HomeMy WebLinkAboutO-2430-8-05ORDINANCE NO. 2430-8-05
AN ORDINANCE authorizing the issuance of "CITY OF ALLEN, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES
2005"; pledging the net revenues of the City's combined Waterworks and
Sewer System to the payment of the principal of and interest on said
Bonds; enacting provisions incident and related to the issuance, payment,
security and delivery of said bonds, including the approval and execution
of a Paying Agent/Registrar Agreement and the approval and distribution
of an Official Statement pertaining thereto; and providing an effective
date.
WHEREAS, in accordance with the provisions of V.T.C.A., Government Code, Chapter
1502, the City Council finds and determines that revenue bonds in the principal amount of
$4,300,000 for the purpose of providing money to construct, improve, renovate, enlarge or equip
property, buildings, structures, facilities or related infrastructure for the City's Waterworks and
Sewer System (the "System") should be issued and sold at this time; and
WHEREAS, the City Council hereby further finds and determines that all of such
revenue bonds can and should be issued on a parity with the City's outstanding revenue bonds
(hereinafter defined and identified as "Previously Issued Bonds") payable from and secured by a
first lien on and pledge of the Net Revenues of the City's combined Waterworks and Sewer
System (the "System") in that (i) the Finance Director of the City will execute a certificate stating
(a)that, to the best of his knowledge and belief, the City is not now in default as to any
covenant, obligation or agreement contained in any ordinance or other proceeding relating to
any obligations of the City payable from and secured by a lien on and pledge of the Net
Revenues of the System that would materially affect the security or payment of such obligations
and (b) payments into all special funds or accounts created and established for the payment
and security of all outstanding obligations payable from and secured by a lien on and pledge of
the Net Revenues of the System have been made and that the amounts on deposit in such
special funds or accounts are the amounts now required to be on deposit therein; (ii) the bonds
herein authorized shall be scheduled to mature as to principal on June 1 in each year; and
(iii) the City will secure a certificate or opinion of a Certified Public Accountant to the effect that,
according to the books and records of the City, the Net Earnings, for the last completed Fiscal
Year or for 12 consecutive months out of the 15 months immediately preceding the date hereof,
are at least equal to 1.20 times the "Average Annual Debt Service" for all "Bonds Similarly
Secured" to be outstanding after giving effect to the issuance of the bonds herein being issued;
now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ALLEN, TEXAS:
SECTION 1. Authorization - Designation - Principal Amount - Purpose. Revenue
bonds of the City shall be and are hereby authorized to be issued in the aggregate principal
amount of $4,300,000 to be designated and bear the title "CITY OF ALLEN, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2005" (hereinafter
referred to as the "Bonds"), for the purpose of providing funds to construct, improve, renovate,
enlarge or equip property, buildings, structures, facilities or related infrastructure for the City's
Waterworks and Sewer System and to pay costs of issuance, in conformity with the Constitution
and laws of the State of Texas, including V.T.C.A., Government Code, Chapter 1502, as
amended. '
45616225.7110503916
SECTION 2. Fully Registered Obligations - Authorized Denominations - Stated
Maturities - Date. The Bonds shall be issued as fully registered obligations, without coupons,
shall be dated August 1, 2005 (the "Bond Date") and, other than the single fully registered Initial
Bond referenced in Section 8 hereof, shall be in denominations of $5,000 or any integral
multiple thereof (within a Stated Maturity), shall be numbered consecutively from One (1)
upward and shall become due and payable on June 1 in each of the years and in principal
amounts (the "Stated Maturities") and bear interest at per annum rates in accordance with the
following schedule:
Year of
Principal
Interest
Stated Maturity
Amount
Rate(s
2006
$165,000
6.625%
2007
140,000
6.625%
2008
150,000
6.625%
2009
155,000
6.625%
2010
165,000
6.625%
2011
175,000
5.875%
2012
180,000
3.625%
2013
190,000
3.700%
2014
195,000
3.800%
2015
205,000
3.900%
2016
210,000
4.000%
2017
220,000
4.100%
2018
230,000
4.150%
2019
240,000
4.200%
2020
250,000
4.250%
2021
260,000
4.300%
2022
275,000
4.350%
2023
285,000
4.375%
2024
300,000
4.400%
2025
310,000
4.450%
The Bonds shall bear interest on the unpaid principal amounts from the Bond Date at the
rate(s) per annum shown in the above schedule (calculated on the basis of a 360 -day year of
twelve 30 -day months). Interest on the Bonds shall be payable on June 1 and December 1 in
each year, commencing December 1, 2005.
SECTION 3. Terms of Payment — Paving Agent/Registrar. The principal of, premium,
if any, and the interest on the Bonds, due and payable by reason of maturity, redemption or
otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter
called the "Holders") appearing on the registration and transfer books maintained by the Paying
Agent/Registrar and the payment thereof shall be in any coin or currency of the United States of
America, which at the time of payment is legal tender for the payment of public and private
debts, and shall be without exchange or collection charges to the Holders.
The selection and appointment of JPMorgan Chase Bank, National Association, Dallas,
Texas to serve as Paying Agent/Registrar for the Bonds is hereby approved and confirmed.
Books and records relating to the registration, payment, transfer and exchange of the Bonds
(the "Security Register") shall at all times be kept and maintained on behalf of the City by the
Paying AgentlRegistrar, as provided herein and in accordance with the terms and provisions of
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a "Paying Agent/ Registrar Agreement", substantially in the form attached hereto as Exhibit A,
and such reasonable rules and regulations as the Paying AgentlRegistrar and the City may
prescribe. The Mayor and City Secretary are authorized to execute and deliver such Agreement
in connection with the delivery of the Bonds. The City covenants to maintain and provide a
Paying Agent/Registrar at all times until the Bonds are paid and discharged, and any successor
Paying Agent/Registrar shall be a bank, trust company, financial institution or other entity
qualified and authorized to serve in such capacity and perform the duties and services of Paying
Agent/Registrar. Upon any change in the Paying AgentlRegistrar for the Bonds, the City agrees
to promptly cause a written notice thereof to be sent to each Holder by United States Mail, first
class postage prepaid, which notice shall also give the address of the new Paying
AgenttRegistrar.
Principal of and premium, if any, on the Bonds shall be payable at the Stated Maturities
or upon the earlier redemption thereof, only upon presentation and surrender of the Bonds to
the Paying AgentlRegistrar at its designated offices in Dallas, Texas (the "Designated
Payment(Transfer Office"). Interest on the Bonds shall be paid to the Holders whose names
appear in the Security Register at the close of business on the Record Date (the 15th day of the
month next preceding each interest payment date) and shall be paid by the Paying
Agent/Registrar (i) by check sent United States Mail, first class postage prepaid, to the address
of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the
Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for
the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal
holiday, or a day when banking institutions in the city where the Designated Payment/Transfer
Office of the Paying Agent/ Registrar is located are authorized by law or executive order to
close, then the date for such payment shall be the next succeeding day which is not such a
Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and
payment on such date shall have the same force and effect as if made on the original date
payment was due.
In the event of a non-payment of interest on one or more maturities on a scheduled
payment date, and for thirty (30) days thereafter, a new record dale for such interest payment
for such maturity or maturities (a "Special Record Dale") will be established by the Paying
AgenttRegistrar, if and when funds for the payment of such interest have been received from
the City. Notice of the Special Record Date and of the scheduled payment date of the past due
interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5)
business days prior to the Special Record Date by United States Mail, first class postage
prepaid, to the address of each Holder of such maturity or maturities appearing on the Security
Register at the close of business on the last business day next preceding the date of mailing of
such notice.
SECTION 4. Redemption. (a) Optional Redemption. The Bonds maturing on and
after June 1, 2016 shall be subject to redemption prior to maturity, at the option of the City, in
whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a
Stated Maturity by lot by the Paying Agent/ Registrar), on June 1, 2015 or on any date thereafter
at the redemption price of par plus accrued interest to the date of redemption.
(b) Exercise of Redemption Option. At least forty—five (45) days prior to a date set
for the redemption of Bonds (unless a shorter notification period shall be satisfactory to the
Paying Agent/Registrar), the City shall notify the Paying AgentlRegistrar of its decision to
exercise the right to redeem Bonds, the principal amount of each Stated Maturity to be
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redeemed, and the date set for the redemption thereof. The decision of the City to exercise the
right to redeem Bonds shall be entered in the minutes of the governing body of the City.
(c) Selection of Bonds for Redemption. If less than all Outstanding Bonds of the
same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar
shall treat such Bonds as representing the number of Bonds Outstanding which is obtained by
dividing the principal amount of such Bond by $5,000 and shall select the Bonds, or principal
amount thereof, to be redeemed within such Stated Maturity by lot.
(d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date
for the Bonds, a notice of redemption shall be sent by United States Mail, first class postage
prepaid, in the name of the City and at the City's expense, to each Holder of a Bond to be
redeemed in whole or in part at the address of the Holder appearing on the Security Register at
the close of business on the business day next preceding the date of mailing such notice, and
any notice of redemption so mailed shall be conclusively presumed to have been duly given
irrespective of whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii)
identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be
redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price,
(iv) state that the Bonds, or the portion of the principal amount thereof to be redeemed, shall
become due and payable on the redemption date specified, and the interest thereon, or on the
portion of the principal amount thereof to be redeemed, shall cease to accrue from and after the
redemption date, (v) specify that payment of the redemption price for the Bonds, or the principal
amount thereof to be redeemed, shall be made at the Designated PaymentlTransfer Office of
the Paying Agent/Registrar only upon presentation and surrender thereof by the Holder and (vi)
state that the redemption of such Bonds is conditional upon the deposit of sufficient funds to pay
the redemption price. If a Bond is subject by its terms to prior redemption and has been called
for redemption and notice of redemption thereof has been duly given or waived as herein
provided, such Bond (or the principal amount thereof to be redeemed) shall become due and
payable, and interest thereon shall cease to accrue from and after the redemption date therefor,
provided moneys sufficient for the payment of such Bonds (or of the principal amount thereof to
be redeemed) at the then applicable redemption price are held for the purpose of such payment
by the Paying Agent/Registrar.
SECTION 5. Registration - Transfer - Exchange of Bonds - Predecessor Bonds. The
Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and
address of each registered owner of the Bonds issued under and pursuant to the provisions of
this Ordinance. Any Bond may, in accordance with its terms and the terms hereof, be
transferred or exchanged for Bonds of other authorized denominations upon the Security
Register by the Holder, in person or by his duly authorized agent, upon surrender of such Bond
to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer
or request for exchange duly executed by the Holder or by his duly authorized agent, in form
satisfactory to the Paying Agent/ Registrar.
Upon surrender for transfer of any Bond (other than the Initial Bonds authorized in
Section 8 hereof) at the Designated Payment[Transfer Office of the Paying Agent/Registrar, the
Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or
transferees, one or mon: new Bonds, executed on behalf of, and furnished by, the City of
authorized denominations and having the same Stated Maturity and of a like aggregate principal
amount as the Bond or Bonds surrendered for transfer.
