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ORD 2001-28TOWN OF TROPHY CLUB, TEXAS
ORDINANCE NO. 2001-28
AN ORDINANCE OF THE TOWN OF TROPHY CLUB, TEXAS, AUTHORIZING THE
ISSUANCE OF GENERAL OBLIGATION BONDS; ESTABLISHING BOND AMOUNT
AND PURPOSE; PROVIDING FOR DESIGNATION OF THE BONDS; PROVIDING FOR
INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED
OWNER, AND CHARACTERISTICS OF THE INITIAL BOND; PROVIDING FOR
INTEREST; PROVIDING FOR THE FORM OF THE INITIAL BOND; DEFINING
ADDITIONAL CHARACTERISTICS OF THE BONDS; PROVIDING FOR THE FORM OF
SUBSTITUTE BONDS; PROVIDING FOR TAX LEVY; PROVIDING FOR DEFEASANCE
OF .BONDS; PROVIDING FOR DAMAGED, MUTILATED, LOST, STOLEN OR
DESTROYED BONDS; ESTABLISHING GUIDELINES FOR CUSTODY, APPROVAL,
AND REGISTRATION OF BONDS/BOND COUNSEL'S OPINION/CUSIP NUMBERS/AND
CONTINGENT INSURANCE PROVISION, IF OBTAINED; PROVIDING COVENANTS
REGARDING TAX .EXEMPTION; PROVIDING FOR DESIGNATION AS QUALIFIED
TAX-EXEMPT OBLIGATIONS; PROVIDING FOR ALLOCATION OF, AND
LIMITATION ON, EXPENDITURES FOR THE PROJECT; PROVIDING FOR
DISPOSITION OF PROJECT; PROVIDING FOR CONTINUING DISCLOSURE;
PROVIDING FOR SALE OF INITIAL BOND; PROVIDING FOR INTEREST EARNINGS
ON BOND PROCEEDS; PROVIDING FOR APPROPRIATION; PROVIDING A
CUMULATIVE CLAUSE; PROVIDING FOR SAVINGS; PROVIDING SEVERABILITY;
PROVIDING FOR PUBLICATION; PROVIDING ENGROSSMENT AND ENROLLMENT;
AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the general obligation bonds hereinafter authorized were lawfully and favorably voted for at
an election duly held the Town of Trophy Club, Texas, on July 15, 2000;
WHEREAS, the Town Council of the Town of Trophy Club, Texas, now deems it necessary and advisable
to authorize, issue and deliver this installment or series of said bonds;
WHEREAS, the bonds hereinafter authorized and designated are to be issued and delivered pursuant to
Chapter 1331, Texas Government Code; and
WHEREAS, the meeting of the Town Council was open to the public and public notice of the time, place
and purpose of said meeting was given pursuant to Chapter 551, Texas Government Code, the "Open Meetings
Act."
NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF
TROPHY CLUB, TEXAS:
SECTION 1.
AMOUNT AND PURPOSE OF THE BONDS
The bond or bonds of the TOWN OF TROPHY CLUB, TEXAS (the "Issuer"), are hereby authorized to be
issued and delivered in the aggregate principal amount of S3,000,000, for the purpose of constructing and improving
the Town's streets.
SECTION 2.
DESIGNATION OF THE BONDS
Each bond issued pursuant to this Ordinance shall be designated: "TORW OF TROPHY CLUB, TEAS
GENER4L OBLIGATION BOND, SERIES 20112", and initially there shall be issued, sold, and delivered
hereunder a single fully registered bond, without interest coupons, payable in annual installments of principal (the
"Initial Bond"), but the Initial Bond may be assigned and transferred and/or converted into and exchanged for a like
aggregate principal amount of fully registered bonds, without interest coupons, having serial and annual maturities,
and in the denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter
provided. The term "Bonds" as used in this Ordinance shall mean and include collectively the Initial Bond and all
substitute bonds exchanged therefore, as well as all other substitute bonds and replacement bonds issued pursuant
hereto, and the term 'Bond" shall mean any of the Bonds.
SECTION 3.
INITIAL DATE, DENOMINATION, NUMBER,
MATURITIES, INITIAL REGISTERED OWNER, AND
CHARACTERISTICS OF THE INITIAL BOND
(a) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully
registered Bond, without interest coupons, dated January 1, 2002, in the denomination and aggregate principal
amount of $3,000,000, numbered R-1, payable in annual installments of principal to die initial registered owner
thereof, to -wit: SALOMON SMITH BARNEY, INC., or to the registered assignee or assignees of said Bond or
any portion or portions thereof (in each case, the "registered owner"), with the annual installments of principal of the
Initial Bond to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM
OF INITIAL BOND set forth in this O.Jinance.
(b) The Initial Bond (i) may be prepaid or redeemed prior to the respective scheduled due dates of
installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and exchanged for
other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest
on the Initial Bond shall be payable, all as provided, and in the manner required or indicated, in the FORM OF
INITIAL BOND set forth in this Ordinance.
SECTION 4.
INTEREST
The unpaid principal balance of the Initial Bond shall bear interest from the date of the Initial Bond and
will be calculated on the basis of a 360 -day year of twelve 30 -day months to the respective scheduled due dates, or
to the respective dates of prepayment or redemption, of the installments of principal of the Initial Bond, and said
interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF
INITIAL BOND set forth in this Ordinance.
SECTION 5.
FORM OF INITIAL BOND
The form of the Initial Bond, including the form of Registration Certificate of the Comptroller of Public
Accounts of the State of Texas to be endorsed on the Initial Bond, shall be substantially as follows:
FORM OF INITIAL, BOND
NO. R-1$3,000,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
TOWN OF TROPHY CLUB, TEXAS
GENERAL OBLIGATION BOND, SERIES 2002
The TOWN OF TROPHY CLUB, in DENTON COUNTY (the "Issuer"), being a political subdivision of
the State of Texas, hereby promises to pay to
SALOMON SMITH BARNEY, INC.
or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the "registered
owner") the aggregate principal amount of
THREE MILLION DOLLARS
in annual installments of principal due and payable on September 1 in
each of the years, and in the respective
principal amounts, as set forth in the following schedule:
YEAR AMOUNT
YEAR
AMOUNT
2003 90,000
2013
150,000
2004 95,000
2014
155,000
2005 100,000
2015
165,000 _
2006 105,000
****
****
2007 110,000
2008 11.5,000
2013
540,000
2009 125,000
****
****
2010 130,000
****
****
2011 135,000
2021
615,000
2012 140,000
2022
230,000
and to pay interest, from the date of this Bond hereinafter stated, on the balance of each such installment of
principal, respectively, from time to time remaining unpaid, at the rates as Follows:
3
maturities 2003,
5.625
%
maturities 2013,
4.450
%
maturities 2004,
5.635
%
maturities 2014,
4.550
%
maturities 2005,
5.625
%
maturities 2015,
4.650
%
maturities 2006,
5.500
%
*****
***
%
maturities 2007,
5.500
%
****
***
%
maturities 2008,
5.500
%
maturities 2018,
4.750
%
maturities 2009,
5.500
%
*****
***
%
maturities 2010,
4.125
%
*****
***
%
maturities 2011,
4.250
%
maturities 2021,
5.000
%
maturities 2012,
4.350
%
raturities 2022,
5.000
%
with said interest being payable on September I, 2002, and semiannually on each March 1 and September I
thereafter while this Bond or any portion hereof is outstanding and unpaid.
THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful
money of the United States of America, without exchange or collection charges. The installments of principal and
the interest on this Bond are payable to the registered owner hereof through the services of JPMORGAN CHASE
BANW, HOUSTON, TEXAS, which is the "Paying Agent/Registrar" for this Bond. Payment of all principal of and
interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal
andlor interest payment date by check or draft, dated as of such date, drawn by the Paying Agent/Registrar on, and
payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the "Bond
Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such
check or draft shall be sent by the Paying AgentlRegistrar by United States mail, first-class postage prepaid, on each
such principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as
it appeared on the fifteenth day of the month next preceding each such date (the "Record Date") on the Registration
Books kept by the Paying Agent/Registrar, as hereinafter described, or by such other method acceptable to the
Paying Agent/Registrar requested by, and at the risk and expense of, the registered owner. The Issuer covenants
with the registered owner of this Bond that on or before each principal and/or interest payment date for this Bond it
will make available to the Paying Agent/Registrar-, from the "Interest and Sinking Fund" created by the Bond
Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and
interest on this Bond, when due.
IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a
legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registrar is located are
authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which
is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and
payment on such date shall have the same force and effect as if made on the original date payment was due.
THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas, in the
principal amount of 53,000,000, for the purpose of constructing and improving the Town's streets.
ON SEPTEMBER 1, 3011, or any date thereafter, the unpaid installments of principal of this Bond may be
prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any
available source, as a whole, or in part, and, if in part, the Issuer shall select and designate the maturity, or
maturities, and the amount that is to be redeemed, and if less than a whole maturity is to be called, the issuer shall
direct the Paying Agent/Registrar to call by lot (provided that a portion of this Bond may he redeemed only in an
integral multiple of $5,000), at the redemption price of the principal amount, plus accrued interest to the date fixed
for prepayment or redemption.
AT LEAST 30 days prior to the date fixed for any such prepayment or redemption, a written notice of such
prepayment or redemption shall be mailed by United States mail, first class postage pre -paid, by the Paying
Agent/Registrar to the registered owner hereof. By the date fixed for any such prepayment or redemption due
provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepayment
or redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest
thereon to the date fixed For prepayment or redemption. If such written notice of prepayment or redemption is
given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which
is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled
due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded
as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus
accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds
provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such prepayments
or redemptions of principal of this Bond or any portion hereof.
THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and
unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof
and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the
capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other
requirements for such transfer, this Bond must be presented and surrendered to the Paying AgendRegistrar for
cancellation, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory
to the Paying Agent/Registrar, evidencing assignment by the initial registered owner of this Bond, or any portion or
portions hereof in any integral multiple of $5,000, to the assignee or assignees in whose name or names this Bond or
any such portion or portions hereof is or are to be transferred and registered. Any instrument or instruments of
assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any
such portion or portions hereof by the initial registered owner hereof. A new bond or bonds payable to such
assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the
initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial
registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond or
any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the
conversion and exchange of this Bond or any portion hereof. The registered owner of this Bond shall be deemed
and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including
payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying
Agent/Registrar shall not be affected by any notice to the contrary.
AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or unredeemed
principal balance hereof, may be converted into and exchanged for a like aggregate principal amount of fully
registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the
initial registered owner hereof, or to the initial registered owner as to any portion of this Bond which is not being
assigned and transferred by the initial registered owner, in any denomination or denominations in any integral
multiple of $5,000 (subject to the requirement hereinafter stated that each substitute bond issued in exchange for any
portion of this Bond shall have a single stated principal maturity date), upon surrender of this Bond to the Paying
Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. If
this Bond or any portion hereof is assigned and transferred or converted each bond issued in exchange for any
portion hereof shall have a single stated principal maturity date corresponding to the due date of the installment of
principal of this Bond or portion hereof For which the substitute bond is being exchanged, and shall bear interest at
the rate applicable to and borne by such installment of principal or portion thereof. Such bonds, respectively, shall
be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding installment
of principal of this Bond or portion hereof for which they are being exchanged. No such bond shall be payable in
installments, but shall have only one stated principal maturity date. AS PROVIDED IN THE BOND
ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR
CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for this
Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond
Ordinance. The Issuer shall pay dle Paying Agent/Registrar's standard or customary fees and charges for
transferring, converting, and exchanging this Bond or any portion thereof, but the one requesting such transfer,
conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto. The
Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the
period commencing with the close of business on any Record Date and ending with the opening of business on the
next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for
prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption date.
IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or otherwise
ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and
legally qualified substitute therefore, and promptly will cause written notice thereof to be mailed to the registered
owner of this Bond.
IT I5 HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted,
authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist,
and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed,
and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the full faith
and credit thereof; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of
this Bond, as such interest and principal come due, have been levied and ordered to be levied against all taxable
property in the issuer, and have been pledged for such payment, within the limit prescribed by law.
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the
terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that
the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the
governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance
constitute a contract between the registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be sig
Mayor of the Issuer and countersigned with the manual signature of the To vn
official sea of the Issuer to be duly impressed on this Bond, and has cau cd this
Town Secretary �yor
(TOWN SEAL)
10
�h the manual si nature of the
y ofth er, has caused the
to be.dated Janu I, 2003.
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE;
REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney
General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the
State of Texas.
Witness my signature and seal this
{COMPTROLLER'S SEAL} Comptroller of Public Accounts of the State of Texas
SECTION G.
