity, legality, and enforceability of the remaining provisions shall not in any way be
Ordinance No. 2931
Page 11 of 38
affected or impaired thereby. The terms and provisions of this Certificate and the Ordinance
shall be construed in accordance with and shall be governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the City Council of the City has caused this Certificate to be
duly executed under the official seal of the City as of the Certificate Date.
CITY OF NORTH RICHLAND HILLS, TEXAS
Mayor
COUNTERSIGNED:
City Secretary
(SEAL)
(c) Form of Reqistration Certificate of Comptroller of Public Accounts to appear on
Initial Certificate(s) only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER )
)
OF PUBLIC ACCOUNTS )
)
THE STATE OF TEXAS )
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 duly registered by the Comptroller
of Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
(SEAL)
Ordinance No. 2931
Page 12 of 38
(d) Form of Certificate of Payinq AqenUReqistrar to appear on Definitive Certificates
only.
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Certificate has been duly issued and registered under the provisions of the
within-mentioned Ordinance; the certificate or certificates of the above entitled and designated
series originally delivered having been approved by the Attorney General of the State of Texas
and registered by the Comptroller of Public Accounts, as shown by the records of the Paying
AgenURegistrar.
The designated offices of the Paying AgenURegistrar located in Dallas, Texas, or such
office as may be designated for such purpose by the Paying AgenURegistrar or any successor
to its functions, is the "Designated PaymenUTransfer Office" for this Certificate.
THE BANK OF NEW YORK TRUST COMPANY,
N.A., Dallas, Texas,
as Paying AgenURegistrar
Registration Date:
By:
Authorized Signature
(e) Form of Assiqnment.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto (Print
or typewrite name, address and zip code of transferee):
(Social Security or other identifying number ) the within
Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Certificate on the books kept for registration thereof, with full
power of substitution in the premises.
DATED:
Signature guaranteed:
NOTICE: The signature on this
assignment must correspond with the
name of the registered owner as it
appears on the face of the within
Certificate in every particular.
(f) The Initial Certificate(s) shall be in the form set forth in Daraqraph (b) of this
Section, except that the form of a sinqle fully reqistered Initial Certificate shall be modified as
follows:
Ordinance No. 2931
Page 13 of 38
REGISTERED
NO. T-1
REGISTERED
$
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF NORTH RICHLAND HILLS, TEXAS,
TAX AND WATERWORKS AND SEWER SYSTEM
(LIMITED PLEDGE) REVENUE
CERTIFICATE OF OBLIGATION,
SERIES 2007
Certificate Date: April 15, 2007
Registered Owner:
Principal Amount:
DOLLARS
The City of North Richland Hills (hereinafter referred to as the "City"), a body corporate
and municipal corporation in the County of Tarrant, State of Texas, for value received,
acknowledges itself indebted to and hereby promises to pay to the Registered Owner named
above, or the registered assigns thereof, the Principal Amount hereinabove stated on
February 15 in each of the years and in principal installments in accordance with the following
schedule:
YEAR
PRINCIPAL
INSTALLMENTS
INTEREST
RATE
(Information to be inserted from schedule in Section 2 hereof).
(or so much thereof as shall not have been redeemed prior to maturity) and to pay interest on
the unpaid principal amounts hereof from the interest payment date next preceding the
"Registration Date" of this Certificate appearing below at the per annum rate(s) of interest
specified above computed on the basis of a 360-day year of twelve 30-day months; such
interest being payable on February 15 and August 15 in each year, commencing February 15,
2008, until maturity or prior redemption. Principal installments of this Certificate are payable at
its Stated Maturity or on a redemption date to the registered owner hereof by The Bank of New
York Trust Company, N.A., Dallas, Texas (the "Paying AgenURegistrar"), upon presentation and
surrender, at its designated offices in Dallas, Texas (the "Designated PaymenUTransfer Office").
Interest is payable to the registered owner of this Certificate whose name appears on the
"Security Register" maintained by the Paying AgenURegistrar at the close of business on the
"Record Date", which is the last business day of the month next preceding each interest
payment date hereof and interest shall be paid by the Paying AgenURegistrar by check sent
United States Mail, first class postage prepaid, to the address of the registered owner recorded
in the Security Register or by such other method, acceptable to the Paying Agent/ Registrar,
requested by, and at the risk and expense of, the registered owner. If the date for the payment
of the principal of or interest on the Certificates shall be a Saturday, Sunday, a legal holiday, or
a day when banking institutions in the city where the Designated PaymenUTransfer Office of the
Paying AgenURegistrar is located are authorized by law or executive order to close, then the
date for such payment shall be the next succeeding day which is not such a Saturday, Sunday,
legal holiday, or day when banking institutions are authorized to close; and payment on such
Ordinance No. 2931
Page 14 of 38
date shall have the same force and effect as if made on the original date payment was due. All
payments of principal of, premium, if any, and interest on this Certificate shall be without
exchange or collection charges to the owner hereof and in any coin or currency of the United
States of America which at the time of payment is legal tender for the payment of public and
private debts.
SECTION 10: Definitions. For purposes of this Ordinance and for clarity with respect to
the issuance of the Certificates herein authorized, and the levy of taxes and appropriation of Net
Revenues therefor, the following words or terms, whenever the same appears herein without
qualifying language, are defined to mean as follows:
(a) The term "Certificates" shall mean the $1,285,000 "City of North Richland
Hills, Texas. Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of
Obligation, Series 2007" authorized by this Ordinance.
(b) The term "Certificate Fund" shall mean the special Fund created and
established under the provisions of Section 11 of this Ordinance.
(c) The term "Collection Date" shall mean, when reference is being made to
the levy and collection of annual ad valorem taxes, the date the annual ad valorem taxes levied
each year by the City become delinquent.
(d) The term "Fiscal Year" shall mean the twelve month financial accounting
period for the System ending September 30th of each year; provided, however, the City, by
ordinance, may change the Fiscal Year to another period of not less than twelve calendar
months.
(e) The term "Government Securities" shall mean (i) direct noncallable
obligations of the United States of America, including obligations the principal of and interest on
which are unconditionally guaranteed by the United States of America, (ii) noncallable
obligations of an agency or instrumentality of the United States, including obligations
unconditionally guaranteed or insured by the agency or instrumentality and, on the date of their
acquisition or purchase by the City, are rated as to investment quality by a nationally recognized
investment rating firm not less than AAA or its equivalent and (iii) noncallable obligations of a
state or an agency or a county, municipality, or other political subdivision of a state that have
been refunded and that, on the date of their acquisition or purchase by the City, are rated as to
investment quality by a nationally recognized investment rating firm not less than AAA or its
equivalent.
(f) The term "Gross Revenues" shall mean all income and revenues of every
nature derived or received from the operation and ownership (excluding refundable meter
deposits, restricted gifts and grants in aid of construction, impact fees charged developers and
special assessments against landowners) of the System, including earnings and income derived
from the investment or deposit of moneys in any special funds or accounts created and
established for the payment and security of the Prior Lien Obligations and other obligations
payable solely from and secured only by a lien on and pledge of the Net Revenues.
(g) The term "Net Revenues" shall mean Gross Revenues of the System, with
respect to any period, after deducting the System's Operating and Maintenance Expenses
during such period.