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Al the option of the Holder, Bonds (other than the Initial Bonds authorized in Section 8
hereof) may be exchanged for other Bonds of authorized denominations and having the same
Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the
Bonds surrendered for exchange, upon surrender of the Bonds to be exchanged at the
Designated Payment/Transfer Office of the Paying Agent/ Registrar. Whenever any Bonds are
surrendered for exchange, the Paying Agent/Registrar shall register and deliver new Bonds,
executed on behalf of, and furnished by, the City, to the Holder requesting the exchange.
All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the
Designated Payment/Transfer Office of the Paying Agent/Registrar, or sent by United States
Mail, first class postage prepaid, to the Holder and, upon the delivery thereof, the same shall be
valid obligations of the City, evidencing the same obligation to pay, and entitled to the same
benefits under this Ordinance, as the Bonds surrendered in such transfer or exchange.
All transfers or exchanges of Bonds pursuant to this Section shall be made without
expense or service charge to the Holder, except as otherwise herein provided, and except that
the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or
exchange of any tax or other governmental charges required to be paid with respect to such
transfer or exchange. -
Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof
are hereby defined to be "Predecessor Bonds; evidencing all or a portion, as the case may be,
of the same obligation to pay evidenced by the Bond or Bonds registered and delivered in the
exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any
mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued,
registered and delivered in lieu thereof pursuant to Section 30 hereof and such new
replacement Bond shall be deemed to evidence the same obligation as the mutilated, lost,
destroyed, or stolen Bond.
Neither the City not the Paying Agent/Registrar shall be required to transfer or exchange
any Bond called for redemption, in whole or in part, within 45 days of the date fixed for
redemption of such Bond; provided, however, such limitation of transfer shall not be applicable
to an exchange by the Holder of the unredeemed balance of a Bond called for redemption in
part.
SECTION 6. Book -Entry Only Transfers. and Transactions. Notwithstanding the
provisions contained in Sections 3, 4 and 5 hereof relating to the payment, and
transferlexchange of the Bonds, the City hereby approves and authorizes the use of 'Book -
Entry Only" securities clearance, settlement and transfer system provided by The Depository
Trust Company (DTC), a limited purpose trust company organized under the laws of the State of
New York, in accordance with the operational arrangements referenced in the Blanket Issuer
Letter of Representation, by and between the City and DTC (the "Depository Agreement").
Pursuant to the Depository Agreement and the rules of DTC, the Bonds shall be
deposited with DTC who shall hold said Bonds for its participants (the "DTC Participants").
While the Bonds are held by DTC under the Depository Agreement, the Holder of the Bonds on
the Security Register for all purposes, including payment and notices, shall be Cede & Co., as
nominee of DTC, notwithstanding the ownership of each actual purchaser or owner of each
Bond (the "Beneficial Owners") being recorded in the records of DTC and DTC Participants.
45818225.7/10503908
In the event DTC determines to discontinue serving as securities depository for the
Bonds or otherwise ceases to provide book -entry clearance and settlement of securities
transactions in general or the City determines that DTC is incapable of properly discharging its
duties as securities depository for the Bonds, the City covenants and agrees with the Holders of
the Bonds to cause Bonds to be printed in definitive form and provide for the Bond certificates to
be issued and delivered to DTC Participants and Beneficial Owners, as the case may be.
Thereafter, the Bonds in definitive form shall be assigned, transferred and exchanged on the
Security Register maintained by the Paying Agent/Registrar and payment of such Bonds shall
be made in accordance with the provisions of Sections 3, 4 and 5 hereof.
SECTION 7. Execution - Registration. The Bonds shall be executed on behalf of the
City by the Mayor under its seal reproduced or impressed thereon and countersigned by the
City Secretary. The signature of said officers on the Bonds may be manual or facsimile. Bonds
bearing the manual or facsimile signatures of individuals who are or were the proper officers of
the City on the date of the adoption of this Ordinance shall be deemed to be duly executed on
behalf of the City, notwithstanding that such individuals or either of them shall cease to hold
such offices at the time of delivery of the Bonds to the initial purchaser(s) and with respect to
Bonds delivered in subsequent exchanges and transfers, all as authorized and provided in
V.T.C.A., Government Code, Chapter 1201.
No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Bond either a certificate of registration
substantially in the form provided in Section 9C, manually executed by the Comptroller of Public
Accounts of the State of Texas or his duly authorized agent, or a certificate of registration
substantially in the form provided in Section 9D, manually executed by an authorized officer,
employee or representative of the Paying Agent/ Registrar, and either such certificate upon any
Bond duly signed shall be conclusive evidence, and the only evidence, that such Bond has been
duly certified, registered and delivered.
SECTION 8. Initial Bond(sl. The Bonds herein authorized shall be initially issued
either (i) as a single fully registered bond in the total principal amount referenced in Section 1
hereof with principal installments to become due and payable as provided in Section 2 hereof
and numbered T-1, or (ii) as multiple fully registered bonds, being one bond for each year of
maturity in the applicable principal amount and denomination and to be numbered consecutively
from T-1 and upward (hereinafter called the "Initial Bond(s)") and, in either case, the Initial
Bond(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The
Initial Bond(s) shall be the Bonds submitted to the Office of the Attorney General of the State of
Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts
of the State of Texas and delivered to the initial purchaser(s). Any time after the delivery of the
Initial Bond(s), the Paying Agent/Registrar, pursuant to written instructions from the initial
purchaser(s), or the designee thereof, shall cancel the Initial Bond(s) delivered hereunder and
exchange therefor definitive Bonds of authorized denominations, Stated Maturities, principal
amounts and bearing applicable interest rates for transfer and delivery to the Holders named at
the addresses identified therefor; all pursuant to and in accordance with such written
instructions from the initial purchaser(s), or the designee thereof, and such other information
and documentation as the Paying Agent Registrar may reasonably require.
SECTION 9. Forms. A. Forms Generally. The Bonds, the Registration Certificate of
the Comptroller of Public Accounts of the State of Texas, the Certificate of Registration, and the
forth of Assignment to be printed on each of the Bonds, shall be substantially in the forms set
forth in this Section with such appropriate insertions, omissions, substitutions, and other
45616225JI10503996
variations as are permitted or required by this Ordinance and may have such letters, numbers,
or other marks of identification (including identifying numbers and letters of the Committee on
Uniform Securities Identification Procedures of the American Bankers Association) and such
legends and endorsements (including insurance legends in the event the Bonds, or any
maturities thereof, are purchased with insurance and any reproduction of an opinion of counsel)
thereon as may, consistently herewith, be established by the City or determined by the officers
executing such Bonds as evidenced by their execution thereof. Any portion of the text of any
Bonds may be set forth on the reverse thereof, with an appropriate reference thereto on the face
of the Bond.
The definitive Bonds and the Initial Bond(s) shall be printed, lithographed, or engraved,
typewritten, photocopied or otherwise reproduced in any other similar manner, all as determined
by the officers executing such Bonds as evidenced by their execution thereof.
B. Form of Definitive Bond.
REGISTERED
NO.
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF ALLEN, TEXAS,
WATERWORKS AND SEWER SYSTEM
REVENUE BOND
SERIES 2005
Bond Date: Interest Rate:
August 1, 2005 %
Registered Owner.
Principal Amount:
REGISTERED
Stated Maturity: CUSIP NO:
June 1, 20_
DOLLARS
The City of Allen (hereinafter referred to as the "City"), a body corporate and municipal
corporation in the County of Collin, State of Texas, for value received, hereby promises to pay
to the order of the Registered Owner named above, or the registered assigns thereof, solely
from the revenues hereinafter identified, on the Stated Maturity date specified above the
Principal Amount stated above (or so much thereof as shall not have been paid upon prior
redemption) and to pay interest (computed on the basis of a 360 -day year of twelve 30 -day
months) on the unpaid Principal Amount hereof from the Bond Date at the per annum rate of
interest specified above; such interest being payable on June 1 and December 1 of each year,
commencing December 1, 2005. Principal of this Bond is payable at its Stated Maturity or
redemption to the registered owner hereof, upon presentation and surrender at the Designated
Payment Transfer/Office of the Paying Agent/Registrar executing the registration certificate
appearing hereon, or its successor. Interest is payable to the registered owner of this Bond (or
one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose
name appears on the "Security Register" maintained by the Paying Agent/ Registrar at the close
of business on the "Record Date", which is the 15th day of the month next preceding each
interest payment date and interest shall be paid by the Paying Agent/ Registrar by check sent
45616225.7/10503998
United States Mail, first class postage prepaid, to the address of the registered owner recorded
in the Security Register or by such other method, acceptable to the Paying Agent/Registrar,
requested by, and at the risk and expense of, the registered owner. All payments of principal of,
premium, if any, and interest on this Bond shall be without exchange or collection charges to the
owner hereof and in any coin or currency of the United States of America which at the time of
payment is legal tender for the payment of public and private debts. If the date for the payment
of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday, or a day
when banking institutions in the city where the Designated Payment(Transfer Office of the
Paying Agent' Registrar is located are authorized by law or executive order to close, then the
date for such payment shall be the next succeeding day which is not such a Saturday, Sunday,
legal holiday, or day when banking institutions are authorized to close; and payment on such
date shall have the same force and effect as if made on the original date payment was due.
This Bond is one of the series specified in its title issued in the aggregate principal
amount of $4,300,000 (herein referred to as the "Bonds") for the purpose of providing funds to
construct, improve, renovate, enlarge or equip property, buildings, structures, facilities or related
infrastructure for the City's Waterworks and Sewer System and to pay costs of issuance, under
and in strict conformity with the Constitution and laws of the State of Texas, including V.T.C.A.,
Government Code, Chapter 1502, and pursuant to an Ordinance adopted by the City Council of
the City (herein referred to as the "Ordinance').
The Bonds maturing on and after June 1, 2016 may be redeemed prior to their Stated
Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any
integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on
June 1, 2015 or on any date thereafter at the redemption price of par plus accrued interest
thereon to the redemption date.
At least thirty days prior to the date fixed for any redemption of Bonds, the City shall
cause a written notice of such redemption to be sent by United States Mail, first class postage
prepaid, to the registered owners of each Bond to be redeemed at the address shown on the
Security Register and subject to the terms and provisions relating thereto contained in the
Ordinance. If a Bond (or any portion of its principal sum) shall have been duly called for
redemption and notice of such redemption duly given, then upon such redemption date such
Bond (or the portion of its principal sum to be redeemed) shall become due and payable, and
interest thereon shall cease to accrue from and after the redemption date therefor, provided
moneys for the payment of the redemption price and the interest on the principal amount to be
redeemed to the date of redemption are held for the purpose of such payment by the Paying
Agent/Registrar.
