HomeMy WebLinkAboutOrdinance - 2004-O0106 - Certificate & Bond Authorizing Proceedings In Ordinance 2004-O0105 - 09/28/2004CERTIFICATE & BOND
AUTHORIZING PROCEEDINGS
IN
ORDINANCE No. 2004-00105
ORDINANCE NO. 2004-0 0106
First & Final Reading
September 28, 2004
Item No. 31
AN ORDINANCE authorizing the issuance of "CITY OF LUBBOCK, TEXAS,
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2004"; specifying the terms
and features of said certificates: providing for the payment of said
certificates of obligation by the levy of an ad valorem tax upon all taxable
property within the City and a lien on and pledge of the net revenues from
the operation of the City's Waterworks System; and resolving other
matters incident and related to the issuance, sale, security, payment and
delivery of said certificates, including the approval of a Paying
Agent/Registrar Agreement and a Purchase Contract and the approval
and distribution of an Official Statement pertaining thereto; and providing
an effective date.
WHEREAS, notice of the City Council's intention to issue certificates of obligation in the
maximum principal amount of $3,100,000 for the purpose of paying contractual obligations to be
incurred for (i) street improvements, including drainage, street lights, and traffic signalization
and the acquisition of land and rights-of-way therefor, and (ii) professional services rendered in
connection with such projects and the financing thereof, has been duly published in the Lubbock
Avalanche-Journal, a newspaper hereby found and determined to be of general circulation in
the City of Lubbock, Texas, on June 13, 2004 and June 20, 2004, the date of the first
publication of such notice being not less than fifteen (15) days prior to the tentative date stated
therein for the passage of this Ordinance; and
WHEREAS, no petition, protesting the issuance of such certificates and bearing valid
petition signatures of at least 5% of the qualified voters of the City, has been filed with the City
Secretary, any member of the Council or any other official of the City on or prior to the date of
the passage of this Ordinance; and
WHEREAS, the Council hereby finds and determines the certificates of obligation
described in the aforesaid notice should be issued and sold at this time in the amount and
manner as hereinafter provided; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
SECTION 1: . Authorization-Designation-Principal Amount-Purpose. Certificates of
obligation of the City shall be and are hereby authorized to be issued in the aggregate principal
amount of $3,100,000 to be designated and ·bear the title "CITY.OF LUBBOCK, TEXAS, TAX
AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION,
SERIES 2004" (the "Certificates"), for the purpose of paying contractual obligations to be
incurred for (i) street improvements, including drainage, street lights, and traffic signalization
and the acquisition of land and rights-of-way therefor, and (ii) professional services rendered in
connection with such projects and the financing thereof, pursuant to authority conferred by and
in conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Local
Government Code, Subchapter C of Chapter 271.
SECTION 2: Fully Registered Obligations -Authorized Denominations-Stated
Maturities-Date. The Certificates are issuable in fully registered form only; shall be dated
September 15, 2004 (the "Certificate Date") and shall be in denominations of $5,000 or any
integral multiple thereof (within a Stated Maturity) and the Certificates shall become due and
payable on February 15 in each of the years and in principal amounts (the "Stated Maturities")
and bear interest at the per annum rate(s) in accordance with the following schedule:
Year of Principal Interest
Stated Maturity Amount Rate{s)
2005 $410,000 3.000%
2006 105,000 3.000%
2007 105,000 3.000%
2008 110,000 3.000%
2009 115,000 3.000%
2010 115,000 3.000%
2011 120,000 3.000%
2012 125,000 3.150%
2013 125,000 3.300%
2014 130,000 3.400%
2015 135,000 3.625%
2016 140,000 3.750%
2017 145,000 3.850%
2018 155,000 4.000%
2019 160,000 4.000%
2020 165,000 4.125%
2021 175,000 4.200%
2022 180,000 4.300%
2023 190,000 4.400%
2024 195,000 4.500%
The Certificates shall bear interest on the unpaid principal amounts from the Certificate
Date at the per annum rate(s) shown above in this Section (calculated on the basis of a 360-day
year of twelve 30-day months). Interest on the Certificates shall be payable on February 15 and
August 15 in each year, commencing February 15, 2005.
SECTION 3: Terms of Payment-Paying Agent/Registrar. The principal of, premium, if
any, and the interest on the Certificates, due and payable by reason of maturity, redemption or
otherwise, shall be payable only to the registered owners or holders of the Certificates
(hereinafter called the "Holders") appearing on the registration and transfer books maintained by
the Paying 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 Certificates is hereby approved and confirmed. Books and
records relating to the registration, payment, exchange and transfer of the Certificates {the
"Security Register'') shall at all times be kept and maintained on behalf of the City by the Paying
Agent/Registrar, all as provided herein, 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 of the City are hereby authorized to execute and
deliver such Agreement in connection with the delivery of the Certificates. The City covenants
to maintain and provide a Paying Agent/Registrar at all times until the Certificates are paid and
discharged, and any successor Paying Agent/Registrar shall be a bank, trust company, financial
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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 Certificates, the City agrees to promptly cause a written notice thereof to be sent to each
Holder by United States Mail, first class postage prepaid, which notice shall also give the
address of the new Paying Agent/Registrar.
Principal of and premium, if any, on the Certificates shall be payable at the Stated
Maturities or the redemption thereof only upon presentation and surrender of the Certificates to
the Paying Agent/Registrar at its designated offices in Dallas, Texas (the "Designated
Payment/Transfer Office"). Interest on the Certificates shall be paid by the Paying
Agent/Registrar to the Holders whose name appears 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 payment of such interest shall be (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
Certificates 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 nonpayment of interest on a scheduled payment date, and for thirty (30)
days thereafter, a new record date for such interest payment (a "Special Record Date") will be
established by the Paying Agent/ Registrar, if and when funds for the payment of such interest
have been received from the City. Notice of the Special Record Date and of the scheduled
payment date of the past due interest (which shall be 15 days after the Special Record Date)
shall be sent at least five (5) business days prior to the Special Record Date by United States
Mail, first class postage prepaid, to the address of each Holder appearing on the Security
Register at the close of business on the last business next preceding the date of mailing of such
notice.
SECTION 4: Redemption. (a) Optional Redemption. The Certificates having Stated
Maturities on and after February 15, 2015, 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 February 15,
2014 or on any date thereafter at the redemption price of par plus accrued interest to the date of
redemption.
(b) Exercise of Redemption Option. At least forty-five (45) days prior to a
redemption date for the Certificates (unless a shorter notification period shall be satisfactory to
the Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of the decision to
redeem Certificates, the principal amount of each Stated Maturity to be redeemed, and the date
of redemption therefor. The decision of the City to exercise the right to redeem Certificates shall
be entered in the minutes of the governing body of the City.
(c) Selection of Certificates for Redemption. If less than all Outstanding Certificates
of the same Stated Maturity are to be redeemed on a redemption date, the Paying
Agent/Registrar shall treat such Certificates as representing the number of Certificates
Outstanding which is obtained by dividing the principal amount of such Certificates by $5,000
45515552.1 3
and shall select the Certificates, or principal amount thereof, to be redeemed within such Stated
Maturity by lot.
(d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date
for the Certificates, a notice of redemption shall be sent by United States Mail, first class
postage prepaid, in the name of the City and at the City's expense, to each Holder of a
Certificate to be redeemed in whole or in part at the address of the Holder appearing on the
Security Register at the close of business on the business day next preceding the date of
mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to
have been duly given irrespective of whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the Certificates, (ii)
identify the Certificates to be redeemed and, in the case of a portion of the principal amount to
be redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price,
(iv) state that the Certificates, or the portion of the principal amount thereof to be redeemed,
shall become due and payable on the redemption date specified, and the interest thereon, or on
the portion of the principal amount thereof to be redeemed, shall cease to accrue from and after
the redemption date, and (v) specify that payment of the redemption price for the Certificates, or
the principal amount thereof to be redeemed, shall be made at the Designated
Payment!Transfer Office of the Paying Agent/Registrar only upon presentation and surrender
thereof by the Holder. If a Certificate is subject by its terms to prior redemption and has been
called for redemption and notice of redemption thereof has been duly given as hereinabove
provided, such Certificate (or the principal amount thereof to be redeemed) shall become due
and payable and interest thereon shall cease to accrue from and after the redemption date
therefor; provided moneys sufficient for the payment of such Certificate (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 Certificates-Predecessor
Certificates. The Paying Agent/Registrar shall obtain, record, and maintain in the Security
Register the name and address of each and every owner of the Certificates issued under and
pursuant to the provisions of this Ordinance, or if appropriate, the nominee thereof. Any
Certificate may be transferred or exchanged for Certificates of other authorized denominations
by the Holder, in person or by his duly authorized agent, upon surrender of such Certificate to
the Paying 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 of any Certificate (other than the Initial Certificate(s) authorized in
Section 8 hereof) for transfer 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 transferees, one or more new Certificates of authorized denominations
and having the same Stated Maturity and of a like aggregate principal amount as the Certificate
or Certificates surrendered for transfer.
At the option of the Holder, Certificates (other than the Initial Certificate(s) authorized in
Section 8 hereof) may be exchanged for other Certificates of authorized denominations and
having the same Stated Maturity, bearing the same rate of interest and of like aggregate
principal amount as the Certificates surrendered for exchange, upon surrender of the
Certificates to be exchanged at the Designated Payment/Transfer Office of the Paying Agent/
Registrar. Whenever any Certificates are surrendered for exchange, the Paying
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AgenVRegistrar shall register and deliver new Certificates to the Holder requesting the
exchange.
All Certificates issued in any transfer or exchange of Certificates shall be delivered to the
Holders at the Designated Payment/Transfer Office of the Paying AgenVRegistrar or sent by
United States Mail, first class, postage prepaid to the Holders, and, upon the registration and
delivery thereof, the same shall be the valid obligations of the City, evidencing the same
obligation to pay, and entitled to the same benefits under this Ordinance, as the Certificates
surrendered in such transfer or exchange.
All transfers or exchanges of Certificates pursuant to this Section shall be made without
expense or service charge to the Holder, except as otherwise herein provided, and except that
the Paying AgenVRegistrar shall require payment by the Holder requesting such transfer or
exchange of any tax or other governmental charges required to be paid with respect to such
transfer or exchange.
Certificates canceled by reason of an exchange or transfer pursuant to the provisions
hereof are hereby defined to be "Predecessor Certificates," evidencing all or a portion, as the
case may be, of the same obligation to pay evidenced by the new Certificate or Certificates
registered and delivered in the exchange or transfer therefor. Additionally, the term
"Predecessor Certificates'' shall include any mutilated, lost, destroyed, or stolen Certificate for
which a replacement Certificate has been issued, registered and delivered in lieu thereof
pursuant to the provisions of Section 23 hereof and such new replacement Certificate shall be
deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Certificate.
Neither the City nor the Paying AgenVRegistrar shall be required to issue or transfer to
an assignee of a Holder any Certificate called for redemption, in whole or in part, within 45 days
of the date fixed for the redemption of such Certificate; provided, however, such limitation on
transferability shall not be applicable to an exchange by the Holder of the unredeemed balance
of a Certificate called for redemption in part.
SECTION 6: Book-Entry Only Transfers and Transactions. Notwithstanding the
provisions contained in Sections 3, 4 and 5 hereof relating to the payment and
transfer/exchange of the Certificates, the City hereby approves and authorizes the use of
"Book-Entry Only" securities clearance, settlement and transfer system provided by The
Depository Trust Company (DTC), a limited purpose trust company organized under the laws of
the State of New York, in accordance with the operational arrangements referenced in the
Blanket Issuer Letter of Representations by and between the City and DTC (the "Depository
Agreement"). ·
Pursuant to the Depository Agreement and the rules of DTC, the Certificates shall be
deposited with DTC who shall hold said Certificates for its participants (the "DTC Participants")
and, while the Certificates are held by DTC under the Depository Agreement, the Holder of the
Certificates on the Security Register for all purposes, including payment and notices, shall be
Cede & Co., as nominee of DTC, notwithstanding the ownership of each actual purchaser or
owner of each Certificate (the "Beneficial Owners"} being recorded in the records of DTC and
DTC Participants.
In the event DTC determines to discontinue serving as securities depository for the
Certificates or otherwise ceases to provide book-entry clearance and settlement of securities
transactions in general or the City determines that DTC is incapable of properly discharging its
45515552.1 5
duties as securities depository for the Certificates, the City covenants and agrees with the
Holders of the Certificates to cause Certificates to be printed in definitive form and provide for
the Certificate certificates to be issued and delivered to DTC Participants and Beneficial
Owners, as the case may be. Thereafter, the Certificates in definitive form shall be assigned,
transferred and exchanged on the Security Register maintained by the Paying Agent/Registrar
and payment of such Certificates shall be made in accordance with the provisions of Sections 3,
4 and 5 hereof.
SECTION 7: Execution -Registration. The Certificates shall be executed on behalf of
the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the
City Secretary. The signature of said officers on the Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals who are or were the proper
officers of the City on the Certificate Date shall be deemed to be duly executed on behalf of the
City, notwithstanding that one or more of the individuals executing the same shall cease to be
such officer at the time of delivery of the Certificates to the initial purchaser(s) and with respect
to Certificates delivered in subsequent exchanges and transfers, all as authorized and provided
in V.T.C.A., Government Code, Chapter 1201.
No Certificate shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Certificate either a certificate of
registration substantially in the form provided in Section 9( c), manually executed by the
Comptroller of Public Accounts of the State of Texas, or his duly authorized· agent, or a
certificate of registration substantially in the form provided in Section 9(d), manually executed by
an authorized officer, employee or representative of the Paying Agent/Registrar, and either such
certificate duly signed upon any Certificate shall be conclusive evidence, and the only evidence,
that such Certificate has been duly certified, registered and delivered.
