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HomeMy WebLinkAboutOrdinance - 2002-O0092 - Transcript Relating To $8,500,000 Electric Light And Power System Revenue Bonds - 08/15/2002- - - Document Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 TRANSCRIPT OF PROCEEDINGS RELATING TO $8,500,000 CITY OF LUBBOCK, TEXAS, ELECTRIC LIGHT AND POWER SYSTEM REVENUE BONDS, SERIES 2002 DATED AUGUST 15, 2002 Description of Document . Resolution Approving and Authorizing Publication of Notice of Sale Affidavit of Publication Bond Ordinance Executed Paying Agent/Registrar Agreement Purchase Letter . Certificate of Certified Public Accountant General· Certificate Signature and No-Litigation Certificate Closing Instructions Certificate as to Tax Exemption Attorney General's Opinion and Comptroller's Registration Certificate Receipt for Payment Opinion of Bond Counsel Filed Information Report 1 - - - - - - / CERTIFICATE OF CITY SECRETARY THE STATE OF TEXAS COUNTY OF LUBBOCK CITY OF LUBBOCK § § § § § I, the undersigned, City Secretary of the City of Lubbock, Texas, DO HEREBY CERTIFY as follows: 1. On the 23rd day of May, 2002, a regular meeting of the City Council of the City of Lubbock, Texas, was held at a meeting place within the City; the duly constituted members of the Council being as follows: MARC McDOUGAL MAYOR ALEX "TY" COOKE ) MAYOR PRO TEM FRANK W. MORRISON ) VICTOR HERNANDEZ } COUNCILMEMBERS T. J. PATIERSON ) GARY BOREN ) TOM MARTIN } and all of said persons were present at said meeting, except the following: -:--:-:----::--~- (all present:) . Among other business considered at said meeting, the attached resolution entitled: "A RESOLUTION approving and authorizing publication of notice of sale with respect to revenue bonds." was introduced and submitted to the Council for passage and adoption. After presentation and due consideration of the resolution, and upon a motion being made by rY COOKE and seconded by TJ PAl'TERSON , the resolution was finally passed and adopted by the Council to be effective immediately by the foflowing vote:· 7 voted "For" ---=-0 __ voted "Again sf' _o_ abstained all as shown in the official Minutes of the Council for the meeting held on the aforesaid date. 2. The attached resolution is a true and correct copy of the original on file in the official records of the City; the duly qualified and acting members of the City Council of said City on the date of the aforesaid meeting are those persons shown above and. according to the records of my office, advance notice of the time, place and purpose of the meeting was given to each member of the Council; and that said meeting and the deliberation of the aforesaid public business was open to the public and written notice of said meeting. including the subject of the above entitled resolution, was posted and given in advance thereof in compliance with the provisions of V.T.C.A., Government Code, Chapter 551, as amended. 45179661.1 ·- - - - - } IN WITNESS WHEREOF, I have hereunto signed my name officially and affixed. the seal of said City, this the 2~ day of May, 2002. (City Seal) 45179661.1 2 - - - - Resolution No. 2002-R0192 Kay 23, 2002 Item Ho. 25 RESOLUTION NO. ----,-- A RESOLUTION approving and authorizing publication of notice of sale with respect to revenue bonds. · WHEREAS, the City Council of the City of Lubbock. Texas, has determined to issue electric light and power system revenue bonds in the principal amount not to exceed $8,500,000 and, in connection therewith, the sale of such bonds is to be advertised in a newspaper once a week for a period of 30 days; now, therefore BE IT RESOLVED BY THE CITY COUNCIL Of!" THE CITY OF LUBBOCK, TEXAS: The Clty Secretary is hereby authorized and directed to cause a notice of sale relating to the sale of electric light and power system revenue bonds to be published once a week for a period of thirty (30) days; such notice of sale to read substantially in the form and content of Exhibit A hereto attached and Incorporated herein by reference as a part of this resolution for all purposes. PASSED AND APPROVED, this May 23, 2002. ATTEST: (City Seal) LUBBOCK EL&P REV 2002_NOS RES. DOC - - - - - Exhibit A NOTICE OF SALE $8,500,000 Resolution No. 2002-R0192 May 23, 2002 Item No. 25 City of Lubbock, Texas, Electric Ught and Power System Revenue Bonds, Series 2002 On the 11111 day of July, 2002, the· City Council of the City of Lubbock, Texas, plans to sell the above referenced bonds during its regular meeting scheduled to begin at 10:30 o'clock A.M .. A complete description of the Bands being authorized and sold may be obtained from the Division of Finance, City of Lubbock, P.O. Box 2000, Lubbock, Texas 79457; or from First . Southwest Company, 1700 Pacific Avenue, Suite 500, Dallas, Texas 75201, Financial Consultants to the City. LUBBOCK El&P REV 2002 NOS RES.OOC - Rebecca Garza City Secretary City of Lubbock, Texas 2 - - - - AFFIDAVIT OF PUBLICATION __ :s::_._..:::>_\t".::'_::e_q_;._ __ ,, 2002; __ ;s;..;;...;;:l..);...""-"l;;...;;;;;;:f:;:;..· _\;...'-o.;;;.._ __ ,, 2002; _...;;;-:s.=-~=..;:.."""-.:::.~..::;;;_d-=-~..;.=-:::--•• 2002; and ~ ',....,p ~ 2002• __ _;.....,_''--..;;_.~~"----'' ' and said newspaper devotes not less than twenty-five percent (25%) of its total column lineage to items of general interest, is published not less frequently than once each week, entered as periodical postal matter in the county where it is published and has been published regularly and continuously for not less than twelve (12) months prior to the date of the publication of said ''NOTICE OF SALE". (Notary Seal) 45179666.1 3 - - - THE STATE OF TEXAS COUNTY OF LUBBOCK CITY OF LUBBOCK CERTIFICATE OF CITY SECRETARY § § § § § I, the undersigned, City Secretary of the City of Lubbock, Texas, DO HEREBY CERTIFY as follows: 1. On the 291h day of August, 2002, the City Council of the City of Lubbock, Texas, convened in regular session at its regular meeting place in the City Hall of said City; the duly constituted members of the Council being as follows: MARC McDOUGAL VICTOR HERNANDEZ T. J. PATIERSON GARY BOREN FRANK W. MORRISON TOM MARTIN ALEX "TY" COOKE ) ) ) ) ) ) MAYOR MAYOR PRO TEM COUNCILMEMBERS all of said persons were present at said meeting, except the following: Marc McDougal*, T. J. Patterson* . Among other business considered at said meeting, the attached ordinance entitled: "AN ORDINANCE authorizing the issuance of 'CITY OF LUBBOCK, TEXAS, ELECTRIC LIGHT AND POWER SYSTEM REVENUE BONDS, SERIES 2002'; specifying the terms and features of said bonds; pledging the net revenues of the City's Electric Light and Power System to the payment of the principal of and interest on said bonds; enacting provisions incident and related to the issuance, payment, security, sale and delivery of said bonds, including the approval and execution of a Paying Agent/Registrar Agreement and a Purchase Letter; and providing an effective date." was introduced and submitted to the Council for final passage and adoption. After presentation and due consideration of the Ordinance, and upon a motion being made by Alex "Ty" Cooke and seconded by Frank W. Morrison , the Ordinance was duly passed and adopted to be effective immediately in accordance with the Section 1201.028 by the following vote: 5 voted "For" 0 voted "Against" 0 abstained all as shown in the official Minutes of the Council for the meeting held on the aforesaid date. The Mayor and Mr. Patterson vacated the meeting temporarily while the vote was being taken. 45195614.1 - - 2. The attached Ordinance is a true and correct copy of the original on file in the official records of the City; the duly qualified and acting members of the City Council of said City on the date of the aforesaid meetings are those persons shown above and, according to the records of my office, advance notice of the time, place and purp'ose of each meeting was given to each member of the Council; and that said meetings and the deliberation of the aforesaid public business were open to the public and written notice of said meetings, including the subject of the above entitled Ordinance, was posted and given in advance thereof in compliance with the provisions of V.T.C.A., Government Code, Chapter 551, as amended. IN WITNESS WHEREOF, I have hereunto signed my name officially and affixed the seal of said City, this the 2f1h day of August, 2002. C1t Secretary 't::::i City bf Lubbock, Texas (City Seal) 45195614.1 - 2 - ORDINANCE NO. 2002-00092 AN ORDINANCE authorizing .the issuance of. "CITY OF LUBBOCK, TEXAS, ELECTRIC LIGHT AND POWER SYSTEM REVENUE BONDS, SERIES 2002"; specifying the terms and features of said bonds; pledging the net revenues of the City's Electric Light and Power System to the payment of the principal of and interest on said bonds; enacting provisions incident and related to the issuance, payment, security, sale and delivery of said bonds, including the approval and execution of a Paying Agent/Registrar Agreement and a Purchase Letter; and providing an effective date. WHEREAS, in accordance with the provisions of V.T.C.A., Government CodE), Chapter 1502, the City Council of the Cityof Lubbock, Texas (the "City") hereby finds. and determines that electric light and power system revenue bonds in the principal amount of $8,500,000 for the purpose of providing money to construct, improve, renovate, enlarge or equip property, buildings, structures, facilities or related infrastructure for the City's Electric Light and Power System (the "System") should be issued and sold at this time; and, WHEREAS, the City Council has further determined and hereby finds said bonds can and should be issued on a parity with other outstanding revenue bonds of the City (hereinafter called and defined as "Previously Issued Bonds") payable from and secured by a first lien on and pledge of the net revenues of the System and that the terms and conditions for the issuance of "additional bonds" on a parity with the Previously Issued Bonds can be met and · satisfied, to wit: (i) the Mayor and Director of Finance (who has assumed the duties of City Treasurer) can certify that the City is not now in default as to any covenant, condition or obligation prescribed by the ordinances authorizing the issuance of the outstanding Previously Issued Bonds, including showings that all interest, sinking, and reserve funds have been fully maintained in accordance.with the provisions of said ordinances; (ii) applicable laws of the State of Texas now in force permit and authorize the issuance of the bonds and the bonds herein authorized will be issued in compliance with such applicable laws, (iii) the City can secure from an independent Certified Public Accountant a written report demonstrating that the net revenues of the System were, during the last completed fiscal year, equal to at least 1-1/2 times the average annual principal and interest requirements of all the bonds which will be secured by a first lien on and pledge of the net revenues of the System and which will be outstanding upon the issuance of the bonds herein authorized; and further demonstrating that the net revenues of the System during the last completed fiscal year were equal to at least 1~1/5 times the maximum· annual principal and interest requirements of all such bonds as will be outstanding upon the issuance of the bonds herein authorized, (iv) the bonds herein authorized will mature on April15 in each year, and (v) the "Reserve Portion" of the Bond Fund shall be accumulated and supplemented as necessary to maintain therein a sum equal to at least the average annual principal and interest requirements of all bonds secured by a first lien on and pledge of the net revenues of the System which will be outstanding upon the issuance of the bonds herein authorized; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: SECTION 1: Authorization -Designation -Principal Amount -Purpose. Revenue bonds of the City shall be and are hereby authorized to be issued in the aggregate principal 45195259.4 - amount of $8,500,000, to be designated and bear the title "City of Lubbock, Texas, Electric Light and Power System· Revenue Bonds, Series 2002" (the "Bonds"), for the purpose of providing money to construct, improve, renovate, enlarge or equip property, buildings, structures, facilities or related infrastructure for the City's Electric Light and Power System, in conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Government Code, Section 1502.051{c). · · SECTION 2: Fully Registered Obligations -Authorized Denominations· -· Stated Maturities -Date. The Bonds shall be issued as fully registered obligations, without coupons, shall be dated August 15, 2002 {the "Bond Date") and shall be in denominations of $5,000 or any integral multiple thereof {within a Stated Maturity), shall be issued as serial bonds numbered consecutively "S" One (1) and upward and as a term bond numbered consecutively from "T" One {1) and upward, and such serial bonds and term bond shall have stated maturities as follows: Serial Bonds: Stated Maturity Principal April15 Amount 2004 . $455,000 2005 480,000 2006 500,000 2007 520,000 2008 550,000 2009 575,000 2010 605,000 2011 630,000 2012 660,000 2013 690,000 Term Bond: Stated Maturity Principal Apri115 Amount 2013 $2,835,000 The Bonds shall bear interest on the unpaid principal amounts from the Bond Date at the rate of 4.75% per annum {calculated on the basis of a 360-day year of twelve 30-day months). Interest on the Bonds shall be payable on April15 and October 15 in each year, commencing April 15, 2003. SECTION 3: Terms of Payment-Paying AgenURegistrar. The principal of, premium, if any, and the interest on the Bonds, due and payable by reason of maturity, redemption or otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter · called the "Holders") appearing on the registration and transfer books maintained by the Paying 45195259.4 -2- - Agent/Registrar and the payment thereof shall be in any coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, and shall be without exchange or collection charges to the Holders. The selection and appointment of JPMorgan Chase Bank, Dallas, Texas to serve as Paying Agent/Registrar for the Bonds is hereby approved. and confirmed. Books and records relating to the registration, payment, transfer and exchange of the Bonds (the "Security Register") shall at all times be kept and maintained on behalf of the City by the Paying Agent/Registrar, as provided herein and in accordance with the terms and provisions of a "Paying Agent/ Registrar Agreement", substantially in the form attached hereto as Exhibit A, and such reasonable rules and regulations as the Paying Agent/Registrar and the City may · prescribe. The Mayor and City Secretary are authorized to execute and deliver such Agreement in connection with the delivery of the Bonds. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are paid and discharged, and any successor Paying Agent/Registrar shall be a bank, trust company, financial institution or other entity qualified and authorized to serve in such capacity and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Bonds, the City agrees to promptly cause a written notice thereof to be sent to each Holder by United States Mail, first class postage prepaid, which notice shall alsogive the address of the new Paying Agent/Registrar. Principal of and premium, if any, on· the Bonds shall be payable at the Stated Maturities or upon the earlier redemption thereof, only upon presentation and surrender of the Bonds to the Paying Agent/Registrar at its designated offices in Dallas, Texas (the "Designated Payment/Transfer Office"). Interest on the Bonds shall be paid to the Holders whose names appear in the Security Register at the close of business on the Record Date (the last business day of the month next preceding each interest payment date) and shall be paid by the Paying Agent/Registrar (i) by check sent United States Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the City where the Designated Payment/Transfer Office of the Paying Agent/ Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. · In the event of a non-payment of interest on one or more maturities on a scheduled payment date, and for thirty {30) days thereafter, a new record date for such interest payment for such maturity or maturities (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 City. Notice of the Special Record Date and ofthe scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder of such maturity or maturities appearing on the Security 45195259.4 -3- - - - - Register at the close of business on the last business day next preceding the date of mailing of . such notice. · · SECTION 4: Redemption. (a) Optional Redemption. The Bonds having· Stated Maturities on and after April 15, 2004, shall be subject to redemption prior to maturity, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent! Registrar), on October 15, 2003 or on any date thereafter at the redemption price of par plus accrued interest to the date of redemption. At least forty-five (45) days prior to a redemption date for the Bonds (unless a shorter notification period shall be satisfactory to the Paying Agent/Registrar). the City shall notify the Paying Agent/Registrar of the decision to redeem Bonds, the principal amount of each Stated Maturity to be redeemed, and the date of redemption therefor. The decision of the City to exercise the right to redeem Bonds shall be entered in the minutes of the governing body of the City. (b) Mandatory Redemption. The Term Bonds due April 15, 2013 shall be subject to mandatory redemption prior to maturity at the ·price of par plus accrued interest to the mandatory redemption date on the respective dates and in principal amounts as follows: Redemption Date April15, 2004 April 15, 2005 April 15, 2006 April 15,2007 April 15, 2008 April 15, 2009 April 15, 2010 April15, 2011 April15, 2012 April 15, 2013 (maturity) Principal Amount $230,000 235,000 250,000 265,000 275,000 285,000 300,000 315,000 330,000 350,000 Approximately forty-five (45) days prior to each mandatory redemption date, the Paying Agent/Registrar shall select by lot the numbers of the Term Bonds to be redeemed on the next following April 15 from moneys set aside for that purpose in the Bond Fund (as hereinafter defined). Any Term Bonds not selected for prior redemption shall be paid on the date of their Stated Maturity. The principal amount of the Term Bonds required to be redeemed on a mandatory redemption date may be reduced, at the option of the City, by the principal amount of Term Bonds which, at least 50 days prior to the mandatory redemption date, (1) shall have been acquired by the City at a price· not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation or (2) shall have been redeemed pursuant to the optional redemption provisions set 45195259.4 -4- - - forth in paragraph(a) of this Section and not theretofore credited against a mandatory redemption requirement. · (c) Selection of Bonds for Redemption;. If less than all Outstanding Bonds of the same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/ Registrar shall treat such Bonds as representing the number of Bonds Outstanding which is obtained by dividing the principal amount of such Bonds by $5,000 and shall select the Bonds· to be redeemed within such Stated Maturity by lot. · {d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date for the Bonds, a notice of redemption shall be sent by United States Mail, first class postage prepaid, in the name of the City and at the City's expense, to each Holder of a Bond to be redeemed in whole or in part at the address of the Holder appearing on the Security Register at the close of business on the business day next preceding the date of mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Holder. All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii) identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price, (iv) state that the Bonds, or the portion of the principal amount thereof to be redeemed, shall become due and payable on the redemption date specified, and the interest thereon, or on the portion of the principal amount thereof to be redeemed, shall cease to accrue from and after the redemption date, and (v) specify that payment of the redemption price for the Bonds, or the principal amount thereof to be redeemed, shall be made at the Designated Paymentrrransfer Office of the Paying Agent/ Registrar only upon presentation and surrender thereof by the Holder. If a Bond is subject by its terms to prior redemption and has been called for redemption and notice of redemption thereof has been duly given or waived as herein provided, such Bond (or the principal amount thereof to be redeemed) shall become due and payable, and interest thereon shall cease to accrue from and after the redemption date therefor, provided moneys sufficient for the payment of such Bonds (or of the principal amount thereof to be redeemed) at the then applicable redemption price are held for the purpose of such payment by the Paying Agent/Registrar. SECTION 5: Registration-Transfer-Exchange of Bonds-Predecessor Bonds. