O-3655-4-19 ORDINANCE NO. 3655-4-19
AN ORDINANCE authorizing the issuance of "CITY OF ALLEN, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES
2019"; 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; and resolving other matters incident and related to the issuance,
sale, payment, and delivery of said Bonds, including establishing
parameters therefor and delegating matters relating to the sale and
issuance of the Bonds to authorized City officials
WHEREAS, the City Council of the City of Allen, Texas (the "City"), hereby finds and
determines that revenue bonds should be authorized at this time to construct, improve,
renovate, enlarge or equip property, buildings, structures, facilities or related infrastructure for
the City's Waterworks and Sewer System (the "System") and
WHEREAS, the City shall by this Ordinance, in accordance with the provisions of Texas
Government Code, Chapter 1371, delegate to a Pricing Officer (hereinafter designated) the
authority to determine the principal amount of Bonds to be issued and to negotiate the terms of
sale thereof; and
WHEREAS, the City Council hereby finds and determines that it is a public purpose and
in the best interests of the City to authorize the issuance of the bonds and the terms of such
bonds to be included in a pricing certificate (the "Pricing Certificate") to be executed by the
Pricing Officer (hereafter designated), all in accordance with the provisions of Chapter 1371;
and
WHEREAS, the 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 Chief Financial Officer 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 will mature as to principal on June 1 or December 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, 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:
74216725.1/1001065798
SECTION 1: Authorization - Series Designation - Principal Amount - Purpose - Bond
Date. Revenue bonds of the City shall be and are hereby authorized to be issued in one or
more series in the aggregate principal amount set forth in the Pricing Certificate to be
designated and bear the title "CITY OF ALLEN, TEXAS WATERWORKS AND SEWER
SYSTEM REVENUE BONDS, SERIES 2019" (herein referred to as the "Bonds"), in the amount
specified in the Pricing Certificate to construct, improve, renovate, enlarge or equip property,
buildings, structures, facilities or related infrastructure for the City's Waterworks and Sewer
System, all as provided in the Pricing Certificate and in accordance with the authority conferred
by and in conformity with the Constitution and laws of the State of Texas, including Government
Code, Chapter 1502.051(c) and Texas Government Code, Chapter 1371, as amended. The
Bonds shall be dated (the "Bond Date") as provided in the Pricing Certificate.
SECTION 2: Fully Registered Obligations - Terms. The Bonds shall be issued as fully
registered obligations, without coupons, and the Bonds (other than the Initial Bond(s) referenced
in Section 8 hereof) shall be in denominations of $5,000 or any integral multiple (within a Stated
Maturity) thereof, shall be lettered "R" and numbered consecutively from one (1) upward and
principal shall become due and payable on a date certain in each of the years and in amounts
(the "Stated Maturities") and bear interest at the rate(s) per annum in accordance with the
details of the Bonds as set forth in the Pricing Certificate.
The Bonds shall bear interest on the unpaid principal amounts from the date specified in
the Pricing Certificate at the rate(s) per annum shown in the Pricing Certificate (calculated on
the basis of a 360-day year consisting of twelve 30-day months). Interest on the Bonds shall be
payable in each year, on June 1 and December 1, and commencing on the date set forth in the
Pricing Certificate.
SECTION 3: Delegation of Authority to Pricing Officer. (a) As authorized Texas
Government Code, Chapter 1371, as amended, each of the Mayor and Chief Financial Officer
(either one of them, a "Pricing Officer") is hereby authorized to act on behalf of the City in selling
and delivering the Bonds and carrying out the other procedures specified in this Ordinance,
including determining the aggregate principal amount of the Bonds, the aggregate principal
amount to be issued from each proposition, the date of the Bonds, any additional or different
designation or title by which the Bonds shall be known, the price at which the Bonds will be sold,
the manner of sale (negotiated, privately placed or competitively bid), the years in which the
Bonds will mature, the principal amount to mature in each of such years, the rate of interest to
be borne by each such maturity, the interest payment dates, the record date, the price and
terms upon and at which the Bonds shall be subject to redemption prior to maturity at the option
of the City, as well as any mandatory sinking fund redemption provisions, the terms of any bond
insurance applicable to the Bonds, the determination of the Required Reserve, and all other
matters relating to the issuance, sale, and delivery of the Bonds, including any modification of
the Rule 15c2-12 continuing disclosure undertaking contained in Section 46 hereof, all of which
shall be specified in the Pricing Certificate, provided that:
(i) the aggregate original principal amount of the Bonds shall not
exceed $4,000,000;
(ii) the true interest cost rate for the Bonds shall not exceed 4.00%;
(iii) the maximum maturity date for the Bonds shall not exceed June 1,
2039.
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The execution of the Pricing Certificate shall evidence the sale date of the Bonds by the
City to the Purchasers (hereinafter defined).
(b) The delegation made hereby shall expire if not exercised by the Pricing Officer
within 180 days of the date hereof. The Pricing Officer may exercise such delegation on more
than one occasion during such time period.