SECTION 8: Initial Certificate(s). The Certificates he~ein authorized shall be initially
issued either (i) as a single fully registered certificate in the total principal amount stated in
Section 1 hereof with principal installments to become due and payable as provided in Section 2
hereof and numbered T-1, or (ii) as multiple fully registered certificates, being one certificate for
each year of maturity in the applicable principal amount and denomination and to be numbered
consecutively from T-1 and upward (hereinafter called the "Initial Certificate(s)") and, in either
case, the Initial Certificate(s) shall be registered in the name of the initial purchaser(s) or the
designee thereof. The Initial Certificate(s) shall be the Certificates submitted to the Office of the
Attorney General of the State of Texas for approval, certified and registered by the Office of the
Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser(s).
Any time after the delivery of the Initial Certificate(s), the Paying Agent/Registrar, pursuant to
written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial
Certificate(s) delivered hereunder and exchange therefor definitive Certificates of authorized
denominations, Stated Maturities, principal amounts and bearing applicable interest rates for
transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to
and in accordance with such written instructions from the initial purchaser(s), or the designee
thereof, and such other information and documentation as the Paying Agent/Registrar may
reasonably require.
SECTION 9: Forms. (a) Forms Generally. The Certificates, the Registration
Certificate of the Comptroller of Public Accounts of the State of Texas, the Registration
Certificate of Paying Agent/Registrar, and the form of Assignment to be printed on each of the
Certificates, shall be substantially in the forms set forth in this Section with such appropriate
insertions, omissions, substitutions, and other variations as are permitted or required by this
45515552.1 6
Ordinance and may have such letters, numbers, or other marks of identification (including
identifying numbers and letters of the Committee on Uniform Securities Identification
Procedures of the American Bankers Association) and such legends and endorsements
(including insurance legends in the event the Certificates, or any maturities thereof, are
purchased with insurance and any reproduction of an opinion of counsel) thereon as may,
consistently herewith, be established by the City or determined by the officers executing such
Certificates as evidenced by their execution. Any portion of the text of any Certificates may be
set forth on the reverse thereof, with an appropriate reference thereto on the face of the
Certificate.
The definitive Certificates and the Initial Certificate(s) shall be printed, lithographed, or
engraved, typewritten, photocopied or otherwise reproduced in any other similar manner, all as
determined by the officers executing such Certificates as evidenced by their execution thereof.
(b) Form of Certificates.
REGISTERED
NO. ___ _
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF LUBBOCK, TEXAS,
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATE OF OBLIGATION,
SERIES 2004
REGISTERED
$ ___ _
Certificate Date: Interest Rate: Stated Maturity: CUSIP NO:
September 15, 2004 %
Registered Owner:
Principal Amount: 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,
acknowledges itself indebted to and hereby promises to pay to the Registered Owner named
above, or the registered assigns thereof, on the Stated Maturity date specified above the
Principal Amount stated above (or so much thereof as shall not have been paid upon prior
redemption) and to pay interest (computed on the basis of a 360·day year of twelve 30·day
months) on the unpaid Principal Amount hereof from the Certificate Date at the per annum rate
of interest specified above; such interest being payable on February 15 and August 15 of each
year, commencing February 15, 2005. Principal of this Certificate is payable at its Stated
Maturity or redemption to the registered owner hereof, upon presentation and surrender, at the
Designated Payment/Transfer Office of the Paying AgenURegistrar executing the registration
certificate appearing hereon, or its successor; provided, however, while this Certificate is
registered to Cede & Co., the payment of principal upon a partial redemption of the principal
amount hereof may be accomplished without presentation and surrender of this Certificate.
Interest is payable to the registered owner of this Certificate (or one or more Predecessor
Certificates, as defined in the Ordinance hereinafter referenced) whose name appears on the
45515552.1 7
"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 on the Record Date 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 Certificate shall be without
exchange or collection charges to the owner hereof and in any coin or currency of the United
States of America which at the time of payment is legal tender for the payment of public and
private debts.
This Certificate is one of the series specified in its title issued in the aggregate principal
amount of $3,100,000 (herein referred to as the "Certificates"} for the purpose of paying
contractual obligations to be incurred for (i} street improvements, including drainage, street
lights, and traffic signalization and the acquisition of land and rights-of-way therefor, and {ii}
professiooal services rendered in connection with such projects and the financing thereof,
under and in strict conformity with the Constitution and laws of the State of Texas, particularly
V.T.C.A., Local Government Code, Subchapter C of Chapter 271, and pursuant to an Ordinance
adopted by the governing body of the City (herein referred to as the "Ordinance"}.
The Certificates maturing on and after February 15, 2015, 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 February 15, 2014, 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 a redemption date, the City shall cause a written notice of
such redemption to be sent by United States Mail, first class postage prepaid, to the registered
owners of each Certificate to be redeemed at the address shown on the Security Register and
subject to the terms and provisions relating thereto contained in the Ordinance. If a Certificate
(or any portion of its principal sum) shall have been duly called for redemption and notice of
such redemption duly given, then upon the redemption date such Certificate (or the portion of its
principal sum to be redeemed) shall become due and payable, and, if moneys for the payment
of the redemption price and the interest accrued on the principal amount to be redeemed to the
date of redemption are held for the purpose of such payment by the Paying Agent/Registrar,
interest shall cease to accrue and be payable from and after the redemption date on the
principal amount redeemed.
In the event a portion of the principal amount of a Certificate is to be redeemed and the
registered owner is someone other than Cede & Co., payment of the redemption price of such
principal amount shall be made to the registered owner only upon presentation and surrender of
such Certificate to the Designated Payment/Transfer Office of the Paying Agent/Registrar, and a
new Certificate or Certificates of like maturity and interest rate in any authorized denominations
provided by the Ordinance for the then unredeemed balance of the principal sum thereof will be
issued to the registered owner, without charge. If a Certificate is selected for redemption, in
whole or in part, the City and the Paying Agent/Registrar shall not be required to transfer such
Certificate to an assignee of the registered owner within 45 days of the redemption date
therefor; provided, however, such limitation on transferability shall not be applicable to an
exchange by the registered owner of the unredeemed balance of a Certificate redeemed in part.
45515552.1 8
The Certificates are payable from the proceeds of an ad valorem tax levied, within the
limitations prescribed by law, upon all taxable property in the City and, together with the
Previously Issued Obligations (as defined in the Ordinance), are additionally payable from and
secured by a lien on and pledge of the Net Revenues (as defined in the Ordinance) of the City's
Waterworks System {the "System"), such lien and pledge, however, being junior and
subordinate to the lien on and pledge of the Net Revenues of the System securing the payment
of "Prior Lien Obligations" (as defined in the Ordinance) hereafter issued by the City. In the
Ordinance, the City reserves and retains the right to issue Prior Lien Obligations while the
Certificates are outstanding without limitation as to principal amount but subject to any terms,
conditions or restrictions as may be applicable thereto under law or otherwise, as well as the
right to issue Additional Obligations (as defined in the Ordinance).
Reference is hereby made to the Ordinance, a copy of which is on file in the Designated
Payment/Transfer Office of the Paying Agent/Registrar, and to all the provisions of which the
Holder hereof by the acceptance hereof hereby assents, for definitions of terms; the description
of and the nature and extent of the tax levied for the payment of the Certificates; the nature and
extent of the pledge of the Net Revenues securing the payment of the Certificates; the terms
and conditions relating to the transfer or exchange of this Certificate; the conditions upon which
the Ordinance may be amended or supplemented with or without the consent of the Holders;
the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and
provisions upon which the tax levy and the pledge of the Net Revenues and covenants made in
the Ordinance may be discharged at or prior to the maturity of this Certificate, and this
Certificate deemed to be no longer Outstanding thereunder; and for the other terms and
provisions contained therein. Capitalized terms used herein have the meanings assigned in the
Ordinance.
This Certificate, subject to certain limitations contained in the Ordinance, may be
transferred on the Security Register only upon its presentation and surrender at the Designated
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 fully registered
Certificates of authorized denominations 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
Certificate as the owner entitled to payment of principal hereof at its Stated Maturity or its
redemption, in whole or in part, and (iii) on any other date as the owner for all other purposes,
and neither the City nor the Paying Agent/Registrar, or any agent of either, shall be affected by
notice to the contrary. In the event of nonpayment of interest on a scheduled payment date and
for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record
Date") will be established by the Paying 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 of the
scheduled payment date of the past due interest (which shall be 15 days after the Special
Record Date) shall be sent at least five (5) business days prior to the Special Record Date by
United States Mail, first class postage prepaid, to the address of each Holder appearing on the
Security Register at the close of business on the last business day next preceding the date of
mailing of such notice.
45515552.1 9
It is hereby certified, recited, represented and covenanted that the City is a body.
corporate and political subdivision duly organized and legally existing under and by virtue of the
Constitution and laws of the State of Texas; that the issuance of the Certificates is duly
authorized by law; that all acts, conditions and things required to exist and be done precedent to
and in the issuance of the Certificates to render the same lawful and valid obligations of the City
have been properly done, have happened and have been performed in regular and due time,
form and manner as required by the Constitution and laws of the State of Texas, and the
Ordinance; that the Certificates do not exceed any constitutional or statutory limitation; and that
due provision has been made for the payment of the principal of and interest on the Certificates
as aforestated. In case any provision in this Certificate 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 Certificate and the Ordinance shall be construed in accordance with and shall
be governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the City Council of the City has caused this Certificate to be
duly executed under the official seal of the City as of the Certificate Date.
CITY OF LUBBOCK, TEXAS
Mayor
COUNTERSIGNED:
City Secretary
(SEAL)
45515552.1 10
(c) * Form of Registration Certificate of Comptroller of Public Accounts to Appear
on Initial Certificate(s) only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER
OF PUBLIC ACCOUNTS
THE STATE OF TEXAS
)
)
)
)
REGISTER NO.-------
I HEREBY CERTIFY that this Certificate has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and duly registered by the Comptroller
of Public Accounts of the State of Texas.
(SEAL)
WITNESS my signature and seal of office this ________ ,
Comptroller of Public Accounts
of the State of Texas
*NOTE TO PRINTER: Do not print on definitive Certificates
(d) Form of Certificate of Paying Agent/Registrar to Appear on Definitive Certificates.
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Certificate has been duly issued and registered under the provisions of the
within-mentioned Ordinance; the certificate or certificates of the above entitled and designated
series originally delivered having been approved by the Attorney General of the State of Texas
and registered by the Comptroller of Public Accounts, as shown by the records of the Paying
Agent/Registrar.
The designated offices of the Paying Agent/Registrar located in Dallas, Texas, is the
"Designated Payment/Transfer Office" for this Certificate.
Registration Date:
45515552.1 11
JP MORGAN CHASE BANK,
Dallas, Texas,
as Paying Agent/Registrar
Authorized Signature
(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
Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Certificate on the books kept for registration thereof, with full
power of substitution in the premises.
DATED:
Signature guaranteed:
NOTICE: The signature on this
assignment must correspond with the
name of the registered owner as it
appears on the face of the within
Certificate in every particular.
(f) The Initial Certificate(s) shall be in the form set forth in paragraph B of this
Section, except that the form of a single fully registered Initial Certificate shall be modified
as follows:
Heading and first paragraph shall be modified to read as follows:
REGISTERED
NO. T~1
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF LUBBOCK, TEXAS,
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATE OF OBLIGATION,
SERIES 2004
Certificate Date:
September 15, 2004
Registered Owner:
Principal Amount:
REGISTERED $ ___ _
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,
acknowledges itself indebted to and hereby promises to pay to the Registered Owner named
above, or the registered assigns thereof, the Principal Amount hereinabove stated, on
45515552.1 12
February 15 in each of the years and in principal installments in accordance with the following
schedule:·
YEAR
PRINCIPAL
INSTALLMENTS
INTEREST
RATE
(Information to be inserted from schedule in Section 2 hereof).
(or so much principal thereof as shall not have been prepaid prior to maturity) and to pay
interest on the unpaid Principal Amount hereof from the Certificate Date at the per annum rates
of interest specified above computed on the basis of a 360-day year of twelve 30-day months;
such interest being payable on February 15 and August 15 of each year, commencing
February 15, 2005. Principal installments of this Certificate are payable in the year of maturity
or on a prepayment date to the registered owner hereof by JPMorgan Chase Bank, Dallas,
Texas (the "Paying Agent/Registrar"), upon presentation and surrender, at its designated offices
in Dallas, Texas (the "Designated Payment/Transfer Office"). Interest is payable to the
registered owner of this Certificate 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 hereof 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
fhis Certificate shall be without exchange or collection charges to the owner hereof and in any
coin or currency of the United States of America which at the time of payment is legal tender for
the payment of public and private debts.
SECTION 10: Definitions. For purposes of this Ordinance and for clarity with respect to
the issuance of the Certificates, and the levy of taxes and appropriation of Net Revenues
therefor, the following words or terms, whenever the same appear herein without qualifying
language, are defined to mean as follows:
(a) The term "Additional Obligations" shall mean tax and revenue
obligations hereafter issued which by their terms are payable from ad valorem
taxes and additionally payable from and secured by a parity lien on and pledge
of the Net Revenues of the System of equal rank and dignity with the lien and
pledge securing the payment of the Previously Issued Obligations and the
Certificates.
(b) The term "Certificates" shall mean $3,100,000 "CITY OF
LUBBOCK, TEXAS, TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2004" authorized by this Ordinance.
(c) The term "Certificate Fund" shall mean the special Fund created
and established under the provisions of Section 11 of this Ordinance.
(d) The term "Collection Date" shall mean, when reference is being
made to the levy and collection of annual ad valorem taxes, the date annual ad
valorem taxes levied each year by the City become delinquent.