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each registered owner of the Bonds issued under and pursuant to the provisions of this Ordinance. Any Bond may, in accordance with its terms and the terms hereof, be transferred or exchanged for Bonds of other authorized denominations upon the Security Register by the Holder, in person or by his duly authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/ Registrar. Upon surrender for transfer of any Bond (other than the Initial Bonds authorized in Section 8 hereof) at the Designated Payment/Transfer Office of the Paying Agent/Registrar, the Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or 45195259.4 -5- - transferees, one or more new Bonds, executed on behalf of, and furnished by, the City of authorized denominations and having the same Stated Maturity arid of a like aggregate principal · amount as the Bond or Bonds surrendered for transfer. At the option of the Holder, Bonds (other than the Initial Bonds authorized in Section 8 hereof) may be exchanged for other Bonds of authorized denominations and having the same Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the Bonds surrendered for exchange, upon surrender of the Bonds to be exchanged at the Designated Payment!Transfer Office of the Paying Agent/ Registrar. Whenever any Bonds are surrendered for exchange, the Paying Agent/Registrar shall register and deliver new Bonds, executed on behalf of, and furnished by, the City, to the Holder requesting the exchange. All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the Designated Payment!Transfer Office of the Paying Agent/Registrar, or sent by United States Mail, first class postage prepaid, to the Holder and, upon the delivery thereof, the same shall be valid obligations of the City, evidencing the same obligation to pay, and entitled to the same benefits under this Ordinance, as the Bonds surrendered in such transfer or exchange. All transfers or exchanges of Bonds pursuant to this Section shall be made without expense or service charge to the Holder, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined to be "Predecessor Bonds," evidencing all or a portion, as the case may be, of the same obligation to pay evidenced by the Bond or Bonds registered and delivered in the exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued, registered and delivered in lieu thereof pursuant to Section 31 hereof and such new replacement Bond shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond called for redemption, in whole or in part, within 45 days of the date fixed for redemption of such Bond; provided, however, such limitation of transfer shall not be applicable to an exchange by the Holder of the unredeemed balance of a Bond called for redemption in part. SECTION 6: Book-Entry Only Transfers and Transactions. Notwithstanding the provisions contained in Sections 3, 4 and 5 hereof relating to the payment, and transfer/exchange of the Bonds, the City hereby approves and authorizes the use of "Book-Entry Only" securities clearance, settlement and transfer system provided by The Depository Trust Company (DTC), a limited purpose trust company organized under the laws of the State of New York, in accordance with the operational arrangements referenced in the Blanket Issuer Letter Representation, by and between the City and DTC (the "Depository Agreement") relating to the Bonds. 45195259.4 -6- - - - Pursuant to the Depository Agreement and the rules of DTC, the Bonds shaH be deposited with DTC who shall hold said Bonds for its participants (the "DTC Participants"). While the Bonds are held by DTC under the Depository Agreement, the Holder of the Bonds on the Security Register for all purposes, including payment and notices, shall be Cede & Co., as nominee of DTC, notwithstanding the ownership of each actual purchaser or owner of each Bond (the "Beneficial Owners") being recorded in the records of DTC and DTC Participants. In the event DTC determines to discontinue serving as securities depository for the Bonds or otherwise ceases to provide book-entry clearance and settlement of securities transactions in general or the City determines that DTC is incapable of properly disch<;irging its duties as securities depository for the Bonds, the Cify covenants and agrees with the Holders of the Bonds to cause Bonds to be printed in definitive form and provide for the Bond certificates to · be issued and delivered to DTC Participants and Beneficial Owners, as the case may be. Thereafter, the Bonds in definitive form shall be assigned, transferred and exchanged on the Security Register maintained by the Paying Agent/Registrar and payment ofsuch Bonds shall be made in accordance with the provisions of Sections 3, 4 and 5 hereof. SECTION 7: Execution -Registration. The Bonds shall be executed on behalf of the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the City Secretary. The signature of said officers on the Bonds may be manual or facsimile .. Bonds bearing the manual or facsimile signatures of individuals who are or were the proper officers of the City on the Bond Date shall be deemed to be duly executed on behalf of the City, notwithstanding that such individuals or either of them shall cease to hold such offices at the time of delivery of the Bonds to the initial purchaser(s) and with respect to Bonds delivered in subsequent. exchanges and transfers, all as authorized and provided in-the V.T.C.A., Government Code, Chapter 1201. · No Bond shall be entitled to any· right or benefit under this Ordinance, or be valid or obligatory for any purpose, unless there appears on such Bond either a certificate of registration substantially in the form provided in Section 9C, manually executed by the Comptroller of Public Accounts of the State of Texas or his duly authorized agent, or a certificate of registration substantially in the form provided in Section 90, manually executed by an authorized officer, employee or representative of the Paying Agent/ Registrar, and either such certificate upon any Bond duly signed shall be conclusive evidence, and the only evidence, that such Bond has been duly certified, registered and delivered. SECTION 8: Initial Bond(s). The Bonds herein authorized shall be initially issued as three (3) fully registered bonds, being one bond for each purchaser in the principal amount of their respective commitments and to mature as set forth in said commitments attached hereto as Exhibit B and numbered Sl-1 and Sl-2 for, the serial bonds and Tl-3 for the term bond (hereinafter called the "Initial Bonds"). The Initial Bonds shall be the Bonds submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Pubric Accounts of the State of Texas and delivered to the initial purchasers. Any time after the delivery of the Initial . Bonds, the Paying Agent/Registrar, pursuant to written instructions from the initial purchasers, or the designee thereof, shall cancel the Initial Bonds delivered hereunder and exchange therefor definitive Bonds of like kind (serial for serial and term for term), of authorized denominations, Stated Maturities and principal 45195259.4 -7- - - - - - amounts for transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to and in accordance with such written instructions from the initial purchasers, or the designee thereof, and such other information and documentation as the Paying Agent/Registrar may reasonably require. · SECTION 9: Forms. A. Forms Generally. The Bonds, the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of Registration, and the form of Assignment to be printed on each of the Bonds, shall be substantially in the forms set forth in this Section with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the .American Bankers Association) and such legends and endorsements (including insurance legends in the event the Bonds, or any. maturities thereof, are purchased with insurance and any reproduction of.an opinion of counsel) thereon as may, consistently herewith, be established by the City or determined by the officers executing such Bonds as evidenced by their execution thereof. Any portion of the text of any Bonds may be set forth on the reverse thereof, wtth an appropriate reference thereto on the face of the Bond. · · The definitive Bonds and the Initial Bonds shall be printed, lithographed, or engraved, typewritten, photocopied or otherwise reproduced.in any other similar manner, all as determined · by the officers executing such Bonds as evidenced by their execution. B. Form of Definitive Bond and Initial Term Bond. REGISTERED NO. ___ _ Bond Date: August 15, 2002 Registered Owner: Principal Amount: REGISTERED $ _____ _ UNITED STATE OF AMERICA STATE OF TEXAS CITY OF LUBBOCK, TEXAS ELECTRIC LIGHT AND POWER SYSTEM REVENUE BONO, SERIES 2002 Interest Rate: Stated Maturity: % -- CUSIP NO. DOLLARS The City of Lubbock (hereinafter referred to as the "City"), a body corporate and municipal corporation in the County of Lubbock, State of Texas, for value received, hereby promises to pay to the Registered Owner named above, or the registered assigns thereof, solely from the revenues hereinafter defined, on the Stated Maturity date specified above, the Principal Amount stated above (or so much thereof as shall not have been paid upon prior redemption) 45195259.4 . -8- - - - and to pay interest on the. unpaid Principal Amount hereof from the Bond Date at the per annum rate of interest specified above computed on the basis of a 360-day year of twelve 30-day months; such interest being payable on April 15 and October 15 of each year, commencing April 15,. 2003. Principal of this Bond shall be payable to the registered owner hereof, upon · presentation and surrender, [at the Designated Paymentrrransfer Office of the Paying Agent/Registrar executing the registration certificate appearing hereon, or its successor]1; provided, however, while this Bond is registered to Cede & Co., the payment of principal upon a partial redemption of the principal amount hereof may be accomplished without presentation and surrender of this Bond. Interest is payable to the registered owner of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose name.· appears on the "Security Register" maintained by the Paying Agent/ Registrar at the close of business on the "Record Date", which is the last business day of the month next preceding each interest payment date and interest shall be paid by the Paying Agent/ Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such othermethod, acceptable to the paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Bond shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. This Bond is o"ne of the series specified in its title issued in the aggregate principal amount of $8,500,000 (herein referred to as the "Bonds") for the purpose of providing money to construct, improve, renovate, enlarge or equip property, buildings, structures, facilities or related infrastructure for the City's Electric Light and Power System, under and in strict conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Government Code, Section 1502.051(c), and pursuant to an Ordinance adopted by the City Council of the City (herein referred to as the "Ordinance"). The Term Bonds due April 15, 2013 are subject to mandatory redemption prior to maturity with funds on deposit in the Bond Fund established and maintained for the payment thereof in the Ordinance, and shall be redeemed in part prior to maturity at the price of par and accrued interest thereon to the date of redemption, and without premium, on the dates and in the principal amounts as follows: Redemption Date April 15, 2004 April15,2005 April 15,2006 April 15, 2007 April 15, 2008 Principal Amount $230,000 235,000 250,000 265,000 275,000 1 Language in brackets to be omitted in the Initial Term Bond and the following language .inserted in lieu thereof: "by JPMorgan Chase Bank, Dallas, Texas (the "Paying Agent/Registrar"), upon presentation and surrender, at its designated office in Dallas, Texas (the "Designated Payment/Transfer Office") 45195259.4 -9- ·-· - ·- ·- - April 15, 2009 April 15,2010 April15, 2011 April15, 2012 April15, 2013 (maturity) 285,000 300,000 . 315,000 330,000 350,000 The particular Term Bonds to be redeemed on each redemption date shall be chosen by Jot by the Paying Agent/Registrar; provided, however, that the principal amount of Term Bonds required to be redeemed on a mandatory redemption date may be reduced, at the option of the City, by the principal amount of Term Bonds which, at least 50 days prior to the mandatory redemption date, (1) shall have been acquired by the City at a price not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation or (2) shall have been redeemed pursuant to the optional redemption provisions appearing below and not theretofore credited against a mandatory redemption requirement. The Bonds maturing on and after April 15, 2004, may be redeemed prior to their Stated Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on October 15, 2003, or on any date thereafter, at the redemption price of par, together with accrued interest to the date of redemption. At least thirty days prior to the date fixed for any redemption of Bonds, the City shall cause a written notice of such redemption to be sent by United States Mail, first class postage prepaid, to the registered owners of each Bond to be redeemed at the address shown on the Security Register and subject to the terms and provisions relating thereto contained in the Ordinance. If a Bond (or any portion of its principal sum) shall have been duly called for redemption and notice of such redemption duly given, then upon such redemption date such Bond (or the portion of its principal sum to be redeemed) shall become due and payable, and interest thereon shall cease to accrue from and after the redemption date therefor, provided moneys for the payment of the redemption price and the interest on the principal amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying Agent/Registrar. In the event a portion of the principal amount of a Bond is to be redeemed and the registered owner is someone other than Cede & Co., payment of the redemption price of such principal amount shall be made to the registered owner only upon presentation and surrender of such Bond to the Designated Payment/Transfer Office of the Paying Agent/Registrar, and a new Bond or Bonds of like maturity and interest rate in any authorized denominations provided by the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to the registered owner, without charge. If a Bond is selected for redemption, in whole or in part, the City and the Paying Agent/Registrar shall not be required to transfer such Bond to an assignee of the registered owner within 45 days of the redemption date therefor; provided, however, such limitation on transferability shall not be applicable to an exchange by the registered owner of the unredeemed balance of a Bond redeemed in part. 45195259.4 -10- - The Bonds are special obligations of the City and, together with the outstanding and unpaid Previously Issued Bonds (as defined in the Ordinance), are payable solely from and secured by a first lien on and pledge of the Net Revenues {as defined in the Ordinance) of the City's Electric Light and Power System (the "System"). The Bonds do not constitute a legal or equitable pledge, charge, lien or encumbrance upon any property of the City or the System, except with respect to the Net Revenues. The holder hereof shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation. Subject to satisfying the terms and conditions prescribed therefor, the City has reserved the right to issue additional revenue obligations payable from and equally and ratably secured by a parity lien on and pledge of the Net Revenues of the System, in the same manner and to the same extent as the Bonds. Reference is hereby made to the Ordinance, a copy of which is on file in the Designated Payment/Transfer Office the Paying Agent/Registrar, and to all of the provisions of which the Holder by his acceptance hereof hereby assents, for definitions of terms: the description of and the nature and extent of the security for the Bonds; the properties constituting the System; the Net Revenues pledged to the payment of the principal of and interest on the Bonds; the nature · and extent and manner of enforcement of the lien and pledge securing the payment of the Bonds; the termsand. conditions for the issuance of additional revenue obligations; the terms and conditions relating to the transfer or exchange of this Bond; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders; the rights, duties, and obligations of the City and the Paying Agent/ Registrar; the terms and provisions upon which the liens, pledges, charges and covenants made therein may be discharged at or prior to the maturity or redemption of this Bond, and this Bond deemed to be no longer Outstanding thereunder; and for the other terms and provisions thereof. Capitalized terms used herein have the same. meanings assigned in the Ordinance. This Bond, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and .surrender at the Designated Payment/Transfer Office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by, the registered owner hereof, or his duly authorized agent When a transfer on the Security Register occurs, one or more new fully registered 13onds of the same Stated Maturity, of authorized denominations, bearing the same rate of interest, and of the same aggregate principal amount will be issued by the Paying Agent/Registrar to the designated transferee or transferees. The City and the Paying Agent/Registrar, and any agent of either, may treat the registered owner hereof whose name appears on the Security Register (i) on the Record Date as the owner entitled to payment of interest hereon, (ii) on the date of surrender of this Bond as the owner entitled to payment of principal hereof at its Stated Maturity or its redemption, in whole or in part, and (iii) on any other date as the owner for all other purposes, and neither the City nor the Paying Agent/ Registrar, or any agent of either, shall be affected by notice to the contrary. In the event of non-payment 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 45195259.4 -11- - - - interest have been received from the City. Notice of the Special Record Date and of the · scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last businessday next preceding the date of mailing of such notice. It is hereby certified, recited and represented and covenanted that the City is a duly organized and legally existing municipal corporation under and by virtue of the Constitution and laws of the State of Texas; that the issuance of the Bonds is duly authorized by law; that all acts, conditions and things required to exist and be done precedent to and in the issuance of the Bonds to render the same lawful and valid obligations of the City have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitutiqn and laws of the State of Texas, and the. Ordinance; that the Bonds do not exceed any constitutional or statutory limitation; and that due provision has .been made for the payment of the principal of and interest on the Bonds by a pledge of the Net Revenues of the System as aforestated. In case any provision in this Bond or any application thereof shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions and applications shall not in any way be affected or impaired thereby. The terms and provisions of this Bond and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly executed under the official seal of the City as of the Bond Date. CITY OF LUBBOCK, TEXAS Mayor COUNTERSIGNED: City Secretary· (City Seal) 45195259.4 -12- - - - - -- - - - C. *Form of Registration Certificate of Comptroller of Public Accounts to Appear on Initial Bonds only. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS § § § § REGISTER NO. ------ THE STATE OF TEXAS 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 duly registered by the Comptroller of Public Accounts of the State of Texas. WITNESS my signature and seal of office this--------- (SEAL) Comptroller of Public Accounts of the State of Texas * NOTE TO PRINTER: Do not print on Definitive Bonds. D. Form of Certificate-of Paying Agent/Registrar to Appear on definitive Bonds only. This_ Bond has been duly issued and registered in the name of the Registered Owner shown above under the provisions of the within-mentioned Ordinance; the bond or bonds of the above entitled and designated series originally delivered having been approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts, as shown by the records of the Paying Agent/Registrar. The designated offices of the Paying Agent/Registrar in Dallas, Texas, is the "Designated Payment/Transfer Office" for this Bond. Registration. date: 45195259.4 -13- JPMORGAN CHASE BANK, Dallas, Texas, as Paying Agent/Registrar By_~~~~~------­Authorized Officer -· - - - E. Form of Assignment ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print or typewrite name, address, and zip code of transferee:) ______ ....,._ ___ _ (Social Security or other identifying number the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, withfull power of substitution in the premises. DATED: Signature guaranteed: NOTICE: The signature on this assignment must correspond with the name. of the registered owner as it · appears on the face of the within Bond in every particular. F. The Initial Bonds shall be in the form set forth in paragraph B of this Section, except that the form of the single fully registered Serial Initial Bonds shall be modified as follows: (i) immediately under the name of the bond the headings "Interest Rate .. and "Stated Maturity " shall both be omitted; (ii) Paragraph one shall read as follows: The City of Lubbock (hereinafter referred to as the !'City"), a body corporate and municipal corporation in the County of Lubbock, State of Texas, for value received, hereby promises to pay to the Registered Owner named above, or the registered assigns thereof, solely from the revenues hereinafter identified, on April 15 in each of the years and in principal amounts in accordance with the following schedule: · YEAR PRINCIPAL INSTALLMENTS (Information to be inserted from schedule in Section 2 hereof and . the purchase letter attached hereto). (or so much thereof as shall not have been prepaid prior to maturity) and to pay interest on the unpaid principal amounts hereof from the Bond Date at the rate of 4.75% per annum computed onthe basis ofa 360-day year of twelve 30-day months; such interest being payable on April 15 45195259.4 -14- - - - -- - - - and October 15 of each year, commencing April 15, 2003. Principal of this Bond shall be payable to the registered owner hereof byJPMorgan Chase Bank, Dallas, Texas (the "Paying Agent/Registrar"), upon presentation and surrender, at its designated office in Dallas, Texas (the "Designated Payment/ Transfer Office"). Interest is payable to the registered owner of this Bond whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the last business day of the month next preceding each interest payment date and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded .in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any,. and interest on this Bond shall be ,without exchange or ·collection charges to the owner hereof and in any coin or currency of the. United States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 10: Definitions. For all purposes of this Ordinance and in particular for clarity with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of revenues therefor, the following definitions are provided: {a) The term "Additional Bonds" shall mean the additional parity obligations the ·City reserves the right to issue in accordance with the terms and conditions prescribed in Section 21 hereof. · (b) The term "Bonds" shall mean the $8,500,000 "City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 2002," dated August 15, 2002, authorized by this Ordinance. (c) The term "Bonds Similarly Secured" means the Previously Issued Bonds, the Bonds and Additional Bonds. (d) The term "Fiscal Year'' shall mean the twelve month accounting period used by the City in connection with the operations of the System which may be any twelve { 12) consecutive month period establishe<;l by the City. (e) The term "Government Obligations" shall mean (i) direct noncallable obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations unconditionally guaranteed or insured by the agency or instrumentality and on the date of their acquisition or purchase by the City are rated a~ 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 on the date of their acquisition or purchase by the City, are rated as to investment quality by a nationally recognized investment . rating firm not less than AAA or its equivalent. 45195259.4 -15- ·-·-·-··-~----~--------~----~-"-'--~~-~--------~---'""-- - - - - - - {f) The term "Net Revenues" shall mean the gross revenues of the System less expenses of operation and . maintenance. Such expenses of operation and maintenance shall not include depreciation charges or funds pledged for the Bonds Similarly Secured, but shall include all salaries, labor, materials, repairs, and extensions necessary to render services; provided, however, that in determining "Net Revenues", only such repairs and extensions as in the judgment of the City Council, reasonably and fairly exercised, are necessary to keep the System in operation and render adequate service to the City and inhabitants thereof, or such as might be necessary to meet some · physical accident or condition wh.ich otherwise would impair the security of the Bonds Similarly Secured, shall be deducted, and payments under contracts for the purchase and supply of power. (g) The term "Outstanding" when used in this Ordinance with respect to Bonds or Bonds Similarly Secured, as the case may be, shall mean, as of the date of determination, all Bonds and Bonds Similarly Secured theretofore sold, issued and delivered by the City, except: (1) those Bonds or Bonds Similarly Secured cancelled or delivered to the ~ransfer agent or registrar for cancellation in connection with the exchange odransfer of such obligations; (2) those Bonds or Bonds Similarly Secured paid or deemed to be paid in accordance with the provisions of Section 29 hereof; and . (3) those Bonds or Bonds Similarly .Secured that have been mutilated, destroyed, lost, or stolen and replacement bonds have been registered and delivered in lieu thereof. {h) The term "Previously Issued Bonds" shall mean the outstanding and unpaid revenue bonds payable from and secured by a first lien on and · pledge of the Net Revenues of the System, further identified as follows: 45195259.4 (1) City of Lubbock, Texas, Electric Light and Power · System Refunding Revenue Bonds, Series 1995, dated June 15, 1995, in the original principal amount of $13,560,000. (2} City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 1998, dated January 1, 1998, in the original principal amount of $9,170,000. (3) City of Lubbock, Texas, Electric tight and Power System Revenue Refunding and Improvement Bonds, Series 1999, dated January 15, 1999, in the original principal amount of $14,975,000. -16- - ....... - - (4) City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 2001, dated July 1, 2001, in the original principal amount of $9,200,000. · (i) The term "System" shall mean all properties, real, personal, mixed or otherwise, now owned or hereafter acquired by the City of Lubbock through purchase, 90nstruction or otherwise, and used in connection with the City's Electric Light and Power System and in anywise pertaining thereto, whether situated within or without the limits of the City. SECTION 11: Pledge. The City hereby covenants and agrees that all of the Net Revenues derived from the operation of the System, with the exception of those in excess of the amounts required to establish and maintain the special Funds created for the payment and security of the .Bonds Similarly Secured, are hereby irrevocably pledged for the payment of the Previously Issued Bonds, the Bonds and Additional Bonds, if issued, and the interest thereon, and it is hereby ordained that the Previously Issued Bonds, the Bonds and Additional Bonds, if issued, and the interest thereon, shall constitute a first lien on the Net Revenues of the System in accordance with the terms and provisions hereof and be valid and binding and fully perfected from and after the date of adoption of this Ordinance without physical delivery or transfer or transfer of control of the Net Revenues, the filing of this Ordinance or any other act; all as provided in Chapter 1208 of the Texas Government Code. Section 1208, Government Code, applies to the issuance of the Bonds and the pledge of the Net Revenues of the System granted by the City under this Section 11, and such pledge is therefore valid, effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding such tl)at the pledge of the Net Revenues of the System granted by the City under this Section 11 is to be subject to the filing requirements of Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in said pledge, the City agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce Code and enable a filing to perfect the security interest in said pledge to occur. SECTION 12: Rates and Charges. The City hereby covenants and agrees with the owners of the Bonds that rates and charges for electric power and energy afforded by the System will be established and maintained to provide revenues sufficient at all times to pay: (a) all necessary and reasonable expenses of operating and maintaining the System as set forth in the definition "Net Revenues" and to recover depreciation; (b) the amounts required to be deposited to the Bond Fund to pay the principal of and interest on the Bonds Similarly Secured as the same becomes due and payable and to accumulate and maintain the reserve amount required to be deposited therein; and · · 45195259.4 -17- - - - - - - {c) any other legally incurred indebtedness payable from· the revenues of the System and/or secured by a lien on the System or the 'revenues . thereof. SECTION 13: Segregation of Revenues/Fund Designations. All receipts, revenues and income derived from the operation and ownership . of the System shall be kept separate from other funds of the City and deposited within twenty-four (24) hours after collection in the "Electric Light and Power System. Fund" (created and established in connection with the issuance of the Previously Issued Bonds), which Fund (hereinafter referred to as the "System Fund") is hereby reaffirmed and shall continue ·to be kept and maintained at an official depository bank of the City while the Bonds remain Outstanding. Furthermore, the "Special Electric Light and Power System Revenue Bond Retirement and Reserve Fund" (hereinafter referred to as the "Bond Fund"), created and established in connection with the issuance of the Previously Issued Bonds, is hereby reaffirmed and shall continue to be maintained by the City while the Bonds remain Outstanding. The Bond Fund is and shall continue to be kept and maintained at the City's official depository bank, and moneys deposited in the Bond Fund shall be used for no purpose other than for the payment, redemption and retirement of Bonds Similarly Secured. SECTION 14: System Fund. The City hereby reaffirms its covenant to the holders of the Previously Issued Bonds and agrees with the owners of the Bonds that the moneys deposited in the System Fund shall be used first for the payment of the reasonable and proper expenses of operating and maintaining the System, as identified in Section 1 O(f) hereof. All moneys deposited in the System Fund in excess of the amounts required to pay operating and maintenance expenses of the System shall be applied and appropriated, to the extent required and in the order of priority prescribed, as follows: · (a) To the payment of the amounts required to be deposited in the Bond Fund for the payment of principal of and interest on the Bonds Similarly Secured as the same become due and payable; and {b) To the payment of the amounts, if any, required to be deposited in the Bond Fund to accumulate and maintain the reserve amount as security for the payment of the principal of and interest on the Bonds Similarly Secured. SECTION 15: Bond Fund. (a) In addition to the required monthly deposits to the Bond Fund for the payment of principal of and interest on the Previously Issued Bonds, the City hereby agrees and covenants to deposit to the Bond Fund an amount equal to one . hundred percentum ( 100%) of the amount required to fully pay the interest on and principal of the Bonds falling due on or before each maturity and interest payment date, such payments to be made in substantially equal monthly installments on or before the 1st day of each month beginning on or before the .1st day of the month next following the month the Bonds are delivered to the initial purchaser. The required monthly deposits to the Bond Fund for the payment of principal of and interest on the Bonds shall continue to be made as hereinabove provided until such time as (i) the, total amount on deposit in the Bond Fund, including the "Reserve Portion" deposited therein, 45195259.4 -18- - is equal to the amount required to fully pay and discharge all outstanding Bonds Similady Secured (principal and interest) or (ii) the Bonds are no longer outstanding, i.e., the Bonds have been fully paid as to principal and interest or all the Bonds have been refunded. Accrued interest and premium, if any, received from the purchasers of the Bonds shall be deposited in the Bond Fund, and shall be taken into consideration and reduce the amount of the monthly deposits hereinabove required which would otherwise be required to be deposited in the Bond Fund from the Net Revenues of the System. (b) In addition to the amounts to be deposited in the Bond Fund ·to pay current principal and interest for the Bonds Similarly Secured, the City reaffirms its covenant to . the holders of the Previously Issued Bonds and agrees to accumulate and maintain in said Fund a reseNe amount (the "ReseNe Portion") equal to not less than the average annual principal and interest requirements of all outstanding Bonds Similarly Secured (calculated and redetermined at the time of issuance of each series of Bonds Similarly Secured). In accordance with the ordinances authorizing the issuance of the Previously Issued Bonds, there is currently on deposit to the credit of the ReseNe Portion of the Bond Fund the sum of $2,761,819 (the "Current Reserve"). By virtue of the issuance of the Bonds, the amount required to be on deposit in the Reserve Portion of the Bond Fund is determined to be $3,062,400 (the "Required Reserve"), which amount equals not less than the average annual principal and interest requirements of the outstanding Bonds Similarly Secured after giving effect to the issuance of the Bonds. Simultaneously with the delivery of the Bonds, the City shall cause to be deposited to the credit of the ReseNe Portion of the Bond Fund an amount sufficient to fully fund the Required Reserve from available Net Revenues of the System. The Reserve Portion of the Bond Fund shall be made available for and reasonably employed in meeting the requirements of the Bond Fund if need be, and if any amount thereof is so employed, the ReseNe Portion in the Bond Fund shall be fully restored to the Required Reserve as rapidly as possible from the first available Net Revenues of the System in the System Fund subject only to the priority of payments hereinabove prescribed in Section 14. Any amounts on deposit in the Reserve Portion of the Bond Fund which is in excess of the Required Reserve shall be transferred to the System Fund. SECTION 16: Payment of Bonds. While any of the Bonds are outstanding, the proper officers of the City are hereby authorized to transfer or cause to be transferred to the Paying Agent/Registrar, from funds on deposit in the Bond Fund, including the Reserve Portion, if necessary, amounts sufficient to fully pay and discharge promptly as each installment of interest · and principal of the Bonds accrues or matures or comes due by reason of redemption prior to maturity; such transfer of funds to be made in such manner as will cause immediately available funds to be deposited with the Paying Agent/Registrar for the Bonds at the close of the business day next preceding the date of payment for the Bonds. SECTION 17: Deficiencies in Funds. If in any month the City shall, for any reason, fail to pay into the Bond Fund the full amounts above stipulated, amounts equivalent to such deficiencies shall be set apart and paid into said Fund from the first available and unallocated Net Revenues of the System in the following month or months and such payments shall be in 45195259.4 -19- - addition to the amounts hereinabove provided to be otherwise paid into said Fund during such month or months. SECTION 18: Excess Revenues. Any surplus Net Revenues of the System remaining after all payments have been made into the Bond Fund and after all deficiencies in making deposits to said Fund have been remedied, may be used for any other City purposes now or hereafter permitted by law, including the use thereof for the retirement in advance of maturity of the Bonds Similarly Secured by the purchase of any of such Bonds Similar~y Sect,Jred on the open market at not exceeding the market value thereof. Nothing herein, however, shall be construed as impairing the right of the City to pay, in accordance with the provisions thereof, any junior lien bonds legally issued and payable out of the Net Revenues of the System. --. . . . . SECTION 1 9: Security of Funds. Moneys on deposit in the System Fund (except any amounts as may be properly invested) shall be secured in the manner and to the fullest extent required by the laws of the State of Texas for the security of public funds .. Moneys on deposit in the Bond Fund shall be continuously secured by a valid pledge of direct obligations of, or obligations unconditionally guaranteed by the United States of America, having a par value, or market value, exclusive of accrued interest, at all tlmes at least equal to the amountof money to be deposited in said Fund. All sums deposited in said Bond Fund shall be held as a trust fund for the benefit of the Holders of the Bonds Similarly Secured, while the beneficial interest therein deemed to be vested in such Holders. To the extent money in the Reserve