ADDITIONAL CHARACTERISTICS OF THE BONDS
(a) Registration and Transfer. The Issuer shall keep or cause to be kept at the principal corporate trust
office of JPMORGAN CHASE BANK, 110USTON, TEXAS, (the "Paying Agent/Registrar") books or records of
the registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying
Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and
registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the
Paying Agent/Registrar shall make such transfers and registrations as herein provided. The Paying Agent/Registrar
shall obtain and record in the Registration Books the address of the registered owner of each Bond to which
payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered
owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such
interest payments shall not be mailed unless such notice has been given. The Issuer shall have the right to inspect
the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying
Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not
permit their inspection by any other entity. Registration of each Bond may be transferred in the Registration Books
only upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registration and
cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures
satisfactory to the Paying Agent/Registrar, (i) evidencing the assignment of the Bont'•; or any portion thereof in any
integral multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to
have the Bond or any such portion thereof registered in the name of such assignee or assignees. Upon the
assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued in
conversion and exchange therefore in the manner herein provided. The Initial Bond, to the extent of the unpaid or
unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner thereof once
only, and to one or more assignees designated in writing by the initial registered owner thereof. All Bonds issued
and delivered in conversion of and exchange for the Initial Bond shall be in any denomination or denominations of
any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a
single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE BOND set
forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as
hereinafter provided. If the Initial Bond or any portion thereof is assigned and transferred or converted the Initial
Bond must be surrendered to the Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any
portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments;
and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal
or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the
single rate applicable to and borne by such installment of principal or portion thereof for which it is being
exchanged. If only a portion of the Initial Bond is assigned and transferred, there shall be delivered to and registered
in the name of the initial registered owner substitute Bonds in exchange for the unassigned balance of the Initial
Bond in the same manner as if the initial registered owner were the assignee thereof. If any Bond or portion thereof
other than the Initial Bond is assigned and transferred or converted each Bond issued in exchange shall have the
same principal maturity date and bear interest at the same rate as the Bond for which it is exchanged. A form of
assignment shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall be executed by the
registered owner or its duly authorized attorney or representative to evidence an assignment thereof, Upon surrender
of any Bonds or any portion or portions thereof for transfer of registration, an authorized representative of the
Paying Agent/Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered
substitute Bond or Bonds, having the characteristics herein described, payable to such assignee or assignees (which
then will be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner in case
only a portion of a Bond is being assigned and transferred, all in conversion of and exchange for said assigned Bond
or Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in
Section G(d), below, for the conversion and exchange of Bonds by any registered owner of a Bond. The Issuer shall
pay the Paying Agent/Registrar's standard or customary fees and charges for malting such transfer and delivery of a
substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes or other governmental charges
required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of
registration of any Bond or any portion thereof (i) during the period commencing with the close of business on any
Record Date and ending with the opening of business on the next following principal or interest payment date, or,
(ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 30 days prior to
its redemption date.
(b) Ownership of Bonds. The entity in whose name any Bond shall be registered in the Registration
Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance,
whether or not such Bond shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by
any notice to the contrary; and payment of, or on account of, the principal of premium, if any, and interest on any
such Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy
and discharge the liability upon such Bond to the extent of the sum or sums so paid.
(c) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to
act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to convert and
exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records
of all payments made by the Issuer and the Paying AgentfRegistrar with respect to the Bonds, and of all conversions
and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a
nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such
interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for
the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the
scheduled payment date of the past due interest (which shall be 15 days after the Special Record pate) shall be sent
at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to
the address of each Bondholder appearing on the Registration Books at the close of business on the last business day
next preceding the date of mailing of such notice,
(d) Conversion and Exchange or Replacement: Authentication. Each Bond issued and delivered
pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount thereof,
may, upon surrender of such Bond at the principal corporate trust office of the Paying Agent/Registrar, together with
a written request therefore duly executed by the registered owner or the assignee or assignees thereof, or its or their
duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar,
may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into and
exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF
SUBSTITUTE BOND set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000
(subject to the requirement hereinafter stated that each substitute Bond shall have a single stated maturity date), as
requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal
to the unpaid or unredeemed principal balance or principal amount of any Bond or Bonds so surrendered, and
payable to the appropriate registered owner, assignee, or assignees, as the case may be. If the Initial Bond is
assigned and Lransferred or converted each substitute Bond issued in exchange for any portion of the Initial Bond
shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall
have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for
which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to
and borne by such installment of principal or portion thereof for which it is being exchanged. If a portion of any
Bond (other than the Initial Bond) shall be redeemed prior to its scheduled maturity as provided herein, a substitute
Bond or Bonds having the same maturity date, bearing interest at the same rate, in the denomination or
denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal
amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for
cancellation. If any Bond or portion thereof (other than the Initial Bond) is assigned and transferred or converted,
each Bond issued in exchange therefore shall have the same principal maturity date and bear interest at the same rate
as the Bond for which it is being exchanged, Each substitute Bond shall bear a letter and/or number to distinguish it
from each other Bond. The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided herein,
and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond or portion
thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes
of this Ordinance, and may again be converted and exchanged or replaced. It is specifically provided that any Bond
authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first scheduled
Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each substitute Bond so
authenticated after such first scheduled Record Date shall bear interest from the interest payment date next
preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated after any
Record Date but on or before the next following interest payment date, in which case it shall bear interest from such
next following interest payment date; provided, however, that if at the time of delivery of any substitute Bond the
interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall bear interest
9
from the date to which such interest has been paid in full. THE INITIAL BOND issued and delivered pursuant to
this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/ Registrar, but on each
substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds issued under this
Ordinance there shall be printed a certificate, in the form substantially as follows:
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described
on the face of this Bond; and that this Bond has been issued in conversion of and exchange for or replacement of a
bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of
the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas.
Dated
Paying Agent/Registrar
By
Authorized Representative"
An authorized representative of the Paying AgentJRegistrar shall, before the delivery of any such Bond, date and
manually sign the above Certificate, an -1 no such Bond shall be deemed to be issued or outstanding unless such
Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for conversion
and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the
governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and
exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the
printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of
type composition printed on paper with lithographed or steel engraved borders of customary weight and strength.
Pursuant to Chapter 1201, Texas Government Code, the duty of conversion and exchange or replacement of Bonds
as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying
Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid,
incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which originally was
issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public
Accounts. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for
transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer,
conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a
condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall
not be required to make any such conversion and exchange or replacement of Bonds or any portion thereof (i) during
the period commencing with the close of business on any Record Date and ending with the opening of business on
the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for
redemption prior to maturity, within 45 days prior to its redemption date.
(e) In General. All Bonds issued in conversion and exchange or replacement of any other Bond or
portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and
interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their
scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for other Bonds,
(v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Bonds
shall be payable, all as provided, and in the manner required or indicated, in the FORM OF SUBSTITUTE BOND
set forth in this Ordinance.
(0 Payment of Fees and Charges. The Issuer hereby covenants with the registered owners of the
Bonds that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services
with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay the fees and charges
of the Paying Agent/Registrar for services with respect to the transfer of registration of Bonds, and with respect to
the conversion and exchange of Bonds solely to the extent above provided in this Ordinance.
(g) Substitute Paving Aaent/Reeisirar. The Issuer covenants with the registered owners of the Bonds
that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust
company, financial institution, or other agency to act as and perforin the services of Paying Agent/Regiarar for the
to
Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to,
and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying
Agent/ Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such
notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger,
acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that promptly it
will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as
Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying
Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other
pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by
the Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof
to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, first-
class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the
position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of
this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar.
(h) Book -Entry Only System. The Bonds issued in exchange for the Bonds initially issued to the
purchaser specified herein shall be initially issued in the form of a separate single fully registered Bond for each of
the maturities thereof. Upon initial issuance, the ownership of each such Bond shall be registered in the name of
Cede & Co., as nominee of Depository Trust Company of New York ("DTC"), and except as provided in subsection
(f) hereof, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Issuer and the Paying
Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of
whom such a DTC Participant holds an interest on the Bonds. Without limiting the immediately preceding sentence,
the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy
of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii)
the delivery to any DTC Participant or any other person, other than a Bondholder, as shown on the Registration
Books, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC
Participant or any other person, other than a Bondholder, as shown in the Registration Books of any amount with
respect to principal of, premium, if any, or interest on, as the case may be, the Bonds. Notwithstanding any other
provision of this Ordinance to the contrary, the Issuer and the Paying Agent/Registrar shall be entitled to treat and
consider the person in whose name each Bond is registered in the Registration Books as the absolute owner of such
Bond for the purpose of payment of principal, premium, if any, and interest, as the case may be, with respect to such
Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose
of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying
Agent/Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the
respective owners, as shown in the Registration Books as provided in this Ordinance, or their respective attomeys
duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the
Issuer's obligations with respect to payment of principal of premium, if any, and interest on, or as the case may be,
the Bonds to the extent of the sum or sums so paid. No person other than an owner, as shown in the Registration
Books, shall receive a Bond certificate evidencing the obligation of the Issuer to make payments of principal,
premium, if any, and interest, as the case may be, pursuant to this Ordinance. Upon delivery by DTC to the Paying
Agent/.Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede
& Co., and subject to the provisions in this Ordinance with respect to interest checks being mailed to the registered
owner at the close of business on the Record Date, the word "Cede & Co." in this Ordinance shall refer to such new
nominee of DTC.
(i) Successor Securities Depository; Transfers Outside Book -Entry Only System. In the event that
the Issuer or the Paying Agent/Registrar determines that DTC is incapable of discharging its responsibilities
described herein and in the representation letter of the Issuer to DTC and that it is in the best interest of the
beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Issuer or the Paying
Agent/Registrar shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the
Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such
successor securities depository and transfer one or more separate Bonds to such successor securities depository or
(ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one or more separate
Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer
be restricted to being registered in the Registration Books in the name of Cede & Co., as nominee of DTC, but may
be registered in the name of the successor securities depository, or its nominee, or in whatever name or names
Bondholders transferring or exchanging Bonds shall designate, in accordance with the provisions of this Ordinance.
Q)
Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary,
so long as any Band is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to
principal of premium, if any, and interest on, or as the case may be, such Bond and all notices with respect to such
Bond shall be made and given, respectively, in the manner provided in the representation letter of the Issuer to DTC.
SECTION 7.
FORM OF SUBSTITUTE BONDS
The form of all Bonds issued in conversion and exchange or replacement of any other Bond or portion
thereof, including the form of Paying Agent/Registrar's Certificate to be printed on each of such Bonds, and the
Form of Assignment to be printed on each of the Bonds, shall be, respectively, substantially as follows, with such
appropriate variations, omissions, or insertions as are permitted or required by this Ordinance.
12
FORM OF SUBSTITUTE BOND
PRINCIPAL AMOUNT
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
TOWN OF TROPHY CLUB, TEXAS
GENERAL, OBLIGATION BOND, SERIES 2002
INTEREST RATE MATURITY DATE DATE OF ORIGINAL ISSUE CUSIP NO.
January 1, 2002
ON THE MATURITY DATE specified above the TOWN OF TROPHY CLUB, in DENTON COUNTY
(the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to
or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount of
and to pay interest thereon from January 1, 2002 to the maturity date specified above, or the date of redemption prior
to maturity, at the interest rate per annum specified above; with interest being payable on September 1, 2002 and
semiannually thereafter on each March 1 and September 1, except that if the date of authentication of this Bond is
later than August 3 I, 2002, such principal amount shall bear interest from the interest payment date next preceding
the date of authentication, unless such date of authentication is after any Record Date (hereinafter defined) but on or
before the next following interest payment date, in which case such principal amount shall bear interest from such
next following interest payment date.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of
America, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner
hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to
maturity, at the principal corporate trust office of JPMORGAN CHASE BANK, HOUSTON, TEXAS, which is the
"Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying
Agent/Registrar to the registered owner hereof on each interest payment date by check or draft, dated as of such
interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer
required by the ordinance authorizing the issuance of the Bonds (the "Bond Ordinance") to be on deposit with the
Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying
Agent/Registrar by United States Mail, first-class postage prepaid, on each such interest payment date, to the
registered owner hereof, at the address of the registered owner, as it appeared on the fifteenth day of the month next
preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as
hereinafter described, or by such other method acceptable to the Paying Agent/Registrar requested by, and the risk
and expense of, the registered owner. Any accrued interest due upon the redemption of this Bond prior to maturity
as provided herein shall be paid to the registered owner upon presentation and surrender of this Bond for redemption
and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the
registered owner of this Bond that on or before each principal payment date, interest payment date, and accrued
interest payment date for this Bond it will matte available to the Paying Agent/Registrar, from the "Interest and
Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately
available funds, of all principal of and interest on the Bonds, when due.
IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a
legal holiday, or a day on which banning institutions in the city where the Paying Agent/.Registrar is located are
authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which
is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and
payment on such date shall have the same force and effect as if made on the original date payment was due.
13
THIS BOND is one of an issue of Bonds initially dated January 1, 2002, authorized in accordance with the
Constitution and laws of the State of Texas in the principal amount of $3,000,000, for the purpose of constructing
and improving the Town's streets.
ON SEPTEMBER 1, 2011, or any date thereafter, the Bonds of this Series may be redeemed prior to their
scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a
whole, or in part, and, if in part, the Issuer shall select and designate tate maturity or maturities and the amount that is
to be redeemed, and if less than a whole maturity is to be called, the Issuer shall direct the Paying Agent/Registrar to
call by lot (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at the
redemption price of the principal amount thereof, plus accrued interest to the date fixed for redemption.
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to
maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States mail, first
class postage prepaid, not less than 30 days prior to the date fixed for any such redemption, to the registered owner
of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemption date; provided,
however, that lite failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing
thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond, and it is
hereby specifically provided that the mailing of such notice as required above shall be the only notice actually
required in connection with or as a prerequisite to the redemption of any Bonds or portions thereof. By the date
fixed for any such redemption due provision shall be made with the Paying AgendRegistrar for the payment of the
required redemption price for the Bonds or portions thereof which are to be so redeemed, plus accrued interest
thereon to the date fixed for redemption. If such written notice of redemption is published and if due provision for
such payment is made, all as provided above, tate Bonds or portions thereof which are to be so redeemed thereby
automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after
the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the
registered owner to receive the redemption price plus accrued interest from the Paying Agent/Registrar out of the
funds provided for such payment. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the
same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple
of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed
portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of
the Issuer, all as provided in the Bond Ordinance.
THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF
$5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying
Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond
Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and
surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with
guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any
portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names
this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment
printed or endorsed on this Bond shall be executed by the registered owner or its duly authorized attorney or
representative, to evidence the assignment hereof A new Bond or Bonds payable to such assignee or assignees
(which then will be the new registered owner or owners of such new Bond or Bonds), or to the previous registered
owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying
Agent/Registrar in conversion of and exchange for this Bond, all in the form and manner as provided in the next
paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the Paying Agent/Registrar's
standard or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any
taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not
be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing
with the close of business on any Record Date and ending with the opening of business on the next following
principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior
to maturity, within 45 days prior to its redemption date. The registered owner of this Bond shall be deemed and
treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including
payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying
AgendRegistrar shall not be affected by any notice to the contrary.
14
ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in
the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance, this Bond, or any
unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be
converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest
coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same
maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple
of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be,
upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and
procedures set forth in the Bond Ordinance. The Issuer shall pay the Paying Agent/Registrar's standard or
customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the
one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be
paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The
Paying Agent/Registrar shall not be required to make any such conversion and exchange (i) during the period
commencing with the close of business on any Record Date and ending with the opening of business on the next
following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for
redemption prior to maturity, within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or otherwise
ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and
legally qualified substitute therefore, and promptly will cause written notice thereof to be mailed to the registered
owners of the Bonds.
IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted,
authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist,
and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed,
and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the full faith
and credit thereof, and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of
this Bond, as such interest and principal come due, have been levied and ordered to be levied against all taxable
property in the Issuer, and have been pledged for such payment, within the limit prescribed by law.
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the
terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that
the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the
governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance
constitute a contract between each registered owner hereof and the Issuer.
IN WITNESS WIIEREOF, the Issuer has caused this Bond o`be signed with th manua or facsimile
signature of the Mayor of the Issuer and countersigned with the manu1r facsimi Signa e of the wn Secretary
of the Issue , d has ca ed the official seal ofthe Issuer to be duly pressed r plac in facsi R6, on this Bond.
Town Secretary M��oi j
(TOWN SEAL) QPH r�
O
0
14! ` %J
15
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Bond is not accompanied by an executed Registration Certificate
of the Comptroller of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance
described in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in
exchange for, a bond, bonds, or a portion of a bond or bonds of a Series which originally was approved by the
Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of
Texas.
Dated JPMORGAN CHASE BANK, HOUSTON, TEXAS
Authorized Representative
FORM OF ASSIGNMENT
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized
representative or attorney thereof, hereby assigns this Bond to
(Assignee's Social Security or Tax Payer (Print or type Assignee's Name and
Identification Number) Address Including Zip Code)
and hereby irrevocably constitutes and appoints
attorney, to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full
power of substitution in the premises.
Dated
NOTICE: This signature must be guaranteed by NOTICE: This signature must correspond with the
a member of the New York Stock Exchange or name of the Registered Owner appearing on the face
a commercial bank or trust company. of this Bond in every particular without alteration or
enlargement or any change whatsoever.
101
SECTION 8.
TAX LEVY
A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the
benefit of the Bonds, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an
official depository bank of the Issuer. The Interest and Sinking Fund shall be kept separate and apart from all other
funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of the Bonds, All ad
valorem taxes Ievied and collected for and on account of the Bonds, together with any premium received from the
sale of the Bonds, shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year
while any of the Bonds or interest thereon are outstanding and unpaid, the governing body of the Issuer shall
compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money
required to pay the interest on the Bonds as such interest comes due, and to provide and maintain a sinking fund
adequate to pay the principal of its Bonds as such principal matures (but never less than 2% of the original principal
amount of the Bonds as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of the
Issuer, with full allowance being made for tax delinquencies and the cost of tax collection. Said rate and amount of
ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the Issuer for each
year while any of the Bonds or interest thereon are outstanding and unpaid; and said tax shall be assessed and
collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem
taxes sufficient to provide Lr the payment of the interest on and principal of the Bonds, as such interest comes due
and such principal matures, are hereby pledged for such payment, within the limit prescribed by law.
SECTION 9.
DEFEASANCE OF BONDS
(a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding
(a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsection (d) of this
Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be
by reason of maturity, or otherwise) either (i) shall have been made or caused to be made in accordance with the
terms thereof or (ii) shall have been provided for on or before such due date by irrevocably depositing with or
making available to the Paying Agent/Registrar in accordance with an escrow agreement or other instrument (the
"Future Escrow Agreement") for such payment (1) lawful money of the United States of America sufficient to make
such payment or (2) Defeasance Securities that mature as to principal and interest in such amounts and at such times
as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when
proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services
until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a
Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable
from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and
such principal and interest shall be payable solely from such money or Defeasance Securities. Notwithstanding any
other provision of this Ordinance to the contrary, it is hereby provided that any determination not to redeem
Defeased Bonds that is made in conjunction with the payment arrangements specified in subsection 9(a)(i) or (ii)
shall not be irrevocable, provided that: (1) in the proceedings providing for such payment arrangements, the Issuer
expressly reserves the right to call the Defeased Bonds for redemption; (2) gives notice of the reservation of that
right to the owners of the Defeased Bonds immediately following the making of the payment arrangements, and (3)
directs that notice of the reservation be included in any redemption notices that it authorizes.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the
Issuer also be invested in Defeasance Securities, maturing in the amounts and times as hereinbefore set forth, and all
income from such Defeasance Securities received by the Paying Agent/Registrar that is not required for the payment
of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to
the Issuer, or deposited as directed in writing by the Issuer. Any Future Escrow Agreement pursuant to which the
money and/or Defeasance Securities are held for the payment of Defeased Bonds may contain provisions permitting
the investment or reinvestment of such moneys in Defeasance Securities or the substitution of other Defeasance
Securities upon the satisfaction of the requirements specified in subsection 9(a)(i) or (ii). All income from such
Defeasance Securities received by the Paying Agent/Registrar which is not required for the payment of the Defeased
Bonds, with respect to which such money has been so deposited, shall be remitted to the Issuer or deposited as
directed in writing by the Issuer.
17
(c) The tern "Defeasance Securities" means (i) direct, noncallable obligations of the United States of
America, including obligations that are unconditionally guaranteed by the United States of America, (ii) noncallable
obligations of an agency or instrumentality of the United States of America, including obligations that are
unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the purchase thereof
are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its
equivalent, and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refunded and that, on the date the governing body of the Issuer adopts or
approves the proceedings authorizing the financial arrangements are rated as to investment quality by a nationally
recognized investment rating firm not less than AAA or its equivalent.
(d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall
perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased,
and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance,
(e) In the event that the Issuer elects to defease less than all of the principal amount of Bonds of a
maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount of Bonds by such random
method as it deems fair and appropriate.
SECTION 10.
DAMAGED, MUTILATED, LOST,
STOLEN OR DESTROYED BONDS
(a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or
destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same
principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in
replacement for such Bond in the manner hereinafter provided.
(b) Anolication for Replacement Bonds. Application for replacement of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every
case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the
Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of
them harmless from any Ioss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a
Bond, the registered owner shall furnish to the Issuer and to the Paying Agetnt/Registrar evidence to their satisfaction
of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond,
the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or
mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any
such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal
of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without
surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond,
provided security or indemnity is furnished as above provided in this Section.
(d) Charge for Issuing, Replacement Bonds. Prior to the issuance of any replacement bond, the Paying
Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in
connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact
that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the
lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all
the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this
Ordinance.
(e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1201, Government Code,
this Section 10 of this Ordinance shall constitute authority for the issuance of any such replacement bond without
necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the
replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying
is
Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in
Section 6(d) of this Ordinance for Bonds issued in conversion and exchange for other Bonds.
SECTION 11.
CUSTODY, APPROVAL, AND REGISTRATION OF BONDS
BOND COUNSEL'S OPINION, CUSIP NUMBERS AND
CONTIGENT INSURANCE PROVISION, IF OBTAINED
The Mayor of the Issuer is hereby authorized to have control of the Initial Bond issued hereunder and all
necessary records and proceedings pertaining to the Initial Bond pending its delivery and its investigation,
examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of
Public Accounts of the State of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts
(or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration
Certificate on the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on the
Initial Bond. The approving legal opinion of the Issuer's bond counsel and the assigned CUSIP numbers may, at the
option of the Issuer, be printed on the Bond or any Bonds issued and delivered in conversion of and exchange or
replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and
information of the registered owners of the Bonds. In addition, if bond insurance is obtained, the fronds may bear an
appropriate legend as provided by the Insurer.
SECTION 12.
COVENANTS REGARDING TAX EXEMPTION
The Issuer covenants to refrain from taping any action which would adversely affect, and to take any
required action to ensure, the treatment of the Bonds as obligations described in Section 103 of the Internal Revenue
Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder
for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use,"
as defined in Section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed
therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use,
do not, under the terms of this Ordinance, or any underlying arrangement, directly or indirectly, secure or provide
for the payment of more than 10 percent of the debt service on the Bonds, in contravention of Section 141(b)(2) of
the Code;
(b) to take any action to assure that in the event that the "private business use" described in subsection
(a) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited
into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is
"related" and not "disproportionate," within the meaning of Section 141(b)(3) of the Code, to the governmental use;
(c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5
percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used
to finance loans to persons, other than state or local governmental units, in contravention of Section 141(c) of the
Code;
(d) to refrain from taking any action which would otherwise result in the Bonds being treated as
°private activity bonds" within the meaning of Section 141(b) of the Code;
(e) to refrain from taking any action that would result in the Bonds being "federally guaranteed"
within the meaning of Section 149(b) of the Code;
(f) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or
to replace funds which were used, directly or indirectly, to acquire investment property (as defined in Section
148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment
property acquired with --
IVB
(1) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, in
the case of a refunding bond, for a period of 30 days or less until such proceeds are needed for the purpose
for which the bonds are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning of Section
1.148-1(b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement fund to the extent
such amounts do not exceed 10 percent of the proceeds of the Bonds;
(g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the
Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of Section 148 of the
Code (relating to arbitrage) and, to the extent applicable, Section 149(d) of the Code (relating to advance
refundings); and
(h) to pay to the United States of America at least once during each five-year period (beginning on the
date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the
meaning of Section 1480 of the Code and to pay to the United States of America, not later than 60 days after the
Bonds have been paid in full, I00 percent of the amount then required to be paid as a result of Excess Earnings
under Section 148(f) of the Code.
For the purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds" includes "disposition
proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any)
and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of
the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations
or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or
rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the
Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in
the opinion of nationally -recognized bond counsel, will not adversely affect the exemption from federal income
taxation of interest on the Bonds under Section 103 of the Code. In the event that regulations or rulings are hereafter
promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply
with the additional requirements to the extent necessary, in the opinion of nationally -recognized bond counsel, to
preserve the exemption from federal income taxation of interest on the Bonds under Section 103 of the Code. In
furtherance of such intention, the Issuer hereby authorizes and directs the Mayor of the Issuer to execute any
documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which
may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds.