In the event a portion of the principal amount of a Bond is to be redeemed and the
registered owner is someone other than Cede & Co., payment of the redemption price of such
principal amount shall be made to the registered owner only upon presentation and surrender of
such Bond to the Designated PaymentfTransfer Office of the Paying Agent/Registrar, and a new
Bond or Bonds of like maturity and interest rate in any authorized denominations provided by
the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to
the registered owner, without charge. If a Bond is selected for redemption, in whole or in part,
the City and the Paying Agent/Registrar shall not be required to transfer such Bond to an
assignee of the registered owner within 45 days of the redemption date therefor, provided,
however, such limitation on transferability shall not be applicable to an exchange by the
registered owner of the unredeemed balance of a Bond redeemed in part.
45616225.7/10503M
The Bonds are special obligations of the City, and, together with the outstanding
Previously Issued Bonds (identified and defined in the Ordinance), are payable solely from and
equally and ratably secured by a first lien on and pledge of the Net Revenues (as defined in the
Ordinance) of the City's combined Waterworks and Sewer System (hereinafter referred to as
the "System"). The Bonds do not constitute a legal or equitable pledge, charge, lien or
encumbrance upon any property of the City or the System, except with respect to the Net
Revenues. The holder hereof shall never have the right to demand payment of this obligation
out of any funds raised or to be raised by taxation.
Subject to satisfying the terms and conditions prescribed therefor, the City has reserved
the right to issue additional revenue obligations payable from and equally and ratably secured
by a parity lien on and pledge of the Net Revenues of the System, in the same manner and to
the same extent as the Bonds.
Reference is hereby made to the Ordinance, a copy of which is on file in the Designated
Payment(Ransfer Office of the Paying AgenURegistrar, and to all of the provisions of which the
Holder by the acceptance hereof hereby assents, for definitions of terms; the description of and
the nature and extent of the security for the Bonds; the properties constituting the System; the
Net Revenues pledged to the payment of the principal of and interest on the Bonds; the nature
and extent and manner of enforcement of the lien and pledge securing the payment of the
Bonds; the terms and conditions for the issuance of additional revenue obligations; the terms
and conditions relating to the transfer or exchange of this Bond; the conditions upon which the
Ordinance may be amended or supplemented with or without the consent of the Holders; the
rights, duties, and obligations of the City and the Paying AgenURegistrar; the terms and
provisions upon which the liens, pledges, charges and covenants made therein may be
discharged at or prior to the maturity or redemption of this Bond, and this Bond deemed to be no
longer Outstanding thereunder; and for the other terms and provisions contained therein.
Capitalized terms used herein have the same meanings assigned in the Ordinance.
This Bond, subject to certain limitations contained in the Ordinance, may be transferred
on the Security Register only upon its presentation and surrender at the Designated
Payment/Transfer Office of the Paying Agent/Registrar, with the Assignment hereon duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the
Paying Agent/Registrar duly executed by, the registered owner hereof, or his duly authorized
agent. When a transfer on the Security Register occurs, one or more new fully registered
Bonds of the same Stated Maturity, of authorized denominations, bearing the same rate of
interest, and of the same aggregate principal amount will be issued by the Paying
Agent/Registrar to the designated transferee or transferees.
The City and the Paying Agent/Registrar, and any agent of either, may treat the
registered owner whose name appears on the Security Register (i) on the Record Date as the
owner entitled to payment of interest hereon, (ii) on the date of surrender of this Bond as the
owner entitled to payment of principal hereof at its Stated Maturity or its redemption, in whole or
in part, and (iii) on any other date as the owner for all other purposes, and neither the City nor
the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In
the event of non-payment of interest on a scheduled payment date and for thirty (30) days
thereafter, a new record date for such interest payment (a "Special Record Date") will be
established by the Paying Agent/Registrar, if and when funds for the payment of such interest
have been received from the City. Notice of the Special Record Date and of the scheduled
payment date of the past due interest (which shall be 15 days after the Special Record Date)
shall be sent at least five (5) business days prior to the Special Record Date by United States
45616225.7!10503948
Mail, first class postage prepaid, to the address of each Holder appearing on the Security
Register at the close of business on the last business day next preceding the date of mailing of
such notice.
It is hereby certified, recited, represented and covenanted that the City is a duly
organized and legally existing municipal corporation under and by virtue of the Constitution and
laws of the State of Texas; that the issuance of the Bonds is duly authorized by law; that all
acts, conditions and things required to exist and be done precedent to and in the issuance of the
Bonds to render the same lawful and valid obligations of the City have been property done, have
happened and have been performed in regular and due time, form and manner as required by
the Constitution and laws of the State of Texas, and the Ordinance; that the Bonds do not
exceed any constitutional or statutory limitation; and that due provision has been made for the
payment of the principal of and interest on the Bonds by a pledge of the Net Revenues of the
System as aforestated. In case any provision in this Bond or any application thereof shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining
provisions and applications shall not in any way be affected or impaired thereby. The terms and
provisions of this Bond and the Ordinance shall be construed in accordance with and shall be
governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly
executed under the official seal of the City as of the Bond Date.
CITY OF ALLEN, TEXAS
COUNTERSIGNED:
City Secretary
(City Seal)
45616225.7/10503948 10
C. 'Form of Registration Certificate of Comptroller of Public Accounts to Appear
on Initial Bond only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER )
OF PUBLIC ACCOUNTS ) REGISTER NO.
THE STATE OF TEXAS )
I HEREBY CERTIFY that this Bond has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and duly registered by the Comptroller
of Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
(SEAL)
'NOTE TO PRINTER: Do Not Print on Definitive Bonds
D. Form of Certificate of Paving Agent/Registrar to appear on Definitive Bonds
only.
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued and registered under the provisions of the
within -mentioned Ordinance; the bond or bonds of the above entitled and designated series
originally delivered having been approved by the Attorney General of the State of Texas and
registered by the Comptroller of Public Accounts, as shown by the records of the Paying
Agent'Registrar.
The designated offices of the Paying Agent/Registrar in Dallas, Texas is the "Designated
Payment7ransfer Office" for this Bond.
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION
Dallas, Texas,
as Paying Agent/Registrar
45616225.7110503948 11
Registration date:
E. Form of Assianment.
By:
Authorized Signature
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto
(Print or typewrite name, address, and zip code of transferee:)
(Social Security or other identifying number:
) the within Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
attorney to transfer the within Bond on the books kept for registration thereof, with full power of
substitution in the premises.
DATED:
Signature guaranteed:
NOTICE: The signature on this assignment
must correspond with the name of the
registered owner as it appears on the face
of the within Bond in every particular.
F. The Initial Bond(s) shall be in the form set forth in paragraph B of this Section
except that the form of a single fully registered Initial Bond shall be modified as
follows:
(i) immediately under the name of the bond the headings "Interest Rate
"Stated Maturity " and "CUSIP NO.— . shall be omitted;
(ii) Paragraph one shall read as follows:
The City of Allen (hereinafter referred to as the "City"), a body corporate and municipal
corporation in the County of Collin, State of Texas, for value received, hereby promises to pay
to the order of the Registered Owner named above, or the registered assigns thereof, solely
from the revenues hereinafter identified, the Principal Amount hereinabove stated on June 1 in
each of the years and in principal installments in accordance with the following schedule:
PRINCIPAL INTEREST
YEAR INSTALLMENTS RATE
(information to be inserted from schedule in Section 2 hereof).
(or so much thereof as shall not have been prepaid prior to maturity) and to pay interest,
computed on the basis of a 360 -day year of twelve 30 -day months, on the unpaid principal
45616225.7/10503948 12
amounts hereof from the Bond Date at the per annum rates of interest specified above; such
interest being payable on June 1 and December 1 in each year, commencing December 1,
2005. Principal installments of this Bond are payable in the year of maturity or on a prepayment
date to the registered owner hereof by JPMorgan Chase Bank, National Association, Dallas,
Texas (the "Paying Agent/Registrar"), upon presentation and surrender, at its designated offices
in Dallas, Texas (the "Designated Payment/Transfer Office"). Interest is payable to the
registered owner of this Bond whose name appears on the "Security Register" maintained by
the Paying Agent/Registmr at the close of business on the "Record Date", which is the 15th day
of the month next preceding each interest payment date and interest shall be paid by the Paying
Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of
registered owner recorded in the Security Register or by such other method, acceptable to the
Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All
payments of principal of, premium, if any, and interest on this Bond shall be without exchange or
collection charges to the owner hereof and in any coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public and private
debts. If the date for the payment of the principal of or interest on the Bonds shall be a
Saturday, Sunday, a legal holiday, or a day when banking institutions in the city where the
Designated Payment/Transfer Office of the Paying Agent/ Registrar is located are authorized by
law or executive order to close, then the date for such payment shall be the next succeeding
day which is not such a Saturday, Sunday, legal holiday, or day when banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made
on the original date payment was due.
SECTION 10. Definitions. For all purposes of this Ordinance and in particular for clarity
with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of
revenues to the payment of the Bonds, the following definitions are provided:
"Additional Parity Bonds" - Revenue bonds or other evidences of indebtedness which
the City reserves the right to issue or enter into, as the case may be, in the future in accordance
with the terms and conditions provided in Section 18 hereof and which are equally and ratably
secured by a first lien on and pledge of the Net Revenues of the System.
"Average Annual Debt Service" - That amount which, at the time of computation, is
derived by dividing the total amount of Debt Service to be paid over a period of years as the
same is scheduled to become due and payable by the number of years taken into account in
determining the total Debt Service. Capitalized interest payments provided from bond proceeds
shall be excluded in making the aforementioned computation.
"Bonds" - The "City of Allen, Texas, Waterworks and Sewer System Revenue Bonds,
Series 2005', dated August 1, 2005, authorized by this Ordinance.
"Bonds Similarly Secured" - Collectively, the Previously Issued Bonds, the Bonds and
Additional Parity Bonds.
"City" - The City of Allen located in the County of Collin, Texas.
"Debt Service" - As of any particular date of computation, with respect to any obligations
and with respect to any period, the aggregate of the amounts to be paid or set aside by the City
as of such date or in such period for the payment of the principal of, premium, if any, and
interest (to the extent not capitalized) on such obligations; assuming, in the case of obligations
without a fixed numerical rate, that such obligations bear, or would have borne, interest at the
45616225.7/10503948 13
highest rate reached, or that would have been applied to such obligations (using the index or
measure for computing interest applicable to such obligations) during the twenty-four (24) month
period next preceding the date of computation, and further assuming in the case of obligations
required to be redeemed or prepaid as to principal prior to maturity, the principal amounts
thereof will be redeemed prior to maturity in accordance with the mandatory redemption
provisions applicable thereto.
"Fiscal Year" - The twelve month accounting period used by the City in connection with
the operation of the System which may be any twelve consecutive month period established by
the City.