SECTION 4: Terms of Payment - Paying 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 the Paying Agent/Registrar for the Bonds shall be as
provided in the Pricing Certificate. Books and records relating to the registration, payment,
exchange and transfer of the Bonds (the "Security Register") shall at all times be kept and
maintained on behalf of the City by the Paying Agent/Registrar, all as provided herein, in
accordance with the terms and provisions of a "Paying Agent/Registrar Agreement,"
substantially in the form attached hereto as Exhibit A and such reasonable rules and
regulations as the Paying Agent/Registrar and the City may prescribe. The Pricing Officer is
hereby 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
commercial bank, trust company, financial institution, or other entity qualified and authorized to
serve in such capacity and perform the duties and services of Paying Agent/Registrar. Upon
any change in the Paying Agent/Registrar for the Bonds, the City agrees to promptly cause a
written notice thereof to be sent to each Holder by United States Mail, first class postage
prepaid, which notice shall also give the address of the new Paying Agent/Registrar.
The Bonds shall be payable at their Stated Maturities or upon their earlier redemption,
only upon the presentation and surrender of the Bonds to the Paying Agent/Registrar at its
designated offices as provided in the Pricing Certificate (the "Designated Payment/Transfer
Office") provided, however, while a Bond is registered to Cede & Co., the payment of principal
upon a partial redemption of the principal amount thereof may be accomplished without
presentation and surrender of such Bond. Interest on a Bond shall be paid by the Paying
Agent/Registrar to the Holders whose names appears in the Security Register at the close of
business on the Record Date (which shall be set forth in the Pricing Certificate) and such
interest payments shall be made (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 on which 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 be closed, then the date for such payment shall be the next
succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking
institutions are authorized to be closed; and payment on such date shall have the same force
and effect as if made on the original date payment was due.
74216725.1/1001065798 3
In the event of a non-payment of interest on one or more maturities of the Bonds 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 past due 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 fifteen (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 the Bonds 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 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 and every Holder of the Bonds issued under and pursuant to the provisions of
this Ordinance, or if appropriate, the nominee thereof. Any Bond may be transferred or
exchanged for Bonds of like maturity, and amount and in 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 at its Designated Payment/Transfer Office 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 assignment or transfer of any Bond (other than the Initial Bond(s)
authorized in Section 8 hereof) for transfer at the Designated Payment/Transfer Office of the
Paying Agent/Registrar, one or more new Bonds, executed on behalf of and furnished by the
City, shall be registered and issued to the assignee or transferee of the previous Holder; such
Bonds to be of authorized denominations, of like Stated Maturity, and of a like aggregate
principal amount as the Bond or Bonds surrendered for transfer.
At the option of the Holder, Bonds (other than the Initial Bond(s) 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 such transfer or exchange of Bonds shall be delivered to the
Holders at the Designated Payment/Transfer Office of the Paying Agent/Registrar or sent by
United States Mail, first class postage prepaid, to the Holders, and, upon the registration and
delivery thereof, the same shall be the valid obligations of the City, evidencing the same
obligation to pay and entitled to the same benefits under this Ordinance, as the 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 canceled 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,
74216725.1/1001065798 4
of the same obligation to pay evidenced by the new 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 the provisions of 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 nor the Paying Agent/Registrar shall be required to transfer or exchange
any Bond called for redemption, in whole or in part, within forty-five (45) days of the date fixed
for the redemption of such Bond; provided, however, such limitation on transferability 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 4 and 5 hereof relating to the payment and transfer/exchange
of the Bonds, the City hereby approves and authorizes the use of "Book-Entry-Only" securities
clearance, settlement, and transfer system provided by The Depository Trust Company ("DTC"),
a limited purpose trust company organized under the laws of the State of New York, in
accordance with the requirements and procedures identified in the current DTC Operational
Arrangements memorandum, as amended, the Blanket Issuer Letter of Representation, by and
between the City and DTC, and the Letter of Representation from the Paying Agent/Registrar to
DTC (collectively, the "Depository Agreement") relating to the Bonds.
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.
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 4 and 5 hereof.
SECTION 7: Execution - Registration. The Bonds shall be executed on behalf of the
City by the Mayor or Mayor Pro Tem under the City's seal reproduced or impressed thereon and
countersigned by the City Secretary. The signature of said officials on the Bonds may be
manual or facsimile. Bonds bearing the manual or facsimile signatures of individuals who are or
were the proper officials 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 Chapter 1201, Texas Government Code, as amended.
74216725.1/1001065798 5
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 9(c), manually executed by the Comptroller of
Public Accounts of the State of Texas, or his or her duly authorized agent, or a certificate of
registration substantially in the form provided in Section 9(d), manually executed by an
authorized officer, employee or representative of the Paying Agent/Registrar, and either such
certificate duly signed upon any Bond shall be conclusive evidence, and the only evidence, that
such Bond has been duly certified, registered, and delivered.
SECTION 8: Initial Bond(s). The Bonds herein authorized shall be initially issued either
(i) as a single fully registered bond in the aggregate principal amount of the Bonds with
principal installments to become due and payable as provided in the Pricing Certificate 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 Registration Certificate of Paying Agent/Registrar,
and the form of Assignment to be printed on each of the Bonds, shall be substantially in the
forms set forth in this Section with such appropriate insertions, omissions, substitutions, and
other variations as are permitted or required by this Ordinance and, with the Bonds to be
completed and modified with the information set forth in the Pricing Certificate, 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 on insured
Bonds and any reproduction of an opinion of counsel) thereon as may, consistently herewith, be
established by the City or determined by the Pricing Officer. The Pricing Certificate shall set
forth the final and controlling forms and terms of the Bonds. 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, 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.