In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established by the
Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any
other person, including without limitation the bondholders. The Rebate Fund is established for the additional
purpose of compliance with Section 148 of the Code.
SECTION 13.
DESIGNATION AS QUALIFIED TAX -.EXEMPT OBLIGATIONS
The Issuer hereby designates the Certificates of Obligation as "qualified tax-exempt obligations" as defined
in Section 265(b)(3) of the Code. In furtherance of such designation, the Issuer represents, covenants and warrants
the following: (a) that during the calendar year in which the Certificates of Obligation are issued, the Issuer
(including any subordinate entities) has not designated nor will designate obligations, which when aggregated with
the Certificates of Obligation, will result in more than $10,000,000 of "qualified tax-exempt obligations" being
issued; and (b) that the Issuer reasonably anticipates that the amount of tax-exempt obligations issued, during the
calendar year in which the Certificates of Obligation are issued, by the Issuer (or any subordinate entities) will not
exceed $10,000,000.
20
SECTION 14.
ALLOCATION OF, AND LIMITATION ON,
EXPENDITURES FOR THE PROJECT
The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for
the purposes described in Section 1 of this Ordinance (the "Project") on its books and records by allocating proceeds
to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is
completed. The foregoing notwithstanding, the Issuer shall not expend sale proceeds or investment earnings thereon
more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds
are retired, unless the Issuer obtains an opinion of nationally -recognized bond counsel that such expenditure will not
adversely affect the tax-exempt status of the Bonds. For purposes hereof, the Issuer shall not be obligated to comply
with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for
federal income tax purposes from gross income of the interest.
SECTION 15.
DISPOSITION OF PROJECT
The Issuer covenants that the property constituting the project will not be sold or otherwise disposed in a
transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion
of nationally -recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt
status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and
disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other
compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an
opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from
gross income of the interest.
SECTION 16.
CONTINUING DISCLOSURE
(a) Annual Reports.
(i) The Issuer shall provide annually to any SID, within six months after the end of each
fiscal year ending in or after 2001, financial information and operating data with respect to the
Issuer of the general type included in the final Official Statement authorized by Section 32 of this
Resolution, being the information described in Exhibit A. Any financial statements so to be
provided shall be prepared in accordance with the accounting principles described in Appendix A
thereto, or such other accounting principles as the Issuer may be required to employ from time to
time pursuant to state law or regulation, and audited, if the Issuer commissions an audit of such
statements and the audit is completed within the period during which they must be provided. If
the audit of such financial statements is not complete within such period, then the Issuer shall
provide audited financial statements for the applicable fiscal year to any SID, when and if the
audit report on such statements become available.
(ii) If the Issuer changes its fiscal year, it will notify any SID of the change (and of the date
of the new fiscal year end) prior to the next date by which the Issuer otherwise would be required
to provide financial information and operating data pursuant to this Section. The financial
information and operating data to be provided pursuant to this Section may be set forth in full in
one or more documents or may be included by specific reference to any document (including an
official statement or other offering document, if it is available from the MSRB) that theretofore
has been provided to any S.ID or filed with the SEC.
(b) Material Event Notices. The Issuer shall notify any SID and the MSRB, in a timely manner, of
any of the following events with respect to the Bonds, if such event is material within the meaning of the federal
securities laws:
Principal and interest payment delinquencies;
21
?. 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 Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
14. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The Issuer shall notify any SID and the MSRB, in a timely manner, of any failure by the Issuer to provide financial
information or operating data in accordance with subsection (a) of this Section by the time required by such
subsection.
(c) Limitations, Disclaimers. and Amendments.
(i) The Issuer shall be obligated to observe and perform the covenants specified in this
Section for so long as, but only for so long as, the Issuer remains an "obligated person" with
respect to the Bonds within the meaning of the Rule, except that the Issuer in any event will give
notice of any deposit made in accordance with this Resolution or applicable law that causes Bonds
no longer to be outstanding.
(ii) The provisions of this Section are for the sole benefit of the holders and beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any
legal or equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to
provide only the financial information, operating data, financial statements, and notices which it
has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide
any other information that may be relevant or material to a complete presentation of the Issuer's
financial results, condition, or prospects or hereby undertake to update any information provided
in accordance with this Section or otherwise, except as expressly provided herein. The Issuer does
not make any representation or warranty concerning such information or its usefulness to a
decision to invest in or sell Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE
HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN
CONTRACT OR TORT, FOR DAMAGES RESULTING 1N WHOLE OR IN PART FROM
ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS
PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF
ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR
SPECIFIC PERFORMANCE.
(iv) No default by the Issuer in observing or performing its obligations under this Section
shall comprise a breach of or default under the Resolution for purposes of any other provision of
this Resolution. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise
limit the duties of the Issuer under federal and state securities laws.
(v) The provisions of this Section may be amended by the Issuer from time to time to adapt
to changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the Issuer, but only if (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell
Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any
amendments or interpretations of the Rule since such offering as well as such changed
circumstances and (2) either (a) the holders of a majority in aggregate principal amount (or any
greater amount required by any other provision of this Resolution that authorizes such an
amendment) of the Outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated with the Issuer (such as bond counsel) determined that such amendment will not
materially impair the interest of the holders and beneficial owners of the .Bonds. If the Issuer so
amends the provisions of this Section, it shall include with any amended financial information or
operating data next provided in accordance with subsection (a) of this Section an explanation, in
narrative form, of the reason for the amendment and of the impact of any change in the type of
financial information or operating data so provided. The Issuer may also amend or repeal the
provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable
provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the
Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent
an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds.
(d) Definitions_ As used in this Section, the following terms have the meanings ascribed to such
terms below:
"HSRB" means the Municipal Securities Rulemaking Board
WRAIISIR" 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.
SECTION 17.
SAFE OF INITIAL BOND
The Initial Bond is hereby sold and shall be delivered to for cash for the
par value thereof and accrued interest thereon to date of delivery (accrued interest to be deposited into the Interest
and Sinking Fund), plus a premium of $ (premium to be deposited into the Interest and Sinking Fund).
It is hereby officially found, determined, and declared that the Initial Bond has been sold at public sale to the bidder
offering the lowest interest cost, after receiving sealed bids pursuant to an Official Notice of Sale and Bidding
Instructions and Official Statement dated November 20, 2001, prepared and distributed in connection with the sale
of the Initial Bond. Said Official Notice of Sale and Bidding Instructions and Official Statement, and any addenda,
supplement, or amendment thereto have been and are hereby approved by the governing body of the Issuer, and their
use in the offer and sale of the Bonds is hereby approved. It is further officially found, determined, and declared
that the statements and representations contained in said Official Notice of Sale and Official Statement are true and
correct in all material respects, to the best knowledge and belief of the governing body of the Issuer.
SECTION IS.
INTEREST EARNINGS ON BONDS PROCEEDS
The earnings derived from the investment of proceeds from the sale of the Bonds shall be used along with
other Bond proceeds as described in Section I hereof; provided that after completion of such project, if any of such
interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is
further provided, however, that interest earnings on the Bonds proceeds which are required to be rebated to the
United States of America pursuant to Section 12 hereof in order to prevent the Bonds from being arbitrage bonds
shall be so rebated and not considered as interest earnings for the purpose of this Section.
23
SECTION 19.
APPROPRIATION
There is hereby appropriated for transfer into the Interest and Sinking Fund, from available funds of the
Issuer, moneys sufficient to pay the interest coming due on the Bonds on September 1, 2002.
SECTION 20.
CUMULATIVE
This ordinance shall be cumulative of all provisions of the Ordinances of the Town, except when the
provisions of this Ordinance are in direct conflict with the provisions of such Ordinances, in which event the
conflicting provisions of such Ordinances are hereby repealed. Any complaint, action, claim or .lawsuit which has
been initiated or has arisen under or pursuant to any conflicting Ordinance on the date of adoption of this Ordinance
shall continue to be governed by the provisions of such Ordinance and for that purpose the Ordinance shall remain
in full force and effect.
SECTION 21.
SAVINGS
All rights and remedies of the Town of Trophy Club, Texas, are expressly saved as to any and all violations
of the provisions of any other Ordinance affecting the issuance of bonds which have secured at the time of the
effective date of this Ordinance; and, as to such accrued violations and all pending litigation, both civil and criminal,
whether pending in court or not, under such Ordinances same shall not be affected by this Ordinance but may be
prosecuted until final disposition by the courts.
SECTION 22.
SEVERABILITY
If any section, article, paragraph, sentence, clause, phrase or word in this Ordinance or application thereof
to any person or circumstance is held invalid or unconstitutional by a Court of competent jurisdiction, such holding
shall not affect the validity of the remaining portions of this Ordinance, and the Town Council hereby declares it
would have passed such remaining portions of this Ordinance despite such invalidity, which remaining portions
shall remain in full force and effect.
SECTION 23.
PUBLICATION
The Town Secretary of the Town of Trophy Club is hereby directed to publish, the Caption and Effective
Date of this Ordinance as required by Section 52.011 of the Texas Local Government Code.
SECTION 24.
ENGROSSMENT AND ENROLLMENT
The Town Secretary of the Town of Trophy Club is hereby directed to engross and enroll this Ordinance by
copying the exact Caption and Effective Date in the minutes of the Town Council and by filing this Ordinance in the
ordinance records of the Town.
SECTION 25.
EFFECTIVE DATE
This Ordinance shall become effective from and after its date of adoption and publication as provided by
law, and it is so ordained.
PASSED AND APPROVED by the Town Council of the Town of Trophy Club, Texas, this 3rd day of
December, 2001.
'14
ATTEST:
0'-
Town Se re#ary
Town of Trophy Clu , T `s `
[SEAL] yt
Z ' -9
:30
APPROVED
APPROVED AS TO FORM:
Town Attorney
Town of Trophy Club, Texas
25
EXHIBIT A
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 16 of this Ordinance.
I. Annual Financial Statements and Operating .Data
The financial information and operating data with respect to the Issuer to be provided annually in
accordance with such Section are as specified (and included in the Appendix or under the headings of the Official
Statement and Tables referred to) below:
T21BLES 1, 11, IZ and 13 OFAPPENDLYA and AUDIT
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in the notes to
the financial statements referred to in paragraph I above.
26
CERTIFICATE FOR ORDINANCE
THE STATE OF TEXAS §
COUNTY OF DENTON §
TOWN OF TROPHY CLUB §
We, the undersigned officers of said Town, hereby certify as follows:
1. The Town Council of said Town convened in REGULAR MEETING ON THE
3RD DAY OF DECEMBER, 2002, at the Town Hall, and the roll was called of the duly constituted
officers and members of said Town Council, to -wit:
Scott Smith, Mayor
Susan Edstom
Barry Huizenga
Bill Matthal
Scott Spence
Roger Williams
Diane Cockrell, Town Secretary
and all of said persons were present, except the following absentees: �%,j
thus constituting a quorum. Whereupon, among other business, the following was transacted at said
Meeting: a written
ORDINANCE AUTHORIZING THE ISSUANCE OF TOWN OF TROPHY CLUB, TEXAS
GENERAL OBLIGATION BONDS, SERIES 2002, IN THE PRINCIPAL AMOUNT OF
$3,000,000 AND OTHER MATTERS RELATING THERETO
was duly introduced for the consideration of said Town Council and read in full. It was then duly
moved and seconded that said Ordinance be passed; and, after due discussion, said motion carrying
with it the passage of said Ordinance, prevailed and carried by the following vote:
AYES: All members of said Town Council shown present above voted "Aye".
NOES: None.
2. That a true, full and correct copy of the aforesaid Ordinance passed at the Meeting
described in the above and foregoing paragraph is attached to and follows this Certificate; that said
Ordinance has been duly recorded in said Town Council's minutes of said Meeting; that the above
and foregoing paragraph is a true, full and correct excerpt from said Town Council's minutes of said
Meeting pertaining to the passage of said Ordinance; that the persons named in the above and fore-
going paragraph are the duly chosen, qualified and acting officers and members of said Town
Council as indicated therein; that each of the officers and members of said Town Council was duly
and sufficiently notified officially and personally, in advance, of the time, place and purpose of the
aforesaid Meeting, and that said Ordinance would be introduced and considered for passage at said
Meeting, and each of said officers and members consented, in advance, to the holding of said
Meeting for such purpose, and that said Meeting was open to the public and public notice of the
time, place and purpose of said meeting was given, all as required by Chapter 551, Texas
Government Code.
3. That the Mayor of said Town has approved and hereby approves the aforesaid
Ordinance; that the Mayor and the Town Secretary of said Town have duly signed said Ordinance;
and that the Mayor and the Town Secretary of said Town hereby declare that their signing of this
Certificate shall constitute the signing of the attached and following copy of said Ordinance for all
purposes.
