R-86-929 - 11/13/1986WHEREAS, the Council of the City of Round Rock, Texas has
previously consented to the creation of The Meadows at Chandler Creek
Municipal Utility District and
WHEREAS, The Meadows at Chandler Creek Municipal Utility District
has been organized, created, and established, and
WHEREAS, at an election duly called and held, the Directors were
authorized to issue bonds in the maximum amount of $13,000,000 and
WHEREAS, the Texas Water Commission has authorized issuance of
$2,450,000 of such bonds, and
WHEREAS, the Consent Agreement provided that the issuance of
bonds be approved by the Council of the City of Round Rock, Texas,
NOW THEREFORE BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND
ROCK, TEXAS
That the Bond Resolution of The Meadows at Chandler Creek
Municipal District be and is hereby approved in the "substantial
draft" form attached hereto and incorporated herein for all purposes.
RESOLVED this /� day of , 1986.
ATTEST:
J
NNE
LAND, C
ity Secretary
RESOLUTION NO. 6 Y, IM
MIKE ROBINSON, Mayor
City of Round Rock, Texas
DATE: November 10, 1986
SUBJECT: Council Agenda, November 13, 1986
ITEM: 13C - Consider a resolution approving the issuance of Combination
Unlimited Tax and Revenue Bonds for the Meadows at Chandler
Creek Municipal Utility District.
This authorization is to issue $2,450,000 of 20 year Combination Tax & Revenue
Bonds out of the $13,000,000 authorized for this MUD. This issue will be paid
from unlimited tax proceeds and any net utility revenues. These bonds will
be the sole responsibility of the district and NOT the City.
Richard A. Wells
Ed Walsh
Ferris F. (Rick) Akins
R. Mark Dietz
Mr. Jack Harzk
City Manage
City of :a nd Rock
214 E -= Main
Rou a Rock, Texas 78664
Dear Jack:
Re:
RA:sb
6RA14 7:RA16f1
cc: Mr. Don Wolf
City Attorney
City of Round Rock
214 East Main
Round Rock, Texas 78664
LAW OFFICES
WELLS, WALSH & AKINS
A Professional Corporation
ONE FINANCIAL CENTRE, SUITE 301
1717 NORTH IH 35
ROUND ROCK, TEXAS 78664
TELEPHONE (512) 244 -1442
October 28, 1986
The Meadows at Chandler Creek Municipal
Utility District Water Works and Sewer
System Combination Unlimited Tax and
Revenue Bonds, Series 1986
Sincerely yours,
d?iaJ& o44Lns
Rick Akins
Jane McAdams
Nickey Decker
Legal Assistants
Enclosed is a "substantial draft" of the Order Authorizing
( Issuance of Combination Unlimited Tax and Revenue Bonds or the
� Meadows at Chandler Creek Municipal Utility District. The
Utility Construction Agreement between the City and the D strict
requires that a "substantial draft" of the Bond Resolution be
approved by the City Council before bonds are issued.
Pursuant to that provision, the District hereby requests
that the enclosed Bond Resolution be placed on the agenda for the
next City Council meeting, and that such Bond Resolution be
approved. If you or Mr. Wolf or the Council need any further
information or desire further clarification before approval of
the Order, please let me know.
ORDER AUTHORIZING THE ISSUANCE OF
COMBINATION UNLIMITED TAX AND REVENUE BONDS
THE STATE OF TEXAS
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT .
WHEREAS, The Meadows at Chandler Creek Municipal
Utility District (the "District ") has been organized,
created, and established pursuant to Article 16, Section 59
of the Constitution of the State of Texas by an order of the
Texas Water Commission as a body politic and corporate and a
political subdivision of the State of Texas, and operates
pursuant to Chapter 54 of the Texas Water Code;
WHEREAS, at an election duly called and held for and
within the District on July 13, 1985, the duly qualified
resident electors of the District authorized the Board of
Directors (the "Board ") of the District to issue bonds of
the District with the terms and for the purposes described
herein in the maximum amount of $13,000,000 and to provide
for the payment of the principal of and the interest and
redemption price on such bonds from the sources and in the
manner described herein;
WHEREAS, none of the bonds so authorized have been
issued or sold or are outstanding on this date;
WHEREAS, the Texas Water Commission has authorized
issuance of $2,450,000 aggregate principal amount of such
bonds for the purposes described herein by Order dated
November 4, 1986;
WHEREAS, the Board deems it to be in the best interest
of the District to issue the bonds described herein and to
reserve the right to issue the then remaining $10,550,000
unissued balance of bonds authorized at the aforesaid
election, in one or more series, at a future date or dates
when, in the judgment of the Board, the proceeds of sale of
such bonds are required for one or more of the purposes for
which they were authorized;
IT IS, THEREFORE', ORDERED BY THE BOARD OF DIRECTORS OF
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT:
Section 1. AMOUNT AND PURPOSE OF THE BONDS. The bond
or bonds of the District are hereby authorized to be issued
and delivered in the aggregate principal amount of
$2,450,000, for the purpose of paying the cost of purchas-
ing, constructing, acquiring, owning, leasing, operating,
repairing, improving or extending works, improvements,
facilities, plants, equipment and appliances for a water-
works and sewer system, including drainage facilities, and
purchasing rights in any such system, as well as all
expenses in any manner incidental thereto, and paying such
expenses as are incidental to the organization, administra-
tion and financing of the District, which under applicable
law may properly be paid from the proceeds of such bonds,
under and in strict conformity with Article 16, Section 59,
of the Constitution of the State of Texas and the laws of
the State of Texas, including particularly (but not by way
of limitation) Chapter 54 of the Texas Water Code, together
with all amendments and additions thereto.
Section 2. DESIGNATION OF THE BONDS. Each bond issued
pursuant to this Order shall be designated: "THE MEADOWS AT
CHANDLER CREEK MUNICIPAL UTILITY DISTRICT WATERWORKS AND
SEWER SYSTEM COMBINATION UNLIMITED TAX AND REVENUE BOND,
SERIES 1986 ", and initially there shall be issued, sold, and
delivered hereunder a single fully registered bond, without
interest coupons, payable in installments of principal (the
"Initial Bond "), but the Initial Bond may be assigned and
transferred and /or converted into and exchanged for a like
aggregate principal amount of fully registered bonds,
without interest coupons, having serial maturities, and in
the denomination or denominations of $5,000 or any integral
multiple of $5,000, all in the manner hereinafter provided.
The term "Bonds" as used in this Order shall mean and
include collectively the Initial Bond and all substitute
bonds exchanged therefor, as well as all other substitute
bonds and replacement bonds issued pursuant hereto, and the
term "Bond" shall mean any of the Bonds.
Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURI-
TIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE
INITIAL BOND. (a) The Initial Bond is hereby authorized to
be issued, sold, and delivered hereunder as a single fully
registered Bond, without interest coupons, dated December 1,
1986, in the denomination and aggregate principal amount of
$2,450,000, numbered R -1, payable in annual installments of
principal to the initial registered owner thereof, to -wit:
or to the
registered assignee or assignees of said Bond or any portion
or portions thereof (in each case, the "registered owner "),
with the annual installments of principal of the Initial
Bond to be payable on the dates, respectively, and in the
principal amounts, respectively, stated in the FORM OF
INITIAL BOND set forth i{i this Order.
(b) The Initial Bond (i) may be prepaid or redeemed
prior to the respective scheduled due dates of installments
of principal thereof, (ii) may be assigned and transferred,
(iii) may be converted and exchanged for other Bonds, (iv)
shall have the characteristics, and (v) shall be signed and
sealed, and the principal of and interest on the Initial
Bond shall be payable, all as provided, and in the manner
required or indicated, in the FORM OF INITIAL BOND set forth
in this Order.
2
Section 4. INTEREST. The unpaid principal balance of
the Initial Bond shall bear interest from the date of the
Initial Bond to the respective scheduled due dates, or to
the respective dates of prepayment or redemption, of the
installments of principal of the Initial Bond, and said
interest shall be payable, all in the manner provided and at
the rates and on the dates stated in the FORM OF INITIAL
BOND set forth in this Order.
Section 5. FORM OF INITIAL BOND. The form of the
Initial Bond, including the form of Registration Certificate
of the Comptroller of Public Accounts of the State of Texas
to be endorsed on the Initial Bond, shall be substantially
as follows:
FORM OF INITIAL BOND
NO. R -1 $2,450,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF WILLIAMSON
THE MEADOWS AT CHANDLER CREEK MUNICIPAL
UTILITY DISTRICT WATERWORKS AND SEWER SYSTEM
COMBINATION UNLIMITED TAX AND REVENUE BOND
SERIES 1986
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY
DISTRICT, in Williamson County, Texas (the "District "),
being a political subdivision of the State of Texas, hereby
promises to pay to
or to the registered assignee or assignees of this Bond or
any portion or portions hereof (in each case, the
"registered owner ") the aggregate principal amount of
TWO MILLION FOUR HUNDRED FIFTY THOUSAND DOLLARS
in annual installments of principal due and payable on
in each of the years, and in the respective
principal amounts, as set forth in the following schedule:
YEAR AMOUNT YEAR AMOUNT
$ $
3
and to pay interest, from the date of this Bond hereinafter
stated, on the balance of each such installment of
principal, respectively, from time to time remaining unpaid,
at the rates as follows:
° %, per annum on the above installment of
principal due and payable on
°% per annum on the above installment of
principal due and payable on ,
° %, per annum on the above installment of
principal due and payable on ,
% per annum on the above installment of
principal due and payable on ,
° %, per annum on the above installment of
principal due and payable on ,
° %, per annum on the above installment of
principal due and payable on
% per annum on the above installment of
principal due and payable on ,
°% per annum on the above installment of
principal due and payable on ,
% per annum on the above installment of
principal due and payable on
% per annum on the above installment of
principal due and payable on ,
° %, per annum on the above installment of
principal due and payable on
% per annum on the above installment of
principal due and payable on ,
% per annum on the above installment of
principal due and payable on
%, per annum on the above installment of
principal due and payable on ,
% per annum on the above installment of
principal due and payable on
° %, per annum on the above installment of
principal due and payable on ,
% per annum on the above installment of
principal due and payable on
%per annum on the above installment of
principal due and payable on
°% per annum on the above installment of
principal due and payable on
% per annum on the above installment of
principal due and payable on ,
with said interest being payable on , 19 , and
semiannually on each and there-
after while this Bond or any portion hereof is outstanding
and unpaid.
THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON
this Bond are payable in lawful money of the United States
of America, without exchange or collection charges. The
4
installments of principal and the interest on this Bond are
payable to the registered owner hereof through the services
of
Texas, which is the "Paying Agent /Registrar" for this Bond.
Payment of all principal of and interest on this Bond shall
be made by the Paying Agent /Registrar to the registered
owner hereof on each principal and /or interest payment date
by check or draft, dated as of such date, drawn by the
Paying Agent /Registrar on, and payable solely from, funds of
the District required by the order authorizing the issuance
of this Bond (the "Bond Order ") to be on deposit with the
Paying Agent /Registrar for such purpose as hereinafter pro-
vided; and such check or draft shall be sent by the Paying
Agent /Registrar by United States mail, first -class postage
prepaid, on each such principal and /or interest payment
date, to the registered owner hereof, at the address of the
registered owner, as it appeared on the last business day of
the month next preceding each such date (the "Record Date ")
on the Registration Books kept by the Paying
Agent /Registrar, as hereinafter described. The District
covenants with the registered owner of this Bond that on or
before each principal and /or interest payment date for this
Bond it will make available to the Paying Agent /Registrar,
from the "Interest and Sinking Fund" created by the Bond
Order, the amounts required to provide for the payment, in
immediately available funds, of all principal of and inter-
est on this Bond, when due.
IF THE DATE for the payment of the principal of or
interest on this Bond shall be a Saturday, Sunday, a legal
holiday, or a day on which banking institutions in the city
where the Paying Agent /Registrar is located are authorized
by law or executive order to close, then the date for such
payment shall be the next succeeding day which is not such a
Saturday, Sunday, legal holiday, or day on which banking
institutions are authorized to close; and payment on such
date shall have the same force and effect as if made on the
original date payment was due.
THIS BOND has been authorized in accordance with the
Constitution and laws of the State of Texas for the purpose
of paying the cost of purchasing, constructing, acquiring,
owning, leasing, operating, repairing, improving or
extending works, improvements, facilities, plants, equipment
and appliances for a waterworks and sewer system, including
drainage facilities, and purchasing rights in any such
system, as well as all expenses in any manner incidental
thereto, and paying such expenses as are incidental to the
organization, administration and financing of the District,
which under applicable law may properly be paid from the
proceeds of such bonds, under and in strict conformity with
Article 16, Section 59, of the Constitution of the State of
Texas and the laws of the State of Texas, including
5
particularly (but not by way of limitation) Chapter 54 of
the Texas Water Code, together with all amendments and
additions thereto.
ON , or on any interest payment date
thereafter, the unpaid installments of principal of this
Bond may be prepaid or redeemed prior to their scheduled due
dates, at the option of the District, with funds derived from
any available source, as a whole, or in part, and, if in
part the District shall select and designate the maturity or
maturities and the amount that is to be redeemed, and if
less than a whole maturity is to be redeemed, the District
shall direct the Paying Agent /Registrar to call by lot
(provided that a portion of this Bond may be redeemed only
in an integral multiple of $5,000), at a price equal to the
principal amount to be so prepaid or redeemed, plus accrued
interest to the date fixed for prepayment or redemption. At
least 30 days prior to the date fixed for any such prepay-
ment or redemption a written notice of such prepayment or
redemption shall be mailed by the Paying Agent /Registrar to
the registered owner hereof. By the date fixed for any such
prepayment or redemption due provision shall be made by the
District with the Paying Agent /Registrar for the payment of
the required prepayment or redemption price for this Bond or
the portion hereof which is to be so prepaid or redeemed,
plus accrued interest thereon to the date fixed for prepay-
ment or redemption. If such written notice of prepayment or
redemption is given, and if due provision for such payment
is made, all as provided above, this Bond, or the portion
thereof which is to be so prepaid or redeemed, thereby auto-
matically shall be treated as prepaid or redeemed prior to
its scheduled due date, and shall not bear interest after
the date fixed for its prepayment or redemption, and shall
not be regarded as being outstanding except for the right of
the registered owner to receive the prepayment or redemption
price plus accrued interest to the date fixed for prepayment
or redemption from the Paying Agent /Registrar out of the
funds provided for such payment. The Paying Agent /Registrar
shall record in the Registration Books all such prepayments
or redemptions of principal of this Bond or any portion
hereof.
THIS BOND, to the, extent of the unpaid or unredeemed
principal balance hereof, or any unpaid and unredeemed
portion hereof in any integral multiple of $5,000, may be
assigned by the initial registered owner hereof and shall be
transferred only in the Registration Books of the District
kept by the Paying Agent /Registrar acting in the capacity of
registrar for the Bonds, upon the terms and conditions set
forth in the Bond Order. Among other requirements for
such transfer, this Bond must be presented and surrendered
to the Paying Agent /Registrar for cancellation, together
with proper instruments of assignment, in form and with
guarantee of signatures satisfactory to the Paying
6
Agent /Registrar, evidencing assignment by the initial
registered owner of this Bond, or any portion or portions
hereof in any integral multiple of $5,000, to the assignee
or assignees in whose name or names this Bond or any such
portion or portions hereof is or are to be transferred and
registered. Any instrument or instruments of assignment
satisfactory to the Paying Agent /Registrar may be used to
evidence the assignment of this Bond or any such portion or
portions hereof by the initial registered owner hereof. A
new bond or bonds payable to such assignee or assignees
(which then will be the new registered owner or owners of
such new Bond or Bonds) or to the initial registered owner
as to any portion of this Bond which is not being assigned
and transferred by the initial registered owner, shall be
delivered by the Paying Agent /Registrar in conversion of and
exchange for this Bond or any portion or portions hereof,
but solely in the form and manner as provided in the next
paragraph hereof for the conversion and exchange of this
Bond or any portion hereof. The registered owner of this
Bond shall be deemed and treated by the District and the
Paying Agent /Registrar as the absolute owner hereof for all
purposes, including payment and discharge of liability upon
this Bond to the extent of such payment, and the District and
the Paying Agent /Registrar shall not be affected by any
notice to the contrary.
AS PROVIDED above and in the Bond Order, this Bond, to
the extent of the unpaid or unredeemed principal balance
hereof, may be converted into and exchanged for a like
aggregate principal amount of fully registered bonds,
without interest coupons, payable to the assignee or
assignees duly designated in writing by the initial
registered owner hereof, or to the initial registered owner
as to any portion of this Bond which is not being assigned
and transferred by the initial registered owner, in any
denomination or denominations in any integral multiple of
$5,000 (subject to the requirement hereinafter stated that
each substitute bond issued in exchange for any portion of
this Bond shall have a single stated principal maturity
date), upon surrender of this Bond to the Paying
Agent /Registrar for cancellation, all in accordance with the'
form and procedures set forth in the Bond Order. If this
Bond or any portion hereof is assigned and transferred or
converted each bond issued in exchange for any portion
hereof shall have a single stated principal maturity date
corresponding to the due date of the installment of
principal of this Bond or portion hereof for which the
substitute bond is being exchanged, and shall bear interest
at the rate applicable to and borne by such installment of
principal or portion thereof. Such bonds, respectively,
shall be subject to redemption prior to maturity on the same
dates and for the same prices as the corresponding install-
ment of principal of this Bond or portion hereof for which
they are being exchanged. No such bond shall be payable in
7
installments, but shall have only one stated principal
maturity date. AS PROVIDED IN THE BOND ORDER, THIS BOND IN
ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR
CONVERTED ONCE ONLY, and to one or more assignees, but the
bonds issued and delivered in exchange for this Bond or any
portion hereof may be assigned and transferred, and conver-
ted, subsequently, as provided in the Bond Order. The
District shall pay the Paying Agent /Registrar's standard or
customary fees and charges for transferring, converting, and
exchanging this Bond or any portion thereof, but the one
requesting such transfer, conversion, and exchange shall pay
any taxes or governmental charges required to be paid with
respect thereto. The Paying Agent /Registrar shall not be
required to make any such assignment, conversion, or
exchange (i) during the period commencing with the close of
business on any Record Date and ending with the opening of
business on the next following principal or interest payment
date, or, (ii) with respect to any Bond or portion thereof
called for prepayment or redemption prior to maturity,
within 45 days prior to its prepayment or redemption date.
IN THE EVENT any Paying Agent /Registrar for this Bond
is changed by the District, resigns, or otherwise ceases to
act as such, the District has covenanted in the Bond Order
that it promptly will appoint a competent and legally
qualified substitute therefor, and promptly will cause
written notice thereof to be mailed to the registered owner
of this Bond.