45515552.1 13
(e) The term "Fiscal Year'' shall mean the annual financial accounting
period used with respect to the operations of the System now ending on
September 30th of each year; provided, however, the City Council may change,
by ordinance duly passed, such annual financial accounting period to end on
another date if such change is found and determined to be necessary for
budgetary or other fiscal purposes.
(f) The term "Government Securities" shall mean (i) direct
noncallable obligations of the United States of America, including obligations the
principal of and interest on which are unconditionally guaranteed by the United
States of America, (ii) noncallable obligations of an agency or instrumentality of
the United States, including obligations unconditionally guaranteed or insured by
the agency or instrumentality and on the date of their acquisition or purchase by
the City are rated as to investment quality by a nationally recognized investment
rating firm not less than AAA or its equivalent and (iii) noncallable obligations of a
state or an agency or a county, municipality, or other political subdivision of a
state that have been refunded and 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.
(g) The term "Gross Revenues" shall mean, with respect to any
period, all income, revenues and receipts received from the operation and
ownership of the System.
(h) The term "Net Revenues" shall mean the Gross Revenues of the
System, with respect to any period, after deducting the System's Operating and
Maintenance Expenses during such period.
(i) The term "Operating and Maintenance Expenses" shall mean all
reasonable and necessary expenses directly related and attributable to the
operation and maintenance of the System, including, but not limited to, the cost
of insurance, the purchase and carrying of stores, materials, and supplies, the
payment of salaries and labor, and other expenses reasonably and properly
charged, under generally accepted accounting principles, to the operation and
maintenance of the System or by statute deemed to be a first lien against the
gross revenues. Depreciation charges on equipment, machinery, plants and
other facilities comprising the System and expenditures classed under generally
accepted accounting principles as capital expenditures shall not be considered
as "Operating and Maintenance Expenses" for purposes of determining "Net
Revenues".
G) The term "Outstanding" when used in this Ordinance with respect
to Certificates means, as of the date of determination, all Certificates theretofore
issued and delivered under this Ordinance, except:
45515552.1
(i) those Certificates canceled by the Paying
Agent/Registrar or delivered to the Paying Agent/Registrar for
cancellation;
(ii) those Certificates deemed to be duly paid by the
City in accordance with the provisions of Section 19 hereof; and
14
(iii) those Certificates that have been mutilated,
destroyed, lost, or stolen and replacement Certificates have been
registered and delivered in lieu thereof as provided in Section 23
hereof.
(k) The term "Previously Issued Obligations" shall mean the
outstanding (i) "City of Lubbock, Texas, Tax and Waterworks System Surplus
Revenue Refunding Bonds, Series 1999", dated April 1, 1999, (ii) "City of
Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of
Obligation, Series 1999", dated September 15, 1999, (iii) "City of Lubbock,
Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation,
Series 2002", dated February 15, 2002, and (iv) "City of Lubbock, Texas, Tax
and Waterworks System Surplus Revenue Certificates of Obligation, Series
2003", dated July 15, 2003.
(I) The term "Prior Lien Obligations" shall mean all bonds or other
similar obligations hereafter issued that are payable in whole or in part from and
secured by a lien on and pledge of the Net Revenues of the System and such
lien and pledge securing the payment thereof is prior and superior in claim, rank
and dignity to the lien and pledge of the Net Revenues securing the payment of
the Previously Issued Obligations and the Certificates.
(m) The term "System" shall mean the City's Waterworks System,
being all properties, facilities and plants currently owned, operated and
maintained by the City for the supply, treatment, transmission and distribution of
treated potable water, together with all future extensions, improvements,
replacements and additions thereto.
SECTION 11: Certificate Fund. For the purpose of paying the interest on and to provide
a sinking fund for the payment and retirement of the Certificates, there shall be and is hereby
created a special Fund to be designated "SPECIAL 2004 CITY OF LUBBOCK, TEXAS, TAX
AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATE OF OBLIGATION
FUND", which Fund shall be kept and maintained at the City's depository bank, and moneys
deposited in said Fund shall be used for no other purpose. Proper officers of the City are
hereby authorized and directed to cause to be transferred to the Paying Agent for the
Certificates, from funds on deposit in the Certificate Fund, amounts sufficient to fully pay and
discharge promptly each installment of interest and principal of the Certificates as the same
accrues or matures or comes due by reason of redemption prior to maturity; such transfers of
funds to be made in such manner as will cause immediately available funds to be deposited with
the Paying Agent for the Certificates at the close of business on the last business day next
preceding each interest and/or principal payment date for the Certificates.
Pending the transfer of funds to the Paying Agent/Registrar, money in the Certificate
Fund may, at the option of the City, be invested in obligations identified in, and in accordance
with the provisions of the "Public Funds Investment Acf (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 Fund will be
available at the proper time or times. All interest and income derived . from deposits and
investments in said Certificate Fund shall be credited to, and any losses debited to, the said
Certificate Fund. All such investments shall be sold promptly when necessary to prevent any
default in connection with the Certificates.
45515552.1 15
SECTION 12: Tax Lew. That to provide for the payment of the "Debt Service
Requirements" on the Certificates being (i) the interest on said Certificates and (ii) a sinking
fund for their payment at maturity or redemption or a sinking fund of 2% (whichever amount
shall be the greater), there shall be and there is hereby levied for the current year and each
succeeding year thereafter while said Certificates or any interest thereon shall remain
Outstanding, a sufficient tax on each one hundred dollars' valuation of taxable property in said
City, adequate to pay such Debt Service Requirements, within the limits prescribed by law, full
allowance being made for delinquencies and costs of collection; said tax shall be assessed and
collected each year and applied to the payment of the Debt Service Requirements, and the
same shall not be diverted to any other purpose. The taxes so levied and collected shall be
deposited into the Certificate Fund. This governing body hereby declares its purpose and intent
to provide and levy a tax legally and fully sufficient to pay the said Debt Service Requirements, it
having been determined that the existing and available taxing authority of the City for such
purpose is adequate to permit a legally sufficient tax in consideration of all other outstanding
indebtedness.
The amount of taxes to be provided annually for the payment of the principal of and
interest on the Certificates herein authorized to be issued shall be determined and
accomplished in the following manner:
(a) Prior to the date the City Council establishes the annual tax rate and passes an
ordinance levying ad valorem taxes each year, the City Council shall determine:
(1) The amount on deposit in the Certificate Fund after (a) deducting
therefrom the total amount of Debt Service Requirements to become due on
Certificates prior to the Collection Date for the ad valorem taxes to be levied and
(b) adding thereto the amount of Net Revenues of the System appropriated and
allocated to pay such Debt Service Requirements prior to the Collection Date for
the ad valorem taxes to be levied.
(2) The amount of Net Revenues if any, appropriated and to be set
aside for the payment of the Debt Service Requirements on the Certificates
between the Collection Date for the taxes then to be levied and the Collection
Date for the taxes to be levied during the next succeeding calendar year.
(3) The amount of Debt Service Requirements to become due and
payable on the Certificates between the Collection Date for the taxes then to be
levied and the Collection Date for the taxes to be levied during the next
succeeding calendar year.
(b) The amount of taxes to be levied annually each year to pay the Debt Service
Requirements on the Certificates shall be the amount established in paragraph (3) above less
the sum total of the amounts established in paragraphs {1)and (2), after taking into
consideration delinquencies and costs of collecting such annual taxes.
SECTION 13: Pledge of Revenues. The City hereby covenants and agrees that, subject
only to a prior lien on and pledge of the Net Revenues of the System for the payment and
security of Prior Lien Obligations, the Net Revenues of the System, with the exception of those
in excess of the amounts required to be deposited to the Certificate Fund as hereafter provided,
are hereby irrevocably pledged, equally and ratably, to the payment of the principal of and
interest on the Previously Issued Obligations and the Certificates as herein provided, and the
45515552.1 16
pledge of the Net Revenues of the System herein made for the payment of the Previously
Issued Obligations and the Certificates shall constitute a 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 Certificates and the
pledge of the Net Revenues of the System granted by the City under this Section 13, and such
pledge is therefore valid, effective and perfected. If Texas law is amended at any time while the
Certificates are Outstanding such that the pledge of the Net Revenues of the System granted by
the City under this Section 13 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 Certificates 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 14: System Fund. The City hereby reaffirms its covenant and agreement
made in connection with the issuance of the Previously Issued Obligations that all Gross
Revenues (excluding earnings from the investment of money held in any special funds or
accounts created for the payment and security of Prior Lien Obligations) shaH be deposited from
day to day as collected into a "City of Lubbock, Texas, Waterworks System Operating Fund"
{hereinafter called "System Fund") which Fund shall be kept and maintained at an official
depository bank of the City. All moneys deposited in the System Fund shaH be pledged and
appropriated to the extent required for the following purposes and in the order of priority shown,
to wit:
First: To the payment of all necessary and reasonable Operating and
Maintenance Expenses of the System as defined herein or required by statute to
be a first charge on and claim against the Gross Revenues.
Second: To the payment of the amounts required to be deposited in
the special Funds created and established for the payment, security and benefit
of Prior Lien Obligations in accordance with the terms and provisions of the
ordinances authorizing the issuance of Prior Lien Obligations; and
Third: Equally and ratably to the payment of the amounts required to be
deposited in the special funds and accounts created and established for the
payment of the Previously Issued Obligations, the Certificates and Additional
Obligations, if issued.
Any Net Revenues remaining in the System Fund after satisfying the foregoing
payments, or making adequate and sufficient provision for the payment thereof, may be
appropriated and used for any other City purpose now or hereafter permitted by law.
SECTION 15: Deposits to Certificate Fund. The City hereby covenants and agrees to
cause to be deposited in the Certificate Fund prior to each interest and principal payment date
from the Net Revenues of the System, after deduction of all payments required to be made to
special Funds or accounts created for the payment and security of the Prior Lien Obligations, an
amount equal to one hundred per centum (1 00%) of the amount required to fully pay the
45515552.1 17
accrued interest and principal of the Certificates then due and payable by reason of maturity or
redemption prior to maturity, such deposits to pay accrued interest and principal on the
Certificates to be made in substantially equal monthly installments on or before the last
business day of each month beginning the month the Certificates are delivered to the initial
purchaser.
The monthly deposits to the Certificate Fund, as hereinabove provided, shall be made
until such time as such Fund contains an amount equal to pay the principal of and interest on
the Certificates to maturity. Ad valorem taxes levied, collected and deposited in the Certificate
Fund for and on behalf of the Certificates may be taken into consideration and reduce the
amount of the monthly deposits otherwise required to be deposited in the Certificate Fund from
the Net Revenues of the System. In addition, any proceeds of sale of the Certificates in excess
of the amount required to pay the contractual obligations to be incurred (including change
orders to a construction contract) shall be deposited in the Certificate Fund, which amount shall
reduce the sums otherwise required to be deposited in said Fund from ad valorem taxes and the
Net Revenues of the System.
SECTION 16: Security of Funds. All moneys on deposit in the Funds for which this
Ordinance makes provision (except any portion thereof as may be at any time properly
invested) shall be secured in the manner and to the fullest extent required by the laws of Texas
for the security of public funds, and moneys on deposit in such Funds shall be used only for the
purposes permitted by this Ordinance.
SECTION 17: Special Covenants. The City hereby further covenants as follows:
(a) It has the lawful power to pledge the Net Revenues of the System supporting this
issue of Certificates and has lawfully exercised said powers under the Constitution and laws of
the State of Texas, including said power existing under V.T.C.A., Government Code, Sections
1502.052, et seq. and V.T.C.A., Local Government Code, Subchapter C of Chapter 271.
(b) Other than for the payment of the outstanding Previously Issued Obligations, the
Certificates, the "City of Lubbock, Texas, Tax and Waterworks System (Limited Pledge)
Revenue Certificates of Obligation, Series 1993", dated October 1, 1993, "City of Lubbock,
Texas, Tax and Waterworks System (Limited Pledge) Revenue Certificates of Obligation, Series
1995", dated December 15, 1995, "City of Lubbock, Texas, Tax and Waterworks System
(Limited Pledge) Revenue Certificates of Obligation, Series 1998", dated January 1, 1998, and
"City of Lubbock, Texas, Tax and Waterworks System (Limited Pledge) Revenue Certificates of
Obligation, Series 1999", dated January 15, 1999, the Net Revenues of the System have not in
any manner been pledged to the payment of any debt or obligation of the City or of the System.
SECTION 18: Issuance of Prior Lien Obligations and Additional Obligations;
Subordinate to Prior Lien Obligations Covenants and Agreements. (a) The City hereby
expressly reserves the right to hereafter issue Prior Lien Obligations, without limitation as to
principal amount but subject to any terms, conditions or restrictions applicable thereto under law
or otherwise.
In addition, the City reserves the right to issue Additional Obligations, without limitation
or any restriction or condition being applicable to their issuance under the terms of this
Ordinance, payable from and secured by a lien on and pledge of the Net Revenues of the
System of equal rank and dignity, and on a parity in all respects, with the lien thereon and
pledge thereof securing the payment of the Previously Issued Obligations and the Certificates.
45515552.1 18
(b) It is the intention of this governing body and accordingly hereby recognized and
stipulated that the provisions, agreements and covenants contained herein bearing upon the
management and operations of the System and the administering and application of revenues
derived from the operation thereof, shall to the extent possible be harmonized with like
provisions, agreements and covenants contained in ordinances authorizing the issuance of Prior
lien Obligations, and to the extent of any irreconcilable conflict between the provisions
contained herein and in ordinances authorizing the issuance of Prior Lien Obligations, the
provisions, agreements and covenants contained therein shall prevail to the extent of such
conflict and be applicable to this Ordinance but in all respects subject to the priority of rights and
benefits, if any, conferred thereby to the holders or owners of the Prior Lien Obligations.
