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HomeMy WebLinkAbout1998-O-12 - Issuance of General Obligation BondsORDINANCE NO. 1998-12 AUTHORIZING THE ISSUANCE OF GENERAL OBLIGATION BONDS THE STATE OF TEXAS COUNTY OF ERATH CITY OF STEPHENVILLE WHEREAS, it is deemed advisable and to the best interest of the City of Stephenville, Texas (the "City" or the "Issuer") that all of the general obligation bonds authorized at an election held in the City on May 2, 1998, be sold at this time, pursuant to the Constitution and laws of the State of Texas, including Article 1175, V.A.T.C.S., and the Charter of the City. THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF STEPHENVILLE: Section 1. AMOUNT AND PURPOSE OF THE BONDS. The City Council of the City hereby incorporates the recitals set forth in the preamble hereto as if set forth in full at this place and further finds and determines that said recitals are true and correct. The bonds of the Issuer are hereby authorized to be issued and delivered in the aggregate principal amount of $2,700,000 FOR THE PURPOSE OF PROVIDING FUNDS TO FINANCE THE COSTS OF IMPROVING STREETS WITHIN THE CITY AND EXTENDING AND IMPROVING WATER AND SEWER LINES RELATED IN CONNECTION WITH SUCH STREET IMPROVEMENTS. Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND MATURITIES OF BONDS. Each bond issued pursuant to this Ordinance for the purpose described in Section 1 above shall be designated: "CITY OF STEPHENVILLE, TEXAS GENERAL OBLIGATION BOND, SERIES 1998" (the "Bonds"), and initially there shall be issued, sold, and delivered hereunder one fully registered bond, without interest coupons, dated June 1, 1998, in the principal amount stated in Section 1 above and in the denominations hereinafter stated, numbered T- 1, with bonds issued in replacement thereof being in the denominations and principal amounts hereinafter stated and numbered consecutively from R-1 upward, payable to the respective Registered Owners thereof (with the initial bond being payable to the NationsBank of Texas, N.A., as the Purchaser of the Bonds (the "Purchaser"), or to the registered assignee or assignees of said bonds or any portion or portion thereof (in each case, the 'Registered Owner"), and said bonds shall mature and be payable serially on February 15 in each of the years and in the principal amounts, respectively, as set forth in the following schedule: MM $ 200,000 1999 2000 230,000 2001 240,000 2002 255,000 2003 265,000 2004 275,000 2005 290,000 2006 300,000 2007 315,000 2008 330,000 Section 3. INTEREST. The Bonds shall bear interest on the unpaid principal amounts from the Delivery Date at the rate per annum set forth in the FORM OF BOND in Section 6 hereof. Interest on the Bonds shall be payable on June 1 and December 1 in each year, commencing June 1, 1998. Section 4. CHARACTERISTICS OF THE BONDS. (a) The Issuer shall keep or cause to be kept at the principal corporate trust office ofNationsBank of Texas, N.A., Stephenville, Texas (the "Paying Agent/Registrar") books or records for the registration of the transfer and exchange of the Bonds (the "Registration Bonds"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may pre- scribe; and the Paying Agent/Registrar shall make such registrations, transfers and exchanges as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the Registered Owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. To the extent possible and under reasonable circumstances, all transfers ofBonds shall be made within three business days after request and presentation thereof. The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. The Paying Agent/Registrar's standard or customary fees and charges for making such regis- Go3134 'ration, transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided in the FORM OF BOND set forth in Section 6 of this Ordinance. Registration of assignments, transfers p and exchanges of Bonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in Section 6 of this Ordinance. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. Except as provided in (c) below, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the Paying Agent/Registrar's Authentication Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for transfer and exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing transfer and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Article 717k-6, Vernon's Texas Civil Statutes, and particularly Section 6 thereof, the duty of transfer and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Certificate, the transferred and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all as provided in this Ordinance. The Paying Agent/ Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds. (c) The Bonds (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the Registered Owners thereof, (ii) may be redeemed prior to their scheduled maturities (notice of which shall be given to the Paying Agent/Registrar by the Issuer at least 50 days prior to any such redemption date), (iii) may be trans- ferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Bonds shall be payable, and (viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF BOND set forth in Section 6 of this Ordinance. The Bond initially issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/ Registrar, but on each substitute Bond issued in exchange for any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF BOND. (d) The Issuer covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust company, 00 19; financial institution, or other entity to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each Registered Owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. (e) Except as provided below, no Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar. It shall not be required that the same authorized representative of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Bonds. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Bond delivered on the closing date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Ordinance, manually executed by the Comptroller ofPublic Accounts ofthe State of Texas or by his duly authorized agent, which certificate shall be evidence that the Initial Bond has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the Issuer, and has been registered by the Comptroller. (f) On the closing date, one Initial Bond representing the entire principal amount ofthe Bonds, payable in stated installments to the Purchaser or its designee, executed by manual or facsimile signature of the Mayor and City Secretary of the Issuer, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas, will be delivered to the Purchaser or its designee. Upon payment for the Initial Bond, the Paying Agent/Registrar shall cancel the Initial Bond and deliver to the Purchaser one registered definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all of the Bonds for such maturity. Section 5. AMENDMENT OF ORDINANCE TO ENABLE DTC REGISTRATION. This Ordinance may be amended by the Issuer without the consent of the Holders of the Bonds for the 1 purpose of providing that the Bonds are eligible for registration and payment through the facilities _ of The Depository Trust Company. Section 6. FORM OF BOND. The form of the Bond, including the form of Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached only to the Bonds initially issued and delivered pursuant to this Ordinance, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance. (a) [Form of Bond] NO. R-_ UNITED STATES OF AMERICA PRINCIPAL STATE OF TEXAS AMOUNT COUNTY OF ERATH $ CITY OF STEPHENVILLE, TEXAS GENERAL OBLIGATION BOND SERIES 1998 DATE OF DATE OF STATED BONDS DELIVERY MATURITY CUSIP NO. June 1, 1998 February 15, _ REGISTERED OWNER: 1 C h t' NWITUT[SIi1M The City of Stephenville (hereinafter referred to as the "Issuer"), a body corporate and political subdivision in the County of Erath, State of Texas, for value received, hereby promises to pay to the order of the registered owner named above, or the registered assigns thereof (the "registered owner"), solely from the revenues hereinafter identified, on the Stated Maturity date specified above, the Principal Amount stated above. Principal of this Bond is payable at its Stated Maturity, or upon redemption prior to maturity, to the registered owner hereof, upon presentation and surrender, at the principal office ofNationsBank of Texas, N.A., Stephenville, Texas (the "Paying Agent/Registrar"), or its successor. The Bonds shall bear interest on the unpaid Principal Amount from the Date of Delivery as set forth above, on February 15, 1999 and semiannually on each August 15 and February 15 there- after to the maturity date specified above or the date of redemption prior to maturity; except that if this Bond is required to be authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date; provided, however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being exchanged or converted from is due but has not been paid, then this Bond shall bear interest from the date to which such interest has been paid in full. Interest shall accrue at the interest rate of 4.43% per annum on the unpaid principal balance of the Bonds (calculated on the basis of a 360-day year oftwelve 30-day months); provided, however, that if an 'Event of Taxation" (hereinafter defined) occurs while a Bond is held by NationsBank of Texas, N. A., as the initial purchaser of the Bonds (the 'Initial Purchaser"), the rate of interest on the Bonds so held by the Initial Purchaser shall be 7.43% per annum; and, provided further, however, that if a "Yield Adjustment Event" (hereinafter defined) occurs while the Bonds are held by the Initial Purchaser, the rate of interest on the Bonds held by the Initial Purchaser shall be adjusted as provided in the formula described in the definition of Yield Adjustment Event" below. The term 'Event of Taxation" means the receipt by the Issuer and the Initial Purchaser of an opinion of nationally recognized bond counsel that interest on the Bonds no longer is excludable from gross income of the owner thereof for federal income tax purposes. The term "Yield Adjustment Event" means a change in the interest rate on the Bonds that would result from the following calculation: .0525 x (1 - New Corporate Tax Rate) = Adjusted Interest Rate (1-0.35) where the term "New Corporate Tax Rate" means the then current maximum federal income tax rate applicable to for -profit corporations. In the event of a Yield Adjustment Event, the interest rate on the affected Bonds shall be adjusted as ofthe 30th day after notice has been delivered (i) to the Issuer by the Initial Purchaser (if the adjustment results in an increase in the rate borne by such Bonds) or (ii) to the Initial Purchaser by the Issuer (if the adjustment results in a decrease in the rate borne by such Bonds). Upon the giving of notice of such adjustment to the respective party described in the preceding sentence, notice shall also be provided to the Paying Agent/Registrar by the Issuer of such adjustment in the interest rate, which notice shall specify the effective date of the adjustment and the particular Bonds, if less than all Bonds, which are affected. Interest is payable to the registered owner of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose name appears on the "Registration Books" maintained by the Paying Agent/Registrar at the close of business on the "Record Date," which is the 15th calendar day of the month next preceding each interest payment date. All payments of principal of, premium, if any, and interest on this Bond 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 interest shall be paid by the Paying Agent/Registrar by check sent by United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Registration Books or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. This Bond is one of a series of bonds dated June 1, 1998, issued in the aggregate principal amount of $2,700,000 (herein referred to as the 'Bonds") for the purpose of providing funds to finance the costs of improving streets within the Issuer and extending and improving water and sewer lines related in connection with such street improvements, under and in strict conformity with the Constitution and laws of the State of Texas, including Article 1175, V.A.T.C.S., and the Charter of OU139 the Issuer, and pursuant to an ordinance adopted by the governing body of the Issuer (herein referred to as the "Ordinance"). On any date, the Bonds of this series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be redeemed in inverse order of maturity (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), provided that notice is duly given as described below. The Bonds may be redeemed at a redemption price equal to the principal amount to be so redeemed (the "Prepaid Principal") plus accrued interest to the principal amount to be so redeemed (the "Prepayment Date"), plus the "Make -Whole Amount" (hereinafter defined) ifthe "Treasury Rate" (hereinafter defined) plus the "Closing Spread" (hereinafter defined) is less than 4.43% per annum (the "Base Interest Rate"). Subject to the limitations set forth in Article 717k-2, Vernon's Texas Civil Statutes, as amended, the "Make -Whole Amount" shall equal (i) the sum ofthe amounts calculated by discounting the "Remaining Scheduled Principal Installment Payments" (hereinafter defined) from their respective scheduled due dates to the Prepayment Date, in accordance with accepted financial practice at a discount factor equal to the Treasury Rate plus the Closing Spread, less (ii) the Prepaid Principal; however, the Make -Whole Amount shall in no event be less than zero and nothing herein shall be construed or operate to require the Issuer to pay the Make -Whole Amount except in connection with the Issuer's exercise of the right to redeem Bonds or to pay any amount greater than is permitted by applicable law. For purposes of determining the Make -Whole Amount, the following terms shall have the following meanings: The "Treasury Rate" is the yield on the Treasury Constant Maturity Series with maturity equal to the remaining weighted average life to maturity of the Remaining Scheduled Principal Installment Payments (calculated as of the Prepayment Date in accordance with accepted financial practice and rounded to the nearest quarter -year), as reported in Federal Reserve Statistical Release H.15 (519) - Selected Interest Rates, in the "This Week" column of the issue which, as of the fifth business day before the Prepayment Date, has been most recently published. If no maturity exactly corresponding to such remaining weighted average life to maturity appears in Release H.15, the Treasury Rate will be determined by linear interpolation between the yields reported in Release H.15. If for any reason Release H.15 is no longer published, the Paying Agent, with the consent of the Issuer, shall select a comparable publication to determine the Treasury Rate. The "Remaining Scheduled Principal Installment Payments" are (i) each scheduled payment of principal which is, or to the extent that it is, paid before its scheduled due date by application of the Prepaid Principal in inverse order of maturity of this series of Bonds; and (ii) each scheduled payment of interest on the Prepaid Principal that would be due in accordance with this Bond after the Prepayment Date if no payment of the Prepaid Principal were made prior to its scheduled due dates. OuC;19;. The "Closing Spread" is the difference between the Base Interest Rate and the Treasury Rate with such Treasury Rate being calculated as of the Date of Delivery of the Bonds, as if the principal face amount were the Prepaid Principal and the date of original issuance of this Bond were the Prepayment Date. At least 15 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid to the registered owner of each Bond to be redeemed at its address as it appeared on the 25th day prior to such redemption date. By the date fixed for any such redemption due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed. If such written notice of redemption is given and if due provision for such payment is made, all as provided above, the Bonds or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denomina- tions in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Ordinance. It is hereby certified and recited that the issuance of this Bond, and the series of which it is a part, is duly authorized by law; that the bonds issued for the permanent improvements heretofore described were approved by a vote of the resident, qualified electors of the Issuer voting at an elec- tion held for that purpose within the Issuer on May 2, 1998; that all acts, conditions and things required to be done precedent to and in the issuance of this series of bonds, and of this Bond, have been properly done and performed and have happened in regular and due time, form and manner as required by law; that sufficient and