O-2288-5-04ORDINANCE NO. 2288-5-04
AN ORDINANCE authorizing the issuance of "CITY OF ALLEN, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING AND
IMPROVEMENT BONDS, SERIES 2004"; pledging the net revenues of
the City's combined Waterworks and Sewer System to the payment of the
principal of and interest on said Bonds; enacting provisions incident and
related to the issuance, payment, security and delivery of said bonds,
including the approval and execution of a Paying Agent/Registrar
Agreement, a Purchase Contract and a Special Escrow Agreement and
the approval and distribution of an Official Statement pertaining thereto;
providing for the redemption of the bonds being refunded; and providing
an effective date.
WHEREAS, the City Council of the City of Allen, Texas (the "City") has heretofore
issued, sold, and delivered, and there is currently outstanding, obligations totaling in principal
amount $3,310,000 (collectively, the "Refunded Bonds") more particularly described as follows:
(1) City of Allen, Texas, Waterworks and Sewer System Revenue
Refunding and Improvement Bonds, Series 1992, dated July 15, 1992,
scheduled to mature on June 1 in each of the years 2005 through 2012, and
aggregating in principal amount $695,000 (the "Series 1992 Refunded Bonds");
(2) City of Allen, Texas, Waterworks and Sewer System Revenue
Bonds, Series 1995, dated September 1, 1995, scheduled to mature on June 1 in
each of the years 2006 through 2015, and aggregating in principal amount
$2,615,000 (the "Series 1995 Refunded Bonds");
AND WHEREAS, pursuant to the provisions of V.T.C.A., Government Code,
Chapter 1207, as amended, the City Council is authorized to issue refunding bonds and deposit
the proceeds of sale directly with any place of payment for the Refunded Bonds, or other
authorized depository, and such deposit, when made in accordance with said statute, and
ordinances authorizing the issuance of the Refunded Bonds, shall constitute the making of firm
banking and financial arrangements for their discharge and final payment; and
WHEREAS, the City Council hereby finds and determines that general obligation
refunding bonds should be issued at this time to refund the Refunded Bonds, and such
refunding will result in the City saving approximately $102,536.88 in debt service payments on
such indebtedness and further provide present value savings of approximately $81,021.29; now,
therefore,
WHEREAS, in combination with the revenue bonds issued to refund the Refunded
Bonds, the City Council further finds and determines that revenue bonds in the principal amount
of $3,410,000 for the purpose of providing money to construct, improve, renovate, enlarge or
equip property, buildings, structures, facilities or related infrastructure for the City's Waterworks
and Sewer System (the "System") should be issued and sold at this time•, and
WHEREAS, the Council hereby further finds and determines that all of such revenue
bonds can and should be issued on a party 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
45447933.2
System (the "System) in that (1) the Finance Director of the City will execute a certificate stating
(a) that, to the best of his knowledge and belief, the City is not now in default as to any
covenant, obligation or agreement contained in any ordinance or other proceeding relating to
any obligations of the City payable from and secured by a lien on and pledge of the Net
Revenues of the System that would materially affect the security or payment of such obligations
and (b) payments into all special funds or accounts created and established for the payment
and security of all outstanding obligations payable from and secured by a lien on and pledge of
the Net Revenues of the System have been made and that the amounts on deposit in such
special funds or accounts are the amounts now required to be on deposit therein; (ii) the bonds
herein authorized shall be scheduled to mature as to principal on June 1 in each year; and
(iii) the City has secured a certificate or opinion of a Certified Public Accountant to the effect
that, according to the books and records of the City, the Net Earnings, for the last completed
Fiscal Year, are at least equal to 1.20 times the "Average Annual Debt Service" for all "Bonds
Similarly Secured" to be outstanding after giving effect to the issuance of the bonds herein being
issued; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ALLEN, TEXAS:
SECTION 1: Authorization -Designation -Principal Amount -Purpose. Revenue bonds of
the City shall be and are hereby authorized to be issued in the aggregate principal amount of
$6,710,000 to be designated and bear the title "CITY OF ALLEN, TEXAS, WATERWORKS
AND SEWER SYSTEM REVENUE REFUNDING AND IMPROVEMENT BONDS, SERIES
2004" (hereinafter referred to as the "Bonds"), for the purpose of providing funds for the
discharge and final payment of certain outstanding obligations of the City (identified in the
preamble hereof and referred to as the "Refunded Bonds"), paying costs of issuance, and to
provide funds in the amount of $3,410,000 for providing money to construct, improve, renovate,
enlarge or equip property, buildings, structures, facilities or related infrastructure for the City's
Waterworks and Sewer System, in conformity with the Constitution and laws of the State of
Texas, , including V.T.C.A., Government Code, Chapter 1207, as amended, and Section
1502.051(c).