Portion of the Bond Fund is invested under the provisions of Section 20 hereof, securing such money as provided otherwise in this section, is not required. SECTION 20: Investment of Reserve Portion of Bond Fund. Money deposited to the ·credit of the Reserve Portion of the Bond Fund may, atthe option of the City, be invested in obligations identified in, and in accordance with the provisions of the "Public Funds Investment Act" (V.T.C.A., Government Code, Chapter 2256) relating to the investment of "bond proceeds"; provided that all such investments shall be made in such a manner that the money required to be expended from said Funds will be available at the proper time or times. Such investments (except State and Local Government Series inVestments held in book entry form, which shall at all times be valued at cost) shall be valued in terms of current market value within 45 days of the close of each Fiscal Year and, with respect to investments held for the account of the Reserve Fund, within 30 days of the date of passage of each ordinance authorizing the issuance of Additional Bonds. All moneys resulting from maturity of principal and.interest of the securities shall be reinvested or accumulatedin the Reserve Portion of the Bond Fund and considered a part thereof and used for and only for the purposes hereinabove provided with respect to said Reserve Portion, provided that when the full amount required to be accumulated in the Reserve Portion of the Bond Fund (being the amounts required to be accumulated by the ordinances authorizing the Bonds Similarly Secured) is accumulated, any interest increment may be used in the Bond Fund to reduce the payments that would otherwise be required to pay the current debt service requirements on Bonds Similarly Secured. · SECTION 21: Issuance of Additional Parity Bonds. In addition. to the right to issue bonds of. inferior lien as authorized by the laws of the State of Texas, the City hereby reserves the right to issue Additional Bonds which, when duly authorized and issued in compliance with the terms and conditions hereinafter appearing, shall be on a parity with the Previously Issued 45195259.4 -20- - - - - - Bonds and the Bonds herein authorized, payable from and equally and ratably secured by a first lien on and pledge of the Net Revenues of the System. The Additional Bonds may be issued in one or more installments, provided, however, that none shall be issued unless and until the following conditions have been met: · · (a) The Mayor and Director of Finance (who has assumed the duties of City Treasurer) have certified that the City is not then in default as to any · covenant, condition or obligation prescribed by any ordinance authorizing the issuance of Bonds Similarly Secured then outstanding, including showirtgs that all interest, sinking and reserve funds then provided. for have been fully maintained in accordance with the provisions of said ordinances; (b) The applicable laws of the State. of Texas in force at the time provide permission ·and authority for the issuance of such bonds and have been . fully complied with; {c) The City has secured from an independent Certified Public Accountant a.written report demonstrating the Net Revenues of the System were, during the last completed Fiscal Year, or during any consecutive twelve (12) months period of the last fifteen (15) consecutive months prior to the month of adoption of the ordinance authorizing the Additional Bonds,· equal to at least one and one-half (1-1/2) times the average annual principal and interest requirements of all the bonds which will be secured by a first lien on and pledge of the Net Revenues of the System and which will be outstanding upon the issuance of the Additional Bonds; and further demonstrating that for the same period as is employed in arriving at the aforementioned test said Net Revenues were equal to at least one and one-fifth (1-1/5) times the maximum annual principal and interest requirements of all such bonds as will be outstanding upon the issuance ofthe Additional Bonds; (d) The Additional. Bonds are made to mature on April 15 or October 15, or both, in each of the years in which they are provided to mature; (e) The Reserve Portion of the Bond Fund shall be accumulated and supplemented as necessary to maintain a sum which shafl be not less than the average annual principal and interest requirements of all bonds secured by a first lien on and pledge of the Net Revenues of the System which will be outstanding upon the issuance of any series of Additional Bonds. Accordingly, each ordinance authorizing the issuance of any series of Additional Bonds shall provide for any required increase in the Reserve Portion, and if supplementation is necessary to meet all conditions of said Reserve Portion, said ordinances shall make provision that same be supplemented by the required amounts in equal monthly installments over a period of not to exceed sixty (60) calendar months from the dating of such Additional Bonds. 45195259.4 -21- - When thus issued, such Additional Bonds may be secured by a pledge of the Net Revenues of the System on a parity in all things with the pledge securing the issuance of the Bonds and the Previously Issued Bonds. SECTION 22: Maintenance and Operation-Insurance. The City hereby covenants and agrees to maintain. the System in good condition and operate the same in an efficient manner . and at reasonable cost. The City further agrees to maintain insurance for the benefit of the owners of the Bonds of the kinds and in the amounts which are usually carried by private companies operating similar properties, and that during such time all policies of insurance shall be maintained in force and kept current as to premium payments. All moneys received from losses under such insurance policies other than public liability policies are hereby pledged as security for the Bonds Similarly Secured until and unless the proceeds thereof are ·paid out in making good· the loss or damage in respect of which such proceeds are received, either by replacing the property destroyed or repairing the property damaged, and adequate provisions are made within ninety (90) days after the date of the loss for making good such loss or damage. The premiums for all insurance policies required under the provisions of this Section shall be considered as maintenance and operation expenses of the System. SECTION 23: Records -Accounts -Accounting Reports. The City hereby covenants and agrees while any of the Bonds or any interest thereon remain outstanding and unpaid, it will keep and maintain a proper and complete system of records and accounts pertaining to the operation of the System separate and apart from all other records and accounts of the City in . accordance with generally accepted accounting principles prescribed for municipal corporations, and complete and correct entries shall be made of all transactions relating to said System, as provided by applicable law. The Holder of any Bonds, or any duly authorized agent or agents of such Holder, shall have the right at all reasonable times to inspect all such records, accounts and data relati.ng thereto and to inspect the System and all properties comprising same. The City further agrees that as soon as possible following the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of Certified Public Accountants. Each such audit, in addition to whatever other matters may be thought proper by the Accountant, shall particularly include the following: (a) A detailed statement of the income and expenditures of the System for such Fiscal Year; (b) A balance sheet as of the end of such Fiscal Year; (c) The Accountant's comments regarding the manner in which the City has complied with the covenants and requirements of this Ordinance and his recommendations for any changes or improvements in the operation, records and accounts of the System; (d) A list of the insurance policies in force at the end of the Fiscal Year on the System properties, setting out as to each policy the amount thereof, the risk covered, the name of th.e insurer, and the policy's expiration date; 45195259.4 -22- - - (e) A list of the securities which have been on deposit as security for the money in the Bond Fund throughout the Fiscal Year and a list of the securities, if any, in which the Reserve Portion of the Bond Fund has been invested. {f) The total number of metered and unmetered customers, if any, . connected with the System at the end of the Fiscal Year. Expenses incurred in making the audits above referred to are to be regarded as maintenance and operating expenses of the System and paid as such. Copies of the aforesaid annual audit shall be immediately furnished to the Executive Director of the Municipal Advisory Council. of Texas at his office in Austin, Texas, and, upon written request, to the original purchasers and any subsequent Holders of the Bonds. · SECTION 24: Remedies in Event of Default In addition to all the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City {a) defaults in. payments to be made .to the Bond Fund as required by this Ordinance or {b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this Ordinance, with the consent of the Holders of any of the Bonds shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the City Council and other officers of the City to observe and perform any covenant, condition or obligation prescribed in this Ordinance. No delay or omission to exercise. any· right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right or power may be exercised from time to time and as often as may be deemed expedient. The specific remedies herein provided shall be cumulative of all other existing remedies and the specifications of such remedies shall not be deemed to be exclusive. SECTION 25: Special Covenants. The City hereby further covenants as follows: {a) It has the lawful power to pledge the revenues supporting this issue of Bonds and has lawfully exercised said power under the Constitution and laws of the State of Texas, including V.T.C.A, Government Code, Chapter 1502.; that the Previously Issued Bonds, the Bonds and the Additional Bonds, when issued, shall be ratably secured under said pledge of income in such manner that one bond shall have no preference over any other bond of said issues .. {b) Other than for the payment of the Previously Issued Bonds and the Bonds, the Net Revenues of the System have not been pledged to the payment of any debt or obligation of the City or of the System. · (c) While any of the Bonds or any interest thereon remain outstanding, the City will not sell, lease or encumber the System or any substantial part thereof; provided, however, this covenant shall not be construed to prohibit the sale of such machinery, or other properties or equipment which 45195259.4 . -23- - - - has become obsolete or otherwise unsuited to the . efficient operation of the System when other property of equal value has been substituted therefor, and, also, with the exception of the Additional Bonds expressly permitted by this · Ordinance to be issued, it will not encumber the Net Revenues of the System unless such encumbrance is made junior and subordinate to all of the provisions of this Ordinance. In the event the City sells the System, the City will . use proceeds of such sale to provide for final payment of the Bonds, the Previously Issued Bonds, and any Additional Bonds. (d) The City will cause to be rendered monthly ·to each customer receiving electric services a statement therefor and will not accept payment of less than all of any statement so rendered, using its power under existing ordinances and under all such ordinances to become effective in . the future to enforce payment, to withhold service from such delinquent customers and to enforce and authorize reconnection charges. (e) The City wilf faithfully and punctually perform all duties with respect to the System required by the Constitution and laws of the State of Texas, inCluding the making and collecting of reasonable and sufficient rates for servi~es supplied by the System, and the segregation and application of the revenues of the System as required by the provisions of this Ordinance. (f) No free service shall be provided by the System and to the extent the City or its departments or agencies utilize the services provided by the System, payment shall be made therefor at rates charged to others for similar service. SECTION 26: Special Obligations. The Bonds are special obligations of the City payable from the pledged Net Revenues of the System and the Holders shall never have the right to demand payment thereof out of funds raised or to be raised by taxation. SECTION 27: Ordinance to Constitute Contract. The provisions of the Ordinance shall constitute a contract between the City and the Holder or Holders from time to time of the Bonds and no change, variation or alteration of any kind of the provisions of the Ordinance may be made, except as permitted in this Section. The City may, without the consent of or notice to any Holder or Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders and, with the consent of Holder or Holders holding a majority in aggregate principal amount of the Bonds then Outstanding affected thereby; the City may amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of Outstanding Bonds, no such amendment. addition or rescission shall ( 1) extend the time or times of payment of the principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof, the redemption price therefor, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bend over any other Bond. or (3) reduce the aggregate principal amount of Bonds required for consent to any such amendment, addition or rescission. 45195259.4 -24- - - · . SECTION 28: Covenants to Maintain Tax-Exempt Status. (a) Definitions. When used in this Section, the following terms shall have the following meanings: ·"Closing Date" means the date.on which the Bonds are first authenticated and delivered to the initial purchasers against payment therefor. "Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any, effective on or before the Closing Date. "Computation Date" has the meaning set forth in Section 1.148-1 (b) of the Regulations. . "Gross Proceeds" means any proceeds as defined in Section 1.148-1 (b) of the Regulations, and· any replacement proceeds as defined in Section 1.148-1(c) of the Regulati.ons, of the Bonds. "Investment" has the meaning set forth in Section 1.148-1 (b) of the Regulations. "Nonpurpose Investment" means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and which is not acquired to carry out the governmental purposes of the Bonds. "Rebate Amount" has the meaning setforth in Section 1.148-1 {b) of the Regulations. "Regulations" means any proposed, temporary, or final Income Tax Regulations issued . . pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation designed to supplement, amend or replace the specific Regulation referenced. "Yield" of (1) any Investment has the meaning set forth in Section 1.148-5 of the Regulations; and (2) the Bonds has the meaning set forth in Section 1.14.8-4 of the Regulations. (b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is . to be financed directly or indirectly with Gross Proceeds) in a manner which if made or omitted! respectively, would cause the interest on any Bond to become includable in the gross income, as defined in section 61 of the Code, of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the City receives a written opinion of counsel nationally recognized in the field of municipal bond law to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any Bond, the City shall comply with each of the specific covenants in this Section. 45195259.4 -25- ·"" .. - - - - (c) No Private Use or Private Payments. Except as permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of Bonds: · (1) exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or ·indirectly with Gross Proceeds of the. Bonds, and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (2) · · not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Bonds or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds, other than taxes of general application within the City or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Private Loan. Except to the extent permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the Bonds to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds arE) considered to be "loaned" to a person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt for federal income tax purposes; (2) capacity in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of. such Gross Proceeds or any property acquired, constructed or improved with such Gross Proceeds are otherwise transferred in a transaction which is the economic equivalent of a loan. (e) Not to Invest at Higher Yield. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the final Stated Maturity of the Bonds directly or indirectly invest Gross Proceeds in any Investment (or use Gross Proceeds to replace money so invested), if as a result of such investment the Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of the Bonds. (f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the Bonds to be federally guaranteed within the meaning of section 149(b) of the Code and the Regulations and rulings thereunder. 45195259.4 -26- - - (g) Information Report. The. City -shall timely file the information required by section . 149( e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. (h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(f) of the Code and the Regulations and rulings thereunder: (1) The City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments. thereof) and shall retain all records of accounting for at least six years after the day on which the last Outstanding Bond is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the Bonds with other money- of the City, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith .. (2) Not less frequently than each Computation Date, the City shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Regulations. and rulings thereunder. The City shall maintain such calculations with its official transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date. (3) As additional consideration for the purchase of the Bonds by the Purchasers and the loan of the money represented thereby and in order to induce such· purchase by measures designed to insure the excludability of the interest thereon from the gross income of the owners thereof for federal income tax purposes, the City shall pay to th~ United States out of the Bond Fund or its general fund, as permitted by applicable Texas statute, regulation or opinion of the Attorney General of the State of Texas, the amount that when added to the future value of previous rebate payments made for the Bonds equals (i) in the case of a Final Computation Date as defined in Section 1.148-3(e)(2) of the Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, the rebate payments shall be made at the times, in the installments, to the place and in the manner as is or may be required by section 148(f) of the Code and the. Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or such other forms and information as is or may be required by Section 148(f) of the Code and the Regulations and rulings thereunder. (4) The City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3), and if an error is made, to discover and promptly correct such error within a · reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount oWed to it, interest thereon, and any penalty imposed under Section 1.148-3(h) of the Regulations. 