Ordinance No. 2931
Page 15 of 38
(h) The term "Operating and Maintenance Expenses" shall mean all current
expenses of operating and maintaining the System, including all salaries, labor, materials,
repairs and extensions necessary to render efficient service; provided, however, that only such
repairs and extensions, as in the judgment of the City Council, reasonably and fairly exercised,
are necessary to maintain the operations and render adequate service to the City and the
inhabitants thereof, or such as might be necessary to meet some physical accident or condition
which would otherwise impair obligations payable from Net Revenues shall be deducted in
determining "Net Revenues". Depreciation charges shall not be considered Operating and
Maintenance Expenses. Operating and Maintenance Expenses shall include payments under
contracts for the purchase of water supply, treatment of sewage or other materials, goods or
services for the System to the extent authorized by law and the provisions of such contract.
(i) The term "Outstanding" when used in this Ordinance with respect to
Certificates means, as of the date of determination, all Certificates theretofore issued and
delivered under this Ordinance, except:
(1) those Certificates cancelled by the Paying AgenURegistrar or delivered to
the Paying AgenURegistrar for cancellation;
(2) those Certificates for which payment has been duly provided by the City in
accordance with the provisions of Section 20 hereof; and
(3) those Certificates that have been mutilated, destroyed, lost or stolen and
replacement Certificates have been registered and delivered in lieu thereof as provided
in Section 19 hereof.
U) The term "Previously Issued Certificates" shall mean the outstanding (i)
"City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge)
Revenue Certificates of Obligation, Series 1997", dated April 15, 1997, originally issued in the
principal amount of $2,755,000; (ii) "City of North Richland Hills, Texas, Tax and Waterworks
and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1998", dated
May 1, 1998, originally issued in the principal amount of $8,180,000; (iii) "City of North Richland
Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of
Obligation, Series 1999", dated April 15, 1999, originally issued in the principal amount of
$3,560,000; (iv) "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System
(Limited Pledge) Revenue Certificates of Obligation, Series 2000", dated May 1, 2000, originally
issued in the principal amount of $2,315,000; and (v) "City of North Richland Hills, Texas, Tax
and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series
2006", dated April 15, 2006, originally issued in the principal amount of $11 ,310,000.
(k) The term "Prior Lien Obligations" shall mean all revenue bonds or other
obligations, now outstanding and hereafter issued, payable from and secured, in whole or in
part, by a lien on and pledge of the Net Revenues of the System that is superior to the lien on
and pledge of the Net Revenues of the System securing the Certificates, the Previously Issued
Certificates, the Subordinate Lien Obligations and any obligations having a lien on and pledge
of the Net Revenues of the System that is on an parity with the lien on and pledge of the Net
Revenues of the System securing any of the Certificates, the Previously Issued Certificates, and
the Subordinate Lien Obligations.
Ordinance No. 2931
Page 16 of 38
(I) The term "Subordinate Lien Obligations" shall mean all revenue bonds or
other obligations now outstanding or hereafter issued payable from and secured, in whole or in
part, by a lien on and pledge of the Net Revenues of the System that is inferior to the lien on
and pledge of the Net Revenues of the System securing the Prior Lien Obligations, the
Certificates, the Previously Issued Certificates and any obligation having a lien on and pledge of
the Net Revenues of the System that is on a parity with the lien on and pledge of the Net
Revenues of the System securing any of the Prior Lien Obligations, the Certificates and the
Previously Issued Certificates, including, but not limited to, the outstanding "City of North
Richland Hills, Texas, Tax and Waterworks and Sewer System Surplus Revenue Certificates of
Obligation, Series 2001", dated April 15, 2001, originally issued in the principal amount of
$3,255,000, "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System
Surplus Revenue Certificates of Obligation, Series 2002", dated April 15, 2002, originally issued
in the principal amount of $6,745,000, "City of North Richland Hills, Texas, Tax and Waterworks
and Sewer System Surplus Revenue Certificates of Obligation, Series 2003", dated April 15,
2003, originally issued in the principal amount of $3,700,000, and "City of North Richland Hills,
Texas, Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation,
Series 2004", dated April 15, 2004, originally issued in the principal amount of $685,000.
(m) The term "System" shall mean all properties, facilities and plants currently
owned, operated and maintained by the City for the supply, treatment and transmission of
treated potable water and the collection, treatment and disposal of water-carried wastes,
together with all future extensions, improvements, replacements and additions thereto;
provided, however, that notwithstanding the foregoing, and to the extent now or hereafter
authorized or permitted by law, -the term "System" shall not mean to include facilities of any kind
which are declared not to be a part of the System and which are acquired or constructed by or
on behalf of the City with the proceeds from the issuance of "Special Facilities Bonds", which
are hereby defined as being special revenue obligations of the City which are not Prior Lien
Obligations but which are payable from and secured by other liens on and pledges of any
revenues, sources or payments, not pledged to the payment of the Prior Lien Obligations
including, but not limited to, special contract revenues or payments received from any other
legal entity in connection with such facilities.
SECTION 11: Certificate Fund. For the purpose of paying the interest on and to provide
a sinking fund for the payment, redemption and retirement of the Certificates, there shall be and
is hereby created a special account or fund on the books and records of the City known as the
"SPECIAL SERIES 2007 TAX AND REVENUE CERTIFICATE OF OBLIGATION FUND", and all
moneys deposited to the credit of such Fund shall be shall be kept and maintained in a special
banking account at a depository bank of the City. The Mayor, Mayor Pro Tem, Director of
Finance, City Manager and City Secretary of the City, individually or jointly, are hereby
authorized and directed to make withdrawals from said Fund sufficient to pay the principal of
and interest on the Certificates as the same become due and payable, and, shall cause to be
transferred to the Paying AgenURegistrar from moneys on deposit in the Certificate Fund an
amount sufficient to pay the amount of principal and/or interest falling due on the Certificates,
such transfer of funds to the Paying AgenURegistrar to be made in such manner as will cause
immediately available funds to be deposited with the Paying AgenURegistrar on or before the
last business day next preceding each interest and principal payment date for the Certificates.
Pending the transfer of funds to the Paying AgenURegistrar, money in the Certificate
Fund may, at the option of the City, be invested in obligations identified in, and in accordance
with the provisions of the "Public Funds Investment Act" (V.T.C.A., Government Code, Chapter
2256, as amended) relating to the investment of "bond proceeds"; provided that all such
Ordinance No. 2931
Page 17 of 38
investments shall be made in such a manner that the money required to be expended from said
Fund will be available at the proper time or times. All interest and income derived from deposits
and investments in said Certificate Fund shall be credited to, and any losses debited to, the said
Certificate Fund. All such investments shall be sold promptly when necessary to prevent any
default in connection with the Certificates.
SECTION 12: Tax Levv. To provide for the payment of the "Debt Service
Requirements" on the Certificates being (i) the interest on said Certificates and (ii) a sinking
fund for their redemption at maturity or a sinking fund of 2% (whichever amount shall be the
greater), there shall be and there is hereby levied a sufficient tax, within the limitations
prescribed by law, on each one hundred dollars' valuation of taxable property in said City,
adequate to pay such Debt Service Requirements while the Certificates remain Outstanding,
full allowance being made for delinquencies and costs of collection; and said tax shall be
assessed and collected each year and applied to the payment of the Debt Service
Requirements, and the same shall not be diverted to any other purpose. The taxes so levied
and collected shall be paid into the Certificate Fund. The City Council hereby declares its
purpose and intent to provide and levy a tax legally and fully sufficient to pay the said Debt
Service Requirements, it having been determined that the existing and available taxing authority
of the City for such purpose is adequate to permit a legally sufficient tax in consideration of all
other outstanding indebtedness.