Notwithstanding the above, any change or modification affecting the application of revenues
derived from the operation of the System shall not impair the obligation of contract with respect
to the pledge of revenues herein made for the payment and security of the Certificates.
SECTION 19: Satisfaction of Obligations of Citv. 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 Certificates, at the times and in the manner stipulated in this Ordinance, then the
pledge of taxes levied and the lien on and pledge of the Net Revenues of the System under this
Ordinance and all covenants, agreements, and other obligations of the City to the Holders shall
thereupon cease, terminate, and be discharged and satisfied.
Certificates shall be deemed to have been paid within the meaning and with the effect
expressed above in this Section when (i) money sufficient to pay in full such Certificates or the
principal amount(s) thereof at maturity or (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, together with all interest due thereon, shall have been
irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized
escrow agent, or (ii) Government Securities shall have been irrevocably deposited in trust with
the Paying Agent/Registrar, or an authorized escrow agent, which Government Securities have
been certified by an independent accounting firm to mature as to principal and interest in such
amounts and at such times as will insure the availability, without reinvestment, of sufficient
money, together with any moneys deposited therewith, if any, to pay when due the principal of
and interest on such Certificates, or the principal amount(s) thereof, on and prior to the Stated
Maturity thereof or (if notice of redemption has been duly given or waived or if irrevocable
arrangements therefor acceptable to the Paying Agent/Registrar have been made) the
redemption date thereof. The City covenants that no deposit of moneys or Government
Securities will be made under this Section and no use made of any such deposit which would
cause the Certificates to be treated as "arbitrage bonds" within the meaning of Section 148 of
the Internal Revenue Code of 1986, as amended, or regulations adopted pursuant thereto.
Any moneys so deposited with the Paying Agent/ Registrar and all income from
Government Securities 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 Certificates, or any
principal amount(s) thereof, or interest thereon with respect to which such moneys have been
so deposited shall be remitted to the City or deposited as directed by the City. Furthermore,
any money held by the Paying Agent/Registrar for the payment of the principal of and interest
on the Certificates and remaining unclaimed for a period of three (3) years after the maturity, or
applicable redemption date, of the Certificates for which such moneys were deposited and are
held in trust to pay, shall upon the request of the City be remitted to the City against a written
receipt therefor. Notwithstanding the above and foregoing, any remittance of funds from the
45515552.1 19
Paying Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of
the State of Texas.
SECTION 20: Ordinance a Contract -Amendments. This Ordinance shall constitute a
contract with the Holders from time to time, be binding on the City, and shall not be amended or
repealed by the City so long as any Certificate remains Outstanding except as permitted in this
Section and in Section 37 hereof. The City, may, without the consent of or notice to any
Holders of the Certificates, from time to time and at any time, amend this Ordinance in any
manner not detrimental to the interests of the Holders of the Certificates, including the curing of
any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may,
with the written consent of Holders of the Certificates holding a majority in aggregate principal
amount of the Certificates then Outstanding, amend, add to, or rescind any of the provisions of
this Ordinance; provided that, without the consent of all Holders of Outstanding Certificates, no
such amendment, addition, or rescission shall (1) extend the time or times of payment of the
principal of, premium, if any, and interest on the Certificates, reduce the principal amount
thereof, the redemption price, or the rate of interest thereon, or in any other way modify the
terms of payment of the principal of, premium, if any, or interest on the Certificates, (2) give any
preference to any Certificate over any other Certificate, or (3) reduce the aggregate principal
amount of Certificates required to be held by Holders for consent to any such amendment,
addition, or rescission.
SECTION 21: Notices to Holders -Waivers. Wherever this Ordinance provides for
notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to
the address of each Holder appearing in the Security Register at the close of business on the
business day next preceding the mailing of such notice.
In any case where notice to Holders is given by mail, neither the failure to mail such
notice to any particular Holders, nor any defect in any notice so mailed, shall affect the
sufficiency of such notice with respect to all other Certificates. Where this Ordinance provides
for notice in any manner, such notice may be waived in writing by the Holder entitled to
receive such notice, either before or after the event with respect to which such notice is given,
and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be
filed with the Paying Agent/Registrar, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
SECTION 22: Cancellation. Certificates surrendered for payment, redemption, transfer,
or exchange, 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 Certificates previously certified or
registered and delivered which the City may have acquired in any manner whatsoever, and all
Certificates so delivered shall be promptly canceled by the Paying Agent/Registrar. All
canceled Certificates held by the Paying Agent/Registrar shall be returned to the City.
SECTION 23: Mutilated, Destroyed, Lost and Stolen Certificates. In case any Certificate
shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and
deliver a replacement Certificate of like form and tenor, and in the same denomination and
bearing a number not contemporaneously outstanding, in exchange and substitution for such
mutilated Certificate, or in lieu of and in substitution for such destroyed, lost or stolen Certificate,
only upon the approval of the City and after (i) the filing by the Holder thereof with the Paying
45515552.1 20
Agent/Registrar of evidence satisfactory to the Paying Agent/Registrar of the destruction, loss or
theft of such Certificate, 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 Certificate shall be borne by
the Holder of the Certificate mutilated, or destroyed, lost or stolen.
Every replacement Certificate issued pursuant to this Section shall be a valid and
binding obligation, and shall be entitled to all the benefits of this Ordinance equally and ratably
with all other Outstanding Certificates; notwithstanding the enforceability of payment by anyone
of the destroyed, lost or stolen Certificates.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement and payment of mutilated, destroyed,
lost, or stolen Certificates.
SECTION 24: Covenants to Maintain Tax-Exempt Status.
(a) Definitions. When used in this Section, the following terms have the following
meanings:
"Closing Date" means the date on which the Certificates are first
authenticated and delivered to the initial purchasers against payment 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 Regulations, of the Certificates.
"Investment" has the meaning set forth in Section 1.148-1 (b) of the
Regulations.
"Nonpurpose lnvestmenf' means any investment property, as defined in
section 148(b) of the Code, in which Gross Proceeds of the Certificates are
invested and which is not acquired to carry out the governmental purposes of the
Certificates.
"Rebate Amount" has the meaning set forth in Section 1. 148-1 (b) of the
Regulations.
"Regulations" means any proposed, temporary, or final Income Tax
Regulations issued pursuant to Sections 103 and 141 through 150 of the Code,
and 103 of the Internal Revenue Code of 1954, which are applicable to the
Certificates. Any reference to any specific Regulation shall also mean, as
appropriate, any proposed, temporary or final Income Tax Regulation designed
to supplement, amend or replace the specific Regulation referenced.
45515552.1 21
"Yield" of ( 1) any Investment has the meaning set forth in Section 1.148-
5 of the Regulations; and (2) the Certificates has the meaning set forth in
Section 1.148-4 of the Regulations.
{b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed directly or indirectly with Gross
Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any
Certificate to become includable in the gross income, as defined in section 61 of the Code, of
the owner thereof for federal income tax purposes. Without limiting the generality of the
foregoing, unless and until the City receives a written opinion of counsel nationally recognized in
the field of municipal bond law to the effect that failure to comply with such covenant will not
adversely affect the exemption from federal income tax of the interest on any Certificate, the
City shall comply with each of the specific covenants in this Section.
(c) No Private Use or Private Payments. Except as permitted by section 141 of the
Code and the Regulations and rulings thereunder, the City shall at all times prior to the last
Stated Maturity of Certificates:
(1) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or
indirectly with Gross Proceeds of the Certificates, and not use or permit the use
of such Gross Proceeds (including all contractual arrangements with terms
different than those applicable to the general public) or any property acquired,
constructed or improved with such Gross Proceeds in any activity carried on by
any person or entity (including the United States or any agency, department and
instrumentality thereof) other than a state or local government, unless such use
is solely as a member of the general public; and
(2) not directly or indirectly impose or accept any charge or other
payment by any person or entity who is treated as using Gross Proceeds of the
Certificates or any property the acquisition, construction or improvement of which
is to be financed or refinanced directly or indirectly with such Gross Proceeds,
other than taxes of general application within the City or interest earned on
investments acquired with such Gross Proceeds pending application for their
intended purposes.
(d) No Private Loan. Except to the extent permitted by section 141 of the Code and
the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the
Certificates to make or finance loans to any person or entity other than a state or local
government. For purposes of the foregoing covenant, such Gross Proceeds are considered to
be "loaned" to a person or entity if: (1) property acquired, constructed or improved with such
Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt
for federal income tax purposes; (2) capacity in or service from such property is committed to
such person or entity under a take-or-pay, output or similar contract or arrangement; or (3)
indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any property
acquired, constructed or improved with such Gross Proceeds are otherwise transferred in a
transaction which is the economic equivalent of a loan.
(e) Not to Invest at 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
45515552.1 22
final Stated Maturity of the Certificates directly or indirectly invest Gross Proceeds in any
Investment (or use Gross Proceeds to replace money so invested}, if as a result of such
investment the Yield from the Closing Date of all Investments acquired with Gross Proceeds (or
with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of
the Certificates.
(f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of
the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any
action which would cause the Certificates to be federally guaranteed within the meaning of
section 149(b) of the Code and the Regulations and rulings thereunder.
(g) Information Report. The City shall timely file the information required by section
149(e} of the Code with the Secretary of the Treasury on Form 8038-G or such other form and
in such place as the Secretary may prescribe.
(h) Rebate of 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 Certificate is discharged.
However, to the extent permitted by law, the City may commingle Gross
Proceeds of the Certificates with other money of the City, provided that the City
separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
(2) Not less frequently than each Computation Date, the City shall
calculate the Rebate Amount in accordance with rules set forth in section 148(f}
of the Code and the Regulations and rulings thereunder. The City shall maintain
such calculations with its official transcript of proceedings relating to the issuance
of the Certificates until six years after the final Computation Date.
(3) As additional consideration for the purchase of the Certificates by
the Underwriters and the loan of the money represented thereby and in order to
induce such purchase by measures designed to insure the excludability of the
interest thereon from the gross income of the owners thereof for federal income
tax purposes, the City shall pay to the United States from the Construction Fund,
other appropriate fund, or if permitted by applicable Texas statute, regulation or
opinion of the Attorney General of the State of Texas, the Certificate Fund the
amount that when added to the future value of previous rebate payments made
for the Certificates equals (i) in the case of a Final Computation Date as defined
in Section 1.148-3(e)(2) of the Regulations, one hundred percent (100%) of the
Rebate Amount on such date; and (ii) in the case of any other Computation Date,
ninety percent (90%) of the Rebate Amount on such date. In all cases, the
rebate payments shall be made at the times, in the installments, to the place and
in the manner as is or may be required by section 148(f) of the Code and the
Regulations and rulings thereunder, and shall be accompanied by Form 8038-T
or such other forms and information as is or may be required by Section 148(f) of
the Code and the Regulations and rulings thereunder.
45515552.1 23
(4) The City shall exercise reasonable diligence to assure that no
errors are made in the calculations and payments required by paragraphs (2) and
(3), and if an error is made, to discover and promptly correct such error within a
reasonable amount of time thereafter (and in all events within one hundred eighty
( 180) days after discovery of the error), including payment to the United States of
any additional Rebate Amount owed to it, interest thereon, and any penalty
imposed under Section 1.148-3(h) of the Regulations.
(i) Not to Divert 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 Certificates, enter into any transaction that
reduces the amount required to be paid to the United States pursuant to Subsection (h) of this
Section because such transaction results in a smaller profit or a larger loss than would have
resulted if the transaction had been at arm's length and had the Yield of the Certificates not
been relevant to either party.
G) Elections. The City hereby directs and authorizes the Mayor, City Secretary, City
Manager, Chief Financial Officer, and Assistant City Manager, individually or jointly, to make
elections permitted or required pursuant to the provisions of the Code or the Regulations, as
they deem necessary or appropriate in connection with the Certificates, in the Certificate as to
Tax Exemption or similar or other appropriate certificate, form or document.
SECTION 25: Sale of Certificates-Approval and Execution of Purchase Contract. The
sale of the Certificates to A. G. Edwards & Sons, Inc. and Estrada Hinojosa & Company, Inc.
(herein referred to as the "Underwriters") in accordance with the Purchase Contract, dated
September 28, 2004, attached hereto as Exhibit B and incorporated herein by reference as a
part of this Ordinance for all purposes. The Mayor is hereby authorized and directed to execute
said Purchase Contract for and on behalf of the City and as the act and deed of this Council,
and in regard to the approval and execution of the Purchase Contract, the Council hereby finds,
determines and declares that the representations, warranties and agreements of the City
contained therein are true and correct in all material respects and shall be honored and
performed by the City.
SECTION 26: Official Statement. The use of the Preliminary Official Statement, dated
September 21, 2004, in the offering and sale of the Certificates is hereby ratified, confirmed and
approved in all respects, and the City Council hereby finds that the information and data
contained in said Preliminary Official Statement pertaining to the City and its financial affairs is
true and correct in all material respects and no material facts have been omitted therefrom
which are necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading. The final Official Statement, which reflects the terms of sale
(together with such changes approved by the Mayor, Mayor Pro Tern, City Manager, Assistant
City Manager, Chief Financial Officer, Cash and Debt Manager, or City Secretary, one or more
of said officials), shall be and is hereby in all respects approved and the Underwriters are
hereby authorized to use and distribute said final Official Statement, dated September 28, 2004,
in the offering, sale and delivery of the Certificates to the public.
SECTION 27: Proceeds of Sale. The proceeds of sale of the Certificates, excluding the
accrued interest received from the Underwriters, 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 and any investment
earnings realized may be expended for such authorized projects and purposes or deposited in
4551555~.1 24
the Certificate Fund as· shall be determined by the City Council. Accrued interest received from
the Underwriters as well as all surplus proceeds of sale of the Certificates, including investment
earnings, remaining after completion of all authorized projects or purposes shall be deposited to
the credit of the Certificate Fund.