45195259.4 -27- - - (i) Not to Divert Arbitrage Profits, Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that reduces the amount required to be paid to the United States pursuant to Subsection (h) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yield of the Bonds not been · relevant to either party. U) Elections. The City hereby directs and authorizes the Mayor, City Manager, City Secretary, Cash and Debt Manager, and Director of Finance, either or any combination of them, to make elections permitted or required pursuant to the provisions of the Code or the Regulations, as they deem necessary or appropriate in connection with the Bonds, in the Certificate as to Tax Exemption or similar or other appropriate certificate, form or document. SECTION 29: Satisfaction of Obligation of City. If the City shall pay or cause to be paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on the Bonds, at the times and in the manner stipulated in this Ordinance, then the pledge of the Net Revenues of the System under this Ordinance and all other obligations of the City to the Holders shall thereupon cease, terminate, and become void and be discharged and satisfied. Bonds or any principal amount(s) thereof shall be deemed to have been paid within the meaning and with the effect expressed above in this Section when (i) money sufficient to pay in full such Bonds or the principal amount(s) thereof at maturity or to the redemption date therefor, together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying · Agent/Regi~trar, or an authorized escrow agent, or (ii) Government Obligations shall have been irrevocably deposited in trust with the Paying Agent/ Registrar, or an authorized escrow agent, which Government Obligations have been certified by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money, together with any moneys deposited therewith, if any, to pay when due the principal of and interest on such Bonds, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable to the Paying Agent/Registrar have been made) the redemption date thereof. The City covenants that no deposit of moneys or Government Obligations will be made under this Section and no use made of ariy such deposit which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow agent, and all income from Government Obligations held in trust by the Paying Agent/Registrar or an authorized escrow agent, pursuant to this Section which is not required for the payment of the Bonds, or any principal amount(s) thereof, or interest thereon with respect to which such · moneys have been so deposited shall be remitted to the City or deposited as directed by the City. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Bonds and remaining unClaimed for a period of three (3) years after the Stated Maturity, or applicable redemption date, of the Bonds such moneys were deposited and are held in trust to pay shall, upon the request of the City, be remitted to the City 45195259.4 -28- - - - - - against a written receipt therefor. Notwithstanding the above and foregoing, any remittance of funds from the Paying Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of the State of Texas. · · · SECTION 30: Notices to Holders-Waiver. Wherever this Ordinance provides for notice to Holders of any ·event, such notice shall be sufficiently given {unless otherwise herein expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to the address of each Holder as it appears in the Security Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holders, nor any defect in any notice so mailed; shall affect the sufficiency of such notice with respect to all other Bonds. Where this Ordinance provides for notice in any manner, such notice may be waived in writing by the Holder entitled to receive such notice, either before or after the event with respect to which such notice is given, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with · the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 31: Mutilated -Destroyed -Lost and Stolen Bonds. In case any Bond shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a replacement Bond of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Bond, or in lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the City and after {i) the filing by the Holder thereof with the Paying Agent/ Registrar of evidence satisfactory to the Paying Agent/ Registrar of the destruction, loss or theft of such Bond, and of the authenticity of the ownership thereof and (ii) the furnishing. to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the City and the Paying Agent/Registrar harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Bond shall be borne by the Holder of the Bond mutilated, or destroyed, lost or stolen. Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost, or stolen Bond shall constitute a replacement of the prior obligation of ttie City, whether or not the mutilated, destroyed, lost, or stolen Bond shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this ·Ordinance equally and ratably with ail other Outstanding Bonds. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost, or stolen Bonds. SECTION 32: Cancellation. All Bonds surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly canceled by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already canceled, shall be promptly canceled by the Paying Agent/Registrar. The City may at any time deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or registered and delivered which the City may have acquired in any manner 45195259.4 -29- - -· - - - - whatsoever, and all Bonds so delivered shall. be promptly canceled by the Paying Agent/Registrar. All canceled Bonds held by the Paying Agent/Registrar shall be disposed of as directed by the City. · · SECTION 33: Sale of Bonds. The Bonds authorized by this Ordinance are hereby sold ·by' the City to American State Bank, Bank of America, N.A. and Wells Fargo Bank Texas, N.A.. (herein referred to as the "Purchasers") in accordance with the Purchase Letter, dated August 29, 2002, attached hereto as Exhibit B and incorporated herein by reference as a part of this ·Ordinance for all purposes. The Mayor and City Secretary are hereby authorized and directed to execute the acceptance clause of said Purchase Letter for and on behalf of the City and as the act and deed of this Council. SECTION 34: Approval and Registration of Bonds. The Mayor of said City is hereby authorized to have control. of the Bon(js, including the Initial Bonds, and all necess13ry records and proceedings pertaining to said Bonds pending their delivery and their investigation, examination and approval by the Attorney General of the State of Texas .. Upon registration of the Initial Bonds, said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be printed and endorsed on the Initial Bonds, and the seal of said Comptroller shall be impressed, or printed, or lithographed on said Initial Bonds. In addition, the Mayor, Mayor Pro Tern, City Secretary, City Manager, Deputy City Manager, Cash and Debt Manager, or Director of Finance, any one or more of said officials, are hereby authorized and directed to furnish . and execute such documents and certifications relating to the City and the issuance of the Bonds, including a certification as to facts, estimates, circumstances and reasonable expectations pertaining to the use and expenditure and investment of the proceeds of the Bonds as may be necessary for the approval of the Attorney General, registration by the Comptroller of Public Accounts and delivery of the Bonds to the purchasers thereof and, together with the City's financial advisor, bond counsel and the Paying Agent/ Registrar, make the necessary arrangements for the delivery of the Initial Bonds to· the purchasers. · SECTION 35: Proceeds of Sale. · The proceeds of sale of the Bonds, excluding the accrued interest received from the purchasers and proceeds disbursed for the payment of costs of issuance and municipal bond insurance premium, shall be deposited in a construction fund maintained at the City's depository bank. Pending expenditure for authorized projects and purposes, such proceeds of sale may be invested in authorized investments in accordance with the provisions of V.T.C.A., Government Code; Chapter 2256, including guaranteed investment contracts permitted by V.T.C.A., Section 2256.015 et seq., and the City's investment policies and guidelines, and any investment earnings realized shall be expended for such authorized projects and purposes or deposited in the Bond Fund as shall be determined by the City Council. Accrued interest and premium, if any, received from the sale of the Bonds and any excess bond proceeds, including investment earnings, remaining after completion of all authorized projects or purposes shall be deposited to the credit of the Bond Fund. SECTION 36: Legal Opinion. The obligation of the Purchasers to accept delivery of the Bonds is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P., Attorneys, 45195259.4 -30- - - - - Dallas, Texas, approving such Bonds as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for such Bonds. A true and correct reproduction of said opinion is hereby authorized to be printed on the definitive Bonds or an executed counterpart thereof shall accompany the global Bonds deposited with the Depository Trust Company. SECTION 37: CUSIP Numbers. CUSIP numbers may be printed on the Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor the ·. attorneys approving said Bonds as to l~gality are to be held responsible for CUSIP numbers incorrectly printed on the Bonds. · · · SECTION 38: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other· than the City, the Paying Agent/Registrar, and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being . intended to be and being for the sole and exclusive benefit of the City, the Paying Agent/Registrar, and the Holders. SECTION 39: Inconsistent Provisions. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby . repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain controlling as to the matters contained herein. SECTION 40: ·Governing Law. This Ordinanc~ shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. SECTION 41: Severability. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the ·application thereof to other circumstances shall nevertheless be valid, and this governing body ·hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 42: Continuing Disclosure Undertaking. (a) Definitions. As used in this Section, the following terms· have the meanings ascribed to such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "N,RMSlR" 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. 45195259.4 -31- - - - {b) Annual Reports. The City shall provide annuallyto each NRMSIR and any SID, within six months after the end of each fiscal year (beginning with the fiscal year ending September 30, 2002) financial information and operating data with respect to the City, being the information described in Exhibit C hereto. Financial statements to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit C hereto and (2) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. If audited financial statements are not available at the time the financial information and operating data must be provided, then the City shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and any SID with the financial information and operating data and will file the annual audit report when and if the same becomes available. · If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to tf1e next date by which the City otherwise · would be required to provide financial information and operating data pursuant to this Section. The financial information and operating dat9 to be provided pursuant to this Section may be set forth in full in one or more documents or rhay be included by specific reference to any ·document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or'filed with the SEC. {c) Material Event Notices. The City shall notify any SID and either eachNRrvtSIR or 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 City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the. City to provide financial information or operating data in accordance with subsection (b) of this Section by the time required by such Section. (d) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section while, but only while, the City remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except . that the City in any event will give the notice required by subsection (c) hereof of any Bond calls and defeasance that cause the City to be no longer such an "obligated person." 45195259.4. -32- - - - - 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 City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or Warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. · UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BONDORANY OTHER PERSON, IN CONTRACTOR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN. PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY .RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS QR SPECIFIC PERFORMANCE. No default by the City in observing or performing its obligations under this Section shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The provisions of this Section maybe amended by the City from time to time to adapt to changed circumstances resulting from a change in legal requirements, a change in law, or a change in the id~ntity, nature, status, or type of operations of the City, 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 to the date of such amendment, as well as such changed circumstances, and (2) either (a) the Holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the Outstanding Bonds consent to such amendment or (b) a Person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Holders and beneficial own13rs of the Bonds. The provisions of this Section may also be amended from time to time or repealed by the City if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, but only if and to the extent that reservation of the City's right to do so would not prevent underwriters of the initial public offering of the Bonds from lawfully purchasing or selling Bonds in such offering. If the City so amends the provisions of this Section, it shall include with any amended financial information or operating data filed with each NRMSIR and SID pursuant to subsection (b) of this Section an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information or operating data so provided. 45195259.4 -33- - SECTION 43: Public Meeting. It is officially found, determined, and declared that the meeting at which this Ordinance is adopted was open to the public and public notice of the tirne, place, and subject matter of the public business to be considered at such meeting, including this Ordinance, was given, all as required by V.T.C.A., Government Code, Chapter 551, as amended: SECTION 44:. Effective Date. This Ordinance shall take effect and be in full force from and after its adoption on the date shown below in accordance with V.T.C.A., Government Code, Section 1201.028. PASSED AND ADOPTED, this August 29, 2002. CITY OF LUBBOCK, TEXAS ATTEST: · ~ Dce«C.-< -e. ~ ,., ClSecretary . · · . . · . "<.. (City Seal) APPROVED AS TO CONTENT: APPROVED AS TO QL ~(!, .... ·City Attorney 1 45195259.4 -34- EXHIBIT A PAYING AGENT/REGISTRAR AGREEMENT See Document Number 4 - - - - - - EXHIBIT B PURCHASELETIER See Document Number 5 - - - -- - - Exhibit C to Ordinance The following information is referred to in Section 42 of this Ordinance. Annual Financial Statements and Operating Data The financial information arid operating data with respect to the City to be provided annually: 1. The financial statements of the City for the most recently concluded fiscal year. 2. The following information relating to the System: (a) Identification of Generating Stations; (b) debt service requirements for the all debt payable from the revenues of the System, (c) Statement of Operations, (d) Coverage and Fund Balances; (e) Schedule of the City's Equity in the Sys.tem, (f) Five Year Capital Improvement Plan, (g) Monthly Electric Rates, (h) Ten Largest Customers, (i) Statistical Data, U) Historical Power Supply Requirements and (k) Current Investments. Accounting Principles The accounting principles referred to in such Section are the generally accepted accounting principles as applicable to governmental units as prescribed by The Government Accounting Standards Board. · 45195259.4 4 - - - - PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of August 29, 2002 (this "Agreement"), by and between the City of Lubbock, Texas (the "Issuer"), and JPMorgan Chase Bank, a New York banking corporation organized and existing under the laws of the State of New York and authorized to do business in the State of Texas, or its successors, RECITALS WHEREAS, the Issuer has duly authorized and provided for the execution and delivery of its "City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 2002" (the "Securities"), dated August 15, 2002, and such Securities are scheduled to be delivered to the initial purchasers thereof on or.about September 30, 2002; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof; and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGI;:NT AND REGISTRAR Section 1.01 Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities, and, as Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof; all in accordance with this Agreement and the "Bond Resolution" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities and, as Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Bond Resolution". The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02 Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Annex A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. 45195279.1 - - - - - In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the re;:~sonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01 Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the designated office of the Bank in Dallas, Texas at the address shown in Section 3.01 hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Bond Resolution" means the resolution, order, or ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the Secretary or any other officer of the Issuer and delivered to the Bank. "Fiscal Year" means the fiscal year of the Issuer, ending September 30th. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Order" means a written request or order signed in the name of the Issuer by the Mayor, Mayor Pro Tern, City Manager, Deputy City Manager, Director of Finance, Cash and Debt Manager, or City Secretary, any one or more of said officials, and delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Resolution). 45195279.1 -2- - - - - "Redemption Date" when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to the terms of the Bond Resolution. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice-Chairman of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, ·or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfers of Securities. "Stated Maturity" means the date specified in the Bond Resolution the principal of a Security is scheduled to be due and payable. Section 2.02 Other Definitions. The terms "Bank," "Issuer," and "Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01 Duties of Paying Agent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the following address: P. 0. Box 2320, Dallas, Texas 75221-2320 or 2001 Bryan Street, gth Floor, Dallas, Texas 75201, Attention: Operations. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and making payment thereof to the Holders of the Securities (or their Predecessor Securities) on the Record Date. All payments of principal and/or interest on the Securities to the registered owners shall be accomplished (1) by the issuance of checks, payable to the registered owners, drawn on the paying agent account provided in Section 5.05 hereof, sent by United States mail, first class, postage prepaid, to the address appearing on the Security Register or (2) by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02 Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities at the dates specified in the Bond Resolution. 