SIGNED AND SEALED the 3rd day of Decernher 700
Town Secretary
ORDINANCE `qOC, ! k
AUTHORIZING THE ISSUANCE OF TOWN OF TROPHY CLUB, TEXAS
GENERAL OBLIGATION BONDS, SERIES 2002, IN THE PRINCIPAL AMOUNT OF
$3,000,000 AND OTHER MATTERS RELATING THERETO
THE STATE OF TEXAS §
COUNTY OF DENTON §
TOWN OF TROPHY CLUB §
WHEREAS, the general obligationbonds hereinafter authorized were lawfully and favorably voted
at an election duly held in said Town on July 15, 2000; and
WHEREAS, it is deemed necessary and advisable to authorize, issue and deliver this installment
or series of said bonds; and
WHEREAS, the bonds hereinafter authorized and designated are to be issued and delivered
pursuant to Chapter 1331, Government Code; and
WHEREAS, the meeting was open to the public and public notice of the time, place and purpose
of said meeting was given pursuant to Chapter 551, Texas Government Code.
BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF TROPHY CLUB,
TEXAS:
Section 1. AMOUNT AND PURPOSE OF THE BONDS,. The bond or bonds of the
TOWN OF TROPHY CLUB, TEXAS (the "Issuer") are hereby authorized to be issued and delivered
in the aggregate principal amount of $3,000,000, for the purpose of constructing and improving the Town's
streets.
Section2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Ordinance
shall be designated: "TOWN OF TROPHY CLUB, TEXAS GENERAL OBLIGATIONBOND,
SERIES 2002", and initially there shall be issued, sold, and delivered hereunder a single fully registered
bond, without interest coupons, payable in annual installments ofprincipal (the "Initial Bond"), but the Initial
Bond may be assigned and transferred and/or converted into and exchanged for a like aggregate principal
amount of fully registered bonds, without interest coupons, having serial and annual maturities, and in the
denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter
provided. The term. "Bonds" as used in this Ordinance shall mean and include collectively the Initial Bond
and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds
issued pursuant hereto, and the term "Bond" shall mean any of the Bonds.
Section 3. INITIAL DATE DENOMINATION NUMBE MATURITIES INITIAL
REGISTERED OWNER, AND, CHARACTERISTICS OF THE INITIAL BOND. (a) The Initial Bond
is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without
interest coupons, dated January 1, 2002, in the denomination and aggregate principal amount of
$3,000,000, numbered R-1, payable in annual installments of principal to the initial registered owner
thereof, to -wit: SAL OMONSMITH BARNEY, INC., or to the registered assignee or assignees of said
Bond or any portion or portions thereof (in each case, the "registered owner"), with the annual installments
of principal of the Initial Bond to be payable on the dates, respectively, and in the principal amounts,
respectively, stated in the FORM OF INITIAL BOND set forth in this Ordinance.
(b) The Initial Bond (i) may be prepaid or redeemed prior to the respective scheduled due dates
of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and
exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the
principal of and interest on the Initial Bond shall be payable, all as provided, and in the manner required
or indicated, in the FORM OF INITIAL BOND set forth in this Ordinance.
Section 4. INTEREST. The unpaid principal balance of the Initial Bond shall bear interest
from the date of the Initial Bond and will be calculated on the basis of a 360 -day year of twelve 30 -day
months to the respective scheduled due dates, or to the respective dates ofprepayment or redemption, of
the installments of principal of the Initial Bond, and said interest shall be payable, all in the manner provided
and at the rates and on the dates stated in the FORM OF INITIAL BOND set forth in this Ordinance.
Section 5. FORM OF INITIAL BOND. The form. of the Initial Bond, including the form of
Registration Certificate of the Comptroller ofPublic Accounts of the State of Texas to be endorsed on the
Initial Bond, shall be substantially as follows:
NO. R-1
FORM OF INITIAL BOND
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
TOWN OF TROPHY CLUB, TEXAS
GENERAL OBLIGATION BOND, SERIES 2002
$3,000,000
The TOWN OF TROPHY CLUB, in DENTON COUNTY (the "Issuer"), being a political
subdivision of the State of Texas, hereby promises to pay to
SALOMON SMITH BARNEY, INC.
or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the
"registered owner") the aggregate principal amount of
THREE MILLION DOLLARS
in annual installments of principal due and payable on September 1 in each of the years, and in the
respective principal amounts, as set forth in the following schedule:
YEAR
AMOUNT
YEAR
AMOUNT
2003
90,000
2013
150,000
2004
95,000
2014
155,000
2005
100,000
2015
165,000
2006
105,000
****
****
2007
110,000
****
****
2008
115,000
2018
540,000
2009
125,000
****
****
2010
130,000
****
****
2011
135,000
2021
615,000
2012
140,000
2022
230,000
and to pay interest, from the date of this Bond hereinafter stated, on the balance of each such
installment of principal, respectively, from time to time remaining unpaid, at the rates as follows;
3
maturities 2003,
5.625 %
maturities 2013,
4.450
%
maturities 2004,
5.625 %
maturities 2014,
4.550
%
maturities 2005,
5.625 %
maturities 2015,
4.650
%
maturities 2006,
5.500 %
maturities 2007,
5.500 %
*****
***
maturities 2008,
5.500 %
maturities 2018,
4.750
%
maturities 2009,
5.500 %
*****
***
maturities 2010,
4.125 %
*****
***
maturities 2011,
4.250 %
maturities 2021,
5.000
%
maturities 2012,
4.350 %
maturities 2022,
5.000
%
with said interest being payable on September 1, 2002, and semiannually on each March 1 and September
1 thereafter while this Bond or any portion hereof is outstanding and unpaid.
THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable
in lawful money of the United States of America, without exchange or collection charges. The installments
of principal and the interest on this Bond are payable to the registered owner hereof through the services
ofJPMOR GAN CHASE BANK, HO USTON, TEXAS, which is the "Paying Agent/Registrar" for this
Bond. Payment of all principal of and interest on this Bond shall be made by the Paying Agent/Registrar
to the registered owner hereof on each principal and/or interest payment date by check or dram, dated as
ofsuch date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required
by the ordinance authorizing the issuance of this Bond (the 'Bond Ordinance") to be on deposit with the
Paying Agent/Registrar for such purpose as hereinafter provided, and such check or draft shall be sent by
the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such principal and/or
interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared
on the fifteenth day of the month next preceding each such date (the "Record Date") on the Registration
Books kept by the Paying Agent/Registrar, as hereinafter described, or by such other method acceptable
to the Paying Agent/Registrar requested by, and at the risk and expense of, the registered owner. The
Issuer covenants with the registered owner of this Bond that on or before each principal and/or interest
payment date for this Bond it will make available to the Paying Agent/Registrar, from the "interest and
Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in
immediately available funds, of all principal of and interest on this Bond, when due,
IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday,
Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registrar
is located are authorized by law or executive order to close, then the date for such payment shall be the
next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking
institutions are authorized to close; and payment on such date shall have the same force and effect as if
made on the original date payment was due.
THIS BOND has been authorized in accordance with the Constitution and laws of the State of
Texas, in the principal amount of $3,000,000, for the purpose of constructing and improving the Town's
streets.
ON SEPTEMBER 1, 2011, orany date thereafter, the unpaid installments ofprincipal of this Bond
may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds
derived from any available source, as a whole, or in part, and, if in part, the Issuer shall select and designate
the maturity, or maturities, and the amount that is to be redeemed, and if less than a whole maturity is to
be called, the Issuer shall direct the Paying Agent/Registrar to call by lot (provided that a portion of this
Bond may be redeemed only in an integral multiple of $5,000), at the redemption price of the principal
amount, plus accrued interest to the date fixed for prepayment or redemption.
THE Bonds of this Series scheduled to mature on SEPTEMBER 1, 2018 and 2021 are subject
to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part,
prior to their scheduled maturities, with money from the Mandatory Redemption Account of the Interest
and Sinking Fund, with the particular Bonds or portion thereof to be redeemed to be selected by the Paying
Agent/Registrar, by lot or other customary method (provided that a portion of a Bond may be redeemed
only in an integral multiple of $5,000), at a redemption price equal to the par or principal amount thereof
and accrued interest to the date of redemption, on the dates, and in the principal amounts, respectively, as
shown ifl the following schedule:
September 1, 2018 Maturity
Mandatory Redemption Dates Principal Amounts
2016 170,000
2017 180,000
2018 190,000 (payment at maturity)
September 1, 2021 Maturity
Mandatary Redemption Dates Principal Amounts
2019 195,000
2020 205,000
2021 215,000 (payment at maturity)
The principal amount of the Bonds required to be redeemed on each such redemption date pursuant to the
foregoing operation of the Mandatory Redemption Account shall be reduced, at the option of the Issuer,
by the principal amount of any Bonds, which at least 45 days prior to the mandatory sinking fund
redemption date, (1) shall have been defeased or acquired by the Issuer and delivered to the Paying
Agent/Registrar for cancellation, or (2) shall have been purchased and canceled by the Paying
Agent/Registrar at the request of the Issuer at a price not exceeding the principal amount of such Bonds
plus accrued interest to the date of purchase, (3) have been redeemed pursuant to the optional redemption
provisions set forth above and not theretofore credited against a mandatory sinking fund redemption.
During any period in which ownership of the Bonds is deternuned by a book entry at a securities depository
for the Bonds, if fewer than all of the Bonds of the same maturity and bearing the same interest rate are to
be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in
accordance with the arrangements between the Issuer and the securities depository.
AT LEAST 30 days prior to the date fixed for any such prepayment or redemption, a written notice
of such prepayment or redemption shall be mailed by United States mail, first class postage pre -paid, by
the Paying Agent/Registrar to the registered owner hereof. By the date fixed for any such prepayment or
redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of
the required prepayment or redemption price for this Bond or the portion hereof which is to be so prepaid
or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption. If such written
notice of prepayment or redemption is given, and if due provision for such payment is made, all as provided
above, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall
be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date
fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right
of the registered owner to receive the prepayment or redemption price plus accrued interest to the date
fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such
payment. The Paying Agent/Registrar shall record in the Registration Books all such prepayments or
redemptions of principal of this Bond or any portion hereof.
THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid
and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered
owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying
Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth
in the Bond Ordinance. Among other requirements for such transfer, this Bond must be presented and
surrendered to the Paying Agent/Registrar for cancellation, togetherwith proper instruments of assignment,
in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment
by the initial registered owner of this Bond, or any portion or portions hereof in any integral multiple of
$5,000, to the assignee or assignees in whose name or names this Bond or any such portion or portions
hereof is or are to be transferred and registered. Any instrument or instruments of assignment satisfactory
to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any such portion or
portions hereof by the initial registered owner hereof. A new bond or bonds payable to such assignee or
assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the
initial registered owner as to any portion of this Bond which is not being assigned and transferred by the
initialregistered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for
this Bond or any portion or portions hereof, but solely in the form and manner as provided in the next
paragraph hereof for the conversion and exchange of this Bond or any portion hereof. The registered
owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the
absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the
extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice
to the contrary,
AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or
unredeemed principal balance hereof, may be converted into and exchanged for a life aggregate principal
amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly
designated in writing by the initial registered owner hereof, or to the initial registered owner as to any
portion of this Bond which is not being assigned and transferred by the initial registered owner, in any
denomination or denominations in any integral multiple of $5,000 (subject to the requirement hereinafter
stated that each substitute bond issued in exchange for any portion of this Bond shall have a single stated
principal maturity date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in
accordance with the form and procedures set forth in the Bond Ordinance. If this Bond or any portion
hereof is assigned and transferred or converted each bond issued in exchange for any portion hereof shall
have a single stated principal maturity date corresponding to the due date of the installment of principal of
this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the
rate applicable to and home by such installment of principal or portion thereof. Such bonds, respectively,
shall be subject to redemption prior to maturity on the same dates and for the same prices as the
corresponding installment of principal of this Bond or portion hereof for which they are being exchanged_
No such bond shall be payable in installments, but shall have only one stated principal maturity date. AS
PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE
ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees,
but the bonds issued and delivered in exchange for this Bond or any portion hereof may be assigned and
transferred, and converted, subsequently, as provided in the Bond Ordinance. The Issuer shall pay the
Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and
exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange
7
shall pay any taxes or governmental charges required to be paid with respect thereto. The Paying
Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the
period commencing with the close of business on any Record Date and ending with the opening of business
on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof
called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption
date.
IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or
otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will
appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof
to be mailed to the registered owner of this Bond.
IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted,
authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be
performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have
been performed, existed, and been done in accordance with law; that this Bond is a general obligation of
the Issuer, issued on the full faith and credit thereof; and that ad valorem taxes sufficient to provide for the
payment of the interest on and principal of this Bond, as such interest and principal come due, have been
levied and ordered to be levied against all taxable property in the Issuer, and have been pledged for such
payment, within the limit prescribed by law.
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges
all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes
and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and
the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual signature
ofthe Mayor of the Issuer and countersigned with the manual signature of the Town Secretary of the Issuer,
has caused the official seal of the Issuer to be duly impressed on thts'6nd, and c used this Bond to
be dated January 1, 2002.
Town'Secretary Mayor
p F rR0
(TOWN SEAT LOy��_ ,�•�
C�
C
CD
-91 �'
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE:
REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity, and approved by the
Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public
Accounts of the State of Texas.
Witness my signature and seal this
Comptroller of Public Accounts of the State of Texas
(COMPTROLLER'S SEAL)
Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. (a) Registration and
Transfer. The Issuer shall keep or cause to be kept at the principal corporate trust office of JPMOR GAN
CHASE BANK, HOUSTON, TEXAS, (the "Paying Agent/Registrar") books or records of the
registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying
Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers
and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe;
and the Paying Agent/Registrar shall make such transfers and registrations as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of
each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall
be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which
payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given.
The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying
Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential
and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of
each Bond may be transferred in the Registration Books only upon presentation and surrender of such
Bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written
instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying
Agent/Registrar, (i) evidencing the assignment of the Bond, or any portion thereof in any integral multiple
of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the
Bond or any such portion thereof registered in the name of such assignee or assignees. Upon the
assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued
in conversion and exchange therefor in the manner herein provided. The Initial Bond, to the extent of the
unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial registered
owner thereof once only, and to one or more assignees designated in writing by the initial registered owner
thereof. All Bonds issued and delivered in conversion of and exchange for the Initial Bond shall be in any
denomination or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter
stated that each substitute Bond shall have a single stated principal maturity date), shall be in the form
prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, and shall have the
characteristics, and may be assigned, transferred, and converted as hereinafter provided. If the Initial Bond
or any portion thereof is assigned and transferred or converted the Initial Bond must be surrendered to the
Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any portion of the Initial
Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each
such Bond shall have a principal maturity date corresponding to the due date of the installment of principal
or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest
at the single rate applicable to and borne by such installment of principal or portion thereof for which it is
being exchanged. If only a portion of the Initial Bond is assigned and transferred, there shall be delivered
to and registered in the name of the initial registered owner substitute Bonds in exchange for the unassigned
balance of the Initial Bond in the same manner as if the initial registered owner were the assignee thereof.
If any Bond or portion thereof other than the Initial Bond is assigned and transferred or converted each
Bond issued in exchange shall have the same principal maturity date and bear interest at the same rate as
the Bond for which it is exchanged. A form of assignment shall be printed or endorsed on each Bond,
excepting the Initial Bond, which shall be executed by the registered owner or its duly authorized attorney
or representative to evidence an assignment thereof. Upon surrender of any Bonds or any portion or
portions thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall
make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or
Bonds, having the characteristics herein described, payable to such assignee or assignees (which then will
be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner in
case only a portion of a Bond is being assigned and transferred, all in conversion of and exchange for said
assigned Bond or Bonds or any portion or portions thereof, in the same form and manner, and with the
same effect, as provided in Section 6(d), below, for the conversion and exchange of Bonds by any
registered owner of a Bond. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees
and charges for making such transfer and delivery of a substitute Bond or Bonds, but the one requesting
such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto.
The Paying Agent/Registrar shall not be required to make transfers of registration of any Bond or any
portion thereof (i) during the period commencing with the close of business on any Record Date and ending
with the opening of business on the next following principal or interest payment date, or, (ii) with respect
to any Bond or any portion thereof called for redemption prior to maturity, within 30 days prior to its
redemption date.
(b) Ownership of Bonds. The entity in whose name any Bond shall be registered in the
Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes
of this Ordinance, whether or not such Bond shall be overdue, and the Issuer and the Paying
Agent/Registrar shall not be affected by any notice to the contrary; and payment of, or on account of, the
principal of, premium, if any, and interest on any such Bond shall be made only to such registered owner.
All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.
10
(c) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying Agent/Registrar
to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to
convert and exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar
shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect
to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided
in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and
for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will
be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been
received from the Issuer. Notice of the Special Record Date and of the scheduled payment date 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 Bondholder appearing on the Registration Books at the close of business on the last business day next
preceding the date of mailing of such notice.
{d} Conversion and Exchange or Re lacement• Authentication Each Bond issued and delivered
pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal
amount thereof, may, upon surrender of such Bond at the principal corporate trust office of the Paying
Agent/Registrar, together with a written request therefor duly executed by the registered owner or the
assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee
of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such
assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without
interest coupons, in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this
Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement
hereinafter stated that each substitute Bond shall have a single stated maturity date), as requested in writing
by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the
unpaid or unredeemed principal balance or principal amount of any Bond or Bonds so surrendered, and
payable to the appropriate registered owner, assignee, or assignees, as the case may be. If the Initial Bond
is assigned and transferred or converted each substitute Bond issued in exchange for any portion of the
Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and
each such Bond shall have a principal maturity date corresponding to the due date of the installment of
principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall
bear interest at the single rate applicable to and home by such installment of principal or portion thereof
for which it is being exchanged. If a portion of any Bond (other than the Initial Bond) shall be redeemed
prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having the same maturity
date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of
55,000 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed
portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If any Bond
or portion thereof (other than the Initial Bond) is assigned and transferred or converted, each Bond issued
in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the
Bond for which it is being exchanged. Each substitute Bond shall bear a letter and/or number to distinguish
it from each other Bond. The Paying Agent/Registrar shall convert and exchange or replace Bonds as
11
provided herein, and each fully registered bond delivered in conversion of and exchange for or replacement
of any Bond or portion thereof as pemutted or required by any provision of this Ordinance shall constitute
one of the Bonds for all purposes of this Ordinance, and may again be converted and exchanged or
replaced. It is specifically provided that any Bond authenticated in conversion of and exchange for or
replacement of another Bond on or prior to the first scheduled Record Date for the Initial Bond shall bear
interest from the date of the Initial Bond, but each substitute Bond so authenticated after such first
scheduled Record Date shall bear interest from the interest payment date next preceding the date on which
such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but
on or before the next following interest payment date, in which case it shall bear interest from such next
following interest payment date; provided, however, that if at the time of delivery of any substitute Bond
the interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall
bear interest from the date to which such interest has been paid in full. THE INITIAL BOND issued and
delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying
Agent/ Registrar, but on each substitute Bond issued in conversion of and exchange for or replacement of
any Bond or Bonds issued under this Ordinance there shall be printed a certificate, in the form substantially
as follows:
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance
described on the face of this Bond; and that this Bond has been issued in conversion of and exchange for
or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was
approved by the Attorney General of the State of Texas and registered by the Comptroller of Public
Accounts of the State of Texas.
Paying Agent/Registrar
Dated By
Authorized Representative"
An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date
and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding
unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds
surrendered for conversion and exchange or replacement.. No additional ordinances, orders, or resolutions
need be passed or adopted by the governing body of the Issuer or any other body or person so as to
accomplish the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the
Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the
manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed
or steel engraved borders of customary weight and strength. Pursuant to Chapter 1201, Texas
Government Code, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby
imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying Agent/Registrar's
12
AuthenticationCertificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and
enforceable in the same manner and with the same effect as the initial Bond which originally was issued
pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public
Accounts. The Issuer shall pay the Paying Agent/Regisft&s standard or customary fees and charges for
transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such
transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with
respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The
Paying Agent/Registrar shall not be required to make any such conversion and exchange or replacement
of Bonds or any portion thereof (i) during the period commencing with the close of business on any Record
Date and ending with the opening of business on the next following principal or interest payment date, or,
(ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior
to its redemption date.
(e) In General All Bonds issued in conversion and exchange or replacement of any other Bond
or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal
of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed
prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and
exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the
principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or
indicated, in the FORM OF SUBSTITUTE BOND set forth in this Ordinance.
(f) Pa ent of Fees and Charges. The Issuer hereby covenants with the registered owners of the
Bonds that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for its
services with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay
the fees and charges of the Paying Agent/Registrar for services with respect to the transfer of registration
of Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided
in this Ordinance.
(g) Substitute Pa ' A ent/Re 'stray. The Issuer covenants with the registered owners of the
Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally
qualified bank, trust company, financial institution, or other agency to act as and perform the services of
Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one
entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not
less than 120 days written notice to the Paying Agent/ Registrar, to be effective not later than 60 days prior
to the next principal or interest payment date after such notice. In the event that the entity at any time acting
as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or
otherwise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally
qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under
this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar
promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent
books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by
13
the lssuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice
thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United
States mail, first-class postage prepaid, which notice also shall give the address of the new Paying
Agent/Registrar. By accepting the position and perfbr ning as such, each Paying Agent/Registrar shall be
deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be
delivered to each Paying Agent/Registrar.
(h) Book-Entry„Only , s� The Bonds issued in exchange for the Bonds initially issued to the
purchaser specified herein shall be initially issued in the form of a separate single fully registered Bond for
each of the maturities thereof. Upon initial issuance, the ownership of each such Bond shall be registered
in the name of Cede & Co., as nominee of Depository Trust Company ofNew York ("DTC"), and except
as provided in subsection (f) hereof, all of the outstanding Bonds shall be registered in the name of Cede
& Co., as nominee of DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Issuer and
the Paying Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any
person on behalf of whom such a DTC Participant holds an interest on the Bonds. Without limiting the
immediately preceding sentence, the Issuer and the Paying Agent/Registrar shall have no responsibility or
obligation with respect to (i) the accuracy of the records ofDTC, Cede & Co. or any DTC Participant with
respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person,
other than a Bondholder, as shown on the Registration Books, of any notice with respect to the Bonds,
including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other
than a Bondholder, as shown in the Registration Books of any amount with respect to principal of,
premium, if any, or interest on, as the case may be, the Bonds. Notwithstanding any other provision of this
Ordinance to the contrary, the Issuer and the Paying Agent/Registrar shall be entitled to treat and consider
the person in whose name each Bond is registered in the Registration Books as the absolute owner of such
Bond for the purpose of payment of principal, premium, if any, and interest, as the case may be, with
respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to
such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes
whatsoever. The Paying Agent/Registrar shall pay all principal of, premiurn, if any, and interest on the
Bonds only to or upon the order of the respective owners, as shown in the Registration Books as provided
in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be
valid and effective to fully satisfy and discharge the Issuer's obligations with respect to payment ofprincipal
of, premium, if any, and interest on, or as the case may be, the Bonds to the extent of the sum or sums so
paid. No person other than an owner, as shown in the Registration Books, shall receive a Bond certificate
evidencing the obligation of the Issuer to make payments of principal, premium, if any, and interest, as the
case may be, pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written
notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and
subject to the provisions in this Ordinance with respect to interest checks being mailed to the registered
owner at the close of business on the Record Date, the word "Cede & Co." in this Ordinance shall refer
to such new nominee of DTC.
14
(i) Successor Securities Depository: Transfers Outside Book -Entry Only System In the event that
the Issuer or the Paying Agent/Registrar determines that DTC is incapable of discharging its responsibilities
described herein and in the representation letter of the Issuer to DTC and that it is in the best interest of the
beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Issuer or the Paying
Agent/Registrar shall (i) appoint a successor securities depository, qualified to act as such under Section
17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the
appointment of such successor securities depository and transfer one or more separate Bonds to such
successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC
of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their
DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Registration
Books in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor
securities depository, or its nominee, or in whatevername or names Bondholders transferring or exchanging
Bonds shall designate, in accordance with the provisions of this Ordinance.
0) Pa eats to Cede & Co. Notwithstanding any other provision of this Ordinance to the
contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments
with respect to principal of, premium, if any, and interest on, or as the case may be, such Bond and all
notices with respect to such Bond shall be made and given, respectively, in the manner provided in the
representation letter of the Issuer to DTC.
Section 7. FORM OF SUBSTITUTE BONDS. The form of all Bonds issued in conversion
and exchange or replacement of any other Bond or portion thereof, including the form of Paying
Agent/Registrar's Certificate to be printed on each of such Bonds, and the Form of Assignment to be
printed on each of the Bonds, shall be, respectively, substantially as follows, with such appropriate
variations, omissions, or insertions as are permitted or required by this Ordinance.