SECTION 28: Control and Custody of Certificates. The Mayor of the City shall be and is
hereby authorized to take and have charge of all necessary orders and records pending
investigation by the Attorney General of the State of Texas, including the printing of the
Certificates, and shall take and have charge and control of the Certificates pending the approval
thereof by the Attorney General, the registration thereof by the Comptroller of Public Accounts
and the delivery thereof to the Underwriters.
Furthermore, the Mayor, City Secretary, City Manager, Assistant City Manager, Chief
Financial Officer, and Cash and Debt Manager, 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 Certificates, including a certification as to facts, estimates,
circumstances and reasonable expectations pertaining to the use and .expenditure and
investment of the proceeds of the Certificates as may be necessary for the approval of the
Attorney General, registration by the Comptroller of Public Accounts and delivery of the
Certificates to the Underwriters 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 Certificate(s) to the Underwriters.
SECTION 29: Legal Opinion. The obligation of the Underwriters to accept delivery of
the Certificates is subject to being furnished a final opinion of Fulbright & Jaworski LL.P.,
Attorneys, Dallas, Texas, approving such Certificates as to their validity, said opinion to be
dated and delivered as of the date of delivery and payment for such Certificates. A true and
correct reproduction of said opinion is hereby authorized to be printed on the definitive
Certificates or an executed counterpart thereof shall accompany the global Certificates
deposited with the Depository Trust Company.
SECTION 30: CUSIP Numbers. That CUSIP numbers may be printed or typed on the
definitive Certificates. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Certificates shall be of no significance or effect as regards the legality
thereof and neither the City nor attorneys approving said Certificates as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Certificates.
SECTION 31: 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 32: 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 33: Governing Law. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
45515552.1 25
SECTION 34: Severability. If any provision of this Ordinance or the application thereof
to any circumstance shall be held to be invalid, the remainder of this Ordinance and the
application thereof to other circumstances shall nevertheless be valid, and the City Council
hereby declares that this Ordinance would have been enacted without such invalid provision.
SECTION 35: Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
SECTION 36: Construction of Terms. If appropriate in the context of this Ordinance,
words of the singular number shall be considered to include the plural, words of the plural
number shall be considered to include the singular, and words of the masculine, feminine or
neuter gender shall be considered to include the other genders.
SECTION 37: 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.
"NRMSIR" means each person whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of the Rule
from time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department,
officer, or agency thereof as, and determined by the SEC or its staff to be, a state information
depository within the meaning of the Rule from time to time.
{b) Annual Reports. The City shall provide annually to each NRMSIR and any SID,
within six months after the end of each fiscal year (beginning with the fiscal year ending
September 30, 2004) financial information and operating data with respect to the City of the
general type included in the final Official Statement approved by Section 26 of this Ordinance,
being the information described in Exhibit C hereto. Financial statements to be provided shall
be (1) prepared in accordance with the accounting principles described in Exhibit C hereto and
(2} audited, if the City commissions an audit of such statements and the audit is completed
within the period during which they must be provided. If audited financial statements are not
available at the time the financial information and operating data must be provided, then the City
shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and
any SID with the financial information and operating data and will file the annual audit report,
when and if the same becomes available.
If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change
(and of the date of the new fiscal year end) prior to the next date by which the City otherwise
would be required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may
be set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document, if it is available from the
MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
45515552.1 26
(c) Material Event Notices. The City shall notify any SID and either each NRMSIR or
the MSRB, in a timely manner, of any of the following events with respect to the Certificates, if
such event is material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Certificates;
7. Modifications to rights of holders of the Certificates;
8. Certificate calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Certificates;
and
11. Rating changes.
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 Certificates within the meaning of the Rule,
except that the City in any event will give the notice required by subsection (c) hereof of any
Certificate calls and defeasance that cause the City to be no longer such an "obligated person."
The provisions of this Section are for the sole benefit of the Holders and beneficial
owners of the Certificates, and nothing in this Section, express or implied, shall give any benefit
or any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Certificates at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BELIABLE TO THE HOLDER OR
BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE
CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
45515552.1 27
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 may be amended by the City from time to time to adapt to
changed circumstances resulting from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the City, but only if (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or
sell Certificates in the primary offering of the Certificates in compliance with the Rule, taking into
account any amendments or interpretations of the Rule to the date of such amendment, as well
as such changed circumstances, and (2) either (a) the Holders of a majority in aggregate
principal amount (or any greater amount required by any other provision of this Ordinance that
authorizes such an amendment) of the Outstanding Certificates consent to such amendment or
(b) a person that is unaffiliated with the City (such as nationally recognized bond counsel)
determines that such amendment will not materially impair the interests of the Holders and
beneficial owners of the Certificates. The provisions of this Section may also be amended from
time to time or repealed by the City if the SEC amends or repeals the applicable provisions of
the Rule or a court of final jurisdiction determines that such provisions are invalid, but only if and
to the extent that reservation of the City's right to do so would not prevent underwriters of the
initial public offering of the Certificates from lawfully purchasing or selling Certificates in such
offering. If the City so amends the provisions of this Section, it shall include with any amended
financial information or operating data next provided in accordance with subsection (b) an
explanation, in narrative form, of the reasons for the amendment and of the impact of any
change in the type of financial information or operating data so provided.
SECTION 38: MBIA Insurance. The Certificates have been sold with the principal of
and interest thereon being insured by MBIA Insurance Corporation (hereinafter called "MBIA")
pursuant to a Financial Guaranty Insurance Policy. In accordance with the terms and conditions
applicable to insurance provided by MBIA, the City covenants and agrees that, in the event the
principal and interest due on the Certificates shall be paid by MBIA pursuant to the policy
referred to this Section, the assignment and pledge of all funds and all covenants, agreements
and other obligations of the City to the Holders shall continue to exist and MBIA shall be
subrogated to the rights of such Holders; and furthermore, the City covenants and agrees that:
(a) In the event that, on the second business day, and again on the
business day, prior to the payment date on the Certificates, the Paying
Agent/Registrar has not received sufficient moneys to pay all principal of and
interest on the Certificates due on the second following or following, as the case
may be, business day, the Paying Agent/Registrar shall immediately notify MBIA
or its designee on the same business day by telephone or telegraph, confirmed
in writing by registered or certified mail, of the amount of the deficiency.
(b) If the deficiency is made up in whole or in part prior to or on the
payment date, the Paying Agent/Registrar shall so notify MBIA or its designee.
{c) In addition, if the Paying Agent/Registrar has notice that any
Holder has been required to disgorge payments of principal of or interest on the
Certificates to a trustee in bankruptcy or creditors or others pursuant to a final
judgment by a court of competent jurisdiction that such payment constitutes
avoidable preference to such Holder within the meaning of any applicable
bankruptcy laws, then the Paying Agent/Registrar shall notify the MBIA or its
45515552.1 28
designee of such fact by telephone or telegraphic notice, confirming in writing by
registered or certified mail.
(d) The Paying Agent/Registrar is hereby irrevocably designated,
appointed, directed and authorized to act as attorney-in-fact for Holders of the
Certificates as follows:
(i) If and to the extent there is a deficiency in amounts
required to pay interest on the Certificates, the Paying
Agent/Registrar shall (a) execute and deliver to State Street Bank
and Trust Company, N.A., or its successors under the Policy (the
"Insurance Paying Agent"), in form satisfactory to the Insurance
Paying Agent, an instrument appointing the MBIA as agent for
such Holders in such legal proceeding related to the payment of
such interest and an assignment to the MBIA of the claims for
interest to which such deficiency relates and which are paid by
MBIA, (b) receive as designee to the respective Holders (and not
as Paying Agent/Registrar) in accordance with the tenor of the
Policy payment from the Insurance Paying Agent with respect to
the claims for interest so assigned, and (c) disburse the same to
such respective Holders; and
(ii) If and to the extent of a deficiency in amounts
required to pay principal of the Certificates, the Paying
Agent/Registrar shall (a) execute and deliver to the Insurance
Paying Agent in form satisfactory to the Insurance Paying Agent
an instrument appointing MBIA as agent for such Holder in any
legal proceeding relating to the payment of such principal and an
assignment to MBIA of any of the Certificates surrendered to the
Insurance Paying Agent or so much of the principal thereof as has
not previously been paid or for which moneys are not held by the
Paying Agent/Registrar and available for such payment (but such
assignment shall be delivered only if payment from the Insurance
Paying Agent is received), (b) receive as designee of the
respective Holders (and not as Paying Agent/Registrar) in
accordance with the tenor of the Policy payment therefor from the
Insurance Paying Agent, and (c) disburse the same to such
Holders.
(e) Payments with respect to claims for interest on and principal of
Certificates disbursed by the Paying Agent/Registrar from proceeds of the Policy
shall not be considered to discharge the obligation of the City with respect to
such Certificates, and MBIA shall become of the owner of such unpaid Certificate
and claims for the interest in accordance with the tenor of the assignment made
to it under the provisions of this subsection or otherwise.
(f) Irrespective of whether any such assignment is executed and
delivered, MBIA and the Paying Agent/Registrar hereby agree for the benefit of
the MBIA that:
45515552.1 29
(i) They recognize that to the extent MBIA makes
payments, directly or indirectly (as by paying through the Paying
AgenVRegistrar}, on account of principal of and interest on the
Certificates, MBIA will be subrogated to the rights of such Holders
to receive the amount of such principal and interest from the City
as provided and solely from the sources stated in this Ordinance
· and the Certificates; and
(ii} They will accordingly pay to MBIA the amount of
such principal and interest ·(including principal and interest
recovered under subparagraph (ii} of the first paragraph of the
Policy, which principal and interest shall be deemed past due and
not to have been paid) as provided in this Ordinance and the
Certificates, but only from the sources and in the manner provided
herein for the payment of principal of and interest on the
Certificates to Holders, and will otherwise treat the MBIA as the
owner of such rights to the amount of such principal and interest.
(g) In connection with the issuance of additional obligations, the City
shall deliver to the MBIA a copy of the disclosure document. if any, circulated
with respect to such additional obligations.
(h) No amendment or supplement to this Order may become effective
without prior consent of MBIA. Copies of any amendments made to the
documents executed in connection with the issuance of the Certificates which are
consented to by the MBIA shall be sent to Standard & Poor's Corporation.
(i) MBIA shall receive notice of the resignation or removal of the
Paying AgenVRegistrar and the appointment of a successor thereto.
G) MBIA shall receive copies of all notices required to be delivered to
Holders and, on an annual basis, copies of the City's audited financial statements
and annual budget.
(k) Any notice that is required to be given to a Holder of the
Certificates or to the Paying AgenVRegistrar pursuant to the Ordinance shall also
be provided to MBIA. All notices required to be given to MBIA under the
Ordinance shall be in writing and shall be sent by registered or certified mail
addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York
10504, Attention: Surveillance.
(I) MBIA, acting alone, shall have the right to direct all remedies in
the event of a default. MBlA shall be recognized as the registered owner of each
Certificate which it insures for the purposes of exercising all rights and privileges
available to Holders. For Certificates which it insures, MBIA shall have the right
to institute any suit, action, or proceeding at law or in equity under the same
terms as the Holder in accordance with the applicable provisions of this
Ordinance.
(m) The City agrees, subject to annual appropriation by the City and to
the extent permitted by law, to reimburse MBIA for all reasonable expenses,
45515552.1 30
including attorneys' fees and expenses, incurred by MBIA in connection with (i)
the enforcement by MBIA of the City's obligations, or the preservation or defense
of any rights of MBIA, under this Ordinance and any other document executed in
connection with the issuance of the Certificates, and (ii) any consent,
amendment, waiver or other action with respect this Ordinance or any related
document, whether or not granted or approved, together with interest on all such
expenses from and including the date incurred to the date of payment at
Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law,
whichever is less. In addition, MBIA reserves the right to charge a fee in
connection with its review of such consent, amendment or waiver, whether or not
granted or approved. ·
(n) The City will not enter into a guaranteed investment contract
pursuant to the Public Funds Investment Act without the prior written consent of
MBIA and any investment of money deposited to the credit of the special funds
created or maintained pursuant to this Ordinance shall be in accordance with the
Public Funds Investment Act..
( o) The City agrees, subject to annual appropriation by the City and to
the extent permitted by law, to reimburse MBIA for all reasonable expenses,
including attorneys' fees and expenses, incurred by MBIA in connection with (i)
the enforcement by MBIA of the City's obligations, or the preservation or defense
of any rights of MBIA, under this Ordinance and any other document executed in
connection with the issuance of the Certificates, and (ii) any consent,
amendment, waiver or other action with respect this Ordinance or any related
document, whether or not granted or approved, together with interest on all such
expenses from and including the date incurred to the date of payment at
Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law,
whichever is less. In addition, MBIA reserves the right to charge a fee in
connection with its review of such consent, amendment or waiver, whether or not
granted or approved.
(p) The City agrees not to use MBIA's name in any public document
including, without limitation, a press release or presentation, announcement or
forum without MBIA's prior consent. In the event that the City advised by counsel
that it has a legal obligation to disclose MBIA's name in any press release, public
announcement or other public document, the City shall provide MBIA with at
least three (3) business days' prior written notice of its intent to use MBIA's name
together with a copy of the proposed use of MBIA's name and of any description
of a transaction with MBIA and shall obtain MBIA's prior consent as to the form
and substance of the proposed use of MBIA's name and any such description.
(q) The City shall not enter into any agreement nor shall it consent to
or participate in any arrangement pursuant to which Certificates are tendered or
purchased for any purpose other than the redemption and cancellation or legal
defeasance of such Certificates without the prior written consent of MBIA.