proper provision for the levy and collection of taxes has been made, which, when collected, shall be appropriated exclusively to the payment of this Bond and the series of which it is a part; and that the total indebtedness of the Issuer, including the entire series of bonds of which this is one, does not exceed any constitutional, statutory or charter limitation. Reference is hereby made to the Ordinance, a copy of which is on file in the principal office of the Paying Agent/Registrar, and to all of the provisions of which the owner or holder of this Bond by the acceptance hereof hereby assents, for definition of terms; the description of and the nature and extent of the security for the payment of the Bonds; the terms and conditions relating to the transfer or exchange ofthis Bond; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders; the rights, duties, and obligations of the Issuer and the Paying Agent/Registrar; the terms and provisions upon which the liens, pledges, charges and covenants made therein may be discharged at or prior to the maturity of this Bond, and this Bond shall be deemed to be no longer outstanding thereunder; and for other terms and provisions contained therein. Capitalized terms used herein have the same meanings assigned in the Ordinance. The Bonds, subject to certain limitations contained in the Ordinance, may be transferred on the Registration Books only upon its presentation and surrender at the principal office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instru- ment of transfer in form satisfactory to the Paying Agent/Registrar duly executed by, the registered owner hereof, or his or her duly authorized agent. When a transfer on the Registration Books occurs, one or more new fully registered Bonds of the same Stated Maturity, of authorized denominations, bearing the same rate of interest, and of the same aggregate principal amount will be issued by the Paying Agent/Registrar to the designated transferee or transferees. The Issuer and the Paying Agent/Registrar, and any agent of either, may treat the registered owner hereof whose name appears on the Registration Books (i) on the Record Date as the owner entitled to payment of interest hereon, (ii) on the date of surrender of this Bond as the owner entitled to payment of principal hereof at its Stated Maturity or upon redemption prior to its Stated Maturity, and (iii) on any other date as the owner for all other purposes, and neither the Issuer nor the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In case any provision in this Bond or any application thereof shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions and applications shall not in any way be affected or impaired thereby. The terms and provisions of this Bond and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. CITY OF STEPHENVILLE, TEXAS t ny Necreary (� (SEAL) .7;m's � 000201 (b) [Form of Registration Certificate Of the Comptroller of Public Accounts] COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General ofthe State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this (COMPTROLLER'S SEAL) Comptroller of Public Accounts of the State of Texas (c) [Form of Paying Agent/Registrar's Authentication Certificate] PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in the text of this Bond; and that this Bond has been issued in exchange for a bond or bonds, or a portion of a bond or bonds of a series which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated NationsBank of Texas, N.A., Stephenville, Texas Paying Agent/Registrar Authorized Representative (d) [Form of Assignment] ASSIGNMENT FOR VALUE RECEIVED, the undersigned Registered Owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to (Assignee's Social (print or typewrite Assignee's name and address, including Security or Taxpayer zip code) Identification Number) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises. Dated: 7 Signature Guaranteed: r NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. (e) [Initial Bond Insertions] NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, without alteration or enlargement or any change whatsoever. (i) The Initial Bond shall be in the form set forth is paragraph (a) of this Section, except that: A. immediately under the name of the Bond, the heading "STATED MATURITY" shall be completed with the words "As shown below" and "CUSIP NO. " shall be deleted. B. the first paragraph shall be deleted and the following will be inserted: "The City of Stephenville (hereinafter referred to as the "Issuer"), a body corporate and political subdivision in the County ofErath, State of Texas, for value received, hereby promises to pay to the order ofthe registered owner named above, or the registered assigns thereof(the "registered owner"), solely from the revenues hereinafter identified, the Principal Amount stated above. Principal of this Bond is payable upon redemption prior to maturity, to the registered owner hereof, upon presentation 000020: and surrender, at the principal office ofNationsBank ofTexas, N.A., Stephenville, Texas (the "Paying Agent/Registrar"), or its successor, in the principal installments set forth in the following schedule: Years Principal Installments (Information from Section 2 to be inserted)." C. The Initial Bond shall be numbered "T-1." Section 7. INTEREST AND SINKING FUND. A special "Interest and Sinking Fund" is hereby created and shall be established and maintained by the Issuer at an official depository bank of said Issuer. Said Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of said Issuer, and shall be used only for paying the interest on and principal of said