THE OBLIGATION to pay the principal of and the interest
on this Bond is solely and exclusively the obligation of the
District until such time, if ever, as the District is
abolished and this Bond assumed as described below. No
other entity, including the State of Texas, any political
subdivision thereof other than the District, or any other
public or private body, is obligated, directly, indirectly,
contingently, or in any other manner, to pay the principal
of or the interest on this Bond from any other source
whatsoever. No part of the physical properties of the
District, including the properties provided by the proceeds
of which this Bond is a part, is encumbered by any lien for
the benefit of the owner of this Bond.
THIS BOND is payable (until all the territory within
the District is annexed, all properties and assets of the
District are taken over, and all debts, liabilities, and
obligations of the District, including this Bond, are
assumed by one or more cities and the District is abolished
pursuant to existing Texas law) from the proceeds of a tax
levied upon all taxable property within the District and
from the District's Net Revenues, if any, to wit: All
income and increment which may grow out of the ownership and
operation of the District's improvements or facilities, less
such portion of such revenue income as reasonably may be
8
required to provide for the administration, efficient
operation, and adequate maintenance of such service
facilities, which portion may include payments for any
regional waterworks and /or sewer system or systems, includ-
ing drainage facilities, and less that portion thereof
derived from contracts with other persons (including private
corporations, municipalities, and political subdivisions)
which, under the terms of the authorizing resolutions, may
be pledged for the requirements of the District's revenue
bonds issued particularly to finance the facilities needed
in performing any such contracts in the manner authorized by
law and to the extent provided in the Bond Order.
THIS BOND is issued pursuant to the Bond Order, where -
under the District covenants to levy a continuing direct
annual ad valorem tax on taxable property within the
District, for each year while this Bond or any portion
thereof is considered outstanding under the provisions of
the Bond Order, in sufficient amount, together with revenues
and receipts available from other sources which are equally
available for such purposes, to pay interest on this Bond as
it becomes due, to provide a sinking fund for the payment of
the principal of this Bond when due or the redemption price
at any earlier required redemption date, to pay when due the
other contractual obligations of the District payable in
whole or in part from taxes, and to pay the expenses of
assessing and collecting such tax, all as more specifically
provided in the Bond Order. Reference is hereby made to the
Bond Order for provisions with respect to the operation and
maintenance of the District's facilities, the custody and
application of funds, remedies in the event of a default
hereunder or thereunder, and the other rights of the owner
of this Bond.
THE DISTRICT RESERVES THE RIGHT to issue additional
bonds of the $13,000,000 aggregate principal amount of bonds
that were authorized at an election of July 13, 1985 or such
other bonds as may hereafter be authorized at subsequent
elections payable from and equally secured by a pledge of
taxes and the above- described Net Revenues or from taxes
only to the same extent as pledged for this Bond and in all
things on a parity therewith; bonds, notes, and other
obligations of inferi9r liens; and revenue bonds payable
solely from contracts with other persons, including private
corporations, municipalities, and political subdivisions.
IT IS HEREBY CERTIFIED, COVENANTED, AND REPRESENTED
that all acts, conditions, and things necessary to be done
precedent to the issuance of this Bond in order to render
the same a legal, valid, and binding obligation of the
District have happened and have been accomplished and
performed in regular and due time, form, and manner, as
required by law; that provision has been made for the
payment of the principal of and interest on this Bond by the
9
levy of a continuing, direct annual ad valorem tax upon all
taxable property within the District and by the pledge of
Net Revenues, if any as described above; and that issuance
of this Bond does not exceed any constitutional or
statutory limitation. For the faithful performance of all
covenants, recitals, and stipulations herein contained, the
full faith, credit, and resources of the District are hereby
irrevocably pledged. In the event that any provisions
herein contained do or would, presently or prospectively,
operate to make any part hereof void or voidable, such
provisions shall be without effect or prejudice to the
remaining provisions hereof, which shall nevertheless remain
operative, and such violative provisions, if any, shall be
reformed by a court of competent jurisdiction within the
limits of the laws of the State of Texas.
BY BECOMING the registered owner of this Bond, the
registered owner thereby acknowledges all of the terms and
provisions of the Bond Order, agrees to be bound by such
terms and provisions, acknowledges that the Bond Order is
duly recorded and available for inspection in the official
minutes and records of the governing body of the District,
and agrees that the terms and provisions of this Bond and
the Bond Order constitute a contract between the registered
owner hereof and the District.
IN WITNESS WHEREOF, the District has caused this Bond
to be signed with the manual signature of the President of
the Board and countersigned with the manual signature of the
Secretary of the Board, has caused the official seal of the
District to be duly impressed on this Bond, and has caused
this Bond to be dated December 1, 1986.
Secretary, President,
Board of Directors Board of Directors
(DISTRICT SEAL)
10
COMPTROLLER' S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Bond has been examined,
certified as to validity, and approved by the Attorney
General of the State of Texas, and that this Bond has been
registered by the Comptroller of Public Accounts of the
State of Texas.
(COMPTROLLER'S SEAL)
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS:
Witness my signature and seal this
Comptroller of Public Accounts
of the State of Texas
Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS.
Registration and Transfer. (a) The District shall keep or
cause to be kept at the principal corporate trust office of
Texas (the "Paying Agent /Registrar ") books or records of the
registration and transfer of the Bonds (the "Registration
Books "), and the District hereby appoints the Paying
Agent /Registrar as its registrar and transfer agent to keep
such books or records and make such transfers and regis-
trations under such reasonable regulations as the District
and Paying Agent /Registrar may prescribe; and the Paying
Agent /Registrar shall make such transfers and registrations
as herein provided. The Paying Agent /Registrar shall obtain
and record in the Registration Books the address of the
registered owner of each Bond to which payments with respect
to the Bonds shall be mailed, as herein provided; but it
shall be the duty of each registered owner to notify the
Paying Agent /Registrar in writing of the address to which
payments shall be mailed, and such interest payments shall
not be mailed unless such notice has been given. The
District shall have the right to inspect the Registration
Books during regular, business hours of the Paying
Agent /Registrar, but otherwise the Paying Agent /Registrar
shall keep the Registration Books confidential and, unless
otherwise required by law, shall not permit their inspection
by any other entity. Registration of each Bond may be
transferred in the Registration Books only upon presentation
and surrender of such Bond to the Paying Agent /Registrar for
transfer of registration and cancellation, together with
proper written instruments of assignment, in form and with
guarantee of signatures satisfactory to the Paying
Agent /Registrar, (i) evidencing the assignment of the Bond,
or any portion thereof in any integral multiple of $5,000,
11
to the assignee or assignees thereof, and (ii) the right of
such assignee or assignees to have the Bond or any such
portion thereof registered in the name of such assignee or
assignees. Upon the assignment and transfer of any Bond or
any portion thereof, a new substitute Bond or Bonds shall be
issued in conversion and exchange therefor in the manner
herein provided. The Initial Bond, to the extent of the
unpaid or unredeemed principal balance thereof, may be
assigned and transferred by the initial registered owner
thereof once only, and to one or more assignees designated
in writing by the initial registered owner thereof. All
Bonds issued and delivered in conversion of and exchange for
the Initial Bond shall be in any denomination or denomina-
tions of any integral multiple of $5,000 (subject to the
requirement hereinafter stated that each substitute Bond
shall have a single stated principal maturity date), shall
be in the form prescribed in the FORM OF SUBSTITUTE BOND set
forth in this Order, and shall have the characteristics, and
may be assigned, transferred, and converted as hereinafter
provided. If the Initial Bond or any portion thereof is
assigned and transferred or converted the Initial Bond must
be surrendered to the Paying Agent /Registrar for cancella-
tion, and each Bond issued in exchange for any portion of
the Initial Bond shall have a single stated principal
maturity date, and shall not be payable in installments; and
each such Bond shall have a principal maturity date corres-
ponding to the due date of the installment of principal or
portion thereof for which the substitute Bond is being ex-
changed; and each such Bond shall bear interest at the
single rate applicable to and borne by such installment of
principal or portion thereof for which it is being ex-
changed. If only a portion of the Initial Bond is assigned
and transferred, there shall be delivered to and registered
in the name of the initial registered owner substitute Bonds
in exchange for the unassigned balance of the Initial Bond
in the same manner as if the initial registered owner were
the assignee thereof. If any Bond or portion thereof other
than the Initial Bond is assigned and transferred or
converted each Bond issued in exchange therefor shall have
the same principal maturity date and bear interest at the
same rate as the Bond for which it is exchanged. A form of
assignment shall be printed or endorsed on each Bond,
excepting the Initial pond, which shall be executed by the
registered owner or its duly authorized attorney or
representative to evidence an assignment thereof. Upon sur-
render of any Bonds or any portion or portions thereof for
transfer of registration, an authorized representative of
the Paying Agent /Registrar shall make such transfer in the
Registration Books, and shall deliver a new fully registered
substitute Bond or Bonds, having the characteristics herein
described, payable to such assignee or assignees (which then
will be the registered owner or owners of such new Bond or
Bonds), or to the previous registered owner in case only a
portion of a Bond is being assigned and transferred, all in
12
conversion of and exchange for said assigned Bond or Bonds
or any portion or portions thereof, in the same form and
manner, and with the same effect, as provided in Section
6(d), below, for the conversion and exchange of Bonds by any
registered owner of a Bond. The District shall pay the
Paying Agent /Registrar's standard or customary fees and
charges for making such transfer and delivery of a
substitute Bond or Bonds, but the one requesting such
transfer shall pay any taxes or other governmental charges
required to be paid with respect thereto. The Paying
Agent /Registrar shall not be required to make transfers of
registration of any Bond or any portion thereof (i) during
the period commencing with the close of business on any
Record Date and ending with the opening of business on the
next following principal or interest payment date, or, (ii)
with respect to any Bond or any portion thereof called for
redemption prior to maturity, within 45 days prior to its
redemption date.