45195279.1 -3- - - ARTICLE FOUR REGISTRAR Section 4.01 Security Register-Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a r~:~-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written. instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02 Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other governments or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03 Form of Security Register. The. Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04 List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. 45195279.1 -4- - - The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05 Return of Cancelled Certificates. The Bank will, at such reasonable intervals as it determines, surrender to the Issuer, Securities in lieu of which or in exchange for which other Securities have been issued, or which have been paid. Section 4.06 Mutilated, Destroyed, Lost or Stolen Securities. The Issuer hereby instructs the Bank, subject to the provisions of Section 31 of the Bond Resolution, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only upon the approval of the Issuer and after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery ofa replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07 Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01 Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02 Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Barik shall not be liable for anyerror of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or 45195279.1 -5- in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03 Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04 May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05 Moneys Held by Bank-Paying Agent Account/Collateralization. Money deposited by the Issuer with the Bank of the principal (or Redemption Price, if applicable) of or interest on any Securities shall be segregated from other funds of the Bank and the Issuer and shall be held in trust for the benefit of the Holders of such Securities. All money deposited with the Bank hereunder shall be secured in the manner and to the fullest extent required by law for the security of funds of the Issuer. Amounts held by the Bank which represent principal of and interest on the Securities remaining unclaimed by the owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Bank in accordance with the provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. The Bank shall have no liability by virtue of actions taken in compliance with this provision. The Bank is not obligated to pay interest on any money received by it hereunder. 45195279.1 -6- -This Agreement relates solely to money deposited for the purposes described· herein, and the parties agree that the Bank may serve as depository for other funds of the Issuer, act as trustee under indentures authorizing other bond transactions of the Issuer, or act in any other capacity not in conflict with its duties hereunder. Section 5.06 Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07 Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction in the State of Texas to determine the rights of any Person claiming any interest herein. Section 5.08 DT Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements", which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01 Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02 Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. · Section 6.03 Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on page 9. Section 6.04 Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05 Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. 45195279.1 -7- - Section 6.06 Severability. In case any prov1s1on herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07 Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08 Entire Agreement. This Agreement and the Bond Resolution constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Bond Resolution, the Bond Resolution shall govern. Section 6.09 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10 Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) mc:fy be earlier terminated by either party upon sixty (60) days written notice; provided, however, an ·early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. Section 6.11 Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. 45195279.1 -8- - IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written .. . [SEAL] Title: (CITY SEAL) Attest: 45195279.1 JPMORGAN CHASE BANK BY:. 1)_tJ d t7.,_t ------ Title: J\\!P Deborah L Matula Address: 2001 Bryan Street, 1oth Floor Dallas, Texas 75201 Address: P. 0. Bo 2000 Lubbock, Texas 79457 -9- ~.... . ,.., JPMorgan JPMorgan Chase Bank Issuer Administrative Services 2001 Bryan Street, lOth Floor Dallas, Texas 75201 September 4, 2002 Fee Schedule Paying Agent & Registrar Services City of Lubbock, Texas $8,500,000 Electric Light & Power System Revenue Bonds, Series 2002 Paying Agent & Registrar Services: Acceptance Fee Annual Administration Fee Notes: waived $300 Please note charges for extraordinary expenses, including but not limited to, travel expenses and counsel fees, will be billed to the issuer at cost. Administration fees include one annual audit confirmation without charge. Additional audit confirmations are billed at $75 per requested confirmation. A separate fee of $300 for any required call notice will be assessed in connection with optional or mandatory redemption. The quoted fee is based on our understanding of the information and terms to date. As always, our acceptance of this appointment is subject to our internal credit review process and the review of final documentation furnished with respect to the debt financing. We reserve the right to revise this proposal should any material aspect of the transaction differ from our understanding. 5 -J - - - Honorable Mayor and City Council City of Lubbock Lubbock, Texas August 29, 2002 American State Bank, Bank of America, RA. and Wells Fargo Brokerage Services, LLC, Lubbock, Texas (the "Banks") understand that the City of Lubbock, Texas (the "City") plans to issue $8,500,000 in principal amount of Electric Light and Power System Revenue Bonds, Series 2002 (the "Bonds") to provide funds for payment of Electric System improvements and for professional services in that connection. The Bonds are to be issued pursuant to the general laws of the State of Texas, particularly Vernon's Texas Codes Annotated ("V.T.C.A. "),Texas Goverrunent Code, Chapter 1502. We understand that the Bonds will be payable from a first lien on and pledge of the Net Revenues of the City's Electric Light & Power System. We further understand that the Bonds will be sold for cash, will be approved by the Attorney General of the State of Texas and will be delivered in one installment on or about September 30, 2002. We also understand that the Bonds will NOT be designated by the City as "qualified tax-exempt obligations" under Section 265 of the Internal Revenue Code of 1986. We propose as follows: A. We will pay you a price equal to their par value of legally issued Bonds described as follows: $8,500,000 City of Lubbock,· Texas, Electric Light and Power System Revenue Bonds, Series 2002, dated August 15, 2002: Maturity Maturity Date Date Amount (April15) Rate Amount (Aprill5) Rate $ 455,000 2004 4.75% $ 575,000 2009 4.75% 480,000 2005 4.75% 605,000 2010 4.75% 500,000 2006 4.75% 630,000 2011 4.75% 520,000 2007 4.75% 660,000 2012 4.75% 550,000 2008 4.75% 690,000 2013 4.75% $2,835,000 at 4. 75% Term Bond Due April15, 2013 The Bonds are to bear interest from August 15, 2002, (the "Dated Date") and will be payable April 15 and October 15 of each year commencing April 15, 2003, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. OPTIONAL REDEMPTION .•. The City reserves the right, at its option, to redeem Bonds, in whole or in part, and if in part, in principal amounts of $5,000 or any integral multiple thereof, on or after October 15, 2003, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. MANDATORY SINKING FuND REDEMPTION ... The Bonds maturing April 15, 2013 (the "Term Bond") shall be subject to mandatory redemption prior to maturity at the price of par plus accrued interest to the mandatory redemption date in the principal amounts as follows: - - Term Bond due Aprill5, 2013 Term Bond due Apri115, 2013 Redemption Date Principal Amount Redemption Date Principal Amount April15, 2004 $ 230,000 April15, 2009 $ 285,000 April15, 2005 235,000 April15, 2010 300,000 Aprill5, 2006 250,000 Aprill5, 2011 315,000 Aprill5, 2007 265,000 Aprill5, 2012 330,000 April 15, 2008 275,000 April15, 2013 * 350,000 *Maturity. The Bonds will be fully registered as to principal and interest, and the Paying Agent/Registrar will be JPMorgan Chase Bank, Dallas, Texas, who will serve in this capacity with an annual charge of $300 to the City. The City will.utilize the Book-Entry-Only System of the Depository Trust Company. B. Attached hereto as Exhibit A is a schedule demonstrating the division of the Bonds between the Banks. C. In regard to the purchase of the Bonds, the Banks acknowledge that the City has furnished the Banks with all necessary information desired for the Banks to ·make an informed decision concerning the purchase of the Bonds, and the Banks have made such inspections and investigations as deemed necessary to determine the investment quality of the Bonds and assess all risk factors associated with the purchase and ownership of the Bonds. The Bonds are to be purchased for the account of the Banks for investment (and not on behalf of another), and the Banks have no present intention of reselling the Bonds or dividing the Banks' interest therein, either currently or after the passage of a fixed or determinable period of time or upon the occurrence or nonoccurrence of any predetermined event or circumstance; but the Banks reserve the right to sell, pledge, transfer, convey, hypothecate, or dispose of the Bonds at some future date. D. Our purchase of the Bonds is strictly subject to your acceptance of this proposal on or prior to 30th day of August, 2002 with the following conditions: 1. 2. 3. 4. 5. The Bonds will be approved as to their legality by the Attorney General of the State of Texas and Fulbright & Jaworski L.L.P., Bond Attorneys, Dallas, Texas. The Bonds will be payable from a first lien on and pledge of the Net Revenues of the City's Electrical Light & Power System. The Bonds will NOT be designated bythe City as "qualified tax-exempt obligations" under Section 265 of the Internal Revenue Code of 1986. Delivery of the Bonds shall be made within 90 days from date hereof, it being understood that this agreement may be extended by mutual consent. The City agrees to pay costs of delivery, if any. It is understood that a rating on the Bonds from Moody's Investors Service, Standard & Poor's Corporation or Fitch Ratings is required. E. This agreement shall be terminated by delivery of the Bonds to us or by expiration of the time period referred to in D.4. above. 2 - Respectfully submitted, American State Bank Lubbock, Texas By£U~, Authorized Representa~ ..:51? p;;? 3 - - - Respectfully submitted, Bank of America, N .A. Lubbock, Texas ...> r-· .,; "'L Y.c.• /je.U .~ f .IC'1 By __ ~----L-~~---------- 4 - - - Respectfully submitted, Wells Fargo Brokerage Services, LLC. Austin, Texas 5 ACCEPTANCE - ACCEPTED pursuant to a motion adopted by the City Council ofthe City of Lubbock, Texas, this the 29th day of August, 2002. - ATTEST: ·- ~-4' ~-'5' City Secretary -(City Seal) - 6 Exhibit A - DIVISION OF THE BONDS BETWEEN THE BANKS -.Maturity Principal Date Amortization American Bank of Wells Fargo Brokerage (April15) Amount State Bank America, N.A. Services, LLC(I) 2004 $ 685,000 $ 225,000 $ 230,000 $ 230,000 -2005 715,000 240,000 240,000 235,000 2006 750,000 250,000 250,000 250,000 2007 785,000 260,000 260,000 265,000 2008 825,000 275,000 275,000 275,000 2009 860,000 290,000 285,000 285,000 2010 905,000 300,000 305,000 300,000 -2011 945,000 315,000 315,000 315,000 2012 990,000 330,000 330,000 330,000 2013 1,040,000 345,000 345,000 350,000 $ 8,500,000 $ 2,830,000 . $ 2,835,000 $ 2,835,000 (1) Wells Fargo Bank Texas, N.A. will purchase the Term Bond previously discussed herein. 7 6 REPQRT OF CERnFIED PUBLIC ACCOUNTANT ~ . ,., "~, ', ~ 'ii~~·;·j ; ,_·.! , , .JI. -!·.!.p: :!-;f\•·ft·fl:~lJ•:rt-,~-1..;1fU;•!".;J:•.~'!'l't•J 1HESTATEOFTEXAS § § COUNTY OF WBBOCK § I, the unden;;igned. of the finn of Robinson Burdette Martin Seright & Burrows, LLP, Certified Public Accountants. lubbock, Texas. DO HEREBY MAKE the foUowing report 1. According to the books and records of the Electric Ught and Power System (the "System") of the C"rty of LIJbbock, Texas, the gross revenues, operation and maintenance expense& and net revenoes of the System for the fn;caJ year ending September 30, 2001 are as . follows: . . ,., .. ~.«?6~-' ,;, -~~ . '" ··-· : ..... '!4.~~~!'1!l~---... ~f1 .. ~·-····-~~---···········"-··~--~ -····'" ··-'--...... ..:::. -~--___ . .:..: .. ~ ... :.~.: . RevenUE$ · · Operating Expenses Net Revenues . . . ' •" .. : I L ._.: $114,574,764 $99,255,804. $15,318,960 2. In our opinion, the net revenues of the _System for such fiscal year a~ equal to at least one and one-~f (1-1/2) times•.tne average· annual pnni:::ipal and Interest requirements: Of the City's outstanding lf(;lty of Lubbock, TeXas, Sectric Light and Power System Refunding Revenue BOnds, Series 1995", dated June 15,.1995, "City of Lubbock, Texas, Electric Ught and r:>ower System Revenue Bonds, Series 19$8"', dated January 1, 1998, "City of Lubbock, Texas, . ..... Elecbie Light and Power System Revenue Refunding and Improvement Bonds, Series 199V, · dated January 15, 1999. ·cny of Lubbock, Texas, Electric Ught and Power System Revenue Bonds, Series 2001•. dated July 1, 2001, and the proposed "City of Lubbock, Texas, Electric Light and Power System Revenue-Bonds, Series 2002", dated August 15. 2002, and, further that said net revenues are equal to at least one and one-fifth (1-1/5) times the maximum annual principal and interest requirements of an such aforesaid revenue bonds. · ROBINSON BURDETTE MARTIN, SERIGHT & BURROWS LLP. ·Certified Public AccoUntants .. SWORN TO AND ·suBSCRIBED BEFORE ME, this the~day otJxt*n'lHJ.,..2002. . ! {Notary Seal) 45216904:! 7 - - -J THE STATE OF TEXAS COUNTY OF LUBBOCK CITY OF LUBBOCK GENERAL CERTIFICATE § § § § § WE, the undersigned, Director of Finance and City Secretary, respectively, of the City of Lubbock, Texas, DO HEREBY CERTIFY as follows: 1. Relative to Nonencumbrance Save and except for the pledge of the income and revenues of the City's Electric light and Power System to the payment of (i) the principal of and interest to become due with respect to the outstanding obligations identified in Exhibit A attached hereto and incorporated herein by reference as a part hereof for all purposes (hereinafter collectively referred to as the "Outstanding Obligations") and the proposed "City of lubbock, Texas, Electric light and Power System Revenue Bonds, Series 2002", dated July 15, 2002 (the "Bonds") and (ii) a power supply contract with the West Texas Municipal Power Agency, said income and revenues of the System have not been pledged or hypothecated in any other manner or for any other purpose; and the Outstanding Bonds, the Bonds and the aforementioned contract evidence the only liens, encumbrances or indebtedness of the System or against the income and revenues of such System. 2. Relative to No-Default. The City is not in default as to any covenant, condition or obligation prescribed by any ordinance authorizing the issuance of the Outstanding Obligations and all interest, sinking and reserve funds for such bonds have been fully maintained in accordance with the provisions of the ordinances authorizing the Outstanding Obligations. 3. to Income and Revenues. A schedule of the gross receipts, operating expenses and net revenues of the System for the years stated is as shown in Exhibit A attached hereto and incorporated herein by reference as a part of this certificate for all purposes. 45195750.1 ·- - - - - 4. Relative to Utility Properties. The electric light and power utility properties owned, operated and maintained by the City currently provides electricity to approximately 62,196 customers. As of the date hereof, no question is pending and no proceedings of any nature have been instituted in any manner questioning the City's right and title to its utility properties or its authority to operate the same. 5. Relative to Rates and Charges. The current monthly rates and charges for services provided by the System are as shown in Exhibit A attached hereto and incorporated herein by reference and made a part of this certificate for all purposes. 6. Relative to City Officials. Certain duly qualified and acting officials of the City are as follows: MARC McDOUGAL VICTOR HERNANDEZ BOB CASS DEBRA B. FORTE BEVERLY HODGES REBECCA GARZA ANITA BURGESS ANDY BURCHAM 7. Relative to Incorporation. MAYOR MAYOR PRO TEM CITY MANAGER DEPUTY CITY MANAGER DIRECTOR OF FINANCE CITY SECRETARY CITY ATTORNEY CASH AND DEBT MANAGER The City is incorporated under the General Laws of the State of Texas, and is operating under the Home Rule Amendment to the Texas Constitution, Section 5, Article XI, as amended in 1912. The City Charter was originally adopted at an election held on December 27, 1917, and said Charter has not been amended or revised in any respect since January 18, 1992, the date of the last Charter Amendment Election. 8. Relative to Debt Service Schedule. Attached hereto as Exhibit B and incorporated herein by reference as a part of this certificate for all purposes is a debt service requirements for the Outstanding Obligations and the Bonds. 45195750.1 2 - - WITNESS OUR HANDS AND THE SEAL OF THE CITY OF LUBBOCK, TEXAS, this the 291h day of August, 2002. . (City Seal) 45195750.1 CITY OF LUBBOCK, TEXAS et)ccaGafZa City Secretary 3 - - EXHIBIT A Outstanding Obligations: 1. City of Lubbock, Texas, Electric Light and Power System Refunding Revenue Bonds, Series 1995, dated June 15, 1995, now outstanding in the principal amount of $6,865,000; 2. City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 1998, dated January 1, 1998, now outstanding in the principal amount of $7,350,000; 3. City of Lubbock, Texas, Electric Light and Power System Revenue Refunding and Improvement Bonds, Series 1999, dated January 15, 1999, now outstanding in the principal amount of $11 ,865,000; 4. City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 2001, dated July 1, 2001, now outstanding in the principal amount of $8,740,000; Electric Light and Power System Income and Expenses: Fiscal Year Maintenance and Ending 9-30 Gross Receipts Operating Expenses Net Revenues 1997 $ 63,185,595 $50,199,268 $12,986,327 1998 70,903,644 55,780,777 15,122,867 1999 64,260,424 50,932,204 13,328,220 2000 74,319,918 66,101,040 8,218,878 2001 114,574,764 99,255,804 15,318,960 45195750.1 - - - - Exhibit A Page 2 MONTHLY ELECTRIC RATES Electric rates in the City are set by City Council Ordinance and were the same for LP&L and Southwestern except for church, school and municipal rates, and minor variations in billing policies until June, 2001. In November 1999, LP&L started using their own fuel cost recovery factor which was different from the fuel cost recovery factor used by Southwestern. During Fiscal Year Ended 9-30- 00, LP&L billed an average of $0.058905 per kWh. Starting in June, 2001, LP&L is simplifying its rate structure to be more compatible with a newly purchased billing system. Residential and General Service Rates (Effective June, 2001) Approximately 75% of LP&L customers are billed under the rate schedules shown below. Special rate schedules are available for certain customers such as churches, city street lighting, etc. These rates now include the full 3% franchise within the rate structure. The previous version only included 2% with the additional 1% being billed separately. Residential Service Availability Charge All kilowatt hours ("kWh") per month@ $0.0404 per kWh used during summer months All kWh per month @ $0.03636 per kWh used during winter months Summer Months: June-September Winter Months: October-May Plus: Fuel Cost Recovery (1) Service Availability Charge: General Service Cost per kWh for all additional kW in excess of 10 kW during a summer month Cost per kWh for all additional kW in excess of 10 kW during a winter month First 1,000 kWh per month Next 6,000 kWh per month All additional kWh per month Plus: Fuel Cost Recovery (1) $ 4.70permonth $10.10 per month $8.00 $7.00 0.0515perkWh* (Summer) 0.0465 per kWh* (Winter) 0.0253 per kWh 0.0101 per kWh Minimum Charge: The Demand Charge. No demand shall be taken as less than 50% of highest demand established in 12 months . ending with current month. Large General Service Service Availability: Cost per kWh for all additional kW in excess of200 kW First! 