SECTION 2: Fully Reaistered Obligations - Authorized Denominations - Stated
Maturities - Date. The Bonds shall be issued as fully registered obligations, without coupons,
shall be dated June 1, 2004 (the "Bond Date") and, other than the single fully registered Initial
Bond referenced in Section 8 hereof, shall be in denominations of $5,000 or any integral
multiple thereof (within a Stated Maturity), shall be numbered consecutively from One (1)
upward and shall become due and payable on June 1 in each of the years and in principal
amounts (the "Stated Maturities") and bear interest at per annum rates in accordance with the
following schedule:
Year of
Principal
Interest
Stated Maturity
Amount
Rate(s)
2005
$265,000
4.75%
2006
465,000
4.75%
2007
490,000
4.75%
2008
495,000
4.75%
2009
380,000
4.75%
2010
400,000
5.00%
2011
425,000
5.00%
2012
445,000
5.00%
2013
445,000
5.00%
2014
470,000
4.75%
2015
490,000
5.00%
2016
175,000
5.00%
2017
185,000
5.00%
2018
195,000
5.00%
2019
205,000
5.00%
2020
215,000
5.00%
2021
225,000
5.00%
2022
235,000
5.00%
2023
245,000
5.00%
2024
260,000
5.00%
The Bonds shall bear interest on the unpaid principal amounts from the Bond Date at the
rate(s) per annum shown in the above schedule (calculated on the basis of a 360 -day year of
twelve 30 -day months). Interest on the Bonds shall be payable on June 1 and December 1 in
each year, commencing December 1, 2004.
SECTION 3: Terms of Payment - Paying AcentlReoistrar. The principal of, premium, if
any, and the interest on the Bonds, due and payable by reason of maturity, redemption or
otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter
called the "Holders") appearing on the registration and transfer books maintained by the Paying
Agent/Registrar and the payment thereof shall be in any coin or currency of the United States of
America, which at the time of payment is legal tender for the payment of public and private
debts, and shall be without exchange or collection charges to the Holders.
The selection and appointment of JPMorgan Chase Bank, Dallas, Texas to serve as
Paying Agent/Registrar for the Bonds is hereby approved and confirmed. Books and records
relating to the registration, payment, transfer and exchange of the Bonds (the "Security
Register') shall at all times be kept and maintained on behalf of the City by the Paying
Agent/Registrar, as provided herein and in accordance with the terns and provisions of a
"Paying Agent/ Registrar Agreement", substantially in the form attached hereto as Exhibit A,
and such reasonable rules and regulations as the Paying Agent/Registrar and the City may
prescribe. The Mayor and City Secretary are authorized to execute and deliver such Agreement
in connection with the delivery of the Bonds. The City covenants to maintain and provide a
Paying AgentlRegistrar at all times until the Bonds are paid and discharged, and any successor
Paying Agent/Registrar shall be a bank, trust company, financial institution or other entity
qualified and authorized to serve in such capacity and perform the duties and services of Paying
AgenURegistrar. Upon any change in the Paying AgenURegistrar 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
AgenURegistrar.
Principal of and premium, if any, on the Bonds shall be payable at the Stated Maturities
or upon the earlier redemption thereof, only upon presentation and surrender of the Bonds to
the Paying Agent/Registrar at its designated offices in Dallas, Texas (the "Designated
Payment/Transfer Office"). Interest on the Bonds shall be paid to the Holders whose names
appear in the Security Register at the close of business on the Record Date (the 15th day of the
month next preceding each interest payment date) and shall be paid by the Paying
AgenURegistrar (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
45447933.2
Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for
the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal
holiday, or a day when banking institutions in the City where the Designated Payment/Transfer
Office of the Paying Agent/ Registrar is located are authorized by law or executive order to
close, then the date for such payment shall be the next succeeding day which is not such a
Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and
payment on such date shall have the same force and effect as if made on the original date
payment was due.