Bonds. All ad valorem taxes levied and collected for and on account of said Bonds shall be deposited, as collected, to the credit of said Interest and Sinking Fund. During each year while any of said Bonds are outstanding and unpaid, the governing body of said Issuer shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on said Bonds as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of said Bonds as such principal matures (but never less than 29/o of the original amount of said Bonds as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of said Issuer, with full allowances being made for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in said Issuer, for each year while any of said Bonds are outstanding and unpaid, and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of said Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. Section 8. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning ofthis Ordinance, except to the extent provided in subsection (d) of this Section 8, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. 000^01 (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and at such times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. (c) The term "Government Obligations" as used in this Section, shall mean direct 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, which may be United States Treasury obligations such as its State and Local Government Series, which may be in book -entry form. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. (e) In the event that the Issuer elects to defease less than all of the principal amount of Bonds of a maturity, the Paying Agent/Registrar shall select such amount of Bonds by such random method as it deems fair and appropriate. ^ Section 9. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation of the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, 00020, �.q and other expenses in connection therewith. Every replacement bond issued pursuant to the !f Ij provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. (e) Authority for Issuing ReRacement Bonds. In accordance with Section 6 of Vernon's Ann. Tex. Civ. St. Art. 717k-6, this Section 9 of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 4 of this Ordinance for Bonds issued in conversion and exchange for other Bonds. Section 10. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION, CUSIP NUMBERS AND INSURANCE PROVISION. The Mayor ofthe Issuer is hereby authorized to have control of the Bonds initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation, examination, and approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Bonds said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Certificate. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Bonds issued and delivered under this Ordinance, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. In addition, the Bonds may bear an appropriate legend as provided by the provider of any policy of municipal bond insurance relating to the Bonds. Section 11. DESIGNATION AS QUALIFIED TAX-EXEMPT BONDS. The Issuer hereby designates the Bonds as "qualified tax-exempt bonds" as defined in section 265(b)(3) of the Code. In furtherance of such designation, the Issuer represents, covenants and warrants the following: (a) that during the calendar year in which the Bonds are issued, the Issuer (including any subordinate entities) has not designated nor will designate bonds, which when aggregated with the Bonds, will result in more than $10,000,000 of "qualified tax-exempt bonds" being issued; (b) that the Issuer reasonably anticipates that the amount of tax-exempt obligations issued, during the calendar year in which the Bonds are issued, by the Issuer (or any subordinate entities) will not exceed $10,000,000; and, (c) that the Issuer will take such action or refrain from such action as necessary, and as more particularly set forth in Section 11, hereof, in order that the Bonds will not be considered "private activity bonds" within the meaning of section 141 of the Code. Section 12. COVENANTS REGARDING TAX EXEMPTION. The Issuer covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is 0u7�0( not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (a) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (b) to take any action to assure that in the event that the "private business use" described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 141(b)(3) ofthe Code, to the governmental use; (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (f) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) ofthe Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with -- (1) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 30 days or less until such proceeds are needed for the purpose for which the bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; 00020t (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as k i proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene ! the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (h) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. For purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. Section13. SALE OR DISPOSAL OF PROJECT; ALLOCATION OF BOND PROCEEDS. (a) The Issuer covenants that the property constituting the projects financed by the Refunded Certificates will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally -recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes ofthe foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for federal income tax proposes from gross income of the interest. 