74216725.1/1001065798 6
(b) Form of Bonds.
REGISTERED PRINCIPAL AMOUNT
NO. R- $
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF ALLEN, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE BOND
SERIES 2019
Bond Date: Interest Rate: Stated Maturity: CUSIP No.:
Registered Owner:
Principal Amount: DOLLARS
The City of Allen (hereinafter referred to as the "City"), a body corporate and political
subdivision in the County of Collin, State of Texas, for value received, acknowledges itself
indebted to and hereby promises to pay to the Registered Owner named above, or the
registered assigns thereof, solely from the revenues hereinafter identified, on the Stated
Maturity date specified above the Principal Amount hereinabove stated (or so much thereof as
shall not have been paid upon prior redemption), and to pay interest on the unpaid principal
amount hereof from the interest payment date next preceding the "Registration Date" of this
Bond appearing below (unless this Bond bears a "Registration Date" as of an interest payment
date, in which case it shall bear interest from such date, or unless the "Registration Date" of this
Bond is prior to the initial interest payment date in which case it shall bear interest from the
) at the per annum rate of interest specified above computed on the basis of a 360-day
year of twelve 30-day months; such interest being payable on and
in each year, commencing , until maturity or prior redemption.
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;
provided, however, while this Bond is registered to Cede & Co., the payment of principal upon a
partial redemption of the principal amount hereof may be accomplished without presentation
and surrender of this Bond. Interest is payable to the registered owner of this Bond (or one or
more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose name
appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of
business on the "Record Date", which is the day of the month next preceding
each interest payment date, and interest shall be paid by the Paying Agent/Registrar by check
sent United States Mail, first class postage prepaid, to the address of the registered owner
recorded in the Security Register or by such other method, acceptable to the Paying
Agent/Registrar, requested by, and at the risk and expense of, the registered owner. 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 on which 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 on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made
on the original date payment was due. All payments of principal of, premium, if any, and
74216725.1/1001065798 7
interest on this Bond shall be without exchange or collection charges to the owner hereof and in
any coin or currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts.
This Bond is one of the series specified in its title issued in the aggregate principal
amount of $ (herein referred to as the "Bonds") to construct, improve, renovate,
enlarge or equip property, buildings, structures, facilities or related infrastructure for the City's
Waterworks and Sewer System, under and in strict conformity with the Constitution and laws of
the State of Texas, including Texas Government Code, Chapters 1502 and 1371, as amended,
and pursuant to an Ordinance adopted by the City Council of the City (herein referred to as the
"Ordinance").
[The Bonds maturing on the dates hereinafter identified (the "Term Bonds") are subject
to mandatory redemption prior to maturity with funds on deposit in the Bond Fund established
and maintained for the payment thereof in the Ordinance, and shall be redeemed in part prior to
maturity at the price of par and accrued interest thereon to the date of redemption, and without
premium, on the dates and in the principal amounts as follows:
Term Bonds due Term Bonds due
Redemption Date Principal Amount Redemption Date Principal Amount
The particular Term Bonds of a Stated Maturity to be redeemed on each redemption
date shall be chosen by lot by the Paying Agent/Registrar; provided, however, that the principal
amount of Term Bonds for a Stated Maturity required to be redeemed on a mandatory
redemption date may be reduced, at the option of the City, by the principal amount of Term
Bonds of like Stated Maturity which, at least fifty (50) days prior to a mandatory redemption
date, (1) shall have been acquired by the City at a price not exceeding the principal amount of
such Term Bonds plus accrued interest to the date of purchase thereof, and delivered to the
Paying Agent/Registrar for cancellation or (2) shall have been redeemed pursuant to the
optional redemption provisions appearing below and not theretofore credited against a
mandatory redemption requirement.]
The Bonds maturing on and after , 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 , or on any date thereafter, at the redemption price of
par, together with accrued interest to the date of redemption.
At least thirty (30) 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, in whole or in part, 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.
74216725.1/1001065798 8
In the event a portion of the principal amount of a Bond is to be redeemed and the
registered owner is someone other than Cede & Co., payment of the redemption price of such
principal amount shall be made to the registered owner only upon presentation and surrender of
such Bond to the Designated Payment/Transfer Office of the Paying Agent/Registrar, and a new
Bond or Bonds of like maturity and interest rate in any authorized denominations provided by
the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to
the registered owner, without charge. If a Bond is selected for redemption, in whole or in part,
the City and the Paying Agent/Registrar shall not be required to transfer such Bond to an
assignee of the registered owner within forty-five (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.
With respect to any optional redemption of the Bonds, unless certain prerequisites to
such redemption required by the Ordinance have been met and moneys sufficient to pay the
redemption price of the Bonds to be redeemed shall have been received by the Paying
Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said
redemption is conditional upon the satisfaction of such prerequisites and receipt of such moneys
by the Paying Agent/Registrar on or prior to the date fixed for redemption. If a conditional notice
of redemption is given and such prerequisites to the redemption or sufficient moneys are not
received, such notice shall be of no force and effect, the City shall not redeem such Bonds and
the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption
was given, to the effect that the Bonds have not been redeemed.