00,000 kWh used per month Next 150,000 kWh used per month All additional kWh used per month Plus: Fuel Cost Recovery (l) $ 1,815.00 $ 9.00 0.0059 per kWh 0.0035 per kWh 0.0034 per kWh Minimum Charge: The demand charge. No demand shall be taken as less than 60% of the highest demand established in 12 months ending with the current month. (I) Fuel Cost Recovery: Applications of fuel cost recovery factors are as follows: • _.. '# I. Primary Distribution Fuel/Power Cost Recovery Factor The Primary Distribution Fuel/Power Cost Recovery Factor shall be billed at a rate of 0.98744 times the Secondary FCA (see Section II below), applied per kilowatt hour and shall apply when service is metered at greater than or equal to 12 kV and less than 69 kV . ...... , - - - - - Exhibit A Page 3 '. ' II. Secondary Distribution Fuel/Power Cost Recovery Factor The Secondary Distribution Fuel/Power Cost Recovery Factor will be determined in accordance with the following formula: ' ,,-· The sum of the total fuel costs (inclusive of all costs incurred by LP&L in procuring fuel) used for the month in LP&L's power plants. Plus, the total of all power purchased for the month by LP&L. Plus/Minus any adjustment for under/over collection of the fuel/power cost recovery factor from previous months (see below). The adjustment for under or over collection of the fuel/power cost recovery factor will be amortized over an eighteen (18) month period from the date in which the under or over collection occurred.· Subject to the limitations set forth in this paragraph, the City Manager or, if designated by the City Manager, the Director of Electric Utilities, shall determine the adjustment for each given month. However, in no event shall the adjustment be less than 1/18th of the total under or over collection. The sum of all these amounts will be divided by the estimated electric sales for the current month to determine the Fuel/Power Cost-Recovery Factor, or in summary: Secondary FCA (Gas Cost+ Purchased Power Cost+/-over/under adjustments)lkWh sales. The secondary factors shall be billed per kWh and shall apply when service is metered at less than 12 kV. III. Transmission Fuel/Power Cost Recovery Factor The Transmission Fuel/Power Cost Recovery Factor shall be billed at a rate of 0.941347 times the Secondary FCA, applied per kilowatt-hour and shall apply when service is metered at greater than or equal to 69 kV. Representative Customer Usage and Billings Residential Customer Commercial Customer Monthly Usage kWh kW 845 3,666 14 Monthly Billing $83.78 (summer) $68.44 (winter) $379.70 (summer) $302.91 (winter) EXHIBIT B CITY OF LUBBOCK, TEXAS ELECTRIC LIGHT AND POWER SYSTEM REVENUE DEBT SERVICE REQUIREMENTS Fiscal Year %of Ended Outstanding Debt The Bonds (I) Combined Total Requirements Principal 9/30 Principal Interest Total Principal Interest Total Principal Interest Total Retired 2002 $ 3,985,000 $ 1,726,648 $ 5,711,648 $ $ $ $ 3,985,000 $ 1,726,648 $ 5,711,648 2003 3,535,000 1,631,188 5,166,188 269,167 269,167 3,535,000 1,900,355 5,435,355 2004 3,480,000 1,471,553 4,951,553 685,000 403,750 1,088,750 4,165,000 1,875,303 6,040,303 2005 2,965,000 1,311,703 4,276,703 715,000 371,213 I ,086,213 3,680,000 1,682,916 5,362,916 2006 2,930,000 1,169,673 4,099,673 750,000 337,250 1,087,250 3,680,000 1,506,923 5,186,923 . 40.26% 2007 2,900,000 1,034,538 3,934,538 785,000 301,625 1,086,625 3,685,000 1,336,163 5,021,163 2008 2,530,000 899,060 3,429,060 825,000 264,338 1,089,338 3,355,000 1,163,398 4,518,398 2009 1,720,000 781,655 . 2,501,655 860,000 225,150 1,085,150 2,580,000 1,006,805 3,586,805 2010 1,715,000 700,945 2,415,945 905,000 184,300 1,089,300 2,620,000 885,245 3,505,245 2011 1,705,000 624,848 2,329,848 945,000 141,313 1,086,313 2,650,000 766,161 3,416,161 71.74% 2012 1,360,000 547,595 1,907,595 990,000 96,425 1,086,425 2,350,000 644,020 2,994,020 2013 1,360,000 484,450 1,844,450 1,040,000 49,400 1,089,400 2,400,000 533,850 2,933,850 2014 1,360,000 420,290 1,780,290 1,360,000 420,290 1,780,290 2015 1,360,000 355,000 1,715,000 1,360,000 355,000 1,715,000 2016 1,360,000 288,810 1,648,810 1,360,000 288,810 1,648,810 90.40% 2017 1,360,000 224,700 1,584,700 1,360,000 224,700 1,584,700 2018 1,360,000 159,460 1,519,460 1,360,000 159,460 1,519,460 2019 900,000 94,220 994,220 900,000 94,220 994,220 2020 460,000 48,300 508,300 460,000 48,300 508,300 2021 460,000 24,150 484,150 460,000 24,150 484,150 100.00% $ 38,805,000 $ 13,998,783 $ 52,803,783 $ 8,500,000 $ 2,643,931 $ 11,143,931 $ 47,305,000 $ 16,642,714 $ 63,947,714 (I) Average life ofthe issue 6.423 years. Interest on the Bonds has been calculated at the rate of 4.75% for purposes of illustration. ( ( ( ( ' ( ( ( 8 - -- - - - - - - - SIGNATURE AND NO-LITIGATION CERTIFICATE THE STATE OF TEXAS COUNTY OF LUBBOCK § § § WE, the undersigned, officials of the City of Lubbock, Texas (the "Issuer"), do hereby certify with respect to the "CITY OF LUBBOCK, TEXAS, ELECTRIC LIGHT AND POWER SYSTEM REVENUE BONDS, SERIES 2002", dated August 15 2002 (the "Issue Date"), in the aggregate principal amount of $8,500,000 (the "Bonds") as follows: (1) The Bonds have been duly and officially executed by the undersigned with their manual or facsimile signature in the same manner appearing hereon, and the undersigned hereby adopt and ratify their respective signatures in the manner appearing on each of the Bonds whether in manual or facsimile form, as the case may be, as their true, genuine and official signatures. (2) On the Issue Date and on the date hereof, we were and are the duly qualified and acting officials of the Issuer indicated below. (3) The legally adopted proper and official corporate seal of the Issuer is impressed, imprinted or lithographed on all of the Bonds and impressed on this Certificate. (4) No litigation of any nature is now pending before any federal or state court, or administrative body, or to our knowledge threatened, seeking to restrain or enjoin the issuance or delivery of the Bonds or questioning the issuance or sale of the Bonds, the authority or action of the governing body of the Issuer relating to the issuance or sale of the Bonds, the collection of the revenues of the Issuer's Electric Light and Power System (the "System"), or the imposition of rates and charges with respect to the System, pledged to pay the principal of and interest on the Bonds or that otherwise would have a material adverse effect on the financial affairs of the Issuer or the System to pay the Bonds; and that neither the corporate existence or boundaries of the Issuer nor the right to hold office of any member of the governing body of the · Issuer or any other elected or appointed official of the Issuer is being contested or otherwise questioned. (5) No authority or proceeding for the issuance, sale or delivery of the Bonds, passed and adopted by the governing body of the Issuer, has been amended, repealed, revoked, rescinded or otherwise modified since the date of passage thereof, and all such proceedings and authority relating to the issuance and sale of the Bonds remain in full force and effect as of the date of this Certificate. _.,_ 45195593.1 - - ·- - - SEP 3 0 2002 DELIVERED this ---------- SIGNATURE (Issuer's Seal) THE STATE OF TEXAS COUNTY OF LUBBOCK § § OFFICIAL TITLE Mayor, City of Lubbock, Texas City Secretary, City of Lubbock, Texas The undersigned, a Notary Public, hereby represents and certifies each of the signatures of Marc McDougal and Rebecca Garza, Mayor and City Secretary, respectively, of the City of Lubbock, Texas, appearing above is genuine. ~ GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ;L? day of August, 2002. 45195593.1 2 9 - - - - City of Lubbock Ms. Beverly Hodges P. 0. Box 2000 Lubbock, Texas 79457 Phone: (806) 775-2161 Fax: (806) 775-2033 City of Lubbock Mr. Andy Burcham P.O. Box 2000 Lubbock, Texas 79457 Phone: (806) 775-2149 Fax: (806) 775-2033 Fulbright & Jaworski L.L.P. Mr. Ed H. Esquivel · 2200 Ross Avenue, Suite 2800 Dallas, Texas 75201 Phone: (214) 855-8000 Fax: (214) 855-8200 JPMorgan Chase Bank Ms. Deborah Matula 2001 Bryan Street -lOth Floor Dallas, Texas 75201 Phone: (214) 468-6411 Fax: (214) 468-6322 September 25, 2002 American State Bank Mr. Richard Thornberry P.O. Box 1401 Lubbock, Texas 79408-1401 Phone: (806) 767-7000 Fax: (806) 763-8269 Bank of America, N.A. Mr. Chris Koop 701 S. Taylor, 2nd Floor Amarillo, Texas 79101 Phone: (806) 378-1701 Fax: (806) 378-1756 Wells Fargo Brokerage Services, LLC Mr. Steve Stearns 10400 Research Blvd. Austin, Texas 78759 MAC: T5201-011 Phone: (512) 794-4036 Fax: (512) 794-4031 American State Bank Ms. Shirley Dodson P. 0. Box 1401 · Lubbock, Texas 79408-1401 Phone: (806) 767-7182 Fax: (806) 763-8269 · Re: Closing Instructions for the $8,500,000 City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 2002 (the "Bonds") . . . Payment for the above referenced Bonds is scheduled to occur at 10:00 AM, CDT, on Monday, September 30, 2002, and payment therefor is to occur at the offices of JPMorgan Chase Bank ("JPMorgan"). - - SOURCES OF FUNDS Par Amount of Bonds .......................................................... $ Accrued Interest (08/15/02 to 09/30/02) ......... : ................... . TOTAL FUNDS AVAILABLE AT CLOSING..................... $ USES OF FUNDS Deposit to Project Construction Fund.................................. $ Deposit to Interest & Sinking Fund (accrued interest) ...... .. Paying Agent/Registrar Fee ............................................... .. TOTAL USES OF FUNDS .. . . ... ......... .. ... . ..... .. ..... ............ .... .. $ 8,500,000.00 50,468.75 8,550,468. 7 5 ,700.00 50,468.75 300.00 8,550,468. 75 (A) On Monday, September 30, 2002, the Purchasers shall wire $8,550,468.75 in immediately available funds to the paying agent bank, JPMorgan, prior to 10:00 AM, CDT, for the account of the City of Lubbock, in payment for the purchase price of the Bonds. Wiring Instructions for JPMorgan are as follows: JPMorgan Chase ABA: 113000609 . Credit A/C #: 00103237013 Credit Name: ITS lAS Clearing FPC: City of Lubbock, Series 2002 Attn: Issuer Administrative Services I Deborah Matula Division by Bank: American State B~ ........................................................ $2,846,803.13 Bank of America, N.A ........................................................ 2,851,832.81 Wells Fargo Brokerage Services, LLC ............................... 2,851,832.81 (B) On Thursday, August15, 2002, JPMorgan shall wire or transferimmediately available funds prior to 11:00 AM, CDT, as follows: (1) Transmit by wire to American State Bank, Lubbock, Texas ABA #111322583, Attn: Shirley Dodson Phone (806) 767-7182, depository bank for City of Lubbock for credit to the following account: · City of Lubbock Consolidated Account, Account #87793 ...................... 8,550,168.75 (Project Construction Funds $8,499,700.00 and I&S Funds $50,468.75) (2) Retain in payment of services to be rendered as Paying Agent/Registrar ..,-------:..3..:.0..:.0 . ..:.0..:.0 - - - The cooperation of the addressees with the above instructions is greatly appreciated. If you have any questions or cannot comply with any portion of the instructions, please contact us immediately at (806) 749-3792. cc: Jack Addams Mary Ann Dunda First Southwest Company Sincerely, Vince Viaille 10 CERTIFICATE AS TO TAX EXEMPTION The undersigned, being the duly chosen and qualified Director of Finance of the City of Lubbock, Texas (the "Issuer"), hereby certifies with respect to CITY OF LUBBOCK, TEXAS, ELECTRIC LIGHT AND POWER SYSTEM REVENUE BONDS, SERIES 2002", dated August 15, 2002, in the principal amount of $8,500,000 (the "Bonds"), as follows. A. General. 1. I, along with other officers of the Issuer, am charged with the responsibility for issuing the Bonds. 2. This certificate is made pursuant to Sections 1 03 and 141 through 150 of the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), and Treasury Regulations issued thereunder (the "Regulations"). 3. This certificate is based on the facts and estimates described herein in existence on this date, which is the date of delivery of the Bonds to and payment for the Bonds by the initial purchasers thereof, and, on the basis of such facts and estimates, the Issuer expects that the future events described herein will occur. B. Purpose and Size. 1. The Bonds are being issued pursuant to an Ordinance of the Issuer, finally adopted by the City Council of the Issuer on August 29, 2002, (hereinafter referred to as the · "Ordinance") to finance the construction of improvements and extensions to the Issuer's Electric Light and Power System (the "Project"). Terms used and not defined herein have the same meaning given to them in the Ordinance. 2. The Project will be owned, operated, and maintained by the Issuer. The Issuer has not contracted with any person or entity to operate and/or maintain the Project or any part of it for and on behalf of the Issuer. The Issuer does not expect to enter into any contract for the operation, maintenance or management of the Project or any part of it. 3. There is not; and as of the date hereof the Issuer does not anticipate entering into, any lease, contract or other understanding or arrangement, such as a take-or-pay contract or output contract, with any person other than a state or local governmental unit pursuant to which the Issuer expects that proceeds of the Bonds, or the facilities financed therewith, will be used in the trade or business of such person (including all activities of such persons who are not individuals). 4. The amounts received from the sale of the Bonds, when added. to the amounts expected to be received from the investment thereof, do not exceed the amounts required to pay the costs of the Project and of issuing the Bonds. 5. No receipt from the sale of the Bonds or amounts received from the investment thereof will be used to pay the principal of or interest on any presently outstanding issue of bonds or other similar obligations of the Issuer other than the Bonds. 45216966.1 C. Source and Disbursement of Funds. 1. The Bonds are being issued and delivered to the purchaser or purchasers thereof on the date hereof upon payment of the aggregate agreed purchase price of par plus accrued interest to the date of delivery. 2. The amount received from the purchaser or purchasers of the Bonds representing accrued interest and premium is being deposited on the date hereof in the Bond Fund for the Bonds and will be used to pay the first payment of interest to become due on the Bonds on April 15, 2003. 3. Costs of issuance relating to the Bonds are estimated to be $64,450.00 and will be paid by the Issuer from sales proceeds of the Bonds. The remainder of the sale proceeds will be credited to the construction fund of the Issuer (the "Construction Fund"), will be accounted for separately from all other funds on the books of account of the Issuer, and will be used to pay costs of the Project. The Issuer estimates that income and profit in the aggregate amount of $65,000.00 will be received from the investment of the amounts deposited to the Construction Fund pending the disbursement of such amounts for the governmental purposes for which the Bonds are being issued. All of such income and profit will be used to pay any cost overruns on the Project or if there are none, deposited to the Bond Fund and used to pay principal of and interest on the Bonds within one year of receipt D. Temporary Periods and Time for Expenditures. 1. Within six months from the date hereof, the Issuer will have incurred binding obligations or commitments to third parties for the Project in the amount of at least 5% of the net sales proceeds of the Bonds. 2. After entering into said contracts, completion of the Project and the allocation of net sales proceeds of the Bonds to expenditures will proceed with due diligence. 3. The Issuer expects that all of the net sales proceeds of the Bonds will be spent within thirty months from the date hereof, and that all investment proceeds of the Bonds will be spent within one year from the date of receipt. 4. Approximately $4,093,000.00 of the proceeds of the Bonds will be used to reimburse the Issuer for Project expenditures made by it from its own funds prior to the date hereof. The Issuer adopted an official intent for the original expenditures (except possibly for expenditures meeting the preliminary expenditures exception set forth in section 1.150-2(f)(2) of the Regulations) not later than 60 days after payment of the original expenditures, and a copy of such official intent is attached to this Certificate As To Tax Exemption. Except for expenditures meeting the preliminary expenditures exception set forth in section 1.150-2(f)(2) of the Regulations, the Bonds are being issued and the reimbursement allocation is hereby being made not later than 18 months after the later of {i) the date the original expenditures were paid, or (ii) the date the Project is placed in service or abandoned, but in no event more than 3 years after the original expenditures were paid. The original expenditures were capital expenditures, and in connection with this allocation, the Issuer has not employed any abusive arbitrage device under section 1.148-10 of the Regulations to avoid the arbitrage restrictions or to avoid restrictions under section 142 through 147 of the Code. 45216966.1 2 - E. Reserve Portion. 1. The Issuer is required by the Ordinance to maintain the Reserve Portion of the Bond Fund during the term of the Bonds for the purpose of accumulating and maintaining funds as a reserve for the payment of the Bonds Similarly Secured in an amount (the "Required Reserve") equal to the Average Annual Debt Service for all outstanding Bonds Similarly Secured after giving effect to the issuance of the Bonds. 2. The amount currently on deposit in the Reserve Portion of the Bond Fund is equal to or exceeds $2,761,819 (the "Current Reserve") as a reserve for the payment of the outstanding Bonds Similarly Secured. By reason of the issuance of the Bonds, the total amount to be accumulated and maintained as a. Required Reserve has been determined to be $3,062,400. On the date hereof, the Issuer has caused an amount sufficient to fund in full the Required Reserve from available Net Revenues of the System. 3. The amount on deposit in the Reserve Portion of the Bond Fund at all timeswill be an amount not in excess of the least .of (i) the maximum annual debt service requirement on the Bonds, (ii) 125% of the average annual debt service requirements on the Bonds, or (iii) 10% of the stated principal amount of the Bonds. 4. The Issuer expects that all amounts received from investment of the Reserve Portion of the Bond Fund will, within one year ofreceipt, either be expended to pay principal of or interest on the Bonds or be commingled with other substantial revenues of the Issuer for the governmental purposes of the Issuer. 