000201 (b) The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this Ordinance (the "Project") on its III books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed. The foregoing notwithstanding, the Issuer shall not expend proceeds of the sale of the Bonds or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are retired, unless the Issuer obtains an opinion of nationally -recognized bond counsel that such expenditure will not adversely affect the status, for federal income tax purposes, of the Bonds or the interest thereon. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 14. SALE OF BONDS. The Bonds are hereby sold and shall be delivered to the Purchaser, at a price of par, and plus accrued interest on the Bonds, pursuant to the terns and provi- sions of a Private Placement Agreement in substantially the form attached hereto as Exhibit A which the Mayor of the City is hereby authorized and directed to execute and deliver and which the City Secretary of the City is hereby authorized and directed to attest. It is hereby officially found, determined, and declared that the terms ofthis sale are the most advantageous reasonably obtainable. The Bonds shall initially be registered in the name of NationsBank of Texas, N.A. Section 15. FURTHER PROCEDURES. The Mayor and the City Secretary of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are l hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the seal and on behalf of the Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Bonds or the Paying Agent/Registrar. In case any officer whose signature appears on any Bond or other certificate shall cease to be such officer before the delivery of the Bonds, such signature shall nevertheless be valid and sufficient for all purposes the same as if he or she had remained in office until such delivery. Section 16. NO RULE 15c2-12 UNDERTAKING. The City has not made an undertaking in accordance with Rule 15c2-12 of the Securities and Exchange Commission (the "Rule") due the offering of the Bonds not being within the purview of the Rule, based upon the private placement of the Bonds to the Purchaser. The City is not, therefore, obligated pursuant to the Rule to provide any on -going disclosure relating to the City or the Bonds. Section 17. AGREEMENT TO PROVIDE FINANCIAL RECORDS TO THE PURCHASER. The Issuer hereby covenants and agrees that so long as any of the Bonds or any interest thereon remain outstanding and registered in the name ofthe Purchaser, the Issuer agrees that within 120 days following the close of each fiscal year, it will cause an audit of such books and accounts to be made by an independent firm of Certified Public Accountants. Each such audit, in addition to whatever other matters may be thought proper by the Accountant, shall particularly include the following: 00020 (a) A statement of the income and expenses of the Issuer for such fiscal year. (b) A balance sheet for the Issuer as of the end of such fiscal year. (c) A statement of cash flows of the Issuer for such fiscal year. (d) An operating fund budget analysis for such fiscal year. (e) Appropriate notes, schedules and attachments to the financial statements as are customarily prepared. In addition, subject to applicable law, the Issuer agrees to provide the Purchaser upon request other financial information as may be reasonably required by the Purchaser for the purpose of assessing the ability of the Issuer to pay its obligations under the Bonds as they come due for payment. SECTION 18. ORDINANCE A CONTRACT; AMENDMENTS. This Ordinance shall constitute a contract with the Holders from time to time, be binding on the Issuer, and shall not be amended or repealed by the Issuer so long as any Bond remains Outstanding except as permitted in this Section. The Issuer, may, without the consent of or notice to any Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the Issuer may, with the written consent of Holders holding a majority in aggregate principal amount of the Bonds then Outstanding affected thereby, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of the Bonds, no such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bond over any other Bonds, or (3) reduce the aggregate principal amount of Bonds required to be held by Holders for consent to any such amendment, addition or rescission. Nothing in this Ordinance, expressed or implied, is intended or shall be con- strued to confer upon any person other than the Issuer, the Paying Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provisions hereof, this Ordinance and all its provisions being intended to be and being for the sole and exclusive benefit of the Issuer, the Paying Agent/Registrar and the Holders. SECTION 19. NOTICES TO HOLDERS; WAIVER. Wherever this Ordinance provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to the address of each Holder as it appears on the Registration Books. In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of such notice with respect to all other Bonds. Where this Ordinance provides for notice in any manner, such 17' 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 00211. 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 20. 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 and canceled and the provisions of this Ordinance shall supersede and control as to the matters contained herein. SECTION 21. 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. SECTION 22. SEVERABILITY. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application thereof to other circumstances shall nevertheless be valid, and this City Council hereby declares that this Ordinance would have been enacted without such invalid provision. Reviewed by: &Ajd't& City Administrator - Approved as to form by City Attorn�' 000211