The amount of taxes to be provided annually for the payment of the principal of and
interest on the Certificates shall be determined and accomplished in the following manner:
(a) Prior to the date the City Council establishes the annual tax rate and
passes an ordinance levying ad valorem taxes each year, the Council shall
determine:
(1) The amount on deposit in the Certificate Fund after (a) deducting
therefrom the total amount of Debt Service Requirements to become due on Certificates
prior to the Collection Date for the ad valorem taxes to be levied and (b) adding thereto
the amount of the Net Revenues of the System appropriated and allocated to pay such
Debt Service Requirements prior to the Collection Date for the ad valorem taxes to be
levied.
(2) The amount of Net Revenues of the System, appropriated and to be set
aside for the payment of the Debt Service Requirements on the Certificates between the
Collection Date for the taxes then to be levied and the Collection Date for the taxes to be
levied during the next succeeding calendar year.
(3) The amount of Debt Service Requirements to become due and payable on
the Certificates between the Collection Date for the taxes then to be levied and the
Collection Date for the taxes to be levied during the next succeeding calendar year.
(b) The amount of taxes to be levied annually each year to pay the Debt
Service Requirements on the Certificates shall be the amount established in
paragraph (3) above less the sum total of the amounts established in
paragraphs (1) and (2), after taking into consideration delinquencies and costs of
collecting such annual taxes.
Ordinance No. 2931
Page 18 of 38
SECTION 13: Limited Pledqe of Net Revenues. The City hereby covenants and agrees
that, subject to the prior lien on and pledge of the Net Revenues of the System to the payment
and security of Prior Lien Obligations, the Net Revenues of the System in an aggregate amount
not to exceed $1,000 are hereby irrevocably pledged to the payment of the principal of and
interest on the Certificates, and the limited pledge of $1,000 of the Net Revenues of the System
herein made for the payment of the Certificates shall constitute a lien on the Net Revenues of
the System in accordance with the terms and provisions hereof and shall be on an parity in all
respects with the lien on the Net Revenues securing the payment of the Previously Issued
Certificates. Furthermore, such lien on and pledge of the Net Revenues securing the payment
of the Certificates shall constitute a lien on the Net Revenues of the System until such time as
the City shall pay all of such $1,000, after which time the pledge shall cease, all in accordance
with the terms and provisions hereof and be valid and binding without further action by the City
and without any filing or recording except for the filing of this Ordinance in the records of the
City.
SECTION 14: System Fund. The City covenants and agrees that all Gross Revenues
(excluding earnings from the investment of money held in any special funds or accounts created
for the payment and security of the Prior Lien Obligations) shall be deposited as collected into a
fund maintained at an official depository of the City and known on the books of the City as the
"Water and Sewer System Fund" (hereinafter called the "System Fund"). All moneys deposited
to the credit of the System Fund shall be allocated, dedicated and disbursed to the extent
required for the following purposes and in the order of priority shown, to wit:
First: To the payment of all necessary and reasonable Operating and
Maintenance Expenses of the System as defined herein or required by statute to
be a first charge on and claim against the Gross Revenues of the System.
Second: To the payment of all amounts required to be deposited in the special
Funds created and established for the payment, security and benefit of Prior Lien
Obligations in accordance with the terms and provisions of the ordinances
authorizing the issuance of Prior Lien Obligations.
Third: To the payment, equally and ratably, of the limited amounts pledged to
the payment of the Previously Issued Certificates and the Certificates.
Any Net Revenues remaining in the System Fund after satisfying the foregoing
payments, or making adequate and sufficient provision for the payment thereof, may be
appropriated and used for payment of the Subordinate Lien Obligations and then for any other
City purpose now or hereafter permitted by law.
SECTION 15: Security of Funds. All moneys on deposit in the Funds for which this
Ordinance makes provision (except any portion thereof as may be at any time properly
invested) shall be secured in the manner and to the fullest extent required by the laws of Texas
for the security of public funds, and moneys on deposit in such Funds shall be used only for the
purposes permitted by this Ordinance.
SECTION 16: Special Covenants. The City hereby further covenants as follows:
(a) It has the lawful power to pledge the Net Revenues of the System
to the payment of the Certificates in the manner herein contemplated and has
lawfully exercised such power under the Constitution and laws of the State of
Ordinance No. 2931
Page 19 of 38
Texas, including said power existing under V.T.C.A, Government Code, Sections
1502.056 and 1502.058 and V.T.C.A., Local Government Code, Sections
271.041, et seq.
(b) Other than for the payment of the Prior Lien Obligations, the
Previously Issued Certificates, the Certificates and the Subordinate Lien
Obligations, the Net Revenues of the System have not in any manner been
pledged to the payment of any debt or obligation of the City or of the System.
SECTION 17: Issuance of Prior Lien Obliqations. The City expressly reseryes the right
to hereafter issue Prior Lien Obligations, without limitation as to principal amount but subject to
any terms, conditions or restrictions applicable thereto under law or otherwise. Prior Lien
Obligations hereafter issued may be payable, in whole or in part, from the Net Revenues
(without impairment of the obligation of contract with the Holders of the Certificates) upon such
terms and conditions as the City Council may determine. Additionally, the City reserves the
right to issue (a) obligations payable, in whole or in part, from the Net Revenues of the System
and, to the extent provided, secured by a lien on and pledge of the Net Revenues of equal rank
and dignity with the lien and pledge securing the payment of the Certificates and the Previously
Issued Certificates and (b) Subordinate Lien Obligations.
SECTION 18: Application of Prior Lien ObliQations Covenants and Aqreements. It is the
intention of this governing body and accordingly hereby recognized and stipulated that the
provisions, agreements and covenants contained herein bearing upon the management and
operations of the System, and the administering and application of revenues derived from the
operation thereof, shall to the extent possible be harmonized with like provisions, agreements
and covenants contained in the ordinances authorizing the issuance of the Prior Lien
Obligations, and to the extent of any irreconcilable conflict between the provisions contained
herein and in the ordinances authorizing the issuance of the Prior Lien Obligations, the
provisions, agreements and covenants contained therein shall prevail to the extent of such
conflict and be applicable to this Ordinance but in all respects subject to the priority of rights and
benefits, if any, conferred thereby to the holders of the Prior Lien Obligations.
SECTION 19: Mutilated. Destroyed, Lost and Stolen Certificates. In case any Certificate
shall be mutilated, or destroyed, lost or stolen, the Paying AgenURegistrar may execute and
deliver a replacement Certificate of like form and tenor, and in the same denomination and
bearing a number not contemporaneously outstanding, in exchange and substitution for such
mutilated Certificate, or in lieu of and in substitution for such destroyed, lost or stolen Certificate,
only upon the approval of the City and after (i) the filing by the Holder thereof with the Paying
AgenURegistrar of evidence satisfactory to the Paying AgenURegistrar of the destruction, loss or
theft of such Certificate, and of the authenticity of the ownership thereof and (ii) the furnishing to
the Paying AgenURegistrar of indemnification in an amount satisfactory to hold the City and the
Paying AgenURegistrar harmless. All expenses and charges associated with such indemnity
and with the preparation, execution and delivery of a replacement Certificate shall be borne by
the Holder of the Certificate mutilated, or destroyed, lost or stolen.