45515552.1 31
(r) In regard to any defeasance of the Certificates, MBIA shall
provided with an opinion of counsel acceptance to MBIA that the Certificates
have been legally defeased and that the escrow agreement establishing such
defeasance operates to legally defease the Certificates within the meaning of this
Ordinance. In addition, MBIA shall be entitled to receive (i) 15 business days
notice of any advance refunding of the Certificates and (ii} an accountant's report
with respect to the sufficiency of the amounts deposited in escrow to defease the
Certificates.
SECTION 39: 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 time,
place, and subject matter of the public business to be considered at such meeting, including this
Ordinance, was given, all as required by V.T.C.A., Government Code, Chapter 551, as
amended.
SECTION 40: 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.
[remainder of page left blank intentionally]
45515552.1 32
PASSED AND ADOPTED, this September 28, 2004.
CITY OF LUBBOCK, TEXAS
ATTEST:
(City Seal)
APPROVED AS TO CONTENT:
atileFillancial Officer
APPROVED AS TO FORM:
CL: l tS~e·• City Attorney
45515552.1 S-1
Ordinance No. 2004-ooi06
PAYING AGENT/REGISTRAR AGREEMENT
THIS AGREEMENT entered into as of September 28, 2004 (this "Agreement"}, by and
between the City of Lubbock, Texas (the "Issuer''), and JPMorgan Chase Bank, Dallas, Texas, 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, Tax and Waterworks System Surplus Revenue Certificates of
Obligation, Series 2004" (the "Securities"), dated September 15, 2004, and such Securities are
scheduled to be delivered to the initial purchasers thereof on or about November 2, 2004; 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 AGENT 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.
45517018.1 EXHIBIT A
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 reasonable 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 Tem, City Manager,
Assistant City Manager, Chief Financial Officer, 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 subdivi.sion 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).
45517018.1 2 EXHIBIT A
"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 Pavina Aaent. As Paying Agent, Jhe 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.
45517018.1 3 EXHIBIT A
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
re~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 Securitv 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.
45517018.1 4 EXHIBIT A
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 23 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 of a 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 Bank shall not be liable for any error 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
45517018.1 5 EXHIBIT A
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.
45517018.1 6 EXHIBIT A
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 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.
45517018.1 7 EXHIBIT A
Section 6.06 Severability. In case any provision 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) may 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.
45517018.1 8 EXHIBIT A
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
[SEAL]
Attest:
Title:
(CITY SEAL)
Attest:
City Secretary
45517018.1 9
JPMORGAN CHASE BANK, Dallas, Texas,
BY: -----------------------------Title:
Address: 2001 Bryan Street, 1oth Floor
Dallas, Texas 75201
CITY OF LUBBOCK, TEXAS
BY: ----------------------------Mayor
Address: P. 0. Box 2000
Lubbock, Texas 79457
EXHIBIT A
Ordinance No. 2004-o0106
PURCHASE CONTRACT
$2,025,000 $3,100,000
City of Lubbock, Texas General
Obligation Bonds, Series 2004
Tax and Waterworks System Surplus
Revenue
Certificates of Obligation, Series 2004
September 28, 2004
The Honorable Mayor and Members of the City Council
City of Lubbock
1625 13th Street
Lubbock, Texas 79401
Dear Mayor and Members of the City Council:
A.G. Edwards & Sons, Inc. (the "Authorized Representative") and Estrada Hinojosa &
Company, Inc. (collectively, the "Underwriters"), offer to enter into this Purchase Contract with the
City of Lubbock, Texas (the "City"). This offer is made subject to the City's acceptance of this
Purchase Contract on or before 9:00p.m. Central Time on September 28, 2004.
l. Purchase and Sale of the Securities. Upon the terms and conditions and uponthe
basis of the representations set forth herein, the Underwriters jointly and severally hereby agree to
purchase from the City, and the City hereby agrees to sell and deliver to the Underwriters an
aggregate of $2,025,000 principal amount of City of Lubbock, General Obligation Bonds, Series
2004 (the "Bonds") and $3, I 00,000 Tax and Waterworks System Surplus Revenue Certificates of
Obligation, Series 2004 (the "Certificates") (the Bonds and the Certificates are collectively, the
"Securities"). The Securities shall have the maturities, interest rates and be subject to redemption
in accordance with the provisions of Exhibit A hereto and shall be issued and secured under the
provisions of the Ordinances (as defined below). The purchase price for the Bonds shall be
$2,0 I 2, 134.29, representing the principal amount of the Bonds of$2,025,000, less an Underwriters'
discount on the Bonds of$17,689.27, less a net original issue discount on the Bonds of$5,543.20,
and plus accrued interest in the amount of$ I 0,366. 76. The purchase price for the Certificates shall
be $3,078,762.69, representing the principal amount of the Certificates of$3,100,000.00, less an
Underwriters' discount on the Certificates of $23,388.57, less net original issue discount on the
Certificates of$12,504.25, and plus accrued inte:rest in the amount of $14,655.51.
A.G. Edwards & Sons, Inc. represents that it has been duly authorized to execute this
Purchase Contract and has been duly authorized to act hereunder as the Authorized Representative.
AU actions that may be taken by the Underwriters hereunder may be taken by the Authorized
Representative alone.
EXHIBiT B.
2. Ordinances. The Securities shall be as described in and shall be issued and secured
under the provisions of two ordinances, each to be adopted by the City on September 28, 2004,
respectively authorizing the issuance and sale of the Certificates and the Bonds (collectively, the
"Ordinances"). The Securities shall be secured and payable as provided in the Ordinances.
3. Public Offering. It shall be a condition of the obligations of the City to sell and
deliver the Securities to the Underwriters, and of the obligations ofthe Underwriters to purchase and
accept delivery of the Securities, that the entire principal amount of each series of the Securities
authorized by the Ordinances shall be sold and delivered by the City and accepted and paid for by
the Underwriters at the Closing. The Underwriters agree to make a bona fide public offering of all
of the Securities of a series, at not in excess of the initial public offering prices, as set forth in the
Official Statement~ provided however at least ten percent (10%) of the principal amount of the
Securities of each series and maturity thereof shall be sold to the "public" (exclusive of dealers,
brokers and investment bankers, etc.) at the initial offering price set forth in the Official Statement.
4. Security Deposit. Delivered to the City herewith is a corporate check of the
Authorized Representative payable to the order of the City in the amount of $51,250. Such check
is a common "Good Faith" check for the each series ofthe Securities, and an amount of such check
that is proportionate to the principal amount that a series of the Securities bears to the combined
principal amount of the Securities may be applied toward any obligation of the Underwriters owing
as a result of the failure of the Underwriters to accept delivery of the Securities, or any series ofthe
Securities, as provided herein. The City agrees to hold such check uncashed until the Closing to
ensure the perfonnance by the Underwriters of their obligation to purchase, accept delivery of and
pay for the Securities at the Closing. Concurrently with the payment by the Underwriters of the
purchase price of the Securities, the City shall return such check to the Authorized Representative
as provided in Paragraphs 7 and 8 hereof. Should the City fail to deliver the Securities at the
Closing, or should the City be unable to satisfy the conditions of the obligations of the Underwriters
to purchase, accept delivery of and pay for the Securities, as set forth in this Purchase Contract
(unless waived by the Authorized Representative), or should such obligations ofthe Underwriters
be tenninated for any reason pennitted by this Purchase Contract, such check shall immediately be
returned to the Authorized Representative. In the event the Underwriters fail (other than for a reason
permitted hereunder) to purchase, accept delivery of and pay for the Securities at the Closing as
herein provided, such check shall be retained by the City as and for full liquidated damages for such
failure of the Underwriters and for any defaults hereunder on the part of the Underwriters. The
Authorized Representative hereby agrees not to stop or cause payment on said check to be stopped
unless the City has breached any of the terms of this Purchase Contract.
5. Official Statement. The Official Statement, including the cover pages and
Appendices thereto, of the City, dated September 28, 2004, with respect to the Securities, as further
amended only in the manner herein provided, is hereinafter called the "Official Statement." The
City hereby authorizes the Ordinances and the Official Statement and the information therein
contained to be used by the Underwriters in connection with the public offering and sale of the
Securities. The City confirms its consent to the use by the Underwriters prior to the date hereof of
the Preliminary Official Statement, relative to the Securities, dated September 22, 2004 (the
2
EXHIBIT B
"Preliminary Official Statement"), in connection with the preliminary public offering and sale of the
Securities, and it is "deemed final" as of its date, within the meaning, and for the purposes, of Rule
15c2-12 promulgated under authority granted by the federal Securities and Exchange Act of 1934
(the "Rule"). The City agrees to cooperate with the Underwriters to provide a supply of fmal
Official Statements within seven business days ofthe date hereof in sufficient quantities to comply
with the Underwriters' obligations under the Rule and the applicable rules of the Municipal
Securities Rulemaking Board. The Underwriters will use their best efforts to assist the City in the
preparation of the final Official Statement in order to ensure compliance with the aforementioned
rules.
If at any time after the date of this Purchase Contract but before the first to occur of (i) the
date upon which the Underwriters notify the City that the period ofthe initial public offering of the
Securities has expired or (ii) the date that is 90 days after the date hereof, any event shall occur that
might or would cause the Official Statement to contain any untrue statement of a material fact or to
omit to state a material fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, the City shall notify
the Authorized Representative, and if, in the opinion of the Authorized Representative, such event
requires the preparation and publication of a supplement or amendment to the Official Statement,
the City will at its expense supplement or amend the Official Statement in the fonn and in a manner
approved by the Authorized Representative and furnish to the Underwriters a reasonable number
of copies requested by the Authorized Representative in order to enable the Underwriters to comply
with the Rule.
To the best knowledge and belief of the City, the Official Statement contains information,
including financial information or operating data, as required by the Rule. Except as disclosed in the
Official Statement, the City has not failed to comply with any undertaking specified in paragraph
(b)(5)(i) of the Rule within the last five years.
6. Representations, Warranties and Agreements ofthe City. On the date hereof, the
City represents, warrants and agrees as follows:
(a) The City is a horne rule municipality and a political subdivision of the State
of Texas and a body politic and corporate, and has full legal right, power and authority to
enter into this Purchase Contract to adopt the Ordinances, to sell the Securities, and to issue
and deliver the Securities to the Underwriters as provided herein and to carry out and
consummate all other transactions contemplated by the Ordinances and this Purchase
Contract;
(b) By official action of the City prior to or concurrently with the acceptance
hereof, the City has duly adopted the Ordinances, has duly authorized and approved the
execution and delivery of, and the perfol1'11ance by the City of the obligations contained in
the Securities and this. Purchase Contract and has duly authorized and approved the
performance by the City of its obligations contained in the Ordinances and in this Purchase
Contract;
3
EXHIBIT B
(c) The City is not in breach of or default under any law or administrative
regulation of the State of Texas or the United States (including regulations of its agencies)
applicable to the issuance of the Securities or any applicable judgment or decree or any loan
agreement, note, order, agreement or other instrument, except as may be disclosed in the
Official Statement, to which the City is a party or to the knowledge of the City it is otherwise
subject, that would have a material and adverse effect upon the business or financial
condition of the City; and the execution and delivery ofthe Securities this Purchase Contract
by the City and the execution and delivery of the Securities and the adoption of the
Ordinances by the City and compliance with the provisions of each thereof will not violate
or constitute a breach of or default under any existing law or administrative regulation, or
any judgment, decree or agreement or other instrument to which the City is a party or, to the
knowledge ofthe City, is otherwise subject;
(d) All approvals, consents and orders of any governmental authority or agency
having jurisdiction of any matter that would constitute a condition precedent to the
performance by the City of its obligations to sell and deliver the Securities hereunder will
have been obtained prior to the Closing;
(e) At the time of the City's acceptance hereof and at the time of the Closing, the
Official Statement does not and wi1l not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading:
(f) Between the date of this Purchase Contract and the Closing, the City will not,
without the prior written consent of the Underwriters, sell or issue any additional bonds,
notes or other obligations for borrowed money payable in whole or in pa1t from ad valorem
taxes (except for the City's General Obligation Refunding Bonds that the City is offering
concurrently with the Securities), and the City will not incur any material liabilities, direct
or contingent, nor will there be any adverse change of a material nature in the financial
position of the City;
(g) Except as described in the Official Statement, no litigation is pending or, to
the knowledge of the City, threatened in any court affecting the corporate existence of the
City, the title of its officers to their respective offices, or seeking to restrain or enjoin the
issuance or delivery of the Securities, the levy, collection or application of the ad valorem
taxes pledged or to be pledged to pay the principal of and interest on the Bonds and the levy,
collection or application of the ad valorem taxes and revenues of the City's Waterworks
System pledged or to be pledged to pay the principal of and interest on the Certificates, or
in any way contesting or affecting the issuance, execution, delivery, payment, security or
validity of the Securities, or in any way contesting or affecting the validity or enforceability
of the Ordinances, or contesting the powers of the City, or any authority for the Securities,
the Ordinances, or this Purchase Contract or contesting in any way the completeness,
accuracy or fairness of the Preliminary Official Statement or the Official Statement;
4
EXHIBIT B
(h) The City will cooperate with the Underwriters in arranging for the
qualification of the Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Authorized Representative designates,
and will use its best efforts to continue such qualifications in effect so long as required for
,distribution ofthe Securities; provided, however, that the City will not be required to execute
a consent to service of process or to qualify to do business in connection with any such
qualification in any jurisdiction;
(i) The descriptions of the Securities and the Ordinances contained in the Official
Statement accurately summarize certain provisions of such instruments, and the Securities,
when validly executed, authenticated and delivered in accordance with the Ordinances and
sold to the Underwriters as provided herein, will be validly issued and outstanding
obligations of the City entitled to the benefits of, and subject to the limitations contained in,
the Ordinances;
(j) If prior to the Closing an event occurs affecting the City that is materially
adverse for the purpose for which the Official Statement is to be used and is not disclosed
in the Official Statement, the City shall notify the Authorized Representative, and if in the
opinion of the City and the Authorized Representative such event requires a supplement or
amendment to the Official Statement, the City will supplement or amend the Official
Statement in a fonn and in a manner approved by the Authorized Representative;
(k) The financial statements contained in the Official Statement present fairly the
financial position of the City as of the date and for the period covered thereby and are stated
on a basis substantially consistent with that of the prior year's audited financial statements;
(I) Any certificate signed by any official of the City and delivered to the
Underwriters shall be deemed a representation and warranty by the City to the Underwriters
as to the truth of the statements therein contained;
(m) The City has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications
may not be relied upon; and
(n) The City will not knowingly take or omit to take any action, which action or
omission will in any way cause the proceeds from the sale of the Securities to be applied in
a manner other than as provided in the Ordinances or that would cause the interest of the
Securities to be includable in gross income of the holders thereof for federal income tax
purposes.