"Government Obligations" -(i) direct noncallable obligations of the United States of
America, including obligations the principal of and interest on which are unconditionally
guaranteed by the United States of America, (ii) noncallable obligations of an agency or
instrumentality of the United States, including obligations unconditionally guaranteed or insured
by the agency or instrumentality and on the date of their acquisition or purchase by the City are
rated as to investment quality by a nationally recognized investment rating firm not less than
AAA or its equivalent and (iii) noncallable obligations of a state or an agency or a county,
municipality, or other political subdivision of a state that have been refunded and on the date of
their acquisition or purchase by the City, are rated as to investment quality by a nationally
recognized investment rating firth not less than AAA or its equivalent.
"Gross Revenues" - All income, receipts and revenues of every nature derived or
received from the operation and ownership (excluding refundable meter deposits, restricted gifts
and grants in aid of construction) of the System, including earnings and income derived from the
investment or deposit of moneys in any special funds or accounts created and established for
the payment and security of the Bonds Similarly Secured and other obligations payable solely
from and secured only by a lien on and pledge of the Net Revenues.
"Net Earnings" - The meaning assigned to such term in Section 18 hereof.
"Net Revenues" - Gross Revenues of the System, with respect to any period, after
deducting the System's Operating and Maintenance Expenses during such period.
"Operating and Maintenance Expenses" - All current expenses of operating and
maintaining the System, including all salaries, labor, materials, repairs and extensions
necessary to render efficient service; provided, however, that only such repairs and extensions,
as in the judgment of the City Council, reasonably and fairly exercised, are necessary to
maintain the operations and render adequate service to the City and the inhabitants thereof, or
such as might be necessary to meet some physical accident or condition which would otherwise
impair obligations payable from Net Revenues shall be deducted in determining "Net
Revenues'. Depreciation charges shall not be considered Operating and Maintenance
Expenses. Operating and Maintenance Expenses shall include payments under contracts for
the purchase of water supply or the treatment of sewage or other materials, goods, services or
facilities for the System to the extent authorized by law and the provisions of such contract.
"Outstanding" - When used in this Ordinance with respect to Bonds or Bonds Similarly
Secured, as the case may be, means, as of the date of determination, all Bonds and Bonds
Similarly Secured theretofore sold, issued and delivered by the City, except:
45016225.7/1050390 14
(1) those Bonds or Bonds Similarly Secured cancelled or delivered to the
transfer agent or registrar for cancellation in connection with the exchange or
transfer of such obligations;
(2) those Bonds or Bonds Similarly Secured paid or deemed to be paid in
accordance with the provisions of Section 28 hereof; and
(3) those Bonds or Bonds Similarly Secured that have been mutilated,
destroyed, lost, or stolen and replacement bonds have been registered and
delivered in lieu thereof.
"Previously Issued Bonds" - The presently outstanding and unpaid revenue bonds
payable from and secured by a first lien on and pledge of the Net Revenues of the System,
more particularly described as follows: (1) "City of Allen, Texas, Waterworks and Sewer System
Revenue Refunding and Improvement Bonds, Series 1999", dated February 1, 1999, originally
issued in the principal amount of $12,545,000 and (2) "City of Allen, Texas, Waterworks and
Sewer System Revenue Refunding and Improvement Bonds, Series 2004, dated June 1, 2004,
originally issued in the principal amount of $6,710,000.
"Required Reserve" - The amount required to be accumulated and maintained in the
Reserve Fund under the provisions of Section 14 hereof.
"System" -All properties, facilities and plants owned, operated and maintained by the
City for the supply, treatment and transmission of potable water and for the collection, treatment
and disposal of water -carried wastes, together with all future extensions, improvements,
replacements and additions thereto; provided, however, that notwithstanding the foregoing, and
to the extent now or hereafter authorized or permitted by law, the term "System" shall not mean
to include facilities of any kind which are declared not to be a part of the System and which are
hereafter acquired or constructed by or on behalf of the City with the proceeds from the
issuance of "Special Facilities Bonds", which are hereby defined as being special revenue
obligations of the City which are not Bonds Similarly Secured but which are payable from and
secured by other liens on and pledges of any revenues, sources or payments, not pledged to
the payment of the Bonds Similarly Secured including, but not limited to, special contract
revenues or payments received from any other legal entity in connection with such facilities.
SECTION 11. Pledge. The City hereby covenants and agrees that the Net Revenues of
the System, with the exception of those in excess of the amounts required for the payment and
security of the Bonds Similarly Secured, are hereby irrevocably pledged, to the payment and
security of the Previously Issued Bonds, the Bonds and Additional Parity Bonds, if issued,
including the establishment and maintenance of the special funds created and established by
this Ordinance, all as hereinafter provided, and it is hereby ordained that the lien on and pledge
of the Net Revenues securing the payment of the Bonds Similarly Secured and interest thereon
shall constitute a first lien on the Net Revenues of the System and be valid and binding and fully
perfected from and after the date of adoption of this Ordinance without physical delivery or
transfer of control of the Net Revenues, the filing of this Ordinance or any other act; all as
provided in Chapter 1208 of the Texas Government Code.
Section 1208, Government Code, applies to the issuance of the Bonds and the pledge of
the Net Revenues granted by the City under this Section 11, and such pledge is therefore valid,
effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding
such that the pledge of the Net Revenues granted by the City under this Section 11 is to be
4s 16225.7/10 8 15
subject to the filing requirements of Chapter 9, Business & Commerce Code, then in order to
preserve to the registered owners of the Bonds the perfection of the security interest in said
pledge, the City agrees to take such measures as it determines are reasonable and necessary
under Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce
Code and enable a filing to perfect the security interest in said pledge to occur.
SECTION 12. System Fund. The City hereby covenants and agrees that Gross
Revenues of the System (excluding earnings and income derived from investments held in the
Bond Fund and Reserve Fund) shall be deposited as collected to the credit of a fund maintained
at an official depository of City funds and known on the books and records of the City as the
"Waterworks and Sewer System Fund" (herein called the "System Fund"), and such revenues of
the System shall be kept separate and apart from all other funds of the City. All revenues
deposited in the System Fund shall be pledged and appropriated to the extent required for the
following uses and in the order of priority shown:
(1) To the payment of all necessary and reasonable Operating and
Maintenance Expenses of the System as defined herein or required by statute to
be a first charge on and claim against the Gross Revenues thereof.
(2) To the payment of the amounts required to be deposited in the Bond
Fund for the payment of Debt Service on the Bonds Similarly Secured as the
same becomes due and payable.
(3) To the payment of the amounts required to be deposited in the
Reserve Fund to establish and maintain the Required Reserve in accordance
with the provisions of this Ordinance or any other ordinance relating to issuance
of Bonds Similarly Secured.
Any Net Revenues remaining in the System Fund after satisfying the foregoing
payments, or making adequate and sufficient provision for the payment thereof, may be
appropriated and used for any other City purpose now or hereafter permitted by law.
SECTION 13. Bond Fund. For purposes of providing funds to pay the principal of and
interest on the Bonds as the same becomes due and payable, the City agrees to maintain a
separate and special account or fund on the books and records of the City known as the "City of
Allen Interest and Sinking Revenue Bond Fund" (the "Bond Fund"), and all monies deposited to
the credit of such Fund shall be held in a special banking fund or account maintained at an
official depository of the City. In addition to the deposits to the Bond Fund for the payment of
the Previously Issued Bonds, the City covenants that there shall be deposited into the Bond
Fund prior to each principal and interest payment date from the Net Revenues an amount equal
to one hundred per centum (100%) of the interest on and the principal of the Bonds then falling
due and payable by reason of maturity or redemption, and such deposits to pay principal and
accrued interest on the Bonds shall be made in substantially equal monthly installments on or
before the 25th day of each month, beginning on or before the 25th day of the month next
following the delivery of the Bonds to the initial purchaser.
The required monthly deposits to the Bond Fund for the payment of principal of and
interest on the Bonds shall continue to be made as hereinabove provided until (i)the total
amount on deposit in the Bond Fund and Reserve Fund is equal to the amount required to fully
pay and discharge all Outstanding Bonds Similarly Secured (principal and interest) or (ii) the
Bonds are no longer Outstanding.
45616225.7110503948 16
Accrued interest and premium, if any, received from the purchaser(s) of the Bonds, as
well as earnings derived from the investment of moneys in the Bond Fund, shall be deposited to
the credit of the Bond Fund and taken into consideration and reduce the amount of the monthly
deposits hereinabove required to be deposited in the Bond Fund from the Net Revenues of the
System.
SECTION 14. Reserve Fund. For purposes of accumulating and maintaining funds as a
reserve for the payment of the Bonds Similarly Secured, the City reaffirms its covenant with the
owners of the Previously Issued Bonds and agrees with the Holders of the Bonds to maintain a
separate and special fund or account at a depository of city funds to be known as the "City of
Allen Revenue Bond Reserve Fund" (the 'Reserve Fund"), and all funds deposited therein
(excluding earnings and income derived or received from deposits or investments which may be
transferred to the System Fund established in Section 12 hereof during such periods as there is
on deposit in the Reserve Fund the Required Reserve) shall be used solely for the payment of
the principal of and interest on the Bonds Similarly Secured when (whether at maturity, upon a
mandatory redemption date or any interest payment date) other funds available for such
purposes are insufficient, and, in addition, may be used to the extent not required to maintain
the "Required Reserve", to pay, or provide for the payment of, the final principal amount of a
series of Bonds Similarly Secured so that such series of Bonds Similarly Secured is no longer
deemed to be "Outstanding" as such term is defined herein.
In accordance with the provisions of the ordinances authorizing the issuance of the
Previously Issued Bonds, the amount currently on deposit to the credit of the Reserve Fund is
an amount equal to at least $ (the "Current Reserve"). By reason of the issuance of
the Bonds, the total amount required to be accumulated and maintained in said Fund is hereby
determined to be $ (the 'Required Reserve") which amount is hereby found to
equal or exceed the Average Annual Debt Service for the Bonds and the Previously Issued
Bonds (calculated on a Fiscal Year basis as of the date the Bonds are to be delivered).
Following the delivery of the Bonds, the City covenants and agrees to deposit monthly, on or
before the 25"' day of each month, to the credit of the Reserve Fund from the Net Revenues of
the System not less 1/60 of the difference between the Required Reserve and the Current
Reserve.
When and so long as the cash and investments in the Reserve Fund total not less than
the Required Reserve, no deposits need be made to the credit of the Reserve Fund; but, If and
when the Reserve Fund at any time contains less than the Required Reserve (other than as the
result of the issuance of Additional Parity Bonds as provided in the paragraph below), the City
covenants and agrees to cure the deficiency in the Required Reserve by making monthly
deposits to said Fund from the Net Revenues of the System; such monthly deposits to be in
amounts equal to not less than 1/60th of the then total Required Reserve to be maintained in
said Fund and to be made on or before the 25th day of each month until the total Required
Reserve then to be maintained in said Fund has been fully restored. The City further covenants
and agrees that, subject only to the payments to be made to the Bond Fund, the Net Revenues
shall be applied and appropriated and used to establish and maintain the Required Reserve and
to cure any deficiency in such amounts as required by the terms of this Ordinance and any other
ordinance pertaining to the issuance of Additional Parity Bonds.