Every replacement Certificate issued pursuant to this Section shall be a valid and
binding obligation, and shall be entitled to all the benefits of this Ordinance equally and ratably
with all other Outstanding Certificates; notwithstanding the enforceability of payment by anyone
of the destroyed, lost, or stolen Certificates. The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement
and payment of mutilated, destroyed, lost or stolen Certificates.
Ordinance No. 2931
Page 20 of 38
SECTION 20: Satisfaction of Obliqation of City. If the City shall payor cause to be paid,
or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on
the Certificates, at the times and in the manner stipulated in this Ordinance, then the pledge of
taxes levied under this Ordinance and the Net Revenues of the System and all covenants,
agreements, and other obligations of the City to the Holders shall thereupon cease, terminate,
and be discharged and satisfied.
Certificates or any principal amount(s) thereof shall be deemed to have been paid within
the meaning and with the effect expressed above in this Section when (i) money sufficient to
pay in full such Certificates or the principal amount(s) thereof at maturity or the redemption date
therefor, together with all interest due thereon, shall have been irrevocably deposited with and
held in trust by the Paying AgenURegistrar, or an authorized escrow agent, or (ii) Government
Securities shall have been irrevocably deposited in trust with the Paying AgenURegistrar, or an
authorized escrow agent, which Government Securities have been certified by an independent
accounting firm to mature as to principal and interest in such amounts and at such times as will
insure the availability, without reinvestment, of sufficient money, together with any moneys
deposited therewith, if any, to pay when due the principal of and interest on such Certificates, or
the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice of
redemption has been duly given or waived or if irrevocable arrangements therefor acceptable to
the Paying AgenURegistrar have been made) the redemption date thereof. The City covenants
that no deposit of moneys or Government Securities will be made under this Section and no use
made of any such deposit which would cause the Certificates to be treated as "arbitrage bonds"
within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or
regulations adopted pursuant thereto.
Any moneys so deposited with the Paying AgenURegistrar, or an authorized escrow
agent, and all income from Government Securities held in trust by the Paying AgenURegistrar,
or an authorized escrow agent, pursuant to this Section which is not required for the payment of
the Certificates, or any principal amount(s) thereof, or interest thereon with respect to which
such moneys have been so deposited shall be remitted to the City or deposited as directed by
the City. Furthermore, any money held by the Paying AgenURegistrar for the payment of the
principal of and interest on the Certificates and remaining unclaimed for a period of three (3)
years after the Stated Maturity, or applicable redemption date, of the Certificates such moneys
were deposited and are held in trust to pay shall upon the request of the City be remitted to the
City against a written receipt therefore. Notwithstanding the above and foregoing, any
remittance of funds from the Paying AgenURegistrar to the City shall be subject to any
applicable unclaimed property laws of the State of Texas.
SECTION 21: Ordinance a Contract - Amendments. This Ordinance shall constitute a
contract with the Holders from time to time, be binding on the City, and shall not be amended or
repealed by the City so long as any Certificate remains Outstanding except as permitted in this
Section and in Section 37 hereof. The City may, without the consent of or notice to any
Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental
to the interests of the Holders, including the curing of any ambiguity, inconsistency, or formal
defect or omission herein. In addition, the City may, with the consent of Holders holding a
majority in aggregate principal amount of the Certificates then Outstanding, amend, add to, or
rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders
of Outstanding Certificates, no such amendment, addition or rescission shall (1) extend the time
or times of payment of the principal of, premium, if any, and interest on the Certificates, reduce
the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other
way modify the terms of payment of the principal of, premium, if any, or interest on the
Ordinance No. 2931
Page 21 of 38
Certificates, (2) give any preference to any Certificate over any other Certificate, or (3) reduce
the aggregate principal amount of Certificates required to be held by Holders for consent to any
such amendment, addition, or rescission.
SECTION 22: Covenants to Maintain Tax-Exempt Status. (a) Definitions. When used
in this Section, the following terms have the following meanings:
"Closing Date" means the date on which the Certificates are first authenticated and
delivered to the initial purchasers against payment therefore.
"Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any,
effective on or before the Closing Date.
"Computation Date" has the meaning set forth in Section 1.148-1 (b) of the Regulations.
"Gross Proceeds" means any proceeds as defined in Section 1.148-1 (b) of the
Regulations, and any replacement proceeds as defined in Section 1.148-1 (c) of the
Regulations, of the Certificates.
"Investment" has the meaning set forth in Section 1.148-1 (b) of the Regulations.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Certificates are invested and which is not acquired
to carry out the governmental purposes of the Certificates.
"Rebate Amount" has the meaning set forth in Section 1.148-1 (b) of the Regulations.
"Regulations" means any proposed, temporary, or final Income Tax Regulations issued
pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue
Code of 1954, which are applicable to the Certificates. Any reference to any specific Regulation
shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation
designed to supplement, amend or replace the specific Regulation referenced.
"Yield" of (1) any Investment has the meaning set forth in Section 1.148-5 of the
Regulations and (2) the Certificates has the meaning set forth in Section 1.148-4 of the
Regulations.
(b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed directly or indirectly with Gross
Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any
Certificate to become includable in the gross income, as defined in section 61 of the Code, of
the owner thereof for federal income tax purposes. Without limiting the generality of the
foregoing, unless and until the City receives a written opinion of counsel nationally recognized in
the field of municipal bond law to the effect that failure to comply with such covenant will not
adversely affect the exemption from federal income tax of the interest on any Certificate, the
City shall comply with each of the specific covenants in this Section.
(c) No Private Use or Private Payments. Except as permitted by section 141 of the
Code and the Regulations and rulings thereunder, the City shall at all times prior to the last
Stated Maturity of Certificates:
Ordinance No. 2931
Page 22 of 38
(1) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or indirectly
with Gross Proceeds of the Certificates, and not use or permit the use of such Gross
Proceeds (including all contractual arrangements with terms different than those
applicable to the general public) or any property acquired, constructed or improved with
such Gross Proceeds in any activity carried on by any person or entity (including the
United States or any agency, department and instrumentality thereof) other than a state
or local government, unless such use is solely as a member of the general public; and
(2) not directly or indirectly impose or accept any charge or other payment by
any person or entity who is treated as using Gross Proceeds of the Certificates or any
property the acquisition, construction or improvement of which is to be financed or
refinanced directly or indirectly with such Gross Proceeds, other than taxes of general
application within the City or interest earned on investments acquired with such Gross
Proceeds pending application for their intended purposes.
(d) No Private Loan. Except to the extent permitted by section 141 of the Code and
the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the
Certificates to make or finance loans to any person or entity other than a state or local
government. For purposes of the foregoing covenant, such Gross Proceeds are considered to
be "loaned" to a person or entity if: (1) property acquired, constructed or improved with such
Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt
for federal income tax purposes; (2) capacity in or service from such property is committed to
such person or entity under a take-or-pay, output or similar contract or arrangement; or (3)
indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any property
acquired, constructed or improved with such Gross Proceeds are otherwise transferred in a
transaction which is the economic equivalent of a loan.
(e) Not to Invest at Hiqher Yield. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the
final Stated Maturity of the Certificates directly or indirectly invest Gross Proceeds in any
Investment (or use Gross Proceeds to replace money so invested), if as a result of such
investment the Yield from the Closing Date of all Investments acquired with Gross Proceeds (or
with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of
the Certificates.