(b) Ownership of Bonds. The entity in whose name any
Bond shall be registered in the Registration Books at any
time shall be deemed and treated as the absolute owner
thereof for all purposes of this Order, whether or not such
Bond shall be overdue, and the District and the Paying
Agent /Registrar shall not be affected by any notice to the
contrary; and payment of, or on account of, the principal
of, premium, if any, and interest on any such Bond shall be
made only to such registered owner. All such payments shall
be valid and effectual to satisfy and discharge the
liability upon such Bond to the extent of the sum or sums so
paid.
(c) Payment of Bonds and Interest. The District
hereby further appoints the Paying Agent /Registrar to act as
the paying agent for paying the principal of and interest on
the Bonds, and to act as its agent to convert and exchange
or replace Bonds, all as provided in this Order. The Paying
Agent /Registrar shall keep proper records of all payments
made by the District and the Paying Agent /Registrar with
respect to the Bonds, and of all conversions and exchanges
of Bonds, and all replacements of Bonds, as provided in this
Order. However, in the event of a nonpayment of interest on
a scheduled payment date, and for thirty (30) days there-
after, 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 District. Notice of
the past due interest (which shall be 15 days after the
Special Record Date) shall be sent at least five (5)
business days prior to the Special Record Date by United
States mail, first class postage prepaid, to the address of
each Bondholder appearing on the Security Register at the
close of business on the last business day next preceding
the date of mailing of such notice.
13
(d) Conversion and Exchange or Replacement; Authenti-
cation. Each Bond issued and delivered pursuant to this
Order, to the extent of the unpaid or unredeemed principal
balance or principal amount thereof, may, upon surrender of
such Bond at the principal corporate trust office of the
Paying Agent /Registrar, together with a written request
therefor duly executed by the registered owner or the as-
signee or assignees thereof, or its or their duly authorized
attorneys or representatives, with guarantee of signatures
satisfactory to the Paying Agent /Registrar, may, at the
option of the registered owner or such assignee or assign-
ees, as appropriate, be converted into and exchanged for
fully registered bonds, without interest coupons, in the
form prescribed in the FORM OF SUBSTITUTE BOND set forth in
this Order, in the denomination of $5,000, or any integral
multiple of $5,000 (subject to the requirement hereinafter
stated that each substitute Bond shall have a single stated
maturity date), as requested in writing by such registered
owner or such assignee or assignees, in an aggregate princi-
pal amount equal to the unpaid or unredeemed principal
balance or principal amount of any Bond or Bonds so surren-
dered, and payable to the appropriate registered owner,
assignee, or assignees, as the case may be. If the Initial
Bond is assigned and transferred or converted each
substitute Bond issued in exchange for any portion of the
Initial Bond shall have a single stated principal maturity
date, and shall not be payable in installments; and each
such Bond shall have a principal maturity date corresponding
to the due date of the installment of principal or portion
thereof for which the substitute Bond is being exchanged;
and each such Bond shall bear interest at the single rate
applicable to and borne by such installment of principal or
portion thereof for which it is being exchanged. If a
portion of any Bond (other than the Initial Bond) shall be
redeemed prior to its scheduled maturity as provided herein,
a substitute Bond or Bonds having the same maturity date,
bearing interest at the same rate, in the denomination or
denominations of any integral multiple of $5,000 at the
request of the registered owner, and in aggregate principal
amount equal to the unredeemed portion thereof, will be
issued to the registered owner upon surrender thereof for
cancellation. If any Bond or portion thereof (other than
the Initial Bond) is assigned and transferred or converted,
each Bond issued in exchange therefor shall have the same
principal maturity date and bear interest at the same rate
as the Bond for which it is being exchanged. Each
substitute Bond shall bear a letter and /or number to
distinguish it from each other Bond. The Paying
Agent /Registrar shall convert and exchange or replace Bonds
as provided herein, and each fully registered bond delivered
in conversion of and exchange for or replacement of any Bond
or portion thereof as permitted or required by any provision
of this Order shall constitute one of the Bonds for all
purposes of this Order, and may again be converted and
14
exchanged or replaced. It is specifically provided that any
Bond authenticated in conversion of and exchange for or
replacement of another Bond on or prior to the first sched-
uled Record Date for the Initial Bond shall bear interest
from the date of the Initial Bond, but each substitute Bond
so authenticated after such first scheduled Record Date
shall bear interest from the interest payment date next
preceding the date on which such substitute Bond was so
authenticated, unless such Bond is authenticated after any
Record Date but on or before the next following interest
payment date, in which case it shall bear interest from such
next following interest payment date; provided, however,
that if at the time of delivery of any substitute Bond the
interest on the Bond for which it is being exchanged is due
but has not been paid, then such Bond shall bear interest
from the date to which such interest has been paid in full.
THE INITIAL BOND issued and delivered pursuant to this Order
is not required to be, and shall not be, authenticated by
the Paying Agent /Registrar, but on each substitute Bond
issued in conversion of and exchange for or replacement of
any Bond or Bonds issued under this Order there shall be
printed a certificate, in the form substantially as follows:
"PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued
under the provisions of the Bond Order described on the face
of this Bond; and that this Bond has been issued in con-
version of and exchange for or replacement of a bond, bonds,
or a portion of a bond or bonds of an issue which originally
was approved by the Attorney General of the State of Texas
and registered by the Comptroller of Public Accounts of the
State of Texas.
15
Paying Agent /Registrar
Dated: B
Authorized Representative"
An authorized representative of the Paying Agent /Registrar
shall, before the delivery of any such Bond, date and
manually sign the above, Certificate, and no such Bond shall
be deemed to be issued or outstanding unless such
Certificate is so executed. The Paying Agent /Registrar
promptly shall cancel all Bonds surrendered for conversion
and exchange or replacement. No additional ordinances,
orders, or resolutions need be passed or adopted by the
governing body of the District or any other body or person so
as to accomplish the foregoing conversion and exchange or
replacement of any Bond or portion thereof, and the Paying
Agent /Registrar shall provide for the printing, execution,
and delivery of the substitute Bonds in the manner
prescribed herein, and said Bonds shall be of type
composition printed on paper with lithographed or steel
engraved borders of customary weight and strength. Pursuant
to Vernon's Ann. Tex. Civ. St. Art. 717k -6, and particularly
Section 6 thereof, the duty of conversion and exchange or
replacement of Bonds as aforesaid is hereby imposed upon the
Paying Agent /Registrar, and, upon the execution of the above
Paying Agent /Registrar's Authentication Certificate, the
converted and exchanged or replaced Bond shall be valid,
incontestable, and enforceable in the same manner and with
the same effect as the Initial Bond which originally was
issued pursuant to this Order, approved by the Attorney
General, and registered by the Comptroller of Public
Accounts. The District shall pay the Paying
Agent /Registrar's standard or customary fees and charges for
transferring, converting, and exchanging any Bond or any
portion thereof, but the one requesting any such transfer,
conversion, and exchange shall pay any taxes or governmental
charges required to be paid with respect thereto as a condi-
tion precedent to the exercise of such privilege of conver-
sion and exchange. The Paying Agent /Registrar shall not be
required to make any such conversion and exchange or
replacement of Bonds or any portion thereof (i) during the
period commencing with the close of business on any Record
Date and ending with the opening of business on the next
following principal or interest payment date, or, (ii) with
respect to any Bond or portion thereof called for redemption
prior to maturity, within 45 days prior to its redemption
date.
(e) In General. All Bonds issued in conversion and
exchange or replacement of any other Bond or portion there-
of, (i) shall be issued in fully registered form, without
interest coupons, with the principal of and interest on such
Bonds to be payable only to the registered owners thereof,
(ii) may be redeemed prior to their scheduled maturities,
(iii) may be transferred and assigned, (iv) may be converted
and exchanged for other Bonds, (v) shall have the
characteristics, (vi) shall be signed and sealed, and (vii)'
the principal of and interest on the Bonds shall be payable,
all as provided, and in the manner required or indicated, in
the FORM OF SUBSTITUTE BOND set forth in this Order.
(f) Payment of Fees and Charges. The District hereby
covenants with the registered owners of the Bonds that it
will (i) pay the standard or customary fees and charges of
the Paying Agent /Registrar for its services with respect to
the payment of the principal of and interest on the Bonds,
when due, and (ii) pay the fees and charges of the Paying
Agent /Registrar for services with respect to the transfer of
registration of Bonds, and with respect to the conversion
and exchange of Bonds solely to the extent above provided in
this Order.
16
(g) Substitute Paying Agent /Registrar. The District
covenants with the registered owners of the Bonds that at
all times while the Bonds are outstanding the District will
provide a competent and legally qualified bank, trust
company, financial institution, or other agency to act as
and perform the services of Paying Agent /Registrar for the
Bonds under this Order, and that the Paying Agent /Registrar
will be one entity. The District 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 District 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 Order. 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
District. Upon any change in the Paying Agent /Registrar,
the District 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 Order, and a
certified copy of this Order shall be delivered to each
Paying Agent /Registrar.