FORM OF SUBSTITUTE BOND
PRINCIPAL AMOUNT
NO. $
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
TOWN OF TROPHY CLUB, TEXAS
GENERAL OBLIGATION BOND, SERIES 2002
INTEREST RATE MATURITY DATE DATE OF ORIGINAL CUSIP NO.
ISSUE
January 1, 2002
15
ON THE MATURITY DATE specified above the TOWN OF TROPHY CLUB, in DENTON
COUNTY (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to
or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal
amount of
and to pay interest thereon from January 1, 2002 to the maturity date specified above, or the date of
redemption prior to maturity, at the interest rate per annum specified above; with interest being payable on
September 1, 2002 and semiannually thereafter on each March 1 and September 1, except that if the date
of authentication of this Bond is later than August 31, 2002, such principal amount shall bear interest from
the interest payment date next preceding the date of authentication, unless such date of authentication is
after any Record Date (hereinafter defined) but on or before the next following interest payment date, in
which case such principal amount shall bear interest from such next following interest payment date.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United
States of America, without exchange or collection charges. The principal of this Bond shall be paid to the
registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed
for its redemption prior to maturity, at the principal corporate trust office ofJPMORGAN CHASE BANK.,
HOUSTON, TEXAS, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this
Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment
date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on,
and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Bonds
(the 'Bond Ordinance") to be on deposit with the Paying AgentlRegistrar for such purpose as hereinafter
provided; and such check or draft shall be sent by the Paying Agent/Registrar by United States Mail, first-
class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address
ofthe registered owner, as it appeared on the fifteenth day of the month next preceding each such date (the
"Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described,
or by such other method acceptable to the Paying Agent/Registrar requested by, and the risk and expense
of, the registered owner. Any accrued interest due upon the redemption ofthis Bond prior to maturity as
provided herein shall be paid to the registered owner upon presentation and surrender of this Bond for
redemption and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer
covenants with the registered owner of this Bond that on or before each principal payment date, interest
payment date, and accrued interest payment date for this Bond it will make available to the Paying
Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts
required to provide for the payment, in immediately available funds, of all principal of and interest on the
Bonds, when due.
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IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday,
Sunday, a legal holiday, or a day on which banldng institutions in the city where the Paying Agent/Registrar
is located are authorized by law or executive order to close, then the date for such payment shall be the
next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking
institutions are authorized to close; and payment on such date shall have the same force and effect as if
made on the original date payment was due.
THIS BOND is one of an issue ofBonds initially dated January 1, 2002, authorized in accordance
withthe Constitution and laws of the State of Texas in the principal amount of $3,000,000, for the purpose
of constructing and improving the Town's streets.
ON SEPTEMBER 1, 2011, or any date thereafter, the Bonds of this Series may be redeemed
prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and
lawful, source, as a whole, or in part, and, if in part, the Issuer shall select and designate the maturity or
maturities and the amount that is to be redeemed, and if less than a whole maturity is to be called, the Issuer
shall direct the Paying Agent/Registrar to call by lot (provided that a portion of a Bond may be redeemed
only in an integral multiple of $5,000), at the redemption price of the principal amount thereof, plus accrued
interest to the date fixed for redemption.
THE Bonds of this Series scheduled to mature on SEPTEMBER 1, 2018 and 2021 are subject
to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part,
prior to their scheduled maturities, with money from the Mandatory Redemption Account of the Interest
and Sinking Fund, with the particular Bonds or portion thereof to be redeemed to be selected by the Paying
Agent/Registrar, by lot or other customary method (provided that a portion of a Bond may be redeemed
only in an integral multiple of $5,000), at a redemption price equal to the par or principal amount thereof
and accrued interest to the date of redemption, on the dates, and in the principal amounts, respectively, as
shown in the following schedule:
September 1, 2018 Maturity
Mandatory Redemption Dates Principal Amounts
2016 170,000
2017 180,000
2018 190,000 (payment at maturity)
17
September 1, 2021 Maturity
Mandatory Redem tion Dates Principal Amounts
2019 195,000
2020 205,000
2021 215,000 (payment at maturity)
The principal amount of the Bonds required to be redeemed on each such redemption date pursuant to the
foregoing operation of the Mandatory Redemption Account shall be reduced, at the option of the Issuer,
by the principal amount of any Bonds, which at least 45 days prior to the mandatory sinldng fund
redemption date, (1) shall have been defeased or acquired by the Issuer and delivered to the Paying
Agent/Registrar for cancellation, or (2) shall have been purchased and canceled by the Paying
Agent/Registrar at the request of the Issuer at a price not exceeding the principal amount of such Bonds
plus accrued interest to the date of purchase, (3) have been redeemed pursuant to the optional redemption
provisions set forth above and not theretofore credited against a mandatory sinking fund redemption.
During any period in which ownership of the Bonds is determined by a book entry at a securities depository
for the Bonds, if fewer than all of the Bonds of the same maturity and bearing the same interest rate are to
be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in
accordance with the arrangements between the Issuer and the securities depository.
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior
to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States
mail, first class postage prepaid, not Iess than 30 days prior to the date fixed for any such redemption, to
the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to
such redemption date; provided, however, that the failure to send, mail, or receive such notice, or any
defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the
proceedings for the redemption of any Bond, and it is hereby specifically provided that the mailing of such
notice as required above shall be the only notice actually required in connection with or as a prerequisite
to the redemption of any Bonds or portions thereof. By the date fixed for any such redemption due
provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price
for the Bonds or portions thereof which are to be so redeemed, plus accrued interest thereon to the date
fixed for redemption. If such written notice of redemption is published and if due provision for such
payment is made, all as provided above, the Bonds or portions thereof which are to be so redeemed
thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not
bear interest after the date fired for redemption, and they shall not be regarded as being outstanding except
for the right of the registered owner to receive the redemption price plus accrued interest from the Paying
Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed
a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any
18
denomination or denominations in any integral multiple of $5,000, at the written request of the registered
owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the
registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided
in the Bond Ordinance.
THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL
MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the
Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terns
and conditions set forth in the Bond Ordinance. Among other requirements for such assignment and
transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper
instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying
Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral
multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or
portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on
this Bond shall be executed by the registered owner or its duly authorized attorney or representative, to
evidence the assignment hereof. A new Bond or Bonds payable to such assignee or assignees (which then
will be the new registered owner or owners of such new Bond or Bonds), or to the previous registered
owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the
Paying Agent/Registrar in conversion of and exchange for this Bond, all in the form and manner as provided
in the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the
Paying Agent/Registrar's standard or customary fees and charges for making such transfer, but the one
requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect
thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or
any portion hereof (i) during the period commencing with the close of business on any Record Date and
ending with the opening of business on the next following principal or interest payment date, or, (ii} with
respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to
its redemption date. The registered owner of this Bond shall be deemed and treated by the Issuer and the
Paying Agent/Registrar as the absolute owner hereoffor all purposes, including payment and discharge of
liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall
not be affected by any notice to the contrary.
ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest
coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance, this
Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or
assignees hereof, be converted into and exchanged for a like aggregate principal amount of fully registered
bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as
the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination
or denominations in any integral multiple of 55,000 as requested in writing by the appropriate registered
owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying
Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond
Ordinance. The Issuer shall pay the Paying Agent/Regisft&s standard or customary fees and charges for
19
transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such
transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with
respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The
Paying Agcnt/Registrar shall not be required to make any such conversion and exchange (i) during the
period commencing with the close of business on any Record Date and ending with the opening ofbusiness
on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof
called for redemption prior to maturity, within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or
otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will
appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof
to be mailed to the registered owners of the Bonds.
IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted,
authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be
performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have
been performed, existed, and been done in accordance with law; that this Bond is a general obligation of
the Issuer, issued on the full faith and credit thereof; and that ad valorem takes sufficient to provide for the
payment of the interest on and principal of this Bond, as such interest and principal come due, have been
levied and ordered to be levied against all taxable property in the Issuer, and have been pledged for such
payment, within the limit prescribed by law.
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges
all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes
and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and
the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or
facsimile signature of the Mayor of the Issuer and countersigned with the or flacsiqA ignature of
the Town Secretary of the Issuer, and has caused the official seal o e Issue to b -duly ' ressed, or
1placedacsimile, on this Bond.
a
Town Secretary 11i1avor
(TOWN SEAL) �4► �� ��6n
m Q
O
20
-fydMl�
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Bond is not accompanied by an executed Registration Certificate
of the Comptroller of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described
in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in exchange for,
a bond, bonds, or a portion of a bond or bonds of a Series which originally was approved by the Attorney
General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas.
Dated JPMORGAN CHASE BANK, HOUSTON, TEXAS
By
Authorized Representative
FORM OF ASSIGNMENT
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized
representative or attorney thereof, hereby assigns this Bond to
(Assignee's Social Security or Tax Payer (Print or type Assignee's Name and
Identification Number) Address Including Zip Code)
and hereby irrevocably constitutes and appoints
attorney, to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full
power of substitution in the premises.
Dated
NOTICE: This signature must be guaranteed by
a member of the New York Stock Exchange or
a commercial bank or trust company.
21
NOTICE: This signature must correspond with the
name of the Registered Owner appearing on the face
of this Bond in every particular without alteration or
enlargement or any change whatsoever.
Section 8. TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund")
is hereby created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established
and maintained by the Issuer at an official depository bank of the Issuer. The Interest and Sinking Fund
shall be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for
paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on
account of the Bonds, together with any premium received from the sale of the Bonds, shall be deposited,
as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds or
interest thereon are outstanding and unpaid, the governing body of the Issuer shall compute and ascertain
a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to
pay the interest on the Bonds as such interest comes due, and to provide and maintain a sinking fund
adequate to pay the principal of its Bonds as such principal matures (but never less than 2% of the original
principal amount of the Bonds as a sinking find each year); and said tax shall be based on the latest
approved tax rolls of the Issuer, with full allowance being made for tax delinquencies and the cost of tax
collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied,
against all taxable property in the Issuer for each year while any of the Bonds or interest thereon are
outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the
credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the
payment of the interest on and principal of the Bonds, as such interest comes due and such principal
matures, are hereby pledged for such payment, within the limit prescribed by law.
Section 9. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be
deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this
Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the principal
of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, or
otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof or
(ii) shall have been provided for on or before such due date by irrevocably depositing with or making
available to the Paying Agent/Registrar in accordance with an escrow agreement or other instrument (the
"Future Escrow Agreement") for such payment (1) lawful money of the United States ofAmerica sufficient
to make such payment or (2) Defeasance Securities that mature as to principal and interest in such amounts
and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such
payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar
for the payment of its services until all Defeased Bonds shall have become due and payable. At such time
as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest
thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes
herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable
solely from such money or Defeasance Securities. Notwithstanding any other provision of this Ordinance
to the contrary, it is hereby provided that any determination not to redeem Defeased Bonds that is made
in conjunction with the payment arrangements specified in subsection 9(a)(i) or (ii) shall not be irrevocable,
provided that: (1) in the proceedings providing for such payment arrangements, the Issuer expressly
reserves the right to call the Defeased Bonds for redemption; (2) gives notice of the reservation of that right
22
to the owners of the Defeased Bonds immediately following the making of the payment arrangements, and
(3) directs that notice of the reservation be included in any redemption notices that it authorizes.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the
Issuer also be invested in Defeasance Securities, maturing in the amounts and times as hereinbefore set
forth, and all income from such Defeasance Securities received by the Paying Agent/Registrar that is not
required for the payment of the Bonds and interest thereon, with respect to which such money has been
so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. Any
Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held for the
payment of Defeased Bonds may contain provisions permitting the investment or reinvestment of such
moneys in Defcasance Securities or the substitution of other Defeasance Securities upon the satisfaction
of the requirements specified in subsection 9(a)(i) or (ii). All income from such Defeasance Securities
received by the Paying Agent/Registrar which is not required for the payment of the Defeased Bonds, with
respect to which such money has been so deposited, shall be remitted to the Issuer or deposited as directed
in writing by the Issuer.
(c) The term "Defeasance Securities" means (i) direct, noncallable obligations of the United States
of America, including obligations that are unconditionally guaranteed by the United States of America, (ii)
noncallable obligations ofan agency or instrumentality of the United States ofAmerica, including obligations
that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the
purchase thereof are rated as to investment quality by a nationally recognized investment rating firm not less
than AAA or its equivalent, and (iii) noncallable obligations of a state or an agency or a county,
municipality, or other political subdivision of a state that have been refunded and that, on the date the
governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements
are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or
its equivalent.
(d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall
perform the services ofPaying Agent/Registrar for such Defeased Bonds the same as if they had not been
defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required
by this Ordinance.
(e) In the event that the Issuer elects to defease less than all of the principal amount of Bonds of
a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount of Bonds by such
random method as it deems fair and appropriate.