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/Transfer Office of the Paying Agent/Registrar, 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 Agent/Registrar; the terms and
provisions upon which the liens, pledges, charges and covenants made therein may be
discharged at or prior to the maturity or redemption of this Bond, and this Bond deemed to be no
longer Outstanding thereunder; and for the other terms and provisions contained therein.
Capitalized terms used herein have the same meanings assigned in the Ordinance.
74216725.1/1001065798 9
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, shall 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 at the Stated Maturity, or its redemption, in whole or in
part, and (iii) on any other date as the owner for all other purposes, and neither the City nor the
Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In the
event of nonpayment of interest on a Bond 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 fifteen (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 registered owner of a Bond
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 properly done, have
happened and have been performed in regular and due time, form and manner as required by
the Constitution and laws of the State of Texas, and the Ordinance; that the 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.
74216725.1/1001065798 10
IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly
executed under the official seal of the City.
CITY OF ALLEN, TEXAS
COUNTERSIGNED: Mayor
City Secretary
(SEAL)
(c) Form of Registration Certificate of Comptroller of Public Accounts to appear on
Initial Bond(s) only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER
OF PUBLIC ACCOUNTS
( REGISTER NO.
THE STATE OF TEXAS
I HEREBY CERTIFY that this Bond has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and duly registered by the Comptroller
of Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
(SEAL)
Comptroller of Public Accounts
of the State of Texas
74216725.1/1001065798 11
(d) Form of Certificate of Paying Agent/Registrar to appear on Definitive Bonds only.
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued and registered in the name of the Registered Owner
shown above under the provisions of the within-mentioned Ordinance; the bond or bonds of the
above entitled and designated series originally delivered having been approved by the Attorney
General of the State of Texas and registered by the Comptroller of Public Accounts, as shown
by the records of the Paying Agent/Registrar.
The designated office of the Paying Agent/Registrar in is the
Designated Payment/Transfer Office for this Bond.
as Paying Agent/Registrar
Registration Date:
By:
Authorized Signature
(e) Form of Assignment.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto
(Print or typewrite name, address, and zip code of transferee):
(Social Security or other identifying number:
the within 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:
NOTICE: The signature on this assignment
Signature guaranteed: must correspond with the name of the
registered owner as it appears on the face
of the within Bond in every particular.
I
74216725.1/1001065798 12
(f) The Initial Bond(s) shall be in the form set forth therefor in paragraph (b) of this
Section, except the form of a single registered Initial Bond shall be modified as follows:
Heading and paragraph one shall be amended to read as follows:
NO. T-1 $
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF ALLEN, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE BOND
SERIES 2019
Bond Date:
Registered Owner:
Principal Amount:
The City of Allen (hereinafter referred to as the "City"), a body corporate and political
subdivision in the County of Collin, State of Texas, for value received, acknowledges itself
indebted to and hereby promises to pay to the registered owner named above, or the registered
assigns thereof, solely from the revenues hereinafter identified, the Principal Amount
hereinabove stated on in the years and in principal installments in
accordance with the following schedule:
Stated Principal Interest
Maturity Installment Rate(s)
(Information to be inserted from Pricing Certificate).
(or so much principal thereof as shall not have been redeemed prior to maturity) and to pay
interest on the unpaid principal installments hereof from the at the per annum rates
of interest specified above computed on the basis of a 360-day year of twelve 30-day months;
such interest being payable on , and each and
thereafter, until maturity or prior redemption. Principal installments of this
Bond are payable in the year of maturity or on a redemption date to the registered owner hereof
by (the "Paying Agent/Registrar"),
upon presentation and surrender, at its designated offices in (the
"Designated Payment/Transfer Office"). Interest is payable to the registered owner of this Bond
whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at
the close of business on the "Record Date," which is the day of the month
next preceding each interest payment date, and interest shall be paid by the Paying
Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of
the registered owner recorded in the Security Register or by such other method, acceptable to
the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner.
All payments of principal of, premium, if any, and interest on this Bond shall be without
exchange or collection charges to the registered 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
74216725.1/1001065798 13
be a Saturday, Sunday, a legal holiday, or a day on which 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 be closed, then the date for such payment shall be the next
succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking
institutions are authorized to be closed; 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 2019", 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
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" — unless other provided in the Pricing Certificate, (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
74216725.1/1001065798 14
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, (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 that, 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 (iv) any other then authorized securities or obligations under
applicable law that may be used to defease obligations such as the Bonds.
"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:
(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 in accordance with the provisions of Section 30
hereof.
"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
74216725.1/1001065798 15
Revenue Refunding Bonds, Series 2009", dated February 1, 2009, originally issued in the
111 principal amount of $5,795,000, (2) "City of Allen, Texas, Waterworks and Sewer System
Revenue Refunding Bonds, Series 2013", dated October 15, 2013, originally issued in the
principal amount of $3,370,000, (3) "City of Allen, Texas, Waterworks and Sewer System
Revenue Refunding Bonds, Series 2014", dated April 1, 2014, originally issued in the principal
amount of $1,280,000, and "City of Allen, Texas, Waterworks and Sewer System Revenue
Bonds, Series 2018", dated July 15 2018, originally issued in the principal amount of
$9,330,000.