Section 7. FORM OF SUBSTITUTE BONDS. The form of all
Bonds issued in conversion and exchange or replacement of
any other Bond or portion thereof, including the form of
Paying Agent /Registrar's Certificate to be printed on each
of such Bonds, and the Form of Assignment to be printed on
each of the Bonds, shall be, respectively, substantially as
follows, with such appropriate variations, omissions, or
insertions as are permitted or required by this Order.
17
NO.
FORM OF SUBSTITUTE BOND
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF WILLIAMSON
THE MEADOWS AT CHANDLER CREEK MUNICIPAL
UTILITY DISTRICT WATERWORKS AND SEWER SYSTEM
COMBINATION UNLIMITED TAX AND REVENUE BOND
SERIES 1986
PRINCIPAL
AMOUNT
DATE OF
INTEREST RATE MATURITY DATE ORIGINAL ISSUE CUSIP NO.
December 1, 1986
ON THE MATURITY DATE specified above THE MEADOWS AT
CHANDLER CREEK MUNICIPAL UTILITY DISTRICT, in Williamson
County, Texas (the "District "), being a political
subdivision of the State of Texas, hereby promises to pay to
or
to the registered assignee hereof (either being hereinafter
called the "registered owner ") the principal amount of
and to pay interest thereon from December 1, 1986, to the
maturity date specified above, or the date of redemption
prior to maturity, at the interest rate per annum specified
above with interest being payable on , 19
and semiannually thereafter on each and
; except that if the date of authentication
of this Bond is later than , 19 , such princi-
pal amount shall bear interest from the interest payment
date next preceding the date of authentication, unless such
date of authentication is after any Record Date (hereinafter
defined) but on or before the next following interest
payment date, in which case such principal amount shall bear
interest from such next following interest payment date.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable
in lawful money of the United States of America, without
exchange or collection charges. The principal of this Bond
shall be paid to the registered owner hereof upon presenta-
tion and surrender of this Bond at maturity or upon the date
fixed for its redemption prior to maturity, at the principal
corporate trust office of
Texas, which is the "Paying Agent /Registrar"
for this Bond. The payment of interest on this Bond shall
be made by the Paying Agent /Registrar to the registered
owner hereof on each interest payment date by check or
draft, dated as of such interest payment date, drawn by the
Paying Agent /Registrar on, and payable solely from, funds of
the District required by the order authorizing the issuance
of the Bonds (the "Bond Order ") to be on deposit with the
18
Paying Agent /Registrar for such purpose as hereinafter
provided; and such check or draft shall be sent by the
Paying Agent /Registrar by United States mail, first -class
postage prepaid, on each such interest payment date, to the
registered owner hereof, at the address of the registered
owner, as it appeared on the last business day of the month
next preceding each such date (the "Record Date ") on the
Registration Books kept by the Paying Agent /Registrar, as
hereinafter described. Any accrued interest due upon the
redemption of this Bond prior to maturity as provided herein
shall be paid to the registered owner at the principal
corporate trust office of the Paying Agent /Registrar upon
presentation and surrender of this Bond for redemption and
payment at the principal corporate trust office of the
Paying Agent /Registrar. The District covenants with the
registered owner of this Bond that on or before each princi-
pal payment date, interest payment date, and accrued
interest payment date for this Bond it will make available
to the Paying Agent /Registrar, from the "Interest and
Sinking Fund" created by the Bond Order, the amounts
required to provide for the payment, in immediately avail-
able funds, of all principal of and interest on the Bonds,
when due.
IF THE DATE for the payment of the principal of or
interest on this Bond shall be a Saturday, Sunday, a legal
holiday, or a day on which banking institutions in the city
where the Paying Agent /Registrar is located are authorized
by law or executive order to close, then the date for such
payment shall be the next succeeding day which is not such a
Saturday, Sunday, legal holiday, or day on which banking
institutions are authorized to close; and payment on such
date shall have the same force and effect as if made on the
original date payment was due.
THIS BOND is one of a series of Bonds (the "Bonds ")
dated December 1, 1986, issued pursuant to the Bond Order in
the original aggregate principal amount of $2,450,000 for
the purpose of paying the cost of purchasing, constructing,
acquiring, owning, leasing, operating, repairing, improving
or extending works, improvements, facilities, plants,
equipment and appliances for a waterworks and sewer system,
including drainage facilities, and purchasing rights in any
such system, as well as all expenses in any manner
incidental thereto, and paying such expenses as are
incidental to the organization, administration and financing
of the District, which under applicable law may properly be
paid from the proceeds of such bonds, under and in strict
conformity with Article 16, Section 59, of the Constitution
of the State of Texas and the laws of the State of Texas,
including particularly (but not by way of limitation)
Chapter 54 of the Texas Water Code, together with all
amendments and additions thereto.
19
ON , 19 or on any interest payment date
thereafter, the Bonds of this Series may be redeemed prior
to their scheduled maturities, at the option of the
District, with funds derived from any available and lawful
source, as a whole, or in part, and, if in part, the
maturity or maturities of Bonds and the amounts thereof, to
be redeemed shall be selected and designated by the
District, and the District shall direct the Paying
Agent /Registrar to call by lot Bonds, or portions thereof
within such maturities and in such principal amounts, for
redemption (provided that a portion of a Bond may be re-
deemed only in an integral multiple of $5,000), at the
redemption price of the principal amount thereof, plus
accrued interest to the date fixed for prepayment or redemp-
tion. At least 30 days prior to the date fixed for any
redemption of Bonds or portions thereof prior to maturity a
written notice of such redemption shall be published once in
a financial publication, journal, or reporter of general
circulation among securities dealers in the City of New
York, New York (including, but not limited to, The Bond
Buyer and The Wall Street Journal), or in the State of Texas
(including, but not limited to, The Texas Bond Reporter).
Such notice also shall be sent by the Paying Agent /Registrar
by United States mail, first -class postage prepaid, not less
than 30 days prior to the date fixed for any such redemp-
tion, to the registered owner of each Bond to be redeemed at
its address as it appeared on the 45th day prior to such
redemption date; provided, however, that the failure to
send, mail, or receive such notice, or any defect therein or
in the sending or mailing thereof, shall not affect the
validity or effectiveness of the proceedings for the redemp-
tion of any Bond, and it is hereby specifically provided
that the publication of such notice as required above shall
be the only notice actually required in connection with or
as a prerequisite to the redemption of any Bonds or portions
thereof. By the date fixed for any such redemption due
provision shall be made with the Paying Agent /Registrar for
the payment of the required redemption price for the Bonds
or portions thereof which are to be so redeemed, plus
accrued interest thereon to the date fixed for redemption.
If such written notice of redemption is published and if due
provision for such payment is made, all as provided above,
the Bonds or portions . thereof which are to be so redeemed
thereby automatically shall be treated as redeemed prior to
their scheduled maturities, and they shall not bear interest
after the date fixed for redemption, and they shall not be
regarded as being outstanding except for the right of the
registered owner to receive the redemption price plus ac-
crued interest from the Paying Agent /Registrar out of the
funds provided for such payment. If a portion of any Bond
shall be redeemed a substitute Bond or Bonds having the same
maturity date, bearing interest at the same rate, in any
denomination or denominations in any integral multiple of
$5,000, at the written request of the registered owner, and
20
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 District, all as provided in the Bond Order.
THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY
INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be
transferred only in the Registration Books of the District
kept by the Paying Agent /Registrar acting in the capacity of
registrar for the Bonds, upon the terms and conditions set
forth in the Bond Order. Among other requirements for such
assignment and transfer, this Bond must be presented and
surrendered to the Paying Agent /Registrar, together with
proper instruments of assignment, in form and with guarantee
of signatures satisfactory to the Paying Agent /Registrar,
evidencing assignment of this Bond or any portion or
portions hereof in any integral multiple of $5,000 to the
assignee or assignees in whose name or names this Bond or
any such portion or portions hereof is or are to be trans-
ferred and registered. The form of Assignment printed or
endorsed on this Bond shall be executed by the registered
owner or its duly authorized attorney or representative, to
evidence the assignment hereof. A new Bond or Bonds payable
to such assignee or assignees (which then will be the new
registered owner or owners of such new Bond or Bonds), or to
the previous registered owner in the case of the assignment
and transfer of only a portion of this Bond, may be
delivered by the Paying Agent /Registrar in conversion of and
exchange for this Bond, all in the form and manner as pro-
vided in the next paragraph hereof for the conversion and
exchange of other Bonds. The District shall pay the Paying
Agent /Registrar's standard or customary fees and charges for
making such transfer, but the one requesting such transfer
shall pay any taxes or other governmental charges required
to be paid with respect thereto. The Paying Agent /Registrar
shall not be required to make transfers of registration of
this Bond or any portion hereof (i) during the period
commencing with the close of business on any Record Date and
ending with the opening of business on the next following
principal or interest payment date, or, (ii) with respect to
any Bond or any portion thereof called for redemption prior
to maturity, within 45 days prior to its redemption date.
The registered owner ,of this Bond shall be deemed and
treated by the District and the Paying Agent /Registrar as
the absolute owner hereof for all purposes, including
payment and discharge of liability upon this Bond to the
extent of such payment, and the District and the Paying
Agent /Registrar shall not be affected by any notice to the
contrary.