7. Closing. At 10:00 A.M., Central Time, on November 2, 2004 (the "Closing"), the
City will deliver the initial securities certificates of each series of the Securities (as provided for in
the respective Ordinances) to the Underwriters and the City shall take appropriate steps to provide
DTC with one definite securities certificate for each year of maturity of each series of the Securities,
5
D<HIBIT B
and to provide the Underwriters with the other documents hereinafter mentioned. On or prior to the
date of Closing, the Underwriters shall make arrangements with The Depository Trust Company
("DTC") for the Securities to be immobilized and thereafter traded as book-entry only securities and
on the date of Closing the Underwriters will accept such delivery and pay the purchase price of the
Securities as set forth in Paragraph 1 hereof in immediately available funds. The inability or other
failure of the City to meet the conditions for delivery of one or more series of the Securities shall
not, in and of itself, relieve the Underwriters of their obligations to accept delivery and pay the
purchase price of any series of Securities for which the conditions for delivery have occurred.
Concurrently with such payment by the Underwriters, the City shall return to the Authorized
Representative the check referred to in paragraph 4 hereof. Delivery and payment as aforesaid shall
be made at the office of the paying agent/registrar for the Securities, as identified in the Official
Statement, or such other place as shall have been mutually agreed upon by the City and the
Authorized Representative.
8. Conditions. The Underwriters have entered into this Purchase Contract in reliance
upon the representations and warranties of the City contained herein and to be contained in the
documents and instruments to be delivered at the Closing, and upon the performance by the City of
its obligations hereunder, both as ofthe date hereof and as ofthe date of Closing. Accordingly, the
Underwriters' obligations under this Purchase Contract to purchase and pay for the Securities shall
be subject to the perfonnance by the City of its obligations to be performed hereunder and under
such documents and instruments at or prior to the Closing, and shall also be subject to the following
conditions:
(a) The representations and warranties of the City contained herein shall be true,
complete and correct in all material respects on the date hereof and on and as of the date of
Closing, as if made on the date of Closing;
(b) At the time of the Closing, (i) the Ordinances shall be in full force and effect,
and the Ordinances shall not have been amended, modified or supplemented and the Official
Statement shall not have been amended, modified or supplemented, except as may have been
agreed to by the Authorized Representative; and (ii) the net proceeds of the sale of the
Securities shall be deposited and applied as described in the Official Statement and in the
Ordinances;
(c) At the time of the Closing, all official action of the City related to the
Ordinances shall be in full force and effect and shall not have. been amended, modified or
supplemented;
(d) The City shall not have failed to pay principal or interest when due on any
of its outstanding obligations for borrowed money;
(e) At or prior to the Closing, the Underwriters shall have received each of the
following documents:
6
EXHIBIT ~
(I) The Official Statement of the City, executed on behalf of the City by
the Mayor and City Secretary or a conformed copy thereof;
(2) The Ordinances, certified by the City Secretary under the seal of the
City as having been duly adopted by the City and as being in effect, with such
changes or amendments as may have been agreed to by the Underwriters. The
Ordinances shall contain the agreement of the City, in form satisfactory to the
Underwriters, that is· described under the caption "Continuing Disclosure of
Information'1 in the Preliminary Official Statement;
(3) The opinion pertaining to each series of the Securities, dated the date
of Closing, of Fulbright & Jaworski L.L.P. ("Bond Counsel") in substantially the
form and substance of Appendix C to the Official Statement;
(4) An opinion or certificate with respect each series of the Securities,
dated on or prior to the date of Closing, ofthe Attorney General of Texas, approving
the Securities as required by law and the registration certificate of the Comptroller
of Public Accounts of the State of Texas;
(5) The supplemental opinion or opinions, dated the date of Closing, of
Bond Counsel, addressed to the City and the Underwriters, which provides that the
Underwriters may rely upon the opinion of Bond Counsel delivered in accordance
with the provisions of paragraph 8(e)(3) hereof, and opining to the effect that (a) the
Purchase Contract has been duly authorized, executed and delivered by the City and
(assuming due authorization by the Underwriters) constitutes a binding and
enforceable agreement of the City in accordance with its tenns; (b) in its capacity as
Bond Counsel, such firn1 has reviewed the information in the Official Statement
under the captions or subcaptions "The Obligations" (exclusive of the infonnation
under the subcaptions "Book-Entry Only System," "Sources and Uses of Bond
Proceeds," "Sources and Uses of Certificate Proceeds" and "Bondholders'
Remedies"), "Tax Matters" and "Continuing Disclosure oflnfonnation" (exclusive
of the information under the subcaption "Compliance with Prior Undertakings") and
the subcaptions "Legal Matters" and "Legal Investments and Eligibility to Secure
Public Funds in Texas" under the caption "Other Infonnation" and the subcaption
"Natural Gas Sale Agreement" under the caption "Discussion of Recent Financial
and Management Events" in the Official Statement, and such finn is of the opinion
that such descriptions present a fair and accurate summary of the provisions of_ the
laws and instruments therein described and, with respect to the Obligations, such
information conforms to the Ordinances; and (c) the Securities are exempt from
registration pursuant to the Securities Act of 1933, as amended, and the Ordinances
are exempt from qualification as an indenture pursuant to the Trust Indenture Act of
1939, as amended;
7
EXHIBIT B
(6) An opinion or opinions of McCall, Parkhurst & Horton L.L.P.,
Underwriters' Counsel addressed to the Underwriters, and dated the date of Closing
in substantially the form attached hereto as Exhibit C;
(7) A certificate or certificates, dated the date of Closing, signed by the
Mayor and Chief Financial Officer of the City, to the effect that (i) the
representations and warranties of the City contained herein are true and correct in all
material respects on and as of the date of Closing as if made on the date ofClosing;
(ii) except to the extent disclosed in the Official Statement, no litigation is pending
or, to the knowledge of such· persons, threatened in any court to restrain or enjoin the
issuance or delivery of the Securities, or the levy, collection or application of the ad
valorem taxes and Pledged Revenues pledged or to be pledged to pay the principal
. of and interest on the Securities, or the pledge thereof, or in any way contesting or
affecting the validity of the Securities, the Ordinances, or contesting the powers of
the City or the authorization of the Securities or the Ordinances, or contesting in any
way the accuracy, completeness or fairness of the Official Statement (but in lieu of
or in conjunction with such certificate, the Underwriters may, in their sole discretion,
accept certificates or opinions of the City Attorney that, in the opinion thereof, the
issues raised in any such pending or threatened litigation are without substance or
that the contentions of all plaintiffs therein are without merit); (iii) to the best of their
knowledge, no event affecting the City has occurred since the date of the Official
Statement that should be disclosed in the Official Statement for the purpose for
which it is to be used or that it is necessary to disclose therein in order to make the
statements and infonnation therein not misleading in any respect; and (iv) that there
has not been any material and adverse change in the affairs or financial condition of
the City since September 30, 2003, the latest date as to which audited financial
infonnation is available;
(8) An opinion or opinions of the City Attorney addressed to the
Underwriters and dated the date of Closing substantially in the form and substance
of Exhibit B hereto;
(9) A certificate or certificates, dated the date of the Closing, of an
appropriate officer of the City to the effect that, on the basis of the facts, estimates
and circumstances in effect on the date of delivery of the Securities, it is not expected
that the proceeds of the Securities will be used in a manner that would cause the
Securities to be arbitrage Securities within the meaning of Section 148 of the Internal
Revenue Code of 1986, as amended;
( 1 0) Evidence of the rating on the Securities, which shall be "Aaa" by
Moody's Investors Service, Inc. ("Moody's"), "AAA" by Standard and Poor's
Corporation, a division of the McGraw-Hill Companies, Inc. ("S&P"), and "AAA"
by Fitch Ratings ("Fitch"), shall be delivered in a form acceptable to the
Underwriters;
8
EXHlB1T B
(11) A copy ofthe policy of municipal bond insurance issued by MBIA
Insurance Corporation with respect to the Securities; and
( 12) Such additional legal opinions, certificates, instruments and other
documents as Bond Counsel or the Underwriters may reasonably request to evidence
the truth, accuracy and completeness, as of the date hereof and as of the date of
Closing, of the City's representations and warranties contained herein and of the
statements and information contained in the Official Statement and the due
performance and satisfaction by the City at or prior to the date of Closing of all
agreements then to be performed and all conditions then to be satisfied by the City.
All of the opinions, letters, certificates, instruments and other documents mentioned above
or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions
hereofif, but only if, they are satisfactory to the Underwriters.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriters to
purchase, to accept delivery of and to pay for th~ Securities as set forth in this Purchase Contract,
or if the obligations of the Underwriters to purchase, to accept delivery of and to pay for the
Securities shall be terminated for any reason permitted by this Purchase Contract, this Purchase .
Contract shall tenninate, the security deposit referred to in Paragraph 4 of this Purchase Contract
shall be returned to the Authorized Representative and neither the Underwriters nor the City shall
be under further obligation hereunder, except that the respective obligations of the City and the
Underwriters set forth in Paragraphs I 0 and 12 hereof shall continue in full force and effect.
9. Termination. The Underwriters may terminate its obligation to purchase at any time
before the Closing if any of the following should occur:
(a) (i) Legislation shall have been enacted by the Congress of the United States,
or recommended to the Congress for passage by the President of the United States or
favorably reported for passage to either House of the Congress by any Committee of such
House; or (ii) a decision shall have been rendered by a court established under Article III of
the Constitution of the United States or by the United States Tax Court; or (iii) an order,
ruling or regulation shall have been issued or proposed by or on behalf of the Treasury
Department of the United States or the Internal Revenue Service or any other agency of the
United States; or (iv) a release or official statement shall have been issued by the President
of the United States or by the Treasury Department of the United States or by the Internal
Revenue Service, the effect of which, in any such case described in clause (i), (ii), (iii), or ·
(iv), would be to impose, directly or indirectly, federal income taxation upon interest
received on obligations of the general character of the Securities or upon income of the
general character to be derived by the City, other than any imposition of federal income
taxes upon interest received on obligations of the general character as the Securities on the
date hereof and other than as disclosed in the Official Statement, in such a manner as in the
judgment of the Authorized Representative would materially impair the marketability or
materially reduce the market price of obligations of the general character of the Securities.
9
EXHIBJT. B
(b) Any action shall have been taken by the Securities and Exchange Commission
or by a court that would require registration of any security under the Securities Act of 1933,
as amended, or qualification of any indenture under the Trust Indenture Act of 1939, as
amended, in connection with the public offering of the Securities, or any action shall have
been taken by any court or by any governmental authority suspending the use of the
Preliminary Official Statement or the Official Statement or any amendment or supplement
thereto, or any proceeding for that purpose shall have been initiated or threatened in any such
court or by any such authority.
(c) ( i) The Constitution of the State ofTexas shall be amended or an amendment
shall be proposed, or (ii) legislation shall be enacted, or (iii) a decision shall have been
rendered as to matters of Texas law, or (iv) any order, ruling or regulation shall have been
issued or proposed by or on behalf ofthe State ofTexas by an official, agency or department
thereof, affecting the tax status of the City, its property or income, its securities (including
the Securities) or the interest thereon, that in the judgment of the Authorized Representative
would materially affect the market price of the Se.curities.
(d) A general suspension oftrading in securities shall have occurred on the New
York Stock Exchange.
(e) There shall have occurred any (i) material outbreak of hostilities (including,
without limitation, an escalation of hostilities that existed prior to the date hereof or an act.
of terrorism) or (ii) material other national or international calamity or crisis, or any material
adverse change in the financial, political or economic conditions affecting the United States,
the effect of which on U.S. financial markets of such an event described in clauses (i) or (ii)
shall make it, in the reasonable judgment of the Authorized Representative, impractical or
inadvisable to proceed with the offering or delivery of the Securities as contemplated by the
final Official Statement (exclusive of any amendment or supplement thereto).
(f) An event described in Paragraph 6(j) hereof occurs that, in the reasonable
judgment of the Authorized Representative, requires a supplement or amendment to the
Official Statement that is deemed by them, in their discretion, to adversely affect the market
for the Securities.
(g) A general banking moratorium shall have been declared by authorities of the
United States, the State of New York or the State of Texas.
(h) A lowering of the ratings of"Aaa," "AAA" and "AAA,': initially assigned to
the Securities by Moody's, S&P and Fitch, respectively, shall occur prior to the Closing.
10. Expenses. (a) The City shall pay all expenses incident to the issuance of the
Securities, including but not limited to: (i) the cost of the preparation, printing and distribution of
the Preliminary Official Statement and the Official Statement; (ii) the cost of the preparation and
printing of the Securities; (iii) the fees and expenses of Bond Counsel to the City; (iv) the fees and
10
D<HlBIT B
disbursements of the City's accountants, advisors, and of any other experts or consultants retained
by the City; (v) the fees for the bond ratings and any travel or other expenses incurred incident
thereto; and (vi) the premium for municipal bond insurance policy pertaining to the Securities.