As and when Additional Parity Bonds are delivered or incurred, the Required Reserve
shall be increased, if required, to an amount equal to the lesser of (i) the Average Annual Debt
Service (calculated on a Fiscal Year basis) for all Bonds Similarly Secured then Outstanding, as
determined on the date each series of Additional Parity Bonds are delivered or incurred, as the
45616225 7/10503948 1
case may be, or (ii) the maximum amount in a reasonably required reserve fund that can be
invested without restriction as to yield pursuant to subsection (d) of section 148 of the Internal
Revenue Code of 1986, as amended, and regulations promulgated thereunder. Any additional
amount required to be maintained in the Reserve Fund shall be so accumulated by the deposit
in the Reserve Fund of all or any part thereof in cash immediately after the delivery of the then
proposed Additional Parity Bonds, or, at the option of the City, by the deposit of monthly
installments, made on or before the 25th day of each month following the month of delivery of
the then proposed Additional Parity Bonds, of not less than 1/60th of the additional amount to be
maintained in said Fund by reason of the issuance of the Additional Parity Bonds then being
issued (or 1/60th of the balance of the additional amount not deposited immediately in cash).
During such time as the Reserve Fund contains the total Required Reserve, the City
may, at its option, withdraw all surplus in the Reserve Fund in excess of the Required Reserve
and deposit such surplus in the System Fund.
Notwithstanding anything herein to the contrary, if all of the Previously Issued Bonds
with a Bond Date prior to the Dated Date of the Series 2005 Bonds are either paid or deemed to
have been paid in accordance with the provisions of the ordinances authorizing their issuance,
the City retains the right to fund the Required Reserve in whole or in part with a surety bond or
insurance policy issued by an insurance company or other entity that is rated either for the long
term unsecured debt of the issuer of such surety bond or for obligations insured, secured or
guaranteed by such issuer have a rating in the highest letter category by two nationally
recognized municipal securities rating or evaluation services, and money deposited to the credit
of the Reserve Fund may be used to make any payments required to satisfy the City's
repayment obligation to the issuer of such surety bond or insurance policy in the same manner
and with like effect as if such payments were being used to accumulate, maintain or restore the
Required Reserve in cash or with authorized investments.
SECTION 15. Deficiencies. If on any occasion there shall not be sufficient Net
Revenues of the System to make the required deposits into the Bond Fund and the Reserve
Fund, then such deficiency shall be cured as soon as possible from the next available Net
Revenues of the System, or from any other sources available for such purpose.
SECTION 16. Payment of Bonds. While any of the Bonds are Outstanding, the Finance
Director (or other designated financial officer of the City) shall cause to be transferred to the
Paying Agent/Registrar, from funds on deposit in the Bond Fund, and, if necessary, in the
Reserve Fund, amounts sufficient to fully pay and discharge promptly as each installment of
interest and principal of the Bonds accrues or matures or comes due by reason of redemption
prior to maturity; such transfer of funds to be made in such manner as will cause immediately
available funds to be deposited with the Paying Agent/Registrar for the Bonds at the close of the
business day next preceding the date of payment for the Bonds.
SECTION 17. Investments -Security of Funds. (a) Money in any Fund established
pursuant to this Ordinance may, at the option of the City, be placed in time deposits or
certificates of deposit secured (to the extent not insured by the Federal Deposit Insurance
Corporation) by obligations of the type hereinafter described, or be invested, including
investments held in book -entry form, in direct obligations of the United States of America and
obligations guaranteed or insured by the United States of America, which, in the opinion of the
Attorney General of the United States, are backed by its full faith and credit or represent its
general obligations; provided that all such deposits and investments shall be made in such a
manner that the money required to be expended from any Fund will be available at the proper
45616225.7/10503948 18
time or times and provided further the maximum stated maturity for any investment acquired
with money in the Reserve Fund shall be limited to five (5) years from the date of the investment
of such money. Notwithstanding anything herein to the contrary, if all of the Previously Issued
Bonds with a Bond Date prior to the Dated Date of the Series 2005 Bonds are either paid or
deemed to have been paid in accordance with the provisions of the ordinances authorizing their
issuance, money in any Fund established pursuant to this Ordinance may, at the option of the
City, be invested in eligible investments described in the Texas Public Funds Investment Act,
Chapter 2256, Texas Government Code, consistent with the investment policy approved by the
City Council. Such investments as described in this Section (except State and Local
Government Series investments held in book -entry form, which shall at all times be valued at
cost) shall be valued in terms of current market value within 45 days of the close of each Fiscal
Year and, with respect to investments held for the account of the Reserve Fund, within 30 days
of the date of passage of each ordinance authorizing the issuance of Additional Parity Bonds.
All interest and income derived from deposits and investments in the Bond Fund immediately
shall be credited to, and any losses debited to, the Bond Fund. All interest and interest income
derived from deposits in and investments of the Reserve Fund shall, subject to the limitations
provided in Section 14 hereof, be credited to and deposited in the System Fund. All such
investments shall be sold promptly when necessary to prevent any default in connection with
the Bonds.
(b) Money in all Funds created by this Ordinance, to the extent not invested, shall be
secured in the manner and to the fullest extent required by the laws of the State of Texas for the
security of public funds.
SECTION 18. Issuance of Additional Parity Obligations. Subject to the provisions
hereinafter appearing as to conditions precedent which must be satisfied, the City reserves the
right to issue, from time to time as needed, Additional Parity Bonds for any lawful purpose.
Such Additional Parity Bonds may be issued in such form and manner as now or hereafter
authorized by the laws of the State of Texas for the issuance of evidences of indebtedness or
other instruments, and should new methods or financing techniques be developed that differ
from those now available and in normal use, the City reserves the right to employ the same in
its financing arrangements provided only that the following conditions precedent for the
authorization and issuance of the same are satisfied, to wit:
(1) The Finance Director of the City (or other officer of the City then having the
primary responsibility for the financial affairs of the City) shall have executed a certificate stating
(a)that, to the best of his knowledge and belief, the City is not then in default as to any
covenant, obligation or agreement contained in any ordinance or other proceeding relating to
any obligations of the City payable from and secured by a lien on and pledge of the Net
Revenues of the System that would materially affect the security or payment of such obligations
and (b) either (i) payments into all special funds or accounts created and established for the
payment and security of all outstanding obligations payable from and secured by a lien on and
pledge of the Net Revenues of the System have been made and that the amounts on deposit in
such special funds or accounts are the amounts then required to be on deposit therein or (ii) the
application of the proceeds of sale of such obligations then being issued will cure any such
deficiency.
(2) The Additional Parity Bonds shall be scheduled to mature or be payable as to
principal on June 1 or December 1 (or both) in each year the same are to be outstanding or
during the term thereof.
45616225]/10503968 19
(3) The City has secured a certificate or opinion of a Certified Public Accountant to
the effect that, according to the books and records of the City, the Net Earnings for the last
completed Fiscal Year, or for 12 consecutive months out of the 15 months, immediately
preceding the month the ordinance authorizing the issuance of the Additional Parity Bonds is
adopted are at least equal to 1.20 times the Average Annual Debt Service for all Outstanding
Bonds Similarly Secured after giving effect to the issuance of the Additional Parity Bonds then
being issued. In making a determination of the Net Earnings, the Accountant may take into
consideration a change in the rates and charges for services and facilities afforded by the
System that became effective at least sixty (60) days prior to the last day of the period for which
Net Earnings are determined and, for purposes of satisfying the above Net Earnings test, make
a pro forma determination of the Net Earnings of the System for the period of time covered by
his certification or opinion based on such change in rates and charges being in effect for the
entire period covered by the Accountant's certificate or opinion.
As used in this Section, the term "Net Earnings" shall mean the Gross Revenues of the
System after deducting the Operating and Maintenance Expenses of the System, but not
depreciation charges or other expenditures which, under generally accepted accounting
principles, should be treated as capital expenditures.
SECTION 19. Refunding Bonds. The City reserves the right to issue refunding bonds to
refund all or any part of the Bonds Similarly Secured (pursuant to any law then available) upon
such terms and conditions as the City Council of the City may deem to be in the best interest of
the City and its inhabitants, and if less than all such Bonds Similarly Secured then outstanding
are refunded, the conditions precedent prescribed (for the issuance of Additional Parity Bonds)
set forth in subparagraph (3) of Section 18 hereof shall be satisfied and the Accountant's
certificate or opinion required in subparagraph (3) shall give effect to the Debt Service of the
proposed refunding bonds (and shall not give effect to the Debt Service of the Bonds Similarly
Secured being refunded following their cancellation or provision being made for their payment).
SECTION 20. Obligations of Inferior Lien and Pledge. The City hereby reserves the
right to issue obligations payable from and secured by a lien on and pledge of the Net
Revenues of the System, junior and subordinate in rank and dignity to the lien and pledge
securing the payment of the Bonds Similarly Secured, as may be authorized by the laws of the
State of Texas.
SECTION 21. Rates and Charges. For the benefit of the Holders of the Bonds and in
addition to all provisions and covenants in the laws of the State of Texas and in this Ordinance,
the City hereby expressly stipulates and agrees, while any of the Bonds are Outstanding, to
establish and maintain rates and charges for facilities and services afforded by the System that
are reasonably expected, on the basis of available information and experience and with due
allowance for contingencies, to produce Gross Revenues in each Fiscal Year sufficient:
(1) To pay Operating and Maintenance Expenses,
(2) To produce Net Revenues sufficient to pay the principal of and
interest on the Bonds Similarly Secured and the amounts required to be
deposited in any reserve or contingency fund created for the payment and
security of the Bonds Similarly Secured, and other obligations or evidences of
indebtedness issued or incurred that are payable only from and secured solely by
a lien on and pledge of the Net Revenues of the System, and
45618225.7/10583908 20
(3) To produce Net Revenues equal to at least 1.20 times the annual
Debt Service for the Fiscal Year on the Outstanding Bonds Similarly Secured.
(4) To pay all other indebtedness payable from the Net Revenues and/or
secured by a lien on the properties or the revenues of the System.
SECTION 22. Maintenance and Operation - Insurance. (a) The City shall maintain the
System in good condition and operate the System in an efficient manner and at reasonable
cost. While any Bonds are Outstanding, the City agrees to maintain casualty and other
insurance on the System of a kind and in an amount customarily carried by municipal
corporations owning and operating similar properties. Nothing in this Ordinance shall be
construed as requiring the City to expend any funds derived from sources other than the
operation of the System, but nothing herein shall be construed as preventing the City from doing
SO.
(b) The foregoing notwithstanding, but subject to any similar covenant made in an
ordinance authorizing Previously Issued Bonds, the City may self -insure against risks, accidents
or casualties.