ALL BONDS OF THIS SERIES are issuable solely as fully
registered bonds, without interest coupons, in the denomina-
tion of any integral multiple of $5,000. As provided in
the Bond Order, this Bond, or any unredeemed portion hereof,
21
may, at the request of the registered owner or the assignee
or assignees hereof, be converted into and exchanged for a
like aggregate principal amount of fully registered bonds,
without interest coupons, payable to the appropriate
registered owner, assignee, or assignees, as the case may
be, having the same maturity date, and bearing interest at
the same rate, in any denomination or denominations in any
integral multiple of $5,000 as requested in writing by the
appropriate registered owner, assignee, or assignees, as the
case may be, upon surrender of this Bond to the Paying
Agent /Registrar for cancellation, all in accordance with the
form and procedures set forth in the Bond Order. The
District shall pay the Paying Agent/ Registrar's standard or
customary fees and charges for transferring, converting, and
exchanging any Bond or any portion thereof, but the one
requesting such transfer, conversion, and exchange shall pay
any taxes or governmental charges required to be paid with
respect thereto as a condition precedent to the exercise of
such privilege of conversion and exchange. The Paying
Agent /Registrar shall not be required to make any such
conversion and exchange (i) during the period commencing
with the close of business on any Record Date and ending
with the opening of business on the next following principal
or interest payment date, or, (ii) with respect to any Bond
or portion thereof called for redemption prior to maturity,
within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent /Registrar for the Bonds
is changed by the District, resigns, or otherwise ceases to
act as such, the District has covenanted in the Bond Order
that it promptly will appoint a competent and legally
qualified substitute therefor, and promptly will cause
written notice thereof to be mailed to the registered owners
of the Bonds.
THE OBLIGATION to pay the principal of and the interest
on this Bond is solely and exclusively the obligation of the
District until such time, if ever, as the District is
abolished and this Bond assumed as described below. No
other entity, including the State of Texas, any political
subdivision thereof other than the District, or any other
public or private body, is obligated, directly, indirectly,
contingently, or in any other manner, to pay the principal
of or the interest on this Bond from any other source
whatsoever. No part of the physical properties of the
District, including the properties provided by the proceeds
of which this Bond is a part, is encumbered by any lien for
the benefit of the owner of this Bond.
THIS BOND is payable (until all the territory within
the District is annexed, all properties and assets of the
District are taken over, and all debts, liabilities, and
obligations of the District, including this Bond, are
assumed by one or more cities and the District is abolished
22
pursuant to existing Texas law) from the proceeds of a tax
levied upon all taxable property within the District and
from the District's Net Revenues, if any, to wit: All
income or increment which may grow out of the ownership and
operation of the District's improvements or facilities, less
such portion of such revenue income as reasonably may be
required to provide for the administration, efficient
operation, and adequate maintenance of such service
facilities, which portion may include payments for any
regional waterworks and /or sewer system or systems,
including drainage facilities, and less that portion thereof
derived from contracts with other persons (including private
corporation, municipalities, and political subdivision)
which, under the terms of the authorizing resolutions, may
be pledged for the requirements of the Districts revenue
bonds issued particularly to finance the facilities needed
in performing any such contracts in the manner authorized by
law and to the extent provided in the Bond Order.
THE BONDS are issued pursuant to the Bond Order,
whereunder the District covenants to levy a continuing
direct annual ad valorem tax on taxable property within the
District, for each year while the Bonds or any portion
thereof are considered outstanding under the provisions of
the Bond Order, in sufficient amount, together with revenues
and receipts available from other sources which are equally
available for such purposes, to pay interest on the Bonds as
it becomes due, to provide a sinking fund for the payment of
the principal of the Bonds when due or the redemption price
at any earlier required redemption date, to pay when due the
other contractual obligations of the District payable in
whole or in part from taxes, and to pay the expenses of
assessing and collecting such tax, all as more specifically
provided in the Bond Order. Reference is hereby made to the
Bond Order for provisions with respect to the operation and
maintenance of the District's facilities, the custody and
application of funds, remedies in the event of a default
hereunder or thereunder, and the other rights of the owner
of this Bond.
THE DISTRICT RESERVES THE RIGHT to issue additional
bonds of the $13,000,000 aggregate principal amount of bonds
that were authorized at an election of July 13, 1985 or such
other bonds as may hereafter be authorized at subsequent
elections payable from and equally secured by a pledge of
taxes and the above - described Net Revenues or from taxes
only to the same extent as pledged for this Bond and in all
things on a parity therewith; bonds, notes, and other
obligations of inferior liens; and revenue bonds payable
solely from contracts with other persons, including private
corporations, municipalities, and political subdivisions.
23
IT IS HEREBY CERTIFIED, COVENANTED, AND REPRESENTED
that all acts, conditions, and things necessary to be done
precedent to the issuance of this Bond in order to render
the same a legal, valid, and binding obligation of the
District have happened and have been accomplished and
performed in regular and due time, form, and manner, as
required by law; that provision has been made for the
payment of the principal of and interest on this Bond by the
levy of a continuing, direct annual ad valorem tax upon all
taxable property within the District and by the pledge of
Net Revenues, if any, as described above; and that issuance
of this Bond does not exceed any constitutional or
statutory limitation. For the faithful performance of all
covenants, recitals, and stipulations herein contained, the
full faith, credit, and resources of the District are hereby
irrevocably pledged. In the event that any provisions
herein contained do or would, presently or prospectively,
operate to make any part hereof void or voidable, such
provisions shall be without effect or prejudice to the
remaining provisions hereof, which shall nevertheless remain
operative, and such violative provisions, if any, shall be
reformed by a court of competent jurisdiction within the
limits of the laws of the State of Texas.
BY BECOMING the registered owner of this Bond, the
registered owner thereby acknowledges all of the terms and
provisions of the Bond Order, agrees to be bound by such
terms and provisions, acknowledges that the Bond Order is
duly recorded and available for inspection in the official
minutes and records of the governing body of the District,
and agrees that the terms and provisions of this Bond and
the Bond Order constitute a contract between each registered
owner hereof and the District.
IN WITNESS WHEREOF, the District has caused this Bond
to be signed with the facsimile signature of the President
of the Board and countersigned with the facsimile signature
of the Secretary of the Board, and has caused the official
seal of the District to be duly impressed, or placed in
facsimile, on this Bond.
(facsimile signature) (facsimile signature)
Secretary, President,
Board of Directors Board of Directors
(DISTRICT SEAL)
24
FORM OF PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTI
It is hereby certified that this Bond has been issued
under the provisions of the Bond Order described on the
face of this Bond; and that this Bond has been issued in
conversion of and exchange for or replacement of a bond,
bonds, or a portion of a bond or bonds of an issue which
originally was approved by the Attorney General of the State
of Texas and registered by the Comptroller of Public
Accounts of the State of Texas.
, TEXAS
Dated: Paying Agent /Registrar
/
(Assignee's Social
Security or Taxpayer
Identification Number)
Dated:
/
25
By
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
Authorized Representative
(print or typewrite Assignee's name
and address, including zip code)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration of this Bond on the
Trustee's Registration Books with full power of substitution
in the premises.
Signature Guaranteed:
NOTICE: This signature must be
guaranteed by a member of the
New York Stock Exchange or a
commercial bank or trust
company.
Registered Owner
NOTICE: This signature
must correspond with the
name of the Registered
Owner appearing on the
face of this Bond.
** *NOTE: The Form of Assignment shall appear on all Bonds
except the Initial Bond.
Section 8. DEFINITIONS. In addition to other words
and terms defined in this Order (except those defined and
used in Sections 5 and 7), and unless a different meaning or
intent clearly appears in the context, the following words
and terms shall have the following meanings, respectively:
(a) Additional Bonds. Bonds (other than the Bonds)
which were authorized at the election of July 13, 1985 or
such other tax and revenue bonds as may hereafter be
authorized at subsequent elections, payable from and equally
secured by a pledge of the District's taxes and Net Revenues
(hereinafter defined), if any, to the same extent as pledged
for and in all things on a parity with the lien of the
Bonds.
(b) Board. The board of directors of the District.
(c) Bonds. Any Bond or Bonds or all of the Bonds, as
the case may be, of the series styled "The Meadows At
Chandler Creek Municipal Utility District Waterworks and
Sewer System Combination Unlimited Tax Revenue Bonds, Series
1986 ".
(d) Bond Order or Order. This Order adopted by the
Board authorizing the Bonds to be issued.
(e) District. The Meadows At Chandler Creek Municipal
Utility District, a conservation and reclamation district
organized, created, and established pursuant to Article 16,
Section 59 of the Constitution of the State of Texas.
(f) Net Revenues. All income and increment which may
grow out of the ownership and operation of the District's
improvements or facilities, less such portion of such
revenue income as reasonably may be required to provide for
the administration, efficient operation, and adequate
maintenance of such service facilities, which portion may
include payments for any regional waterworks and /or sewer
system or systems, including drainage facilities, and less
26
that portion thereof derived from contracts with other
persons (including private corporations, municipalities,
and political subdivisions) which, under the terms of the
authorizing resolutions, may be pledged for the requirements
of the District's revenue bonds issued particularly to
finance the facilities needed in performing any such
contracts in the manner authorized by law and to the extent
provided in this Bond Order.
(g) System. The waterworks and sewer system owned and
operated by the District, together with any additions and
extensions thereto, and any interest in the capacity of a
regional system or systems, and improvements and replacements
thereof whatsoever acquired or constructed. The System shall
not include certain facilities which, while owned by the
District, are acquired or constructed to perform contracts
between the District and other persons, including private
corporations, municipalities, and political subdivision, and
which are financed by proceeds of the District's revenue
bonds issued particularly to finance facilities needed to
perform such contracts.