5. The Ordinance provides that any amounts held for the credit of the Reserve Portion of the Bond Fund in excess of the Required Reserve may be withdrawn and transferred by the Issuer to the System Fund to be disbursed as provided therein. The Issuer expects that all amounts received from investment of the Reserve Portion of the Bond Fund will, within one year of receipt, either be expended to pay principal of or interest on the Bonds or be commingled with other substantial revenues of the Issuer for the governmental purposes of the Issuer. 6. The Issuer has been advised by First Southwest Company, financial advisor to the Issuer, that a reserve fund balance of the Required Reserve was required in order to market the Bonds at the interest rate set forth in the Ordinance authorizing the Bonds, and that funding a reserve fund for a lesser amount would have resulted in a less favorable rating with respect to the Bonds and sale of the Bonds at materially higher interest rates or for a materially lower purchase price to the Issuer. F. Bond Fund and System Fund. 1. The Bonds are payable solely from amounts held for the credit of the Bond Fund and the Reserve Portion thereof and are secured solely by a pledge of the Net Revenues of the System. The Issuer may credit against its required deposits to the Bond Fund and the Reserve Fund all amounts received from the investment of funds held therein. 2. The Ordinance requires that all Net Revenues of the System are to be deposited as received in the System Fund, where they are to be disbursed in the following order of priority: 45216966.1 3 - a. To pay the maintenance and operating expenses of the System as defined in the Ordinance or required by statute; · b. To the payment of the amounts required to be deposited in the Bond Fund; c. To the payment of the amounts required to be deposited in the Reserve Portion of the Bond Fund; d. For any other lawful purpose. 3. The Bond Fund will be maintained by the Issuer primarily to achieve a proper matching of revenues and debt service within each bond year. The Issuer expects that the following will occur with respect to the money in the Bond Fund: a. Such fund will be depleted at least once each bond year except possibly for a carryover amount not to exceed the greater of the previous bond year's earnings on the Bond Fund or one-twelfth of the previous bond year's debt service requirements on the Bonds; b. All amounts deposited to such fund to pay debt service on the Bonds will be spent within 13 months of deposit; and c. All amounts received from the investment of such fund will be deposited therein and will be expended within twelve months of receipt. 4. Except for the funds identified above, no other funds of the Issuer have been or will be pledged to payment of principal or interest on the Bonds or otherwise restricted so as to give reasonable assurance of the availability of such funds for such purpose. G. Yield and Nonpurpose Investments. 1. The discount factor required to reduce the principal and interest to be paid on the Bonds to a present value on the date hereof, compounding semiannually, equal to the purchase prices paid by the first buyer of the Bonds, is 4.7467488%. The Bonds were not publicly offered. 2. No other obligations of the Issuer which are reasonably expected to be paid from substantially the same source of funds as the Bonds were sold within 15 days from the date the Bonds were sold. 3. Except as otherwise provided in Section 148(f) of the Code, the Issuer will account for proceeds of the Bonds separately from other funds of the Issuer and will compute and pay to the United States Treasury the Rebate Amount due with respect to the Bonds no less frequently than every five years, in the installments, to the place, in the manner and accompanied by such forms or other information as is or may be required by Section 148(f) of the Code and the regulations and rulings thereunder. 45216966.1 4 - - H. No Abusive Arbitrage Device. 1. In connection with the issuance of the Bonds, the Issuer has not employed any action which has the effect of overburdening the market for tax-exempt obligations by issuing more bonds, issuing bonds earlier, or. allowing bonds to remain outstanding longer than is reasonably necessary to accomplish the governmental purposes of the Bonds. 2. In connection with the issuance of the Bonds, the Issuer has not employed any action which has the effect of enabling the Issuer to exploit the difference between tax-exempt and taxable interest rates to gain a material financial qctyRntag_e. ~tf-i 3 u zooz EXECUTED AND DELIVERED _________ _ . CITY OF LUBBOCK, TEXAS 45216966.1 5 - - - The undersigned has read the foregoing Certificate as to Tax Exemption, has made the representations to the Issuer attributed to it in paragraph E.6, believe such representations to be true, correct and complete as of the date hereof, and is not aware of any facts or circumstances that would make such representations untrue, inaccurate or incomplete. FIRST SOUTHWEST COMPANY / LUBSOCK eLEC REV 2002_TAXCERT.DOC 6 ·- - - Resoluciou No. ·2001-R047Z November 8 7 2001 Item Mo. 24 RESOLUTION DECLARING EXPECTATION TO REIMBURSE EXPENDITURES WITH PROCEEDS OF FUTURE DEBT STATE OF TEXAS § COUNTY OF LUBBOCK § \VHEREAS, the City of Lubbock (the .. Issuer") intends to issue debt for electric system improvements for said City (the "Project"), and further intends to make certain capital expenditures with respect to the Project and currently desires and expects to reimburse such capital expenditures with proceeds of such debt; and WHEREAS, under Treas. Reg.§ 1.150~2 (the "Regulation"), to fund such reimbursement with proceeds of tax-exempt obligations, the Issuer must declare its expectation to make such reimbursements; and WHEREAS, the Issuer desires to preserve its ability to reimburse the capital expenditures with proceeds of tax-exempt obligations. NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE ISSUER THAT the Issuer reasonably expects to reimburse capital expenditures with respect to the Projects with proceeds of debt hereafter to be incurred by the Issuer, and that this resolution shall constitute a declaration of official intent under the Regulation. The maximum principal amount of obligations expected to be issued for the Project is $6,900,000. Passed by the City Council this 8th day of November 200 l. ?J!fik~ ATTEST: 11 -·~~ 0FFIC£ OF TH£ ATTORNE-Y GENERAL • STATE OF TEXAS #~ JoHK CoRNYN September 27, 2002 THIS IS TO CERTIFY that the City of Lubbock, Texas (the "Issuer") has submitted to me City of Lubbock, Texas. Electric Light and Power System Revenue Bonds, Series 2002 (the "Bonds") in the aggregate principal amount of $8,500,000 for approval. The Bonds are dated August 15, 2002, numbered Sl-1 through Sl-2, and Tl-3, and were authorized by Ordinance No. 2002-00092 of the Issuer passed on August 29, 2002 (the "Ordinance"). I have examined the law and such certified proceedings and other papers as I deem necessary to render this opinion. As to questions of fact material to my opinion, I have relied upon representations of the Issuer contained in the certified proceedings and other certifications of public officials furnished to me without undertaking to verify the same by independent investigation. I express no opinion relating to the official statement or any other offering material relating to the Bonds. Based on my examination, I am of the opinion, as of the date hereof and under existing law, as follows (capitalized terms, except as herein defined, have the meanings given to them in the Ordinance): No. 38408 (1) The Bonds have been issued in accordance with law and are valid and binding special obligations of the Issuer. (2) The Bonds are payable solely from and secured by a first lien on and pledge of the Net Revenues of the Issuer's Electric Light and Power system. (3) The owner of the Bonds shall never have the right to demand payment of the Bonds from any funds raised or to be raised by taxation. Therefore, the Bonds are approved. Book No. 2002C MAA POST OFFICE Box 12548, AUSTIN, TEXAS 78711-2548 TEL: (512)463-2100 WEB: WWW.OAG.STATE.TX.US An Equal Employment Opportunity Employer· Printed t.m Ruycfed Paper OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, CAROLE KEETON RYLANDER, Comptroller of Public Accounts of the State of Texas, do hereby certify that the attachment is a true and correct copy of the opinion of the Attorney General approving the: City of Lubbock. Texas. Electric Light and Power System Revenue Bonds. Series 2002 numbered Sl-1. Sl-2. Tl-3. of the denomination of $ various, dated August 15. 2002. as authorized by issuer, interest 4. 75 percent, under and by authority of which said bonds/certificates were registered electronically in the office of the Comptroller, on the '27th day of September. 2002, under Registration Number 66175. Given uhder my hand and seal of office, at Austin, Texas, the 27th day of September, 2002. ~~ CAROLE KEETON RYLANDER Comptroller of Public Accounts of the State of Texas - OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, Melissa Mora, 0 Bond Clerk [8] Assistant Bond Clerk in the office of the Comptroller of the State of Texas, do hereby certify that, acting under the direction and authority of the Comptroller on the 27th day of September. 2002, I signed the name of the Comptroller to the certificate of registration endorsed upon the: City of Lubbock. Texas. Electric Light and Power System Revenue Bonds. Series 2002, numbered SI-1.SI-2. T!-3. dated August 15. 2002, and that in signing the certificate of registration I used the followin-g~---~--·--~ --X'a:C:~~ IN ESS WHEREOF I have executed this certificate this the 27th day of September. I, Carole Keeton Rylander, Comptroller of Public Accounts of the State of Texas, certify that the person who has signed the above certificate was duly designated and appointed by me under authority vested in me by Chapter 403, Subchapter H, Government Code, with authority to sign my name to all certificates of registration, and/or cancellation of bonds required by law to be registered and/or cancelled by me, and was acting as such on the date first mentioned in this certificate, and that the bonds/certificates described in this certificate have been duly registered in the office of the Comp,troUer, under Registration Number 2.21ZQ. GIVENundermy hand and seal of office at Austin, Texas, this the 27th day of September. 2002. ~~ CAROLE KEETON RYLANDER Comptroller of Public Accounts of the State of Texas 12 - - THE STATE OF TEXAS COUNTY OF DALLAS RECEIPT FOR PAYMENT § § § On the date hereof the following described bonds: "CITY OF LUBBOCK, TEXAS, ELECTRIC LIGHT AND POWER SYSTEM REVENUE BONDS, SERIES 2002", dated August 15, 2002, in the aggregate principal amount of $8,500,000 (the "Bonds") were delivered to the purchaser(s) thereof, namely: AMERICAN STATE BANK, BANK OF AMERICA, N.A. WE:LLS FARGO BROKERAGE SERVICES LLC following the receipt of immediately available funds from the purchaser(s) in settlement of the agreed purchase price for the Bonds as follows: PRINCIPAL AMOUNT REOFFERING PREMIUM TOTAL AMOUNT RECEIVED ON DELIVERY OF THE BONDS $8,500,000.00 50,468.75 $8,550,468.75 Furthermore, the undersigned has on the date of this receipt (i) transmitted the total sum of $8,550,168.75 to American State Bank, Texas, Lubbock, Texas (the depository bank of the issuer) for credit to the issuer's accounts as follows: $50468.75 to the credit of the interest and sinking fund for the Bonds and $8,499,700.00 to the credit of the project construction fund and (ii) retained the sum of $300.00 in payment for paying agent/registrar services; all in accordance with the instructions received. DELIVERED, this September 30, 2002. #45229944vl< JPMORGAN CHASE BANK, Dallas, Texas By:hfu~ttt Titlef=l IDENT 13 TELEPHONE: 214/855·8000 F"ACSIM!Uo:: 214/855-8200 FULBRIGHT & -.JAWORSKI L.L.P. A REGISTERED LIMITED LIABILITY PARTNERSHIP 2200 Ross AvENUE, SuiTE 2800 DALLAS, TEXAS 75201-2784 September 30, 2002 HOUSTON WASHINGTON, D.C. AUSTIN SAN ANTONIO DALLAS NEW YORK LOS ANGELES MINNEAPOLIS LONDON HONG KONG WE HAVE ACTED as Bond Counsel in connection with the issuance by City of Lubbock, Texas (the "City") of the "City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 2002" (the "Bonds") in the aggregate principal amount of $8,500,000, dated August 15, 2002, solely to express legal opinions as to the validity of the Bonds and the exclusion of the interest on the Bonds from gross income for federal income tax purposes, and for no other purpose. We have not been requested to investigate or verify, and we neither expressly nor by implication render herein any opinion concerning, the financial condition or capabilities of the City, the disclosure of any financial or statistical information or data pertaining to the City and used in the sale of the Bonds, or the sufficiency of the security for or the value or marketability of the Bonds. THE BONDS are issuable in fully registered form only and in denominations of $5,000 or any integral multiple thereof. The Bonds have stated maturities of April 15 in each of the years 2004 through 2013, unless redeemed prior to maturity in accordance with the optional or mandatory redemption provisions stated on the Bonds. Interest accrues on the Bonds from their date at the rate per annum stated in the ordinance adopted by the City Council of the City authorizing the issuance of the Bonds (the "Ordinance"), and such accrued interest is payable on April 15 and October 15 in each year, commencing April 15, 2003, to the registered owners appearing on the registration books of the Paying Agent/Registrar on the Record Date (stated on the face of the Bonds). IN RENDERING THE OPINIONS herein we have examined and rely upon original or certified copies of the proceedings had in connection with the issuance of the Bonds, including the Ordinance and executed initial Bonds; certifications of officers of the City relating to the expected use and investment of proceeds of the sale of the Bonds and certain other funds of the City and to certain other facts within the knowledge and control of the City; and such other material and such matters of law as we deem relevant. In the examination of the proceedings relating to the issuance of the Bonds, we have assumed the authenticity of all documents submitted to us as originals, the conformity to original copies of all documents submitted to us as certified copies, and the accuracy of the statements contained in such documents and certifications. BASED ON OUR EXAMINATIONS, IT IS OUR OPINION that, under the applicable law of the United States of America and the State of Texas in force and effect on the date hereof: 1. The Bonds have been duly authorized by the City, and the Bonds issued in compliance with the provisions of the Ordinance are valid and legally binding special obligations of the City, in accordance with the terms thereof, and, together with the outstanding Previously Issued Bonds (identified and defined in the Ordinance), are payable solely from and equally and ratably secured by a first lien on and pledge of the Net Revenues (as defined in the Ordinance) of the City's Electric Light and Power System, except to the extent that the - Legal Opinion of Fulbright & Jaworski LLP. Re: "City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 2002", dated August 15, 2002 enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights or the exercise of judicial discretion in accordance with general principles of equity. The Ordinance provides certain conditions under which the City may issue additional obligations payable from the same source and secured in the same manner as the Bonds. 2. Pursuant to section 103 of the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), and existing regulations, published rulings, and court decisions thereunder, and assuming continuing compliance after the date hereof by the City with the provisions of the Ordinance relating to sections 141 through 150 of the Code, interest on the Bonds will be excludable from the gross income, as defined in section 61 of the Code, of the owners thereof for federal income tax purposes, and such interest will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals for federal income tax purposes. Interest on all tax-exempt obligations, such as the Bonds, owned by a corporation (other than an "S" corporation or a qualified mutual fund, real estate mortgage investment conduit, real estate investment trust, or a financial asset securitization investment trust) will be included in such corporation's adjusted current earnings for purposes of calculating the alternative minimum taxable income of such corporation. A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code is computed. WE EXPRESS NO OTHER OPINION with respect to any other federal, state, or local tax consequences under present law or any proposed legislation resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Bonds. Ownership of tax-exempt obligations such as the Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, "S" corporations with subchapter "C" earnings and profits, owners of interests in a financial asset securitization investment trust, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. OUR OPINIONS ARE BASED on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above. EHE:dfc 45196574.1 14 Fonn 8038-G (Rev. November 2000) Department of the Treasury Information Return for Tax-Exempf Governmental Obligations • Under Internal Revenue Code s.ection 149(e) • See separate instructions. Caution: Use Form 8038-GC if the issue price is under $100,000. Proceeds used for accrued interest ...... , .......•..•..................................... 23 Issue price of entire issue (enter amount from line 21, column {b)) ......•.................. 24 Proceeds used for bond issuance costs (including underwriters' discount) .• ~~+--~W~~~-- 25 Proceeds used for credit enhancement ...•........•....•.......... t--+--------- 26 Proceeds allocated to reasonably required reserve or replacement fund ... t---+------------- 27 Proceeds used to currently refund prior issues ...••..•.............. t---+-------~--- 28 Proceeds used to advance refund prior issues .. : , ...•............... '---"'-'--'------.;;_--- Total {add lines 24 through 28) 31 Enter the remaining weighted average maturity of the bonds to be currently refunded •.................. ·. . . .. 32 Enter the remaining weighted average maturity of the bonds to be advance refunded .•..... : .............. .. · .-, · 33 Enter the last date on which the refunded bonds will be called ..............•..•.................•... .,.. 34 Enter the date(s) the refunded bonds were issued Enter the amount of the state volume cap allocated to the section 141 (b)(S) •.......•..... 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see b Enter the final maturity date of the guaranteed investment contract """' 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units b If this issue is a loan made from the proceeds of another tax-exempt issue, check box .. 0 and enter issuer .. and the date of the issue .. OMB No. 1545-0720 38 If the issuer has designated the issue under section 265(b){3)(B){i){lll) (small issuer exception), check box •...••.................•. • 0 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . • . . . . . . . . . . . . . . . . . . ......................... • 0 40 If the issuer has identified a hedge, check box ...........•......•.......•...•..•.. : ••..•.................•........ • . · . • 0 Please Sign Here .... 45217996 th t I have examined this return and accompanying schedules and statements. and to the best of , correct, and \refel 4 2002 ~,...a~I!:.....:~:J£~i::\--AJ~~...,.f=:::......-----------------ll> Beverly Hodges, Director of Finance Date Type or print name and title Form 8038-G (Rev. 11-2000)