(f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of
the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any
action which would cause the Certificates to be federally guaranteed within the meaning of
section 149(b) of the Code and the Regulations and rulings thereunder.
(g) Information Report. The City shall timely file the information required by section
149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and
in such place as the Secretary may prescribe.
(h) Rebate of Arbitraqe Profits. Except to the extent otherwise provided in section
148(f) of the Code and the Regulations and rulings thereunder:
(1) The City shall account for all Gross Proceeds (including all
receipts, expenditures and investments thereof) on its books of account
separately and apart from all other funds (and receipts, expenditures and
Ordinance No. 2931
Page 23 of 38
investments thereof) and shall retain all records of accounting for at least six
years after the day on which the last Outstanding Certificate is discharged.
However, to the extent permitted by law, the City may commingle Gross
Proceeds of the Certificates with other money of the City, provided that the City
separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
(2) Not less frequently than each Computation Date, the City shall
calculate the Rebate Amount in accordance with rules set forth in section 148(f)
of the Code and the Regulations and rulings thereunder. The City shall maintain
such calculations with its official transcript of proceedings relating to the issuance
of the Certificates until six years after the final Computation Date.
(3) As additional consideration for the purchase of the Certificates by
the Purchasers and the loan of the money represented thereby and in order to
induce such purchase by measures designed to insure the excludability of the
interest thereon from the gross income of the owners thereof for federal income
tax purposes, the City shall pay to the United States out of the Interest and
Sinking Fund or its general fund, as permitted by applicable Texas statute,
regulation or opinion of the Attorney General of the State of Texas, the amount
that when added to the future value of previous rebate payments made for the
Certificates equals (i) in the case of a Final Computation Date as defined in
Section 1.148-3(e)(2) of the Regulations, one hundred percent (100%) of the
Rebate Amount on such date; and (ii) in the case of any other Computation Date,
ninety percent (90%) of the Rebate Amount on such date. In all cases, the
rebate payments shall be made at the times, in the installments, to the place and
in the manner as is or may be required by section 148(f) of the Code and the
Regulations and rulings thereunder, and shall be accompanied by Form 8038- T
or such other forms and information as is or may be required by Section 148(f) of
the Code and the Regulations and rulings thereunder.
(4) The City shall exercise reasonable diligence to assure that no
errors are made in the calculations and payments required by paragraphs (2) and
(3), and if an error is made, to discover and promptly correct such error within a
reasonable amount of time thereafter (and in all events within one hundred eighty
(180) days after discovery of the error), including payment to the United States of
any additional Rebate Amount owed to it, interest thereon, and any penalty
imposed under Section 1.148-3(h) of the Regulations.
(i) Not to Divert Arbitraqe Profits. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the
earlier of the Stated Maturity or final payment of the Certificates, enter into any transaction that
reduces the amount required to be paid to the United States pursuant to Subsection (h) of this
Section because such transaction results in a smaller profit or a larger loss than would have
resulted if the transaction had been at arm's length and had the Yield of the Certificates not
been relevant to either party.
Ordinance No. 2931
Page 24 of 38
(j) Elections. The City hereby directs and authorizes the Mayor, City Manager, or
Director of Finance, individually or jointly, to make elections permitted or required pursuant to
the provisions of the Code or the Regulations, as they deem necessary or appropriate in
connection with the Certificates, in the Certificate as to Tax Exemption or similar or other
appropriate certificate, form or document.
(k) Qualified Tax Exempt Obliqations. In accordance with the provisions of
paragraph (3) of subsection (b) of Section 265 of the Code, the City hereby designates the
Certificates to be "qualified tax exempt obligations" in that the Certificates are not "private
activity bonds" as defined in the Code and the reasonably anticipated amount of "qualified tax
exempt obligations" to be issued by the City (including all subordinate entities of the City) for the
calendar year 2007 will not exceed $10,000,000.
SECTION 23: Sale of Certificates - Official Statement Approval. The Certificates
authorized by this Ordinance are hereby sold by the City to Morgan Keegan & Company, Inc.
(herein referred to as the "Underwriter") in accordance with the Purchase Agreement, dated
April 23, 2007, attached hereto as Exhibit B and incorporated herein by reference as a part of
this Ordinance for all purposes. The Mayor is hereby authorized and directed to execute said
Purchase Agreement for and on behalf of the City and as the act and deed of this City Council,
and in regard to the approval and execution of the Purchase Agreement, the City Council
hereby finds, determines and declares that the representations, warranties and covenants of the
City contained in the Purchase Agreement are true and correct in all material respects and shall
be honored and performed by the City.
Furthermore, the use of the Preliminary Official Statement dated April 16, 2007 by the
Underwriter in connection with the public offering and sale of the Certificates is hereby ratified,
confirmed and approved in all respects. The final Official Statement, which reflects the terms of
sale (together with such changes approved by the Mayor, Mayor Pro Tem, City Secretary, City
Manager and Director of Finance, anyone or more of said officials), shall be and is hereby in all
respects approved and the Underwriter are hereby authorized to use and distribute said final
Official Statement, dated April 23, 2007, in the reoffering, sale and delivery of the Certificates to
the public. The Mayor and City Secretary are further authorized and directed to manually
execute and deliver for and on behalf of the City copies of said Official Statement in final form
as may be required by the Underwriter, and such final Official Statement in the form and content
manually executed by said officials shall be deemed to be approved by the City Council and
constitute the Official Statement authorized for distribution and use by the Underwriter.
SECTION 24: Proceeds of Sale. The proceeds of sale of the Certificates (less accrued
interest received from the Purchasers and amounts to pay costs of issuance) shall be deposited
in a construction fund maintained at a depository bank of the City. Pending expenditure for
authorized projects and purposes, such proceeds of sale may be invested in authorized
investments in accordance with the provisions of V.T.C.A., Government Code, Chapter 2256, as
amended, including guaranteed investment contracts permitted by V.T.C.A., Section 2256.015
et seq., and the City's investment policies and guidelines, and any investment earnings realized
may be expended for such authorized projects and purposes or deposited in the Certificate
Fund as shall be determined by the City Council. Accrued interest received from the
Purchasers as well as any surplus proceeds of sale of the Certificates, including investment
earnings on the construction fund, remaining after completion of all authorized projects or
purposes shall be deposited to the credit of the Certificate Fund.
Ordinance No. 2931
Page 25 of 38
SECTION 25: Control and Custody of Certificates. The Mayor of the City shall be and is
hereby authorized to take and have charge of all necessary orders and records pending the sale
of the Certificates, the investigation by the Attorney General of the State of Texas, including the
printing and supply of definitive Certificates, and shall take and have charge and control of the
Initial Certificate(s) pending the approval thereof by the Attorney General, the registration
thereof by the Comptroller of Public Accounts and the delivery thereof to the Purchasers.
Furthermore, the Mayor, Mayor Pro Tem, City Manager, Director of Finance and City
Secretary, anyone or more of said officials, are hereby authorized and directed to furnish and
execute such documents and certifications relating to the City and the issuance of the
Certificates, including a certification as to facts, estimates, circumstances and reasonable
expectations pertaining to the use and expenditure and investment of the proceeds of the
Certificates as may be necessary for the approval of the Attorney General and their registration
by the Comptroller of Public Accounts. In addition, such officials, together with the City's
financial advisor, bond counsel and the Paying AgenURegistrar, are authorized and directed to
make the necessary arrangements for the delivery of the Initial Certificate(s) to the Purchasers
and the initial exchange thereof for definitive Certificates.