Section 9. FUNDS. The District hereby establishes or
confirms the establishment of the following funds of the
District at a depository of the District:
(a) Bond Fund. The Bond Fund is the interest and
sinking fund of the District into which shall be placed (i)
the District's tax collections, less expenses incurred in
such collection, as provided in Section 10 of this Bond
Order, (ii) certain proceeds of the Bonds, as provided in
Section 12 hereof, (iii) any amounts transferred from the
Operating Fund pursuant to subsection (c) hereof, and (iv)
any amounts transferred form the Construction Fund pursuant
to subsection (b) hereof. The Bond Fund shall be used to
pay the principal of or redemption price of and interest on
the Bonds and any Additional Bonds when due.
(b) Construction Fund. The Construction Fund is the
fund into which the balance of the proceeds of the Bonds
shall be placed, after payments into the Bond Fund and
payments to the Operating Fund (hereinafter defined), if
any, as provided in Section 12 of this Bond Order. The
Construction Fund shall be used to pay the costs necessary
or appropriate to accomplish the purposes for which the
Bonds are issued. To the extent that proceeds (and
investment become attributable thereto) of any series of
bonds deposited into the Construction Fund have not been
expended for any such purposes prior to the interest payment
date immediately preceding the third anniversary of the date
of issuance of such unexpended proceeds and income, if any,
shall be transferred to the Bond Fund on such interest
payment date for the purpose of paying interest thereon
coming due or for such other purpose as, in the written
27
opinion of nationally recognized Bond counsel, will not
cause the interest on such bonds to become includable in
the gross income of the owners thereof under the Internal
Revenue Code of 1986, as amended.
(c) Operating Fund. The Operating Fund is the
maintenance fund of the District into which shall be placed
the revenues from operations of the System and certain
proceeds, if any, of the Bonds as provided in Section 12 of
this Bond Order. The Operating Fund shall be used first to
pay all reasonable expenses of administration, efficient
operation, and adequate maintenance of the System and the
District , including payments to political subdivisions or
municipalities for regional waste disposal and water supply
services and facilities, if necessary, after which New
Revenues, if any, shall either (i) periodically be
transferred into the Bond Fund for so long as any part of
the principal of or interest on the Bonds is outstanding, or
(ii), to the extent that the balance in the Bond Fund and
tax collections available for deposit thereto are sufficient
to pay when due the obligations of the District payable from
the Bond Fund, to pay other proper expenses of the District.
Section 10. TAXES. (a) Pledge and Levy. For the
year of 1987 there is hereby levied a tax of not less than
$0.60 on each $100 valuation of all taxable property within
the District, and such tax shall be assessed and collected
and placed in the Bond Fund. For each year while the Bonds,
or any part of the principal thereof or interest thereon,
are outstanding and unpaid there shall be and is hereby
levied a continuing direct, annual ad valorem tax, without
legal limit as to rate or amount, upon each $100 valuation
of all taxable property within the District at a rate from
year to year sufficient (together with revenue and receipts
from other sources which are legally available for such
purpose) to provide funds (i) to pay the interest on the
Bonds as it becomes due, (ii) to create a sinking fund for
the payment of the principal of the Bonds when due or the
redemption price at any earlier required redemption date,
(iii) to pay the expenses of assessing and collecting taxes,
full allowance being made for anticipated delinquencies, and
(iv) to pay when due any other contractual obligations of
the District payable in whole or in part from taxes. Each
order of the Board levying and establishing the rate of ad
valorem taxes shall specify the portion of such rate levied
to pay the debt service requirements on obligations of the
District payable from the Bond Fund, the portion, if any, of
such rate levied to pay other contractual obligations of the
District payable in whole or in part from taxes, and the
portion, if any, of such rate levied for operating and
maintenance purposes, and all collections of ad valorem
taxes, including penalty and interest attributable thereto,
and all expenses of assessing and collecting such taxes,
shall be allocated among such purposes in proportion to the
28
respective levies in the tax year with respect to which such
taxes are owed. In the absence of any specification to the
contrary in the order of the Board levying and establishing
the rate of ad valorem taxes, the entire amount of such
taxes for such year shall be deemed to have been levied to
pay the debt service requirements on obligations of the
District payable from the Bond Fund. For so long as any
Bond remains outstanding and unpaid all collections of
District taxes levied to pay debt service requirements on
obligations of the District payable from the Bond Fund, less
allocable expenses of assessing and collecting such taxes,
shall be deposited not less frequently than monthly to the
Bond Fund. The tax payments into the Bond Fund shall
continue, expect as provided in subsection (b) below, until
the Bonds, with the interest thereon, have been fully paid
and discharged or the District has been abolished pursuant
to Texas law.
(b) Reduction and Abatement of Taxes. It is provided,
however, that at such time as the Net Revenues, hereinafter
pledged to the payment of the Bonds and other contractual
obligations of the District payable in whole or in part from
taxes, together with all amounts derived from the ad
valorem taxes herein levied, may have accumulated a surplus
in the Bond Fund equal to the sum to be required in the
succeeding year to liquidate the principal of and interest
on the District's obligations maturing in that year, the
District's annual tax levies may be lowered to produce not
less than 25% of the Bond maturities for the succeeding
year, until an actual experience of three successive years
may demonstrate that the Net Revenues are wholly adequate to
retire the principal of and interest on such obligations as
they mature, and, at such time, the District's tax may be
wholly abated, until further experience may demonstrate the
necessity again to exert the District's taxing power to
avoid default in the payment of such obligations of the
District, both in principal and interest as the same may
mature.
Section 11. NET REVENUES. (a) Pledge. The District
covenants and agrees that the Net Revenues, if any, are
hereby pledged for payment of the Bonds.
(b) Termination. To the extent provided by law, such
pledge of Net Revenues will terminate when one or more
cities annex the territory within the District, take over
all properties and assets, assume all debts, liabilities,
and obligations, and perform all functions and services of
the District, and the District is abolished pursuant to law.
Section 12. DISPOSITION OF BOND PROCEEDS. The
proceeds of the Bonds shall be placed into the Bond Fund,
Construction Fund, and Operating Fund of the District as
follows:
29
(a) Bond Fund: An amount equal to the interest on the
Bonds from the date of the Bonds, being December 1, 1986, to
, which amount includes an amount equal
to the accrued interest on the Bonds from the date thereof
to the date of delivery to the Initial Purchaser
(hereinafter defined).
(b) Operating Fund: $
(c) Construction Fund: The balance remaining from the
proceeds of the Bonds after the deposits described in
subsection (a) and (b) of this Section 12.
Section 13. INVESTMENTS AND SECURITY. (a) Investment
of Funds. The Board may place money in any Fund created by
this Order in time or demand deposits or invest such money
as authorized by law at the time of such deposit; provided,
however, that the District hereby covenants that the
proceeds of the sale of the Bonds will be used as soon as
practicable for the purposes for which the Bonds are issued.
Obligations purchased as an investment of money in a Fund
shall be deemed to be a part of such Fund.
(b) Amounts Received from Investments. Except as
otherwise provided by law, amounts received from the
investment of any money in any Fund created by this Bond
Order may be placed into any Fund of the District as
determined by the Board.
(c) Security for Funds. All Funds created by this
Bond Order shall be secured in the manner and to the fullest
extent required by law for the security of funds of the
District.
Section 14. COVENANTS OF THE DISTRICT. (a) General
Covenants. The District covenants and represents that:
(1) It has lawful power to issue the Bonds and to
pledge the Net Revenues and has lawfully exercised such
power under the Constitution and laws of the State of
Texas.
(2) The Bonds shall be ratably secured in such
manner that no one Bond shall have preference over
other Bonds.
(3) Except to the payment of the Bonds the Net
Revenues have not been in any manner pledged to the
payment of any debt or obligation of the District or of
the System, and the System is free and clear of all
encumbrances whatsoever except as hereinabove stated.
30
(4) It has obtained or will obtain and will
comply with the terms and conditions of all franchises,
permits, and authorizations in full force and effect.
(b) Specific Covenants. The District covenants and
represents that it will:
(1) Proceed to acquire and construct with all due
diligence and dispatch so much of the System as shall
have been financed with the proceeds of the Bonds.
(2) Fix, establish, maintain, and collect such
rentals, rates, charges, and fees for the use,
availability, facilities, and services of the System
which, together with taxes levied for such purposes, if
any, will provide revenues sufficient at all times to
pay for all reasonable expenses of administration,
efficient operation, and adequate maintenance of the
System and to pay all outstanding indebtedness against
the System other than the Bonds, and any Additional
Bonds. The Board has enacted and will maintain in
effect an order fixing rates and charges for such
facilities and service which contains among other
provisions, a requirement for periodic billing of all
customers of the District and a prohibition against
furnishing of water or sewer service or facilities of
the District without charge to any person, firm,
organization, or corporation.
(3) Levy an ad valorem tax that will be
sufficient to provide funds to pay the current interest
on the Bonds and to provide the necessary sinking fund,
all as described in Section 5.A. of this Order.
(4) Not mortgage or otherwise encumber the
physical properties of the System, or any part thereof,
or sell, lease, or otherwise dispose of any substantial
portion of the physical properties of the System unless
required to do so in order to cooperate with other
political subdivisions or entities to provide for a
regional waste disposal or water supply system,
provided, however, that this provision shall not be
construed as prohibiting the sale of such machinery or
other properties or equipment which have been declared
surplus or otherwise unsuited to the efficient
operation of the System.