"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 Texas Government Code, Chapter 1208, as amended ("Chapter 1208").
Chapter 1208 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 subject to the
filing requirements of Chapter 9, Business & Commerce Code, as amended, 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, as amended, and enable a filing to perfect the security interest in said pledge to occur.
I
74216725.1/1001065798 16
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.
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.
74216725.1/1001065798 17
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.
The amount currently on deposit to the credit of the Reserve Fund in accordance with
the provisions of the ordinances authorizing the issuance of the Previously Issued Bonds will be
stated in the Pricing Certificate (the "Current Reserve"). By reason of the issuance of the
Bonds, the total amount required to be accumulated and maintained in said Fund shall be
determined by the Pricing Officer and specified in the Pricing Certificate (the "Required
Reserve") which amount shall be 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). Beginning on the 25th day of the month following the delivery of
the Bonds and on or before the 25th day of each month thereafter, the City agrees and
covenants to make monthly deposits to the credit of the Reserve Fund from the Net Revenues
of the System equal to not less than 1/60th of the difference between the Required Reserve and
the Current Reserve, if required.
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
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
74216725.1/1001065798 18
proposed Additional Parity Bonds, or, at the option of the City, by the deposit of monthly
111 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.
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.
Notwithstanding anything herein to the contrary, when all Previously Issued Bonds with a
dated date prior to July 15, 2018 are either paid or deemed to have been paid in accordance
with the provisions of the ordinance 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 two letter categories (i.e., AA- or equivalent or higher) by one
nationally recognized municipal securities rating or evaluation services.
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 Chief
Financial Officer (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. Money in any Fund referenced in this
Ordinance may, at the option of the City, be invested in eligible investments described in the
Texas Public Funds Investment Act, Texas Government Code, Chapter 2256, 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
74216725.1/1001065798 19
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.
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 Bonds. 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 Chief Financial Officer 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.
(3) The City has secured a certificate or opinion of a Certified Public
Accountant (the "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
74216725.1/1001065798 20
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;
(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;
and
(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.
74216725.1/1001065798 21
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 Texas Government
Code, Chapter 1502, as amended, 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
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.
74216725.1/1001065798 22
(6) 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 180 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 equally and 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
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
74216725.1/1001065798 23
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 and the Pricing
Certificate, then the pledge of Net Revenues of the System under this Ordinance and all
covenants, agreements, and other obligations of the City to the Holders shall thereupon cease,
terminate, and be discharged and satisfied.
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 Securities shall have been irrevocably deposited in trust with the Paying
Agent/Registrar, or an authorized escrow agent, which Government Securities have been
certified by an independent accounting firm to mature as to principal and interest in such
amounts and at such times as will insure the availability, without reinvestment, of sufficient
money, together with any moneys deposited therewith, if any, to pay when due the principal of
and interest on such 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
Securities 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 Securities held in trust by the Paying Agent/Registrar or
an authorized escrow agent, pursuant to this Section which is not required for the payment of
the 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.
74216725.1/1001065798 24
SECTION 29: Ordinance a Contract - Amendments - Outstanding Bonds. 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 46 hereof. The City, may, without the consent
of or notice to any Holders, from time to time and at any time, amend this Ordinance or the
Pricing Certificate 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; and
with respect to a lost, destroyed, or stolen Bond, a replacement Bond may be issued only upon
the approval of the City and after (i) the filing by the Holder with the Paying Agent/Registrar of
evidence satisfactory to the Paying Agent/Registrar of the destruction, loss, or theft of such
Bond, and of the authenticity of the ownership thereof and (ii) the furnishing to the Paying
Agent/Registrar of indemnification in an amount satisfactory to hold the City and the Paying
Agent/Registrar harmless. All expenses and charges associated with such indemnity and with
the preparation, execution and delivery of a replacement Bond shall be borne by the Holder of
the Bond mutilated, or destroyed, lost, or stolen.
Every replacement Bond issued pursuant to this Section shall be a valid and binding
obligation of the City, and shall be entitled to all the benefits of this Ordinance equally and
ratably with all other Outstanding Bonds; notwithstanding the enforceability of payment by
anyone of the destroyed, lost, or stolen 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: 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.
74216725.1/1001065798 25
"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 (or refinanced) directly or indirectly with
Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest
on any Bond to become includable in the gross income, as defined in Section 61 of the Code, of
the owner thereof for federal income tax purposes. Without limiting the generality of the
foregoing, unless and until the City receives a written opinion of counsel nationally recognized in
the field of municipal bond law to the effect that failure to comply with such covenant will not
adversely affect the exemption from federal income tax of the interest on any Bond, the City
shall comply with each of the specific covenants in this Section.
(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:
(i) 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
74216725.1/1001065798 26
instrumentality thereof) other than a state or local government, unless such use
111 is solely as a member of the general public; and
(ii) 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.
(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:
(i) 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 (6)
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.
74216725.1/1001065798 27
(ii) 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.