SECTION 26: Notices to Holders - Waiver. Wherever this Ordinance provides for notice
to Holders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to
the address of each Holder appearing in the Security Register at the close of business on the
business day next preceding the mailing of such notice.
In any case where notice to Holders is given by mail, neither the failure to mail such
notice to any particular Holders, nor any defect in any notice so mailed, shall affect the
sufficiency of such notice with respect to all other Certificates. Where this Ordinance provides
for notice in any manner, such notice may be waived in writing by the Holder entitled to receive
such notice, either before or after the event with respect to which such notice is given, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Paying AgenURegistrar, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 27: Cancellation. All Certificates surrendered for payment, redemption,
transfer, exchange, or replacement, if surrendered to the Paying AgenURegistrar, shall be
promptly cancelled by it and, if surrendered to the City, shall be delivered to the Paying
AgenURegistrar and, if not already cancelled, shall be promptly cancelled by the Paying
AgenURegistrar. The City may at any time deliver to the Paying AgenURegistrar for cancellation
any Certificates previously certified or registered and delivered which the City may have
acquired in any manner whatsoever, and all Certificates so delivered shall be promptly
cancelled by the Paying AgenURegistrar. All cancelled Certificates held by the Paying
AgenURegistrar shall be returned to the City.
SECTION 28: Bond Counsel's Opinion. The Purchasers' obligation to accept delivery of
the Certificates is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P.,
Dallas, Texas, approving the Certificates as to their validity, said opinion to be dated and
delivered as of the date of delivery and payment for the Certificates. An executed counterpart of
said opinion shall accompany the global certificates deposited with The Depository Trust
Company or a reproduction thereof shall be printed on the definitive Certificates in the event the
book entry only system shall be discontinued.
Ordinance No. 2931
Page 26 of 38
SECTION 29: CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Certificates. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Certificates shall be of no significance or effect as regards the legality
thereof and neither the City nor attorneys approving the Certificates as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Certificates.
SECTION 30: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied,
is intended or shall be construed to confer upon any person other than the City, the Paying
AgenURegistrar and the Holders, any right, remedy, or claim, legal or equitable, under or by
reason of this Ordinance or any provision hereof, and this Ordinance and all its provisions is
intended to be and shall be for the sole and exclusive benefit of the City, the Paying
AgenURegistrar and the Holders.
SECTION 31: Inconsistent Provisions. All ordinances, orders or resolutions, or parts
thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby
repealed to the extent of such conflict, and the provisions of this Ordinance shall be and remain
controlling as to the matters contained herein.
SECTION 32: Governinq Law. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
SECTION 33: Effect of Headinqs. The Section headings herein are for convenience of
reference only and shall not affect the construction hereof.
SECTION 34: Construction of Terms. If appropriate in the context of this Ordinance,
words of the singular number shall be considered to include the plural, words of the plural
number shall be considered to include the singular, and words of the masculine, feminine or
neuter gender shall be considered to include the other genders.
SECTION 35: 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 the City Council
hereby declares that this Ordinance would have been enacted without such invalid provision.
SECTION 36: Continuinq Disclosure Undertakinq. (a) Definitions. As used in this
Section, the following terms have the meanings ascribed to such terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each person whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of the Rule
from time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department,
officer, or agency thereof as, and determined by the SEC or its staff to be, a state information
depository within the meaning of the Rule from time to time.
Ordinance No. 2931
Page 27 of 38
(a) Annual Reports. The City shall provide annually to each NRMSIR and any
SID, within six months after the end of each fiscal year (beginning with the fiscal year ending
September 30, 2007) financial information and operating data with respect to the City of the
general type included in the final Official Statement approved by Section 24 of this Ordinance,
being the information described in Exhibit C hereto. Financial statements to be provided shall
be (1) prepared in accordance with the accounting principles described in Exhibit C hereto and
(2) audited, if the City commissions an audit of such statements and the audit is completed
within the period during which they must be provided. If audited financial statements are not
available at the time the financial information and operating data must be provided, then the City
shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and
any SID with the financial information and operating data and will file the annual audit report
when and if the same becomes available.
If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change
(and of the date of the new fiscal year end) prior to the next date by which the City 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 each NRMSIR and any SID or filed with the SEC.
(b) Material Event Notices. The City shall notify any SID and either each
NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the
Certificates, if such event is material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial
difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the
Certificates;
7. Modifications to rights of holders of the Certificates;
8. Certificate calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the
Certificates; and
11. Rating changes.
Ordinance No. 2931
Page 28 of 38
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner,
of any failure by the City to provide financial information or operating data in accordance with
subsection (b) of this Section by the time required by such Section.
(c) Limitations. Disclaimers and Amendments. The City shall be obligated to
observe and perform the covenants specified in this Section while, but only while, the City
remains an "obligated person" with respect to the Certificates within the meaning of the Rule,
except that the City in any event will give the notice required by subsection (c) hereof of any
Certificate calls and defeasance that cause the City to be no longer such an "obligated person."
The provisions of this Section are for the sole benefit of the Holders and beneficial
owners of the Certificates, and nothing in this Section, express or implied, shall give any benefit
or any legal or equitable right, remedy, or claim hereunder to any other person. The City
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 City'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 City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Certificates at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR
BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE
CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this 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 City under federal and state securities laws.
Notwithstanding anything herein to the contrary, the provisions of this Section may be
amended by the City from time to time to adapt to changed circumstances resulting from a
change in legal requirements, a change in law, or a change in the identity, nature, status, or
type of operations of the City, but only if (1) the provisions of this Section, as so amended,
would have permitted underwriters to purchase or sell Certificates in the primary offering of the
Certificates in compliance with the Rule, taking into account any amendments or interpretations
of the Rule to the date of such amendment, as well as such changed circumstances, and (2)
either (a) the Holders of a majority in aggregate principal amount (or any greater amount
required by any other provision of this Ordinance that authorizes such an amendment) of the
Outstanding Certificates consent to such amendment or (b) a Person that is unaffiliated with the
City (such as nationally recognized bond counsel) determines that such amendment will not
materially impair the interests of the Holders and beneficial owners of the Certificates. The
provisions of this Section may also be amended from time to time or repealed by the City if the
SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction
determines that such provisions are invalid, but only if and to the extent that reservation of the
Ordinance No. 2931
Page 29 of 38
City's right to do so would not prevent underwriters of the initial public offering of the Certificates
from lawfully purchasing or selling Certificates in such offering. If the City so amends the
provisions of this Section, it shall include with any amended financial information or operating
data next provided in accordance with subsection (b) an explanation, in narrative form, of the
reasons for the amendment and of the impact of any change in the type of financial information
or operating data so provided.