(5) Maintain the System in good condition and
repair, ordinary wear and tear and obsolescence
excepted, and operate it in an efficient manner and at
a reasonable cost.
31
(6) Maintain insurance on the System of a kind
and in an amount which usually would be carried by
private companies engaged in similar type of business,
but considering any governmental immunities to which
the District may be entitled.
(7) Keep records and accounts and employ an
independent certified public accountant to audit its
affairs and the close of each fiscal year. Such audits
shall be in accordance with applicable law, rules, and
regulations, including particularly Section 50.371 et
seq. of the Texas Water Code, as amended, and the Water
District Accounting Manual adopted by the Texas Water
Commission. Upon request a copy of the audit shall be
delivered to the owner or owners of at least 25% of the
Bonds then outstanding; copies shall be filed as
required by law; and a copy of the audit shall be
delivered to the office of the District, which shall be
kept on file, and such copy shall constitute a public
record open to inspection by any interested person
during normal office hours.
(8) Allow any owner of 25% of the aggregate
principal amount of the Bonds then outstanding the
right to inspect the System and all records, accounts,
and data of the District relating thereto at all
reasonable times.
(9) Upon the request of any owner of 25% of the
aggregate principal amount of the Bonds then
outstanding, cause a complete engineering inspection
and report of the operations and physical conditions of
the System to be made each year after the second year
following completion of construction of the System by a
registered professional engineer, which engineer may be
the District's Engineer. No such engineering
inspection shall be required prior to the third year of
operation of the system or shall be required to be made
more frequently than once in any two -year period. A
copy of such report shall be kept in the office of the
District and shall be subject to inspection by any
interested person during normal office hours, and a
copy of such report shall be furnished, upon request,
to any owner of 25% of the aggregate principal amount
of the Bonds then outstanding.
Section 15. REMEDIES OF OWNERS. In addition to all
right and remedies of any owner of the Bonds provided by the
laws of the State of Texas, the District and the Board
covenant and agree that in the event the District defaults
in the payment of the principal of or interest on any of the
Bonds when due, fails to make the payments required by this
Order to be made into the Bond Fund, or defaults in the
observance or performance of any of the covenants,
32
conditions, or obligations set forth in this Order, the
owner of any of the Bonds shall be entitled to a writ of
mandamus issued by a court of proper jurisdiction compelling
and requiring the Board and other officers of the District
to observe and perform any covenant, obligation, or
condition prescribed in this Order. No delay or omission
by any owner to exercise any right or power accruing to such
owner upon default shall impair any such right or power, or
shall be construed to be a waiver of any such default or
acquiescence therein, and every such right or power may be
exercised from time to time and as often as may be deemed
expedient. The specific remedies mentioned in this Bond
Order shall be available to the owners of the Bonds as
provided herein and shall be cumulative of all other
existing remedies.
Section 16. ADDITIONAL BONDS. In addition to the
right to issue bonds of inferior liens, the District shall
hereafter have the right to issue Additional Bonds of the
$13,000,000 that were authorized at the election of July 13,
1985 or such other bonds as may hereafter be authorized at
subsequent elections, payable from and equally secured by a
pledge of taxes or Net Revenues or both to the same extent
as pledged for and in all things on parity with the lien of
the Bonds. The District further reserves the right to issue
its revenue bonds payable solely from contracts With other
persons (including private corporation, municipalities, and
political subdivision) issued particularly to finance
facilities needed in performing any such contracts.
Section 17. DEFEASANCE OF BONDS. (a) Any Bond and
the interest thereon shall be deemed to be paid, retired,
and no longer outstanding (a "Defeased Bond ") within the
meaning of this Order, except to the extent provided in
subsection (d) of this Section 17, when payment of the
principal of such Bond, plus interest thereon to the due
date (whether such due date be by reason of maturity, upon
redemption, or otherwise) either (i) shall have been made or
caused to be made in accordance with the terms thereof
(including the giving of any required notice of redemption),
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 District 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
33
shall no longer be secured by, payable from, or entitled to
the benefits of, the lien on the Net Revenues of the System
pledged as provided in this Order, and such principal and
interest shall be payable solely from such money or Govern-
ment Obligations.
(b) Any moneys so deposited with the Paying Agent /Reg-
istrar may at the written direction of the District also be
invested in Government Obligations, maturing in the amounts
and 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 District,
or deposited as directed in writing by the District.
(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 maybe 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 District
shall make proper arrangements to provide and pay for such
services as required by this Order.
Section 18. DAMAGED, MUTILATED, LOST, STOLEN, OR DE-
STROYED 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 District
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 District and to the
Paying Agent /Registrar evidence to their satisfaction of the
loss, theft, or destruction of such Bond, as the case may
34
be. In every case of damage or mutilation of a Bond, the
registered owner shall surrender to the Paying Agent /Regis-
trar for cancellation the Bond so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the
foregoing provisions of this Section, in the event any such
Bond shall have matured, and no default has occurred which
is then continuing in the payment of the principal of,
redemption premium, if any, or interest on the Bond, the
District may authorize the payment of the same (without
surrender thereof except in the case of a damaged or
mutilated Bond) instead of issuing a replacement Bond,
provided security or indemnity is furnished as above
provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to
the issuance of any replacement bond, the Paying
Agent /Registrar shall charge the registered owner of such
Bond with all legal, printing, and other expenses in
connection therewith. Every replacement bond issued
pursuant to the provisions of this Section by virtue of the
fact that any Bond is lost, stolen, or destroyed shall
constitute a contractual obligation of the District 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 Order equally and proportion-
ately with any and all other Bonds duly issued under this
Order.
(e) Authority for Issuing Replacement Bonds. In
accordance with Section 6 of Vernon's Ann. Tex. Civ. St.
Art. 717k -6, this Section 18 of this Order shall constitute
authority for the issuance of any such replacement bond
without necessity of further action by the governing body of
the District or any other body or person, and the duty of
the replacement of such bonds is hereby authorized and
imposed upon the Paying Agent /Registrar, and the Paying
Agent /Registrar shall authenticate and deliver such Bonds in
the form and manner and with the effect, as provided in
Section 6(d) of this Order for Bonds issued in conversion
and exchange for other Bonds.
Section 19. CUSTODY, APPROVAL, AND REGISTRATION OF
BONDS; BOND COUNSEL'S OPINION, AND CUSIP NUMBERS. The
President of the Board is hereby authorized to have control
of the Initial Bond issued hereunder and all necessary
records and proceedings pertaining to the Initial Bond
pending its delivery and its investigation, examination, and
approval by the Attorney General of the State of Texas, and
its registration by the Comptroller of Public Accounts of
the State of Texas. Upon registration of the Initial Bond
said Comptroller of Public Accounts (or a deputy designated
in writing to act for said Comptroller) shall manually sign
the Comptroller's Registration Certificate on the Initial
35
Bond, and the seal of said Comptroller shall be impressed,
or placed in facsimile, on the Initial Bond. The approving
legal opinion of the Issuer's Bond Counsel and the assigned
CUSIP numbers may, at the option of the District, be printed
on the Initial Bond or on any Bonds issued and delivered in
conversion of and exchange or replacement of any Bond, but
neither shall have any legal effect, and shall be solely for
the convenience and information of the registered owners of
the Bonds.
Section 20. ANNEXATION. Under Texas law all of the
territory within the District may be annexed by one or more
cities, which may be accomplished without the District's
consent at any time, and in which event such city or cities
shall take over all properties and assets and assume all
debts, liabilities, and obligations of the District,
including the Bonds and any Additional Bonds, and the
District shall be abolished.
Section 21. NO ARBITRAGE. The District covenants to
and with the registered owners of the Bonds that it will
make no use of the proceeds of the Bonds at any time
throughout the term of this issue of Bonds which, if such
use had been reasonably expected on the date of delivery of
the Bonds to and payment for the Bonds by the purchasers,
would have caused the Bonds to be arbitrage bonds within the
meaning of Section 103(c) of the Internal Revenue Code of
1954, as amended, or any regulations or rulings pertaining
thereto; and by this covenant the District is obligated to
comply with the requirements of the aforesaid Section 103(c)
and all applicable and pertinent Department of the Treasury
regulations relating to arbitrage bonds. The District
further covenants that the proceeds of the Bonds will not
otherwise be used directly or indirectly so as to cause all
or any part of the Bonds to be or become arbitrage bonds
within the meaning of the aforesaid Section 103(c), or any
regulations or rulings pertaining thereto.
Section 22. SALE OF INITIAL BOND. The Initial Bond is
hereby sold and shall be delivered to
for cash for the price of par and accrued interest thereon
to date of delivery. It is hereby officially found, deter-
mined, and declared tha,t the Initial Bond has been sold at
public sale to the bidder offering the lowest interest cost,
after receiving sealed bids pursuant to an Official Notice
of Sale and Bidding Instructions and Official Statement
dated 1986, prepared and distributed in
connection with the sale of the Initial Bond. Said Official
Notice of Sale and Bidding Instructions and Official State-
ment, and any addenda, supplement, or amendment thereto have
been and are hereby approved by the governing body of the
District, and their use in the offer and sale of the Bonds
is hereby approved. It is further officially found, deter-
mined, and declared that the statements and representations
36
4
contained in said Official Notice of Sale and Official
Statement are true and correct in all material respects, to
the best knowledge and belief of the governing body of the
District.
37