(iii) As additional consideration for the purchase of the Bonds by the
Purchasers and the loan of the money represented thereby and in order to
induce such purchase by measures designed to insure the excludability of the
interest thereon from the gross income of the Holders thereof for federal income
tax purposes, the City shall pay to the United States from 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.
(iv) The City shall exercise reasonable diligence to assure that no
errors are made in the calculations and payments required by paragraphs (ii) and
(iii), and if an error is made, to discover and promptly correct such error within a
reasonable amount of time thereafter (and in all events within one hundred eighty
(180) days after discovery of the error), including payment to the United States of
any additional Rebate Amount owed to it, interest thereon, and any penalty
imposed under Section 1.148-3(h) of the Regulations.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by Section 148 of
the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the
earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that
reduces the amount required to be paid to the United States pursuant to subsection (h) of this
Section because such transaction results in a smaller profit or a larger loss than would have
resulted if the transaction had been at arm's length and had the Yield of the Bonds not been
relevant to either party.
(j) Elections. The City hereby directs and authorizes the Mayor, Mayor Pro Tern,
City Manager, Chief Financial Officer, Assistant Chief Financial Officer, and City Secretary of
the City, individually or jointly, to make elections permitted or required pursuant to the provisions
of the Code or the Regulations, as one or more of such persons deems necessary or
appropriate in connection with the Bonds, in the Certificate as to Tax Exemption, or similar or
other appropriate certificate, form, or document.
I
74216725.1/1001065798 28
SECTION 32: Sale of Bonds — Official Statement. The Bonds authorized by this
Ordinance may be sold by the City to the purchaser(s) (herein referred to as the "Purchasers")
by (i) negotiated sale, in accordance with one or more bond purchase agreements (each, a
"Purchase Contract"), (ii) by private placement, in accordance with an agreement to purchase or
other agreement, or (iii) by competitive bidding, in accordance with the successful bid submitted
therefor, as determined by the Pricing Officer, in accordance with Section 3 hereof. The Pricing
Officer is hereby authorized and directed to execute the Purchase Contract, agreement to
purchase in the event of a private placement, or the successful bid form in the event of a
competitive sale, as applicable, for and on behalf of the City and as the act and deed of this City
Council.
The Pricing Officer is hereby authorized and directed to execute said Purchase Contract
for and on behalf of the City and as the act and deed of this City Council.
With regard to such terms and provisions of said Purchase Contract as a result of a
negotiated sale, the Pricing Officer is hereby authorized to come to an agreement with the
Purchasers on the following, among other matters:
1. The details of the purchase and sale of the Bonds;
2. The details of the public offering of the Bonds by the Purchasers;
3. The details of an Official Statement (and, if appropriate, any Preliminary Official
Statement) relating to the Bonds and the City's Rule 15c2-12 compliance;
4. A security deposit for the Bonds;
5. The representations and warranties of the City to the Purchasers;
6. The details of the delivery of, and payment for, the Bonds;
7. The Purchasers' obligations under the Purchase Contract;
8. The certain conditions to the obligations of the City under the Purchase Contract;
9. Termination of the Purchase Contract;
10. Particular covenants of the City;
11. The survival of representations made in the Purchase Contract;
12. The payment of any expenses relating to the Purchase Contract;
13. Notices; and
14. Any and all such other details that are found by the Pricing Officer to be
necessary and advisable for the purchase and sale of the Bonds.
The Mayor and City Secretary of the City are further authorized and directed to deliver
for and on behalf of the City copies of one or more Preliminary Official Statements and Official
Statements, prepared in connection with the offering of the Bonds by the Purchasers, in final
form as may be required by the Purchasers, and such final Official Statement in the form and
74216725.1/1001065798 29
content as approved by the Pricing Officer shall be deemed to be approved by the City Council
of the City and constitute the Official Statement authorized for distribution and use by the
Purchasers.
SECTION 33: Control and Custody of Bonds. The Mayor shall be and is hereby
authorized to take and have charge of all necessary ordinances, resolutions, orders and
records, including the definitive Bonds and the Initial Bond(s), pending the investigation and
approval of the Initial Bond(s) by the Attorney General of the State of Texas, and the registration
of the Initial Bond(s) to the Comptroller of Public Accounts and the delivery thereof to the
Purchasers.
Furthermore, the Mayor, Mayor Pro Tem, City Manager, Chief Financial Officer,
Assistant Chief Financial Officer, and City Secretary of the City, any one or more of said
officials, are hereby authorized and directed to furnish and execute such documents and
certifications relating to the City and the issuance of the Bonds, including a certification as to
facts, estimates, circumstances, and reasonable expectations pertaining to the use,
expenditure, and investment of the proceeds of the Bonds, as may be necessary for the
issuance of the Bonds, the approval of the Attorney General, the registration by the Comptroller
of Public Accounts, and the delivery of the Bonds to the Purchaser 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 Purchaser and the initial exchange
thereof for definitive Bonds.