SECTION 23. Sale or Lease of Properties. The City, to the extent and in the manner
authorized by law, may sell or exchange for consideration representing the fair value thereof, as
determined by the City Council of the City, any property not necessary or required in the
efficient operations of the System, or any equipment not necessary or useful in the operations
thereof or which is obsolete, damaged or worn out or otherwise unsuitable for use in the
operation of the System. The proceeds of any sale of properties of the System shall be
deposited in the System Fund.
SECTION 24. Records and Accounts. The City hereby covenants and agrees that so
long as any of the Bonds are Outstanding, it will keep and maintain separate and complete
records and accounts pertaining to the operations of the System in which complete and correct
entries shall be made of all transactions relating thereto, as provided by V.T.C.A.,
Government Code, Chapter 1502 or other applicable law. The Holders of any Bonds or any
duly authorized agent or agents of such Holders shall have the right at all reasonable times to
inspect such records, accounts and data relating thereto, and to inspect the System and all
properties comprising same. The City further agrees that following the close of each Fiscal
Year, it will cause an audit of such books and accounts to be made by an independent firm of
Certified Public Accountants. Each such audit, in addition to whatever other matters may be
thought proper by the accountant, shall particularly include the following:
(1) A statement of the income and expenses of the System for such
Fiscal Year.
(2) A balance sheet for the System as of the end of such Fiscal Year.
(3) A statement describing the sources and application of funds of the
System for such Fiscal Year.
(4) The Accountant's comments regarding the manner in which the City
has carried out the requirements of this Ordinance and any other ordinance
authorizing the issuance of Additional Parity Bonds and his recommendations for
45816225.7/10503948 21
any changes or improvements in the operations, records and accounts of the
System.
(5) A list of insurance policies in force at the end of the Fiscal Year
covering the properties of the System, setting out as to each policy the amount
thereof, the risk covered, the name of the insurer and the policy's expiration date.
Expenses incurred in making an annual audit of the operations of the System are to be
regarded as Operating and Maintenance Expenses. Copies of each annual audit shall be
furnished to the Executive Director of the Municipal Advisory Council of Texas at his office in
Austin, Texas, and, upon request, to the initial purchasers of the Bonds and subsequent Holders
of any of said Bonds. The audits herein required shall be made within 120 days following the
close of each Fiscal Year insofar as is possible.
SECTION 25. Special Covenants. The City further covenants and agrees by and
through this Ordinance as follows:
(1) It has the lawful power to pledge the Net Revenues of the System to the payment
of the Bonds to the extent provided herein and has lawfully exercised said power under the
Constitution and laws of the State of Texas, and that the Previously Issued Bonds, the Bonds
issued hereunder, together with the Additional Parity Bonds, shall be ratably secured in such
manner that no one bond shall have preference over any other bond of said issues.
(2) The Net Revenues of the System have not been in any manner pledged or
encumbered to the payment of any debt or obligation of the City or the System, save and except
for the Previously Issued Bonds and the Bonds.
(3) No free services of the System shall be allowed, and should the City or any of its
agents or instrumentalities make use of the services and facilities of the System, payment of the
reasonable value thereof shall be made by the City out of funds from sources other than the
revenues and income of the System.
(4) To the extent that it legally may and while any of the Bonds are Outstanding, no
franchise shall be granted for the installation or operation of any competing waterworks or sewer
system facilities.
(5) The City will comply with all of the terms and conditions of any and all franchises,
permits and authorizations applicable to or necessary with respect to the ownership and
operation of municipal facilities for the supply and distribution of potable water and the
collection, treatment and disposal of water -carried wastes, and which have been obtained from
any governmental agency; and the City has or will obtain and keep in full force and effect all
franchises, permits, authorizations and other requirements applicable to or necessary with
respect to the acquisition, construction, equipment, operation and maintenance of such
properties and facilities.
SECTION 26. Remedy in Event of Default. In addition to all rights and remedies
provided by the laws of the State of Texas, the City covenants and agrees particularly that in the
event the City (a) defaults in payments to be made to the Bond Fund or the Reserve Fund as
required by this Ordinance or (b) defaults in the observance or performance of any other of the
covenants, conditions or obligations set forth in this Ordinance, the Holders of any of the Bonds
shall be entitled to a writ of mandamus issued by a court of proper jurisdiction, compelling and
45516225.7/10503948 22
requiring the City and its officers to observe and perform any covenant, condition or obligation
prescribed in this Ordinance. No delay or omission to exercise any right or power accruing
upon any default shall impair any such right or power, or shall be construed to be a waiver of
any such default or acquiescence therein, and every such right and power may be exercised
from time to time and as often as may be deemed expedient.
The specific remedy herein provided shall be cumulative of all other existing remedies
and the specification of such remedy shall not be deemed to be exclusive.
SECTION 27. Special Obligations. The Bonds are special obligations of the City
payable from the pledged Net Revenues of the System and the Holders thereof shall never
have the right to demand payment thereof out of funds raised or to be raised by taxation.
SECTION 28. Satisfaction of Obligation of City. If the City shall pay or cause to be paid,
or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on
the Bonds, at the times and in the manner stipulated in this Ordinance, then the pledge of the
Net Revenues of the System under this Ordinance and all other obligations of the City to the
Holders shall thereupon cease, terminate, and become void and be discharged and satisfied.
Bonds or any principal amount(s) thereof shall be deemed to have been paid within the
meaning and with the effect expressed above in this Section when (i) money sufficient to pay in
full such Bonds or the principal amount(s) thereof at maturity or to the redemption date therefor,
together with all interest due thereon, shall have been irrevocably deposited with and held in
trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) non-callable
Government Obligations shall have been irrevocably deposited in trust with the Paying Agent/
Registrar, or an authorized escrow agent, which Government Obligations have been certified by
an independent accounting firm to mature as to principal and interest in such amounts and at
such times as will insure the availability, without reinvestment, of sufficient money, together with
any moneys deposited therewith, if any, to pay when due the principal of and interest on such
Bonds, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice
of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable
to the Paying Agent/Registrar have been made) the redemption date thereof. The City
covenants that no deposit of moneys or Government Obligations will be made under this
Section and no use made of any such deposit which would cause the Bonds to be treated as
"arbitrage bonds" within the meaning of section 148 of the Internal Revenue Code of 1986, as
amended, or regulations adopted pursuant thereto.
Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow
agent, and all income from Government Obligations held in trust by the Paying Agent/Registrar
or an authorized escrow agent, pursuant to this Section which is not required for the payment of
the Bonds, or any principal amount(s) thereof, or interest thereon with respect to which such
moneys have been so deposited shall be remitted to the City or deposited as directed by the
City. Furthermore, any money held by the Paying Agent/Registrar for the payment of the
principal of and interest on the Bonds and remaining unclaimed for a period of three (3) years
after the Stated Maturity, or applicable redemption date, of the Bonds such moneys were
deposited and are held in trust to pay shall, upon the request of the City, be remitted to the City
against a written receipt therefor. Notwithstanding the above and foregoing, any remittance of
funds from the Paying Agent/Registrar to the City shall be subject to any applicable unclaimed
property laws of the State of Texas.
45616225.7110503948 23
SECTION 29. Ordinance a Contract -Amendments. This Ordinance shall constitute a
contract with the Holders from time to time, be binding on the City, and shall not be amended or
repealed by the City so long as any Bond remains Outstanding except as permitted in this
Section and in Section 45 hereof. The City, may, without the consent of or notice to any
Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental
to the interests of the Holders, including the curing of any ambiguity, inconsistency, or formal
defect or omission herein. In addition, the City may, with the written consent from the owners
holding a majority in aggregate principal amount of the Bonds Similarly Secured then
Outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that,
without the written consent of all Holders of Outstanding Bonds, no such amendment, addition,
or rescission shall (1) extend the time or times of payment of the principal of, premium, if
any, and interest on the Bonds, reduce the principal amount thereof, the redemption price
therefor, or the rate of interest thereon, or in any other way modify the terms of payment of the
principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bond over
any other Bond, or (3) reduce the aggregate principal amount of Bonds or Bonds Similarly
Secured, as the case may be, required to be held for consent to any such amendment, addition,
or rescission.
SECTION 30. Mutilated - Destroyed - Lost and Stolen Bonds. In case any Bond shall
be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a
replacement Bond of like form and tenor, and in the same denomination and bearing a number
not contemporaneously outstanding, in exchange and substitution for such mutilated Bond, or in
lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the
City and after (i) the fling by the Holder thereof with the Paying Agent/ Registrar of evidence
satisfactory to the Paying Agent/ Registrar of the destruction, loss or theft of such Bond, and of
the authenticity of the ownership thereof and (ii) the furnishing to the Paying AgenttRegistrar of
indemnification in an amount satisfactory to hold the City and the Paying AgenflRegistrar
harmless. All expenses and charges associated with such indemnity and with the preparation,
execution and delivery of a replacement Bond shall be borne by the Holder of the Bond
mutilated, or destroyed, lost or stolen.
Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost,
or stolen Bond shall constitute a replacement of the prior obligation of the City, whether or not
the mutilated, destroyed, lost, or stolen Bond shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Ordinance equally and ratably with all other
Outstanding Bonds.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement and payment of mutilated, destroyed,
lost, or stolen Bonds.
SECTION 31. Notices to Holders - Waiver. Wherever this Ordinance provides for notice
to Holders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to
the address of each Holder as it appears in the Security Register.
In any case where notice to Holders is given by mail, neither the failure to mail such
notice to any particular Holders, nor any defect in any notice so mailed, shall affect the
sufficiency of such notice with respect to all other Bonds. Where this Ordinance provides for
notice in any manner, such notice may be waived in writing by the Holder entitled to receive
such notice, either before or after the event with respect to which such notice is given, and such
45616225.7/10503948 24
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 32. Cancellation. All Bonds surrendered for payment, redemption, transfer or
exchange, if surrendered to the Paying Agent/Registrar, shall be promptly cancelled by it and, if
surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already
cancelled, shall be promptly cancelled by the Paying Agent/Registrar, The City may at any time
deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or
registered and delivered which the City may have acquired in any manner whatsoever, and all
Bonds so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled
Bonds held by the Paying Agent/Registrar shall be destroyed as directed by the City.
SECTION 33. Covenants to Maintain Tax -Exempt Status. (a) Definitions. When used
in this Section, the following terms have the following meanings:
"Closing Date" means the date on which the Bonds are first authenticated and delivered
to the initial purchasers against payment therefor.
"Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any,
effective on or before the Closing Date.
"Computation Date" has the meaning set forth in Section 1.148-1(b) of the Regulations.
"Gross Proceeds" means any proceeds as defined in Section 1.148-1(b) of the
Regulations, and any replacement proceeds as defined in Section 1.148-1(c) of the
Regulations, of the Bonds.