In the event of a non-payment of interest on one or more maturities on a scheduled
payment date, and for thirty (30) days thereafter, a new record date for such interest payment
for such maturity or maturities (a "Special Record Date") will be established by the Paying
Agent/Registrar, if and when funds for the payment of such interest have been received from
the City. Notice of the Special Record Date and of the scheduled payment date of the past due
interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5)
business days prior to the Special Record Date by United States Mail, first Gass postage
prepaid, to the address of each Holder of such maturity or maturities appearing on the Security
Register at the close of business on the last business day next preceding the date of mailing of
such notice.
SECTION 4: Redemption. (a) Optional Redemption. The Bonds maturing on and after
June 1, 2015 shall be subject to redemption prior to maturity, at the option of the City, in whole
or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated
Maturity by lot by the Paying Agent/ Registrar), on June 1, 2014 or on any date thereafter at the
redemption price of par plus accrued interest to the date of redemption.
(b) Exercise of Redemption Option. At least forty-five (45) days prior to a date set
for the redemption of Bonds (unless a shorter notification period shall be satisfactory to the
Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of its decision to
exercise the right to redeem Bonds, the principal amount of each Stated Maturity to be
redeemed, and the date set for the redemption thereof. The decision of the City to exercise the
right to redeem Bonds shall be entered in the minutes of the governing body of the City.
(c) Selection of Bonds for Redemption. If less than all Outstanding Bonds of the
same Stated Maturity are to be redeemed on a redemption date, the Paying AgenttRegistrar
shall treat such Bonds as representing the number of Bonds Outstanding which is obtained by
dividing the principal amount of such Bond by $5,000 and shall select the Bonds, or principal
amount thereof, to be redeemed within such Stated Maturity by lot.
(d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date
for the Bonds, a notice of redemption shall be sent by United States Mail, first class postage
prepaid, in the name of the City and at the City's expense, to each Holder of a Bond to be
redeemed in whole or in part at the address of the Holder appearing on the Security Register at
the close of business on the business day next preceding the date of mailing such notice, and
any notice of redemption so mailed shall be conclusively presumed to have been duly given
irrespective of whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii)
identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be
redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price,
(iv) state that the Bonds, or the portion of the principal amount thereof to be redeemed, shall
45417933.2 4
become due and payable on the redemption date specified, and the interest thereon, or on the
portion of the principal amount thereof to be redeemed, shall cease to accrue from and after the
redemption date, (v) specify that payment of the redemption price for the Bonds, or the principal
amount thereof to be redeemed, shall be made at the Designated Paymentlfransfer Office of
the Paying Agent/Registrar only upon presentation and surrender thereof by the Holder and (vi)
state that the redemption of such Bonds is conditional upon the deposit of sufficient funds to pay
the redemption price. If a Bond is subject by its terms to prior redemption and has been called
for redemption and notice of redemption thereof has been duly given or waived as herein
provided, such Bond (or the principal amount thereof to be redeemed) shall become due and
payable, and interest thereon shall cease to accrue from and after the redemption date therefor,
provided moneys sufficient for the payment of such Bonds (or of the principal amount thereof to
be redeemed) at the then applicable redemption price are held for the purpose of such payment
by the Paying AgenURegistrar.
SECTION 5: Recistration - Transfer - Exchance of Bonds - Predecessor Bonds. The
Paying AgenURegistrar shall obtain, record, and maintain in the Security Register the name and
address of each registered owner of the Bonds issued under and pursuant to the provisions of
this Ordinance. Any Bond may, in accordance with its terms and the terms hereof, be
transferred or exchanged for Bonds of other authorized denominations upon the Security
Register by the Holder, in person or by his duly authorized agent, upon surrender of such Bond
to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer
or request for exchange duly executed by the Holder or by his duly authorized agent, in form
satisfactory to the Paying Agent' Registrar.