SECTION 34: Proceeds of Sale. Immediately following the delivery of the Bonds, the
proceeds of sale (less those proceeds of sale designated to pay costs of issuance, amounts to
pay municipal bond insurance premium, if any, any accrued interest received from the
Purchasers of the Bonds and premium in the amount, if any, specified in the Pricing Certificate)
shall be deposited in a construction fund to be maintained at a City depository. Pending
expenditure for authorized projects and purposes, such proceeds of sale deposited to the
construction fund may be invested in authorized investments in accordance with the provisions
of Texas Government Code, Chapter 2256, including guaranteed investment contracts
permitted in Texas Government Code, Section 2256.015, et seq, and any investment earnings
realized may be expended for such authorized projects and purposes or deposited in the Bond
Fund as shall be determined by the City Council. Any excess bond proceeds, including
investment earnings, remaining after completion of all authorized projects or purposes shall be
deposited to the credit of the Bond Fund. Accrued interest and premium in the amount, if any,
specified in the Pricing Certificate received from the sale of the Bonds shall be deposited to the
credit of the Bond Fund. Such proceeds of sale may be invested in authorized investments and
any investment earnings realized may be (with respect to the accrued interest received from the
Purchasers) deposited in the Bond Fund as shall be determined by the City Council of the City.
SECTION 35: Notices to Holders-Waiver. Wherever this Ordinance or the Pricing
Certificate provides for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and sent by United States Mail, first
class postage prepaid, to the address of each Holder appearing in the Security Register at the
close of business on the business day next preceding the mailing of such notice.
In any case in which 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 or the Pricing
Certificate provides for notice in any manner, such notice may be waived in writing by the
74216725.1/1001065798 30
Holder entitled to receive such notice, either before or after the event with respect to which such
notice is given, and such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Paying Agent/Registrar, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
SECTION 36: Cancellation. All Bonds surrendered for payment, redemption, transfer,
exchange, or replacement, 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 returned to
the City.
SECTION 37: Bond Counsel Opinion. The obligation of the Purchasers to accept
delivery of the Bonds is subject to being furnished a final opinion of Norton Rose Fulbright US
LLP, Attorneys, Dallas, Texas, approving the Bonds as to their validity, said opinion to be dated
and delivered as of the date of delivery and payment for the Bonds. A true and correct
reproduction of said opinion is hereby authorized to be printed on the Bonds, or an executed
counterpart thereof is hereby authorized to be either printed on definitive printed obligations or
deposited with DTC along with the global certificates for the implementation and use of the
Book-Entry-Only System used in the settlement and transfer of the Bonds.
SECTION 38: 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 the Bonds as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds.
SECTION 39: Benefits of Ordinance. Nothing in this Ordinance or the Pricing
Certificate, 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 or the Pricing
Certificate, this Ordinance and all of its provisions and the Pricing Certificate being intended to
be and being for the sole and exclusive benefit of the City, the Paying Agent/Registrar, and the
Holders.
SECTION 40: Inconsistent Provisions. All ordinances or resolutions, or parts thereof,
which are in conflict or inconsistent with any provision of this Ordinance or the Pricing
Certificate, are hereby repealed to the extent of such conflict, and the provisions of this
Ordinance and the Pricing Certificate shall be and remain controlling as to the matters contained
herein and therein.
SECTION 41: 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 42: Effect of Headings. The Section headings herein are for convenience of
reference only and shall not affect the construction hereof.
74216725.1/1001065798 31
SECTION 43: Construction of Terms. If appropriate in the context of this Ordinance,
words of the singular number shall be considered to include the plural, words of the plural
number shall be considered to include the singular, and words of the masculine, feminine, or
neuter gender shall be considered to include the other genders.
SECTION 44: Severability. If any provision of this Ordinance or the application thereof
to any circumstance shall be held to be invalid, the remainder of this Ordinance and the
application thereof to other circumstances shall nevertheless be valid, and the City Council of
the City hereby declares that this Ordinance would have been enacted without such invalid
provision.
SECTION 45: Incorporation of Findings and Determinations. The findings and
determinations of the City Council of the City contained in the preamble hereof are hereby
incorporated by reference and made a part of this Ordinance for all purposes as if the same
were restated in full in this Section.
SECTION 46: Continuing Disclosure Undertaking. The Pricing Officer is hereby
authorized to determine whether a continuing disclosure undertaking is required in connection
with the issuance of the Bonds. To the extent it is determined that an undertaking under the
Rule is required, this Section 46 shall apply.
(a) Definitions. As used in this Section, the following terms have the meanings
ascribed to such terms below:
"Financial Obligation" a (a) debt obligation; (b) derivative instrument
entered into in connection with, or pledged as security or a source of payment
for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or
any such derivative instrument; provided that "financial obligation" shall not
include municipal securities as to which a final official statement (as defined in
the Rule) has been provided to the MSRB consistent with the Rule.
"MSRB" means the Municipal Securities Rulemaking Board.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
(b) Annual Reports. The City shall provide annually to the MSRB (1) within six
months after the end of each fiscal year of the City beginning in the year stated in the Pricing
Certificate, financial information and operating data with respect to the City of the general type
included in the final Official Statement approved by the Pricing Officer and described in the
Pricing Certificate, and (2) if not provided as part such financial information and operating data,
audited financial statements of the City, when and if available. Any financial statements to be
provided shall be (i) prepared in accordance with the accounting principles described in the
Pricing Certificate, or such other accounting principles as the City may be required to employ
from time to time pursuant to state law or regulation, and in substantially the form included in the
Official Statement, and (ii) 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 the audit of such
financial statements is not complete within twelve (12) months after any such fiscal year end,
then the City shall file unaudited financial statements within such twelve-month period and
74216725.1/1001065798 32
audited financial statements for the applicable fiscal year, when and if the audit report on such
statements becomes available.