"Investment" has the meaning set forth in Section 1.148-1(b) of the Regulations.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and which is not acquired to
carry out the governmental purposes of the Bonds.
"Rebate Amount" has the meaning set forth in Section 1.148-1(b) of the Regulations.
"Regulations" means any proposed, temporary, or final Income Tax Regulations issued
pursuant to sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue
Code of 1954, which are applicable to the Bonds. Any reference to any specific Regulation
shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation
designed to supplement, amend or replace the specific Regulation referenced.
"Yield" of (1) any Investment has the meaning set forth in Section 1.148-5 of the
Regulations and (2) the Bonds has the meaning set forth in Section 1.148-4 of the Regulations.
(b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed directly or indirectly with Gross
Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any
Bond to become includable in the gross income, as defined in section 61 of the Code, of the
owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
45616225.7110503948 25
unless and until the City receives a written opinion of counsel nationally recognized in the field
of municipal bond law to the effect that failure to comply with such covenant will not adversely
affect the exemption from federal income tax of the interest on any Bond, the City shall comply
with each of the specific covenants in this Section.
(c) No Private Use or Private Payments. Except as permitted by section 141 of the
Code and the Regulations and rulings thereunder, the City shall at all times prior to the last
Stated Maturity of Bonds:
(1) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or
indirectly with Gross Proceeds of the Bonds, and not use or permit the use of
such Gross Proceeds (including all contractual arrangements with terms different
than those applicable to the general public) or any property acquired, constructed
or improved with such Gross Proceeds in any activity carried on by any person or
entity (including the United States or any agency, department and instrumentality
thereof) other than a state or local government, unless such use is solely as a
member of the general public; and
(2) not directly or indirectly impose or accept any charge or other
payment by any person or entity who is treated as using Gross Proceeds of the
Bonds or any property the acquisition, construction or improvement of which is to
be financed or refinanced directly or indirectly with such Gross Proceeds, other
than taxes of general application within the City or interest earned on
investments acquired with such Gross Proceeds pending application for their
intended purposes.
(d) No Private Loan. Except to the extent permitted by section 141 of the Code and
the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the Bonds to
make or finance loans to any person or entity other than a state or local government. For
purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a
person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is
sold or leased to such person or entity in a transaction which creates a debt for federal income
tax purposes; (2) capacity in or service from such property is committed to such person or entity
under a take -or -pay, output or similar contract or arrangement; or (3) indirect benefits, or
burdens and benefits of ownership, of such Gross Proceeds or any property acquired,
constructed or improved with such Gross Proceeds are otherwise transferred in a transaction
which is the economic equivalent of a loan.
(e) Not to Invest at Higher Yield. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the
final Stated Maturity of the Bonds directly or indirectly invest Gross Proceeds in any Investment
(or use Gross Proceeds to replace money so invested), if as a result of such investment the
Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money
replaced thereby), whether then held or previously disposed of, exceeds the Yield of the Bonds.
(f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of
the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any
action which would cause the Bonds to be federally guaranteed within the meaning of section
149(b) of the Code and the Regulations and rulings thereunder.
45616225.7110W 46 26
(g) Information Report. The City shall timely file the information required by section
149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and
in such place as the Secretary may prescribe.
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section
148(f) of the Code and the Regulations and rulings thereunder.
(1) The City shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and
apart from all other funds (and receipts, expenditures and investments thereof)
and shall retain all records of accounting for at least six years after the day on
which the last Outstanding Bond is discharged. However, to the extent permitted
by law, the City may commingle Gross Proceeds of the Bonds with other money
of the City, provided that the City separately accounts for each receipt and
expenditure of Gross Proceeds and the obligations acquired therewith.
(2) Not less frequently than each Computation Date, the City shall
calculate the Rebate Amount in accordance with rules set forth in section 148(f)
of the Code and the Regulations and rulings thereunder. The City shall maintain
such calculations with its official transcript of proceedings relating to the issuance
of the Bonds until six years after the final Computation Date.
(3) As additional consideration for the purchase of the Bonds by the
Underwriters and the loan of the money represented thereby and in order to
induce such purchase by measures designed to insure the excludability of the
interest thereon from the gross income of the owners thereof for federal income
tax purposes, the City shall pay to the United States out of an appropriate fund,
or if permitted by applicable Texas statute, regulation or opinion of the Attorney
General of the State of Texas, the Bond Fund the amount that when added to the
future value of previous rebate payments made for the Bonds equals (i) in the
case of a Final Computation Date as defined in Section 1.148-3(e)(2) of the
Regulations, one hundred percent (100%) of the Rebate Amount on such date;
and (ii) in the case of any other Computation Date, ninety percent (90%) of the
Rebate Amount on such date. In all cases, the rebate payments shall be made
at the times, in the installments, to the place and in the manner as is or may be
required by section 148(f) of the Code and the Regulations and rulings
thereunder, and shall be accompanied by Form 8038-T or such other forms and
information as is or may be required by section 148(f) of the Code and the
Regulations and rulings thereunder.
(4) The City shall exercise reasonable diligence to assure that no errors
are made in the calculations and payments required by paragraphs (2) and (3),
and if an error is made, to discover and promptly correct such error within a
reasonable amount of time thereafter (and in all events within one hundred eighty
(180) days after discovery of the error), including payment to the United States of
any additional Rebate Amount owed to it, interest thereon, and any penalty
imposed under Section 1.148-3(h) of the Regulations.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the
eadier of the Stated Maturity or final payment of the Bonds, enter into any transaction that
4%16225.7/10503946 27
reduces the amount required to be paid to the United States pursuant to Subsection (h) of this
Section because such transaction results in a smaller profit or a larger loss than would have
resulted if the transaction had been at arm's length and had the Yield of the Bonds not been
relevant to either party.
Q) Elections. The City hereby directs and authorizes the Mayor, City Manager,
Finance Director and City Secretary, either individually or jointly, to make elections permitted or
required pursuant to the provisions of the Code or the Regulations, as they deem necessary or
appropriate in connection with the Bonds, in the Certificate as to Tax Exemption or similar or
other appropriate certificate, form or document.
SECTION 34. Sale of Bonds. Pursuant to a public sale of the Bonds, the bid submitted
by A.G. Edwards & Sons, Inc. (herein referred to as the "Purchasers") is declared to be the best
bid received producing the lowest true interest cost rate to the City; such bid is hereby accepted
and incorporated herein by reference as a part of this Ordinance for all purposes and the sale of
the Bonds to said Purchasers at the price of par and accrued interest to the date of delivery,
plus a premium of $-0-, is hereby approved and confirmed. Delivery of the Bonds to the
Purchasers shall occur as soon as possible upon payment being made therefor in accordance
with the terms of sale.
SECTION 35. Official Statement. The use of the Preliminary Official Statement, dated
August 2, 2005, in the offering and sale of the Bonds is hereby ratified, confirmed and approved
in all respects, and the City Council hereby finds that the information and data contained in said
Preliminary Official Statement pertaining to the City and its financial affairs is true and correct in
all material respects and no material facts have been omitted therefrom which are necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading. The final Official Statement, which reflects the terms of sale (together with such
changes approved by the Mayor, City Secretary, City Manager or Finance Director, one or more
of said officials), shall be and is hereby in all respects approved and the Purchasers are hereby
authorized to use and distribute said final Official Statement, dated August 9, 2005, in the
reoffering, sale and delivery of the Bonds to the public.
SECTION 36. Control and Custody of Bonds. The Mayor of the City shall be and is
hereby authorized to take and have charge of all necessary orders and records pending
investigation by the Attomey General of the State of Texas, including the printing and supply of
definitive Bonds, and shall take and have charge and control of the Initial Bond(s) pending the
approval thereof by the Attorney General, the registration thereof by the Comptroller of Public
Accounts and the delivery thereof to the Purchasers.
Furthermore, the Mayor, Mayor Pro Tem, City Secretary, City Manager and Finance
Director, any one or more of said officials, are hereby authorized and directed to furnish and
execute such documents and certifications relating to the City and the issuance of the Bonds,
including certifications as to facts, estimates, circumstances and reasonable expectations
pertaining to the use, expenditure and investment of the proceeds of the Bonds, as may be
necessary for the approval of the Attorney General, their registration by the Comptroller of
Public Accounts and the delivery of the Bonds to the Purchasers, and, together with the City's
financial advisor, bond counsel and the Paying Agent/Registrar, make the necessary
arrangements for the delivery of the Initial Bond(s) to the Purchasers and the initial exchange
thereof for definitive Bonds.
45616zzs.7n0so3sa8 28
SECTION 37. Proceeds of Sale. The proceeds of sale of the Bonds, excluding the
accrued interest and premium, if any, received from the purchasers, shall be deposited in a
construction fund maintained at a depository bank of the City. Pending expenditure for
authorized projects and purposes, such proceeds of sale may be invested in authorized
investments in accordance with the provisions of V.T.C.A., Government Code, Chapter 2256,
including guaranteed investment contracts permitted by V.T.C.A., Section 2256.015 at seq.,
and the City's investment policies and guidelines, and any investment earnings realized shall be
expended for such authorized projects and purposes or deposited in the Interest and Sinking
Fund as shall be determined by the City Council. Accrued interest and premium, if any,
received from the Purchasers as well as surplus proceeds of sale of the Bonds, including
investment earnings, remaining after completion of all authorized projects or purposes shall be
deposited to the credit of the Interest and Sinking Fund.
SECTION 38. Least Opinion. The obligation of the Purchasers to accept delivery of the
Bonds is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P., Attorneys,
Dallas, Texas, approving such Bonds as to their validity, said opinion to be dated and delivered
as of the date of delivery and payment for such Bonds. A true and correct reproduction of said
opinion is hereby authorized to be printed on the definitive Bonds or an executed counterpart
thereof shall accompany the global Bonds deposited with the Depository Trust Company.
SECTION 39. CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Bonds shall be of no significance or effect as regards the legality
thereof and neither the City nor attorneys approving said Bonds as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds.
SECTION 40. Benefits of Ordinance. Nothing in this Ordinance, expressed or implied,
is intended or shall be construed to confer upon any person other than the City, the Paying
Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by
reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being
intended to be and being for the sole and exclusive benefit of the City, the Paying
Agent/Registrar and the Holders.
SECTION 41. Inconsistent Provisions. All ordinances, orders or resolutions, or parts
thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby
repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain
controlling as to the matters contained herein.
SECTION 42. Governing Law. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
SECTION 43. Severability. If any provision of this Ordinance or the application thereof
to any circumstance shall be held to be invalid, the remainder of this Ordinance and the
application thereof to other circumstances shall nevertheless be valid, and the Council hereby
declares that this Ordinance would have been enacted without such invalid provisions.
SECTION 44. Construction of Terms. If appropriate in the context of this Ordinance,
words of the singular number shall be considered to include the plural, words of the plural
number shall be considered to include the singular, and words of the masculine, feminine or
neuter gender shall be considered to include the other genders.