SECTION 37: Insurance. The Certificates have been sold with the principal of and
interest thereon being insured by CIFG Assurance North America, Inc. (nCIFG NAn). In
accordance with the terms and conditions applicable to insurance provided by CIFG, the City
covenants and agrees that, in the event the principal and interest due on the Certificates shall
be paid by CIFG NA pursuant to the policy referred to this Section, the assignment and pledge
of all funds and all covenants, agreements and other obligations of the City to the Holders shall
continue to exist and CIFG NA shall be subrogated to the rights of such Holders; and
furthermore, the City covenants and agrees that:
A. Notice and Other Information to be qiven to CIFG NA.
1. Any notice that is required to be given to the holders of the Certificates
(collectively, the "Certificateholders"), nationally recognized municipal securities information
repositories or state information depositories pursuant to Rule 15c2-12(b )(5) adopted by the
Securities and Exchange Commission or to Paying AgenURegistrar pursuant to this Ordinance
shall also be provided to CIFG NA. All notices required to be given to CIFG NA shall be in
writing and shall be sent by registered or certified mail addressed to CIFG Assurance North
America, Inc., 825 Third Avenue, 6th Floor, New York, New York 10022, Attn: General Counsel;
all electronic mail sent to CIFG NA shall be addressed both to surveillance@cifg.com and to
general.counsel@cifg.com.
2. Within one hundred eighty (180) days of the end of the City's fiscal year, a copy of
the audited financial statements of the City and copy of the annual budget of the City shall be
sent to CIFG Assurance North America, Inc., 825 Third Avenue, 6th Floor, New York, New York
10022, Attn: Surveillance.
3. CIFG NA shall have the right to receive such additional information as it may
reasonably request.
4. The City will permit CIFG NA to discuss the affairs, finances and accounts of the
City or any information CIFG NA may reasonably request regarding the security for the
Certificates with appropriate officers of the City, and will grant CIFG NA access to the facilities,
books and records of the City on any business day upon reasonable prior notice.
5. CIFG NA shall have the right, if CIFG NA has a reasonable basis to believe that
the financial position of the City has materially deteriorated or financial irregularities have
occurred since the date of the date of the most recently provided annual audit or quarterly
report, or that such audit or report fails to accurately set forth the financial position of the City, to
direct City to cause to be prepared a financial report at no expense to CIFG NA in form and
content acceptable to CIFG NA and the City shall comply with such direction within thirty (30)
days after written notice of the direction from CIFG NA; provided, however, that if compliance
cannot occur within such period, then such period will be extended with the prior consent of
CIFG NA so long as compliance is begun within such period and diligently pursued.
Ordinance No. 2931
Page 30 of 38
B. Defeasance. In the event that the principal and/or interest due on the Certificates
shall be paid by CIFG NA pursuant to the policy, the Certificates shall remain outstanding for all
purposes, not be defeased or otherwise satisfied and not be considered paid by the City, and
the levy of taxes and all covenants, agreements and other obligations of the City to the
registered owners shall continue to exist and shall run to the benefit of CIFG NA, and CIFG NA
shall be subrogated to the rights of such registered owners including, without limitation, any
rights that such owners may have in respect of securities law violations arising from the offer
and sale of the Certificates.
In connection with the refunding and defeasance of the Certificates, the City will provide
CIFG NA an opinion that refunding and defeasance will not adversely impact the exclusion from
gross income for federal income tax purposes of interest on the refunding bonds or the refunded
bonds.
Any escrow agreement used in connection with a defeasance shall provide that:
(a) Any substitution of securities shall require a CPA verification and
the prior written consent of CIFG NA.
(b) The City will not exercise any optional redemption of Certificates
secured by the escrow agreement or any other redemption other than mandatory
sinking fund redemptions unless (i) the right to make any such redemption has
been expressly reserved in the escrow agreement and such reservation has
been disclosed in detail in the official statement for the refunding bonds, and (ii)
as a condition of any such redemption there shall be provided to CIFG NA a CPA
verification as to the sufficiency of escrow receipts without reinvestment to meet
the escrow requirements remaining following such redemption.
(c) The City shall not amend the escrow agreement or enter into a forward purchase
agreement or other agreement with respect to rights in the escrow without the prior written
consent of CIFG NA.
C. Payinq AqenUReqistrar. With respect to the Paying AgenURegistrar, the
following provisions shall apply:
1. CIFG NA shall receive prior written notice of any name change of the Paying
AgenURegistrar for the Certificates or the resignation or removal of the Paying AgenURegistrar.
2. No removal, resignation or termination of the Paying AgenURegistrar shall take
effect until a successor, acceptable to CIFG NA, shall be appointed.
D. Amendments and Supplements. With respect to amendments or supplements to
this Ordinance which do not require the consent of the Certificateholders, CIFG NA must be
given notice of any such amendments or supplements. With respect to amendments or
supplements to this Ordinance which require the consent of the Certificateholders, CIFG NA's
prior written consent is required. Copies of any amendments or supplements to such
documents which are consented to by CIFG NA shall be sent to the rating agencies which have
assigned a rating to the Certificates. Notwithstanding any other provision of this Ordinance, in
determining whether the rights of Certificateholders will be adversely affected by any action
taken pursuant to the terms and provisions of any financing document, the Paying
AgenURegistrar shall consider the effect on the Certificateholders as if there were no policy.
Ordinance No. 2931
Page 31 of 38
E. CIFG NA As Third Party Beneficiary. To the extent that this Ordinance confers
upon or gives or grants to CIFG NA any right, remedy or claim under or by reason of this
Ordinance, CIFG NA is explicitly recognized as being a third party beneficiary hereunder and
may enforce any such right, remedy or claim conferred, given or granted hereunder.
F. Consent Riqhts of CIFG NA. The following consent rights apply:
1. Consent of CIFG NA. Any provision of this Ordinance expressly recognizing or
granting rights in or to CIFG NA may not be amended in any manner which affects the rights of
CIFG NA hereunder without the prior written consent of CIFG NA.
2. Consent of CIFG NA in Addition to Certificate holder Consent. Wherever this
Ordinance requires the consent of Certificateholders, CIFG NA's consent shall also be required.
3. Consent of CIFG NA in the Event of Insolvency. If the City is ever authorized to
do so and does so, to the extent permitted by law, any reorganization or liquidation plan with
respect to the City must be acceptable to CIFG NA. In the event of any reorganization or
liquidation, CIFG NA shall have the right to vote on behalf of all Certificateholders absent a
default by CIFG NA under the policy.
4. Consent of CIFG NA Upon Default. Anything in this Ordinance to the contrary
notwithstanding, upon the occurrence and continuance of an event of default as defined herein,
CIFG NA shall be entitled to control and direct the enforcement of all rights and remedies
granted to the Certificateholders or the Trustee for the benefit of the Certificateholders under
this Ordinance.
G. Payment Procedure Under the Policy. The following provisions are applicable to
payments under the policy:
1. In the event that on the second (2nd) business day prior to the payment date on
the Certificates, the Paying AgenURegistrar has not received sufficient moneys to pay all
principal of and interest on the Certificates due on the second (2nd) following business day, the
Paying AgenURegistrar shall immediately notify CIFG NA or its designee on the same business
day by telephone or electronic mail, confirmed in writing by registered or certified mail, of the
amount of the deficiency.
2. If any deficiency is made up in whole or in part prior to or on the payment date,
the Paying AgenURegistrar shall so notify CIFG NA or its designee.
3. In addition, if the Paying AgenURegistrar has notice that any Certificateholder
has been required to disgorge payments of principal or interest on the Certificates pursuant to a
final non-appealable order by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such Certificateholder within the meaning of any applicable bankruptcy
laws, then the Paying AgenURegistrar shall notify CIFG NA or its designee of such fact by
telephone or electronic mail, confirmed in writing by registered or certified mail.