If the City changes its fiscal year, it will notify the MSRB 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 available to the public on the MSRB's Internet Web site or filed with the SEC.
(c) Notice of Certain Events. The City shall provide notice of any of the following
events with respect to the Bonds to the MSRB in a timely manner and not more than 10
business days after occurrence of the event:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(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, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form
5701-TEB), or other material notices or determinations with respect to the tax status of
the Bonds, or other material events affecting the tax status of the Bonds;
(7) Modifications to rights of holders of the Bonds, if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the
Bonds, if material;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership, or similar event of the City, which
shall occur as described below;
(13) The consummation of a merger, consolidation, or acquisition involving the
City or the sale of all or substantially all of its assets, other than in the ordinary course of
business, the entry into of a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than pursuant to
its terms, if material;
74216725.1/1001065798 33
(14) Appointment of a successor or additional trustee or the change of name
of a trustee, if material;
(15) Incurrence of a Financial Obligation of the City, if material, or agreement
to covenants, events of default, remedies, priority rights, or other similar terms of a
Financial Obligation of the City, any of which affect security holders, if material; and
(16) . Default, event of acceleration, termination event, modification of terms,
or other similar events under the terms of a Financial Obligation of the City, any of which
reflect financial difficulties.
For these purposes, (a) any event described in the immediately preceding subsection
(c)12 is considered to occur when any of the following occur: the appointment of a receiver,
fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy
Code or in any other proceeding under state or federal law in which a court or governmental
authority has assumed jurisdiction over substantially all of the assets or business of the City, or
if such jurisdiction has been assumed by leaving the existing governing body and officials or
officers in possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization, arrangement, or
liquidation by a court or governmental authority having supervision or jurisdiction over
substantially all of the assets or business of the City and (b) the City intends the words used in
the immediately preceding subsections (c)15 and (c)16 and the definition of Financial Obligation
in this Section to have the same meanings as when they are used in the Rule, as evidenced by
SEC Release No. 34-83885, dated August 20, 2018.
The City shall notify 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) Filings with the MSRB. All financial information, operating data, financial
statements, notices and other documents provided to the MSRB in accordance with this Section
shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by
identifying information as prescribed by the MSRB.
(e) 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.
74216725.1/1001065798 34
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 to the contrary in this Ordinance, 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
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
include with any amended financial information or operating data next provided pursuant to
subsection (b) hereof 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 47: Municipal Bond Insurance. The Bonds may be sold with the principal of
and interest thereon being insured by a municipal bond insurance provider authorized to
transact business in the State of Texas. The Pricing Officer is hereby authorized to make the
selection of municipal bond insurance (if any) for the Bonds and make the determination of the
provisions of any commitment therefor.
SECTION 48: Further Procedures. Any one or more of the Mayor, Mayor Pro Tem, City
Manager, Chief Financial Officer, Assistant Chief Financial Officer, and City Secretary, are
hereby expressly authorized, empowered and directed from time to time and at any time to do
and perform all such acts and things and to execute, acknowledge and deliver in the name and
on behalf of the City all agreements, instruments, certificates or other documents, whether
mentioned herein or not, as may be necessary or desirable in order to carry out the terms and
provisions of this Ordinance and the issuance of the Bonds. In addition, prior to the initial
delivery of the Bonds, the Mayor, Mayor Pro Tern, City Manager, Chief Financial Officer,
Assistant Chief Financial Officer, City Secretary or Bond Counsel to the City are each hereby
74216725.1/1001065798 35
authorized and directed to approve any technical changes or corrections to this Ordinance or to
any of the documents authorized and approved by this Ordinance, including the Pricing
Certificate: (i) in order to cure any technical ambiguity, formal defect, or omission in the
Ordinance or such other document; or (ii) as requested by the Attorney General of the State of
Texas or his representative to obtain the approval of the Bonds by the Attorney General and if
such officer or counsel determines that such ministerial changes are consistent with the intent
and purpose of the Ordinance, which determination shall be final. In the event that any officer of
the City whose signature shall appear on any document shall cease to be such officer before
the delivery of such document, such signature nevertheless shall be valid and sufficient for all
purposes the same as if such officer had remained in office until such delivery.
SECTION 49: 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 Texas Government Code, Chapter 551, as amended.
SECTION 50: Effective Date. This Ordinance shall take effect and be in full force
immediately from and after its adoption on the date hereof in accordance with the provisions of
Texas Government Code, Section 1201.028, as amended.
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DULY PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, ON THIS THE 9th DAY OF APRIL, 2019.
CITY OF ALLEN, TEXAS
4.4?" 17‘L22
STEPHEN TERRELL
Mayor
ATTEST:
S LLEY B. GEp E
City Secretary
(City Seal)
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74216725.1/1001065798 [signature page to Bond Ordinance]
EXHIBIT A
FORM OF PAYING AGENT/REGISTRAR AGREEMENT
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74216725.1/1001065798 A-1