45616225.7110503948 29
SECTION 45. Continuing Disclosure Undertaking. (a) Definitions. As used in this
Section, the following terms have the meanings ascribed to such terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each person whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of the Rule
from time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department,
officer, or agency thereof as, and determined by the SEC or its staff to be, a state information
depository within the meaning of the Rule from time to time.
(b) Annual Reports. The City shall provide annually to each NRMSIR and any SID,
within six months after the end of each fiscal year (beginning with the fiscal year ending
September 30, 2005) financial information and operating data with respect to the City of the
general type included in the final Official Statement approved by Section 35 of this Ordinance,
being the information described in Exhibit B hereto. Financial statements to be provided shall
be (1) prepared in accordance with the accounting principles described in Exhibit B hereto and
(2) audited, if the City commissions an audit of such statements and the audit is completed
within the period during which they must be provided. If audited financial statements are not
available at the time the financial information and operating data must be provided, then the City
shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and
any SID with the financial information and operating data and will file the annual audit report
when and if the same becomes available.
If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change
(and of the date of the new fiscal year end) prior to the next date by which the City otherwise
would be required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may
be set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document, if it is available from the
MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
(c) Material Event Notices. The City shall notify any SID and either each NRMSIR or
the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such
event is material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
45616225.1/10503948 30
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner,
of any failure by the City to provide financial information or operating data in accordance with
subsection (b) of this Section by the time required by such Section.
(d) Limitations. Disclaimers. and Amendments. The City shall be obligated to
observe and perform the covenants specified in this Section while, but only while, the City
remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except
that the City in any event will give the notice required by subsection (c) hereof of any Bond calls
and defeasance that cause the City to be no longer such an "obligated person."
The provisions of this Section are for the sole benefit of the Holders and beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or
any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR
BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT,
FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY,
WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities laws.
Notwithstanding anything herein to the contrary, the provisions of this Section may be
amended by the City from time to time to adapt to changed circumstances resulting from a
change in legal requirements, a change in law, or a change in the identity, nature, status, or
type of operations of the City, but only if (1) the provisions of this Section, as so amended,
would have permitted an underwriter to purchase or sell Bonds in the primary offering of the
Bonds in compliance with the Rule, taking into account any amendments or interpretations of
the Rule to the date of such amendment, as well as such changed circumstances, and (2) either
(a) the Holders of a majority in aggregate principal amount (or any greater amount required by
any other provision of this Ordinance that authorizes such an amendment) of the outstanding
Bonds consent to such amendment or (b) a Person that is unaffiliated with the City (such as
nationally recognized bond counsel) determines that such amendment will not materially impair
45616225.7110503948 31
the interests of the Holders and beneficial owners of the Bonds. The provisions of this Section
may also be amended from time to time or repealed by the City if the SEC amends or repeals
the applicable provisions of the Rule or a court of final jurisdiction determines that such
provisions are invalid, but only if and to the extent that reservation of the City's right to do so
would not prevent underwriters of the initial public offering of the Bonds from lawfully purchasing
or selling Bonds in such offering. If the City so amends the provisions of this Section, it shall
included with any amended financial information or operating data filed with each NRMSIR and
SID pursuant to subsection (b) of this Section an explanation, in narrative form, of the reasons
for the amendment and of the impact of any change in the type of financial information or
operating data so provided.
SECTION 46. XLCA Insurance. The Bonds have been sold with the principal of and
interest thereon being insured by XL Capital Assurance Inc. (hereinafter called "XLCA")
pursuant to a Financial Guaranty Insurance Policy. In accordance with the terms and conditions
applicable to insurance provided by XLCA, the City covenants and agrees that, in the event the
principal and interest due on the Bonds shall be paid by XLCA pursuant to the policy referred to
this Section, the assignment and pledge of all funds and all covenants, agreements and other
obligations of the City to the Holders shall continue to exist and XLCA shall be subrogated to the
rights of such Holders; and furthermore, the City covenants and agrees that:
(a) If, on the third business day prior to the related scheduled interest payment date
or principal payment date ("Payment Date") there is not on deposit with the Paying
Agent/Registrar, after making all transfers and deposits required under this Ordinance, moneys
sufficient to pay the principal of and interest on the Bonds due on such Payment Date, the
Paying Agent shall give notice to XLCA and to its designated agent (if any) (the "Insurer's Fiscal
Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York
City time, on such business day. If, on the business day prior to the Payment Date, there is not
on deposit with the Paying Agent/Registrar moneys sufficient to pay the principal of and interest
on the Bonds due on such Payment Date, the Paying Agent/Registrar shall make a claim under
the Insurance Policy and give notice to XLCA and the Insurers Fiscal Agent (if any) by
telephone of the amount of such deficiency, and the allocation of such deficiency between the
amount required to pay interest on the Bonds and the amount required to pay principal of the
Bonds, confirmed in writing to XLCA and the Insurer's Fiscal Agent by 10:00 a.m., New York
City time, on such business day by delivering the Notice of Nonpayment and Certificate.
For the purposes of the preceding paragraph, "Notice" means telephonic or telecopied
notice, subsequently confirmed in a signed writing, or written notice by registered or certified
mail, from the Paying Agent/Registrar to XLCA, which notice shall specify (i) the name of the
entity making the claim, (ii) the policy number, (iii) the claimed amount and (iv) the date such
claimed amount will become Due for Payment. "Nonpayment" means the failure of the City to
have provided sufficient funds to the Paying Agent/Registrar for payment in full of all principal of,
and interest on, the XLCA Insured Bonds that are Due for Payment. "Due for Payment", when
referring to the principal of insured Bonds, means when the stated maturity date or mandatory
redemption date for the application of a required sinking fund installment has been reached and
does not refer to any earlier date on which payment is due by reason of call for redemption
(other than by application of required sinking fund installments, acceleration, or other
advancement of maturity), unless XLCA shall elect, in its sole discretion, to pay such principal
due upon such acceleration; and when referring to interest on insured Bonds, means when the
stated date for payment of interest has been reached. "Certificate" means a certificate in form
and substance satisfactory to XLCA as to the Paying Agent/Registrar's right to receive payment
under the Insurance Policy.
45616225.7/10503946 32
The Paying Agent/Registrar shall designate any portion of payment of principal on
insured Bonds paid by XLCA at maturity on its books as a reduction in the principal amount of
insured Bonds registered to the then current bondholder, whether DTC or its nominee or
otherwise, and shall issue a replacement Bond to XLCA, registered in the name of XLCA, as the
case may be, in a principal amount equal to the amount of principal so paid (without regard to
authorized denominations); provided that the Paying Agent/Registrar's failure to so designate
any payment or issue any replacement Bond shall have no effect on the amount of principal or
interest payable by the City on any Bond or the subrogation rights of XLCA
The Paying Agent/Registrar shall keep a complete and accurate record of all funds
deposited by XLCA into the Policy Payments Account (as defined below) and the allocation of
such funds to payment of interest on and principal paid in respect of any Bond. XLCA shall have
the right to inspect such records at reasonable times upon reasonable notice to the Paying
Agent/Registrar.
Upon payment of a claim under the Insurance Policy the Paying Agent/Registrar shall
establish a separate special purpose trust account for the benefit of Holders referred to herein
as the "Policy Payments Account" and over which the Paying Agent/Registrar shall have
exclusive control and sole right of withdrawal. The Paying Agent/Registrar shall receive any
amount paid under the Insurance Policy in trust on behalf of Holders and shall deposit any such
amount in the Policy Payments Account and distribute such amount only for purposes of making
the payments for which a claim was made. Such amounts shall be disbursed by the Paying
AgentlRegistrar to Holders in the same manner as principal and interest payments are to be
made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall
not be necessary for such payments to be made by checks or wire transfers separate from the
check or wire transfer used to pay debt service with other funds available to make such
payments.
(b) Funds held in the Policy Payments Account shall not be invested by the Paying
Agent/Registrar and may not be applied to satisfy any costs, expenses or liabilities of the Paying
Agent/Registrar. Any funds remaining in the Policy Payments Account following a payment date
for a Bond shall promptly be remitted to XLCA.
(c) Payments with respect to claims for interest on and principal of Bonds disbursed
by the Paying Agent/Registrar from proceeds of the Policy shall not be considered to discharge
the obligation of the City with respect to such Bonds, and XLCA shall become of the owner of
such unpaid Bond and claims for the interest in accordance with the tenor of the assignment
made to it under the provisions of this subsection or otherwise.
(d) No amendment or supplement to this Ordinance may become effective without
prior consent of XLCA. Copies of any amendments made to the documents executed in
connection with the issuance of the Bonds which are consented to by the XLCA shall be sent to
Standard & Poor s Corporation.
(e) Any notice that is required to be given to a Holder of the Bonds or to the Paying
Agent/Registrar pursuant to this Ordinance shall also be provided to XLCA. All notices required
to be given to XLCA under this Ordinance shall be in writing and shall be sent by registered or
certified mail addressed to XL Capital Assurance Inc., 1221 Avenue of the Americas, New York,
New York 10020-1001, Attention: Surveillance.
456162251/10503948 33
(f) XLCA, acting alone, shall have the right to direct all remedies in the event of a
default. XLCA shall be recognized as the registered owner of each bond which it insures for the
purposes of exercising all rights and privileges available to Holders. For Bonds which it insures,
XLCA shall have the right to institute any suit, action, or proceeding at law or in equity under the
same terms as the Holder in accordance with the applicable provisions of this Ordinance.
(g) XLCA shall be explicitly recognized as being a third party beneficiary under this
Ordinance with the power to enforce any right, remedy or claims conferred, given or granted
hereunder.
SECTION 47. Public Meeting. It is officially found, determined, and declared that the
meeting at which this Ordinance is adopted was open to the public and public notice of the time,
place, and subject matter of the public business to be considered at such meeting, including this
Ordinance, was given, all as required by V.T.C.A., Government Code, Chapter 551, as
amended.
SECTION 48. Effective Date. This Ordinance shall take. effective immediately upon its
passage and adoption on the date shown below.
[remainder of page left blank intentionally]
45818225.7110503948 34
PASSED AND ADOPTED, this August 9, 2005.
CITY OF ALLEN, TEXAS
igm
ATTEST:
City Secretary
(City Seal)
45818225]/10503998 S-1
EXHIBIT A
PAYING AGENT/REGISTRAR AGREEMENT
45616225.7110503948 A-1
yt•Ilak
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 45 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Section are as specified (an included in the Appendix or under
the headings of the Official Statement referred to) below:
1. The portions of the financial statements of the City appended to the Official
Statement as Appendix E, but for the most recently concluded fiscal year.
2. The information contained under the heading "Investment Policies -Current
Investments" in the Official Statement and in Tables 1 through 11 of Appendix A to the Official
Statement.
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in
the notes to the financial statements referred to in paragraph 1 above
45818225.7/10503948 B-1