4. The Paying AgenURegistrar shall irrevocably be designated, appointed, directed
and authorized to act as attorney-in-fact for holders of the Certificates as follows:
Ordinance No. 2931
Page 32 of 38
(a) If there is a deficiency in amounts required to pay interest on the
Certificates, the Paying AgenURegistrar shall (i) execute and deliver to CIFG NA,
in form satisfactory to CIFG NA, an instrument appointing CIFG NA as agent for
such holders in any legal proceeding related to the payment of and an
assignment to CIFG NA of the claims for interest on the Certificates, (ii) receive
as designee of the respective holders (and not as Paying Agent) in accordance
with the tenor of the policy payment from CIFG NA with respect to the claims for
interest so assigned, and (iii) disburse the same to such respective holders; and
(b) If there is a deficiency in amounts required to pay principal of the
Certificates, the Paying AgenURegistrar shall (i) execute and deliver to CIFG NA,
in form satisfactory to CIFG NA, an instrument appointing CIFG NA as agent for
such holder in any legal proceeding related to the payment of such principal and
an assignment to CIFG NA of the Certificate surrendered to CIFG NA (but such
assignment shall be delivered only if payment from CIFG NA is received), (ii)
receive as designee of the respective holders (and not as Paying Agent) in
accordance with the tenor of the policy payment therefor from CIFG NA, and (iii)
disburse the same to such holders.
5. Payments with respect to claims for interest on and principal of Certificates
disbursed by the Paying AgenURegistrar from proceeds of the policy shall not be considered to
discharge the obligation of the City with respect to such Certificates, and CIFG NA shall become
the owner of such unpaid Certificate and claims for the interest in accordance with the tenor of
the assignment made to it under the provisions of this subsection or otherwise.
6. Irrespective of whether any such assignment is executed and delivered, the City
and the Paying AgenURegistrar shall agree for the benefit of CIFG NA that:
(a) They recognize that to the extent CIFG NA makes payments directly
or indirectly (e.g., by paying through the Paying Agent), on account of principal of
or interest on the Certificates, CIFG NA will be subrogated to the rights of such
holders to receive the amount of such principal and interest from the City as
provided and solely from the sources stated in this Ordinance and the
Certificates; and
(b) They will accordingly pay to CIFG NA the amount of such principal
and interest as provided in this Ordinance and the Certificates, but only from the
sources and in the manner provided herein for the payment of principal of and
interest on the Certificates to holders, and will otherwise treat CIFG NA as the
owner of such rights to the amount of such principal and interest.
7. To the extent permitted by law and subject to annual appropriation by the City,
the City shall agree to payor reimburse CIFG NA any and all charges, fees, costs and
expenses which CIFG NA may reasonably payor incur, including, but not limited to, fees and
expenses of attorneys, accountants, consultants and auditors and reasonable costs of
investigations, in connection with (i) any accounts established to facilitate payments under the
policy, (ii) the administration, enforcement, defense or preseryation of any rights in respect of
the trust agreement or any other financing document including defending, monitoring or
participating in any litigation or proceeding (including any bankruptcy proceeding in respect of
the City or any affiliate thereof) relating to this agreement or any other financing document, any
party to this agreement or any other financing document or the transaction contemplated by this
Ordinance No. 2931
Page 33 of 38
Ordinance (the "Transaction"), (iii) the foreclosure against, sale or other disposition of any
collateral securing any obligations under this agreement or any other financing document, or the
pursuit of any remedies under the trust agreement or any other financing document, to the
extent such costs and expenses are not recovered from such foreclosure, sale or other
disposition, or (iv) any amendment, waiver or other action with respect to, or related to, this
agreement or any other financing document whether or not executed or completed; costs and
expenses shall include a reasonable allocation of compensation and overhead attributable to
the time of employees of CIFG NA spent in connection with the actions described in clauses (ii)
- (iv) above; and CIFG NA shall reserve the right to charge a reasonable fee as a condition to
executing any amendment, waiver or consent proposed in respect of this agreement or any
other financing document.
8. In addition to any and all rights of reimbursement, subrogation and any other
rights pursuant hereto or under law or in equity, to the extent permitted bylaw and subject to
annual appropriation by the City, the City shall agree to payor reimburse CIFG NA any and all
charges, fees, costs, claims, losses, liabilities (including penalties), judgments, demands,
damages, and expenses which CIFG NA or its officers, directors, shareholders, employees,
agents and each Person, if any, who controls CIFG NA within the meaning of either Section 15
of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 may
reasonably payor incur, including, but not limited to, fees and expenses of attorneys,
accountants, consultants and auditors and reasonable costs of investigations, of any nature in
connection with, in respect of or relating to the transactions contemplated by this agreement or
any other financing document by reason of:
(a) any omission or action (other than of or by CIFG NA) in
connection with the offering, issuance, sale, remarketing or delivery of the
Certificates;
(b) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or agent of the
City in connection with any transaction arising from or relating to this agreement
or any other financing document;
(c) the violation by the City of any law, rule or regulation, or any
judgment, order or decree applicable to it;
(d) the breach by the City of any representation, warranty or covenant
under this agreement or any other financing document or the occurrence, in
respect of the City, under this agreement or any other financing document of any
"event of default" or any event which, with the giving of notice or lapse of time or
both, would constitute any "event of default"; or
(e) any untrue statement or alleged untrue statement of a material
fact contained in any official statement or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such claims arise out of
or are based upon any untrue statement or omission in information included in an
official statement and furnished by CIFG NA in writing expressly for use therein.
Ordinance No. 2931
Page 34 of 38
9. CIFG NA shall be entitled to pay any amount payable under the policy in respect
of Regular Payments (as defined in the policy) on the Certificates, including any amount
payable upon its election on the Certificates on an accelerated basis, whether or not any notice
and Certificate shall have been Received (as defined in the policy) by CIFG NA as provided in
the policy.
SECTION 38: Public MeetinQ. It is officially found, determined, and declared that the
meeting at which this Ordinance is adopted was open to the public and public notice of the time,
place, and subject matter of the public business to be considered at such meeting, including this
Ordinance, was given, all as required by V.T.C.A., Government Code, Chapter 551, as
amended.
SECTION 39: Effective Date. This Ordinance shall be in force and effect from and after
its passage on the date shown below.
PASSED AND ADOPTED, this April 23, 2007.
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APPROVED AS TO FORM AND LEGALITY:
APPROVED AS TO CONTENT:
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, Director of Finance
Ordinance No. 2931
Page 35 of 38
EXHIBIT A
PAYING AGENT/REGISTRAR AGREEMENT
Ordinance No. 2931
Page 36 of 38
EXHIBIT B
PURCHASE AGREEMENT
Ordinance No. 2931
Page 37 of 38
EXHIBIT C
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 36 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Section are as specified (and included in the Appendix or
under the headings of the Official Statement referred to) below:
1. The financial statements of the City appended to the Official Statement as
Appendix B, but for the most recently concluded fiscal year.
2.
Statement
The information contained in Tables 1 through 6 and 8 through 15 in the Official
Accounting Principles
The accounting principles referred to in such Section are the generally accepted
accounting principles as applicable to governmental units as prescribed by The Government
Accounting Standards Board.
Ordinance No. 2931
Page 38 of 38