Upon surrender for transfer of any Bond (other than the Initial Bonds authorized in
Section 8 hereof) at the Designated Payment/Transfer Office of the Paying AgenURegistrar, the
Paying AgenURegistrar shall register and deliver, in the name of the designated transferee or
transferees, one or more new Bonds, executed on behalf of, and furnished by, the City of
authorized denominations and having the same Stated Maturity and of a like aggregate principal
amount as the Bond or Bonds surrendered for transfer.
At the option of the Holder, Bonds (other than the Initial Bonds authorized in Section 8
hereof) may be exchanged for other Bonds of authorized denominations and having the same
Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the
Bonds surrendered for exchange, upon surrender of the Bonds to be exchanged at the
Designated Payment/Transfer Office of the Paying Agent/ Registrar. Whenever any Bonds are
surrendered for exchange, the Paying Agent/Registrar shall register and deliver new Bonds,
executed on behalf of, and furnished by, the City, to the Holder requesting the exchange.
All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the
Designated PaymentlTransfer Office of the Paying Agent/Registrar, or sent by United States
Mail, first class postage prepaid, to the Holder and, upon the delivery thereof, the same shall be
valid obligations of the City, evidencing the same obligation to pay, and entitled to the same
benefits under this Ordinance, as the Bonds surrendered in such transfer or exchange.
All transfers or exchanges of Bonds pursuant to this Section shall be made without
expense or service charge to the Holder, except as otherwise herein provided, and except that
the Paying AgenURegistrar 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.
4544]933.2
Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof
are hereby defined to be "Predecessor Bonds," evidencing all or a portion, as the case may be,
of the same obligation to pay evidenced by the Bond or Bonds registered and delivered in the
exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any
mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued,
registered and delivered in lieu thereof pursuant to Section 30 hereof and such new
replacement Bond shall be deemed to evidence the same obligation as the mutilated, lost,
destroyed, or stolen Bond.
Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange
any Band called for redemption, in whole or in part, within 45 days of the date fixed for
redemption of such Bond; provided, however, such limitation of transfer shall not be applicable
to an exchange by the Holder of the unredeemed balance of a Bond called for redemption in
part.
SECTION 6: Book -Entry Only Transfers and Transactions. Notwithstanding the
provisions contained in Sections 3, 4 and 5 hereof relating to the payment, and
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 operational arrangements referenced in the
Blanket Issuer Letter of Representation, by and between the City and DTC (the "Depository
Agreement").
Pursuant to the Depository Agreement and the rules of DTC, the Bonds shall be
deposited with DTC who shall hold said Bonds for its participants (the "DTC Participants").
While the Bonds are held by DTC under the Depository Agreement, the Holder of the Bonds on
the Security Register for all purposes, including payment and notices, shall be Cede & Co., as
nominee of DTC, notwithstanding the ownership of each actual purchaser or owner of each
Bond (the "Beneficial Owners") being recorded in the records of DTC and DTC Participants.
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 forth shall be assigned, transferred and exchanged on the
Security Register maintained by the Paying Agent/Registrar and payment of such Bonds shall
be made in accordance with the provisions of Sections 3, 4 and 5 hereof.
SECTION 7: Execution - Registration. The Bonds shall be executed on behalf of the
City by the Mayor under its seal reproduced or impressed thereon and countersigned by the
City Secretary. The signature of said officers on the Bonds may be manual or facsimile. Bonds
bearing the manual or facsimile signatures of individuals who are or were the proper officers of
the City on the date of the adoption of this Ordinance shall be deemed to be duly executed on
behalf of the City, notwithstanding that such individuals or either of them shall cease to hold
such offices at the time of delivery of the Bonds to the initial purchaser(s) and with respect to
Bonds delivered in subsequent exchanges and transfers, all as authorized and provided in
V.T.C.A., Government Code, Chapter 1201.
45447933.2
No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Bond either a certificate of registration
substantially in the form provided in Section 9C, manually executed by the Comptroller of Public
Accounts of the State of Texas or his duly authorized agent, or a certificate of registration
substantially in the form provided in Section 9D, manually executed by an authorized officer,
employee or representative of the Paying Agent/ Registrar, and either such certificate upon any
Bond duly signed shall be conclusive evidence, and the only evidence, that such