Section 10. DAMAGED MUTILATED LOST STOLEN OR DESTROYED BONDS.
(a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or
destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of
the same principal amount, maturity, and interest rate, as the damaged, mutilated, Iost, stolen, or destroyed
Bond, in replacement for such Bond in the manner hereinafter provided.
23
(b) A�nlication far Replacement Bonds. Application for replacement of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar.
In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond
shall famish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required
by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case
of loss, theft, or destruction of a Band, the registered owner shall furnish to the Issuer and to the Paying
Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may
be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying
Agent/Registrar for cancellation the Bond so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event
any such Bond shall have matured, and no default has occurred which is then continuing in the payment of
the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment
of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of
issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the
Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other
expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section
by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of
the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable
by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any
and all other Bonds duly issued under this Ordinance.
(e) Authqft for Issuiniz Replacement Bonds. In accordance with Chapter 1201, Government
Code, this Section 10 ofthis Ordinance shall constitute authority for the issuance of any such replacement
bond without necessity of further action by the governing body of the Issuer or any other body or person,
and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and
manner and with the effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion
and exchange for other Bonds.
Section 11. CUSTODY APPROVAL AND REGISTRATION OF BONDS,• BOND
COUNSEL'S OPINION• CUSIP NUMBERS: AND CONTINGENT INSURANCE PROVISION
IF OBTAINED. The Mayor of the Issuer is hereby authorized to have control of the Initial Bond issued
hereunder and all necessary records and proceedings pertaining to the Initial Bond pending its delivery and
its investigation, examination, and approval by the Attorney General of the State of Texas, and its
registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial
Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller)
shall manually sign the Comptroller's Registration Certificate on the Initial Bond, and the seal of said
Comptroller shall be impressed, or placed in facsimile, on the Initial Bond. The approving legal opinion of
24
the Issuer's bond counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on
the Bond or any Bonds issued and delivered in conversion of and exchange or replacement of any Bond,
but neither shall have any legal effect, and shall be solely for the convenience and information of the
registered owners of the Bonds. In addition, if bond insurance is obtained, the Bonds may bear an
appropriate legend as provided by the Insurer.
Section 12. COVENANTS REGARDING TAX EXEMPTION. The Issuer covenants to
refrain from taking any action which would adversely affect, and to take any required action to ensure, the
treatment of the Bonds as obligations described in Section 103 of the Internal Revenue Code of 1986, as
amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for
purposes of federal 'income taxation. In furtherance thereof, the Issuer covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private
business use," as defined in Section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or
the projects financed therewith are so used, such amounts, whether or not received by the Issuer, with
respect to such private business use, do not, under the terms of this Ordinance, or any underlying
arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt
service on the Bonds, in contravention of Section 141(b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use" described in
subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed therewith
(less amounts deposited into a reserve fiend, if any) then the amount in excess of 5 percent is used for a
"private business use" which is "related" and not "disproportionate," within the meaning of Section 141(b)(3)
of the Code, to the governmental use;
(c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or
5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or
indirectly used to finance loans to persons, other than state or local governmental units, in contravention of
Section 141(c) of the Code;
(d) to refrain from taking any action which would otherwise result in the Bonds being treated as
"private activity bonds" within the meaning of Section 141(b) of the Code;
(e) to refrain from taking any action that would result in the Bonds being "federally guaranteed"
within the meaning of Section 149(b) of the Code;
(f) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire
or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in
Section 148(b)(2) ofthe Code) which produces a materially higher yield over the term of the Bonds, other
than investment property acquired with —
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(1) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less
or, in the case of a refunding bond, for a period of 30 days or less until such proceeds are needed
for the purpose for which the bonds are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning of Section
1.148-1(b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement fund to the
extent such amounts do not exceed 10 percent of the proceeds of the Bonds;
(g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of
the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of
Section 148 of the Code (relating to arbitrage) and, to the extent applicable, Section 149(d) of the Code
(relating to advance refundings); and
(h) to pay to the United States of America at least once during each five-year period (beginning
on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings,"
within the meaning of Section 148(f) of the Code and to pay to the United States of America, not later than
60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a
result of Excess Earnings under Section 148(f) of the Code.
For the purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds" includes
"disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds,
transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance
of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to
assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of
the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which
modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to
comply with any covenant contained herein to the extent that such failure to comply, in the opinion of
nationally -recognized bond counsel, will not adversely affect the exemption from federal income taxation
of interest on the Bonds under Section 103 of the Code. In the event that regulations or rulings are
hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer
agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally -
recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds
under Section 103 of the Code. In fiutherance of such intention, the Issuer hereby authorizes and directs
the Mayor of the Issuer to execute any documents, certificates or reports required by the Code and to
make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with
the purpose for the issuance of the Bonds.
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In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established
by the Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the
claim of any other person, including without limitation. the bondholders. The Rebate Fund is established
for the additional purpose of compliance with Section 148 of the Code.
Section 13. DESIGNATION AS UALIFIEDTAX-EXEMPT OBLIGATIONS. The Issuer
hereby designates the Certificates of Obligation as "qualified tax-exempt obligations" as defined in Section
265(b)(3) of the Code. In furtherance of such designation, the Issuer represents, covenants and warrants
the following. (a) that during the calendar year in which the Certificates of Obligation are issued, the Issuer
(including any subordinate entities) has not designated nor will designate obligations, which when
aggregated with the Certificates of Obligation, will result in more than $10,000,000 of "qualified tax-exempt
obligations" being issued; and (b) that the Issuer reasonably anticipates that the amount of tax-exempt
obligations issued, during the calendar year in which the Certificates of Obligation are issued, by the Issuer
(or any subordinate entities) will not exceed $10,000,000.
Section 14, ALLOCATION OF AND LIMITATION ON EXPENDITURES FOR THE
PROJECT. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings
to be used for the purposes described in Section I of this Ordinance (the "Project") on its books and
records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the
expenditure is made, or (2) the Project is completed. The foregoing notwithstanding, the Issuer shall not
expend sale proceeds or investment earnings thereon more than 60 days after the earlier of (1) the fifth
anniversary ofthe delivery of the Bonds, or (2) the date the Bonds are retired, unless the Issuer obtains an
opinion ofnationally-recognized band counsel that such expenditure will not adversely affect the tax-exempt
status of the Bonds. For purposes hereof, the Issuer shall not be obligated to comply with this covenant
if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal
income tax purposes from gross income of the interest.
Section 15. DISPOSITION OF PROJECT. The Issuer covenants that the property
constituting the project will not be sold or otherwise disposed in a transaction resulting in the receipt by the
Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally -recognized bond
counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For
purposes of the foregoing, the portion of the property comprising personal property and disposed in the
ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation.
For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion
that such failure to comply will not adversely affect the excludability for federal income tax purposes from
gross income of the interest.
Section 16. CONTINUING DISCLOSURE. (a) Annual Reports. (i) The Issuer shall
provide annually to any SID, within six months after the end of each fiscal year ending in or after 2001,
financial information and operating data with respect to the Issuer of the general type included in the final
Official Statement authorized by Section 32 of this Resolution, being the information described in Exhibit
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A. Any financial statements so to be provided shall be prepared in accordance with the accounting
principles described in Appendix A thereto, or such other accounting principles as the Issuer may be
required to employ from time to time pursuant to state law or regulation, and audited, if the Issuer
commissions an audit of such statements and the audit is completed within the period during which they
must be provided. If the audit of such financial statements is not complete within such period, then the
Issuer shall provide audited financial statements for the applicable fiscal year to any SID, when and if the
audit report on such statements become available.
(ii) If the Issuer changes its fiscal year, it will notify any SID of the change (and of the date of the
new fiscal year end) prior to the next date by which the Issuer otherwise would be required to provide
financial information and operating data pursuant to this Section. The financial information and operating
data to be provided pursuant to this Section may be set forth in full in one or more documents or may be
included by specific reference to any document (including an official statement or other offering document,
if it is available from the MSRB) that theretofore has been provided to any SID or filed with the SEC.
(b) Material Event Notices. The Issuer shall notify any SID and the MSRB, in a timely
manner, of any of the following events with respect to the Bonds, if such event is material within the meaning
of the federal securities laws:
1. 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 Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The Issuer shall notify any SID and the MSRB, in a timely manner, of any failure by the Issuer to provide
financial information or operating data in accordance with subsection (a) of this Section by the time required
by such subsection.
(c) Limitations, Disclaimers. and Amendments. (i) The Issuer shall be obligated to observe
and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains
an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in
any event will give notice of any deposit made in accordance with this Resolution or applicable law that
causes Bonds no longer to be outstanding.
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(ii) The provisions of this Section are for the sole benefit of the holders and beneficial owners of
the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable
right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only the financial
information, operating data, financial statements, and notices which it has expressly agreed to provide
pursuant to this Section and does not hereby undertake to provide any other information that may be
relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects or
hereby undertake to update any information provided in accordance with this Section or otherwise, except
as expressly provided herein. The Issuer does not make any representation or warranty concerning such
information or its usefiriness to a decision to invest in or sell Bonds at any fixture date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE ORIN PART FROM ANY BREACH BY THE
ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE,
(iv) No default by the Issuer in observing or performing its obligations under this Section shall
comprise a breach of or default under the Resolution forpurposes of any otherprovision of this Resolution.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer
under federal and state securities laws.
(v) The provisions of this Section may be amended by the Issuer from time to time to adapt to
changed circumstances that arise from a change in legal requirements, a change in law, or a change in the
identity, nature, status, or type of operations of the Issuer, but only if (1) the provisions of this Section, as
so amended, would have pemmitted an underwriter to purchase or sell Bonds in the primary offering of the
Bonds in compliance with the Rule, taking into account any amendments or interpretations ofthe Rule since
such offering 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 Resolution that authorizes
such an amendment) of the Outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated with the Issuer (such as bond counsel) determined that such amendment will not materially
impair the interest of the holders and beneficial owners of the Bonds, If the Issuer so amends the provisions
of this Section, it shall include with any amended financial information or operating data next provided in
accordance with subsection (a) of this Section an explanation, in narrative form, of the reason for the
amendment and of the impact of any change in the type of financial information or operating data so
provided. The Issuer may also amend or repeal the provisions of this continuing disclosure agreement if
the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters
judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this
sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering
of the Bonds.
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(d) Definitions. As used in this Section, the following terms have the meanings ascribed to such
terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMISIR" 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.
"Rade" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department, officer, or
agency thereof as, and determined by the SEC or its staff to be, a state information depository
within the meaning of the Rule from time to time.
Section 17. SALE OF INITIAL BOND. The Initial Bond is hereby sold and shall be delivered
to SALOMONSMITHBARNEY, INC. for cash for the par value thereof and accrued interest thereon
to date of delivery (accrued interest to be deposited into the Interest and Sinking Fund), plus a premium
of $0.00 (premium to be deposited into the Interest and Sinking Fund). It is hereby officially found,
determined, and declared that the Initial Bond has been sold at public sale to the bidder offering the lowest
interest cost, after receiving sealed bids pursuant to an Official Notice of Sale and Bidding Instructions and
Official Statement dated November 20, 2001, prepared and distributed in connection with the sale of the
Initial Bond. Said Official Notice of Sale and Bidding Instructions and Official Statement, and any
addenda, supplement, or amendment thereto have been and are hereby approved by the governing body
of the Issuer, and their use in the offer and sale of the Bonds is hereby approved. It is further officially
found, determined, and declared that the statements and representations contained in said Official Notice
of Sale and Official Statement are true and correct in all material respects, to the best knowledge and belief
of the governing body of the Issuer.
Section 18. INTERESTEARNINGS ON BONDS PROCEEDS. The earnings derived from
the investment of proceeds from the sale of the Bonds shall be used along with other Bond proceeds as
described in Section 1 hereof, provided that after completion of such project, if any of such interest earnings
remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further
provided, however, that interest earnings on the Bonds proceeds which are required to be rebated to the
United States of America pursuant to Section 12 hereof in order to prevent the Bonds from being arbitrage
bonds shall be so rebated and not considered as interest earnings for the purpose of this Section.
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Section 20. APPROPRIATION. There is hereby appropriated for transfer into the Interest
and Sinldng Fund, from available funds of the Issuer, moneys sufficient to pay the interest coming due on
the Bonds on September 1, 2002.
Section 19. PUBLIC NOTICE. It is hereby officially found and determined that public notice
of the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas
Government Code.
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 16 of this Ordinance.
I. Annual Financial Statements and Operating Data
The financial infon-nation and operating data with respect to the Issuer 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 and Tables referred to) below:
TABLES 1, 11, 12 and 13 OF APPENDIX A and A UDIT
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in the
notes to the financial statements referred to in paragraph I above.