(b) The Underwriters shall pay (i) all advertising expenses in connection with the
offering of the Securities; (ii) the cost of the preparation and printing of all the underwriting
documents; and (iii) the fee of McCall, Parkhurst & Horton L.L.P. for such firm's opinion required
by Paragraph 8( e)( 6) hereof.
11. Notices. Any notice or other communication to be given to the City under this
Purchase Contract may be given by delivering ihe same in writing at the address for the City set
forth above, and any notice or other communication to be given to the Underwriters under this
Purchase Contract may be given by delivering the same in writing to A.G. Edwards & Sons, Inc.,
Renaissance Plaza, 70 N.E. Loop 410, Suite 915, San Antonio, Texas 78216, Attn: Nora Chavez.
12. Parties in Interest. This Purchase Contract is made solely for the benefit ofthe City
and the Underwriters (including the successors or assigns of any Underwriter) and no other person
shall acquire or have any right under this contract. The City's representations, warranties and
agreements contained in this Purchase Contract that exist as of the Closing, and without regard to
any change in fact or circumstance occurring subsequent to the Closing, shall remain operative and
in full force and effect, regardless of ( i) any investigations made by or on behalf of the Underwriters,
and (ii) delivery of any payment for the Securities hereunder; and the City's representations and
warranties contained in Paragraph 6 of this Purchase Contract shall remain operative and in full
force and effect, regardless of any tennination of this Purchase Contract.
13. Severability. If any provision of this Purchase Contract shall be held or deemed to
be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any
constitution, statute, rule of public policy, or any other reason, such circumstances shall not have
the effect of rendering the provision in question invalid, inoperative or unenforceable in any other
case or circumstances, or of rendering any other provision inoperative or unenforceable to any extent
whatever.
14. Choice of Law. This Purchase Contract shall be governed by and construed in
accordance with the laws of the State ofTexas.
15. Execution in Counterparts. This Purchase Contract may be executed in any number
of counterparts, all of which taken together shall constitute one and the same instrument, and any
of the parties hereto may execute this Purchase Contract by signing any such counterpart.
16. Section Headings. Section headings have been inserted in this Contract as a matter
of convenience of reference only, and it is agreed that such section headings are not a part of this
Contract and will not be used in the interpretation of any provisions of this Contract.
II
EXHIBIT B
17. Status of the Underwriters. It is understood and agreed that for all purposes of this
Contract and the transactions contemplated hereby the Underwriters have, in their role as
underwriters, acted solely as independent contractors and have not acted as financial or investment
advisors, fiduciaries or agents to or for the City, whether directly or indirectly through any person.
The City recognizes that the Underwriters expect to profit from the acquisition and potential
distribution of the Securities. ·
[Signature page follows.]
l2
EXHIBIT B
18. Effective Date. This Purchase Contract shall become effective upon the execution
of the acceptance hereofby the Mayor of the City and shall be valid and enforceable as of the time
of such acceptance.
Accepted:
This 27th day of September, 2004
By:
Mayor
City of Lubbock, Texas
Very truly yours,
A.G. Edwards & Sons, Inc.
Estrada Hinojosa & Company, Inc.
By: A.G. Edwards & Sons, Inc.
Authorized Representative
By:
Name: Nora Chavez
Title: Managing Director
EXHIBIT B
EXHIBIT A
Schedule of Maturities, Interest Rates, Yields and Redemption Provisions
$2,025,000
City ofLubbock2 Texas Tax General Obligation Bonds2 Series 2004
Maturity Principal Interest Rate Yield
{2/15} Amount {%t} {%}
2005 $220,000 5.00% 1.55%
2006 70,000 5.00 1.70
2007 70,000 3.00 1.99
2008 75,000 3.00 2.32
2009 75,000 3.00 2.62
2010 80,000. 3.00 2.86
2011 80,000 3.00 3.07
2012 85,000 3.15 3.24
2013 85,000 3.30 3.40
2014 90,000 3.40 3.51
2015 90,000 3.63 3.72
2016 95,000 3.75 3.87
2017 100,000 3.85 3.97
2018 105,000 4.00 4.06
2019 105,000 4.00 4.15
2020 110,000 4.13 4.24
2021 115,000 4.20 4.33
2022 120,000 4.30 4.42
2023 125,000 4.40 4.51
2024 130,000 4.50 4.59
The City reserves· the right, at its option, to redeem Bonds having stated maturities on and after
February 15, 2015, in whole or in part in principal amounts of $5,000 or any integral multiple
thereof, on February 15,2014, or any date thereafter, at the par value thereof plus accrued interest
to the date of redemption.
A-1 EXHIB1T B
$3,100,000
City ofLubbock, Texas Tax and Water System
·Surplus Revenue Certificates of Obligation, Series 2004
Maturity Principal Interest Rate Yield
(2/15} Amount {%} (%)
2005 $410,000 3.00% 1.55%
2006 105,000 3.00 1.70
2007 105,000 3.00 1.99
2008 110,000 3.00 2.32
2009 115,000 3.00 2.62
2010 115,000 3.00 2.86
2011 120,000 3.00 3.07
2012 125,000 3.15 . 3.24
2013 125,000 3.30. 3.40
2014 130,000 3.40 3.51
2015 135,000 3.63 3.72
2016 140,000 3.75 3.87
2017 145,000 3.85 3.97
2018 155,000 4.00 4.06
2019 160,000 4.00 4.15
2020 165,000 4.13 4.24
2021 175,000 4.20 4.33
2022 180,000 4.30 4.42
2023 190,000 4.40 4.51
2024 195,000 4.50 4.59
The City reserves the right, at its option, to redeem Certificates having stated maturities on and after
February 15, 2015, in whole or in part in principal amounts of $5,000 or any integral multiple
thereof, on February 15, 2014, or any date thereafter, at the par value thereof plus accrued interest
to the date of redemption.
A-2
EXHIBIT B
EXHIBIT B
OPINION OF THE CITY ATTORNEY
A.G. Edwards & Sons, Inc.
Estrada Hinojosa & Company, Inc.
November_, 2004
c/o A.G. Edwards & Sons, Inc.
Renaissance Plaza
70N.E. Loop410
Suite 915
San Antonio, Texas 78216
Re: $2,025,000 City of Lubbock, Texas General Obligation Bonds, Series 2004
and
$3,100,000 Tax and Waterworks System Surplus Revenue Certificates of Obligation,
Series 2004
Ladies and Gentlemen:
I am the City Attorney for the City ofLubbock, Texas (the "City") at the time of the issuance
of the above referenced series of Bonds and Certificates of Obligation (collectively, the
"Securities"), pursuant to the provisions of the Ordinances duly adopted by the City Council of the
City on September 28, 2004. Capitalized terms not otherwise defined in this opinion have the
meanings assigned in the Purchase Contract.
In my capacity as City Attorney to the City, I have reviewed such agreements, documents,
certificates, opinions, letters, and other papers as I have deemed necessary or appropriate in
rendering the opinions set forth below.
In making my review, I have assumed the authenticity of all documents and agreements
submitted to me as originals conformity to the originals of all documents and agreements submitted
to me as certified or photostatic copies, the authenticity of the originals of such latter documents and
agreements, and the accuracy of the statement contained in such documents.
Based upon the foregoing, and subject to the qualifications and exceptions hereinafter set
forth, I am of the opinion that under the applicable laws of the United States of America and the
State of Texas in force and effect on the date hereof:
B-1
EXHIBIT B
l. Based on reasonable inquiry made of the responsible City employees and public officials,
the City is not, to the best of my knowledge, in breach of or in default under any applicable
law or administrative regulation of the State of Texas or the United States, or any applicable
judgment or decree or imy trust agreement, loan agreement, bond, note, resolution,
ordinance, agreement or other instrument to which the City is party or is otherwise subject
and, to the best of my knowledge after due inquiry, no event has occurred and is continuing
that, with the passage oftime or the giving of notice, or both, would constitute such a default
by the City under any of the foregoing; and the execution and delivery of the Purchase
Contract, the Securities and the adoption of the Ordinances and compliance with the
provisions of each of such agreements or instruments does not constitute a breach of or
default under any applicable law or administrative regulation of the State of Texas or the
United States or any applicable judgment or decree or, to the best of my knowledge, any
trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other
instrument to which the City is a party or is otherwise subject; and
2. Except as disclosed in the Official Statement, no litigation is pending, or, to my knowledge,
threatened, in any court in any way (a) challenging the titles of the Mayor or any of the other
members of the City Council to their respective offices; (b) seeking to restrain or enjoin the
issuance, sale or delivery of any of the Securities, or the levy, collection or application of the
ad valorem taxes and the revenues pledged or to be pledged to pay the principal of and
interest on the Securities; (c) contesting or affecting the validity or enforceability of the
Securities, the Ordinances, or the Purchase Contract; (d) contesting the powers of the City
or any authority for the issuance of the Securities, or the adoption of the Ordinances; or (e)
that would have a material and adverse effect on the financial condition of the City.
3. I have reviewed the infonnation in the Official Statement contained under the caption "Other
Information--Litigation" and such infonnation in all material respects accurately and fairly
summarizes the matters described therein.
This opinion is furnished solely for your benefit and may be relied upon only by the
addresses hereof or anyone to whom specific permission is given in writing by me.
Very truly yours,
B-2
EXHIBIT B
Exhibit C
Proposed Form ofUnderwriters' Counsel Opinion of
McCall, Parkhurst & Horton L.L.P.
A.G. Edwards & Sons, Inc.
Estrada Hinojosa & Company, Inc.
November_, 2004
c/o A.G. Edwards & Sons, Inc.
Renaissance Plaza
70 N.E. Loop 410
Suite 915
San Antonio, Texas 78216
Re: $2,025,000 City of Lubbock, Texas General Obligation Bonds, Series 2004
and
$3,100,000 Tax and Waterworks System Surplus Revenue Certificates of Obligation,
Series 2004
Ladies and Gentlemen:
We have acted as counsel for you as the underwriters of the Bonds and Certificates of
Obligation described above, issued under and pursuant to separate Ordinances of the City of
Lubbock, Texas (the "Issuer"), authorizing the issuance ofthe Securities, which Securities you are
purchasing pursuant to a Purchase Contract, dated September 28, 2004. All capita.lized undefined
terms used herein shall have the meaning set forth in the Purchase Contract.
In connection with this opinion letter, we have considered such matters of law and of fact,
and have relied upon such Securities and other information furnished to us, as we have deemed
appropriate as a basis for our opinion set forth below. We are not expressing any opinion or views
herein on the authorization, issuance, delivery, validity of the Securities and we have assumed, but
not independently verified, that the signatures on all documents and Securities that we have
examined are genuine.
Based on and subject to the foregoing, we are of the opinion that, under existing laws, the
Securities are not subject to the registration requirements of the Securities Act of 1933, as amended,
and the Ordinances are not required to be qualified under the Trust Indenture Act of 1939, as
amended.
Because the primary purpose of our professional engagement as your counsel was not to
establish factual matters, and because of the wholly or partially nonlegal character of many of the
C-1
· :'-'\HlBIT B
determinations involved in the preparation of the Official Statement dated September 28, 2004 (the
"Official Statement") and because the information in the Official Statement under the headings
"BOOK-ENTRY ONLY SYSTEM," "TAX MATTERS," "DISCUSSION OF RECENT
FINANCIAL AND MANAGEMENT EVENTS-Natural Gas Sale Agreement," "CONTINUING
DISCLOSURE-Compliance with Prior Undertakings" and Appendices A, B, and C thereto were
prepared by others who have been engaged to review or provide such information, we are not
passing on and do not assume any responsibility for, except as set forth in the last sentence of this
paragraph, the accuracy, completeness or fairness of the statements contained in the Official
Statement (including any appendices, schedules and exhibits thereto) and we make no representation
that we have independently verified the accuracy, completeness or fairness of such statements. In
the course of our review of the Official Statement, we had discussions with representatives of the
City regarding the contents of the Official Statement. In the course of our participation in the
preparation of the Official Statement as your counsel, we had discussions with representatives of
the Issuer, including its City Attorney, Bond Counsel and Financial Advisor, regarding the contents
ofthe Official Statement. In the course of such activities, no facts came to our attention that would
lead us to believe that the Official Statement (except for the financial statements and other financial
and statistical data contained therein, the infmmation set forth under the headings "BOOK-ENTRY
ONLY SYSTEM," "TAX MATTERS," "DISCUSSION OF RECENT FINANCIAL AND
MANAGEMENT EVENTS-Natural Gas Sale Agreement," "CONTINUING DISCLOSURE
Compliance with Prior Undertakings" and Appendices A, B and C thereto, as to which we express
no opinion), as of its date contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
We are also of the opinion that the continuing disclosure undertaking of the City, which is
set forth in the Ordinances, satisfies Section (b )(S)(i) of Rule 15c2-12 (the "Rule"), which requires
an undertaking for the benefit of the holders, including beneficial owners, of the Bonds to provide
certain annual financial information and event notices to various infonnation repositories at the time
and in the manner required by the Rule.
This opinion letter may be relied upon by only you and only in connection with the
transaction to which reference is made above and may not be used or relied upon by any other
person for any purposes whatsoever without our prior written consent.
Respectfully,
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EXHIBIT B
EXHIBITC
to
Ordinance
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
Ordinance Ho. 2004-Q0106
The following information is referred to in Section 37 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Section are as specified {and included in the Appendix or
under the headings of the Official Statement referred to) below:
1. The financial statements of the City appended to the Official
Statement as Appendix B, but for the most recently concluded fiscal year.
2. The information under Tables 1 through 6 and 8 through 15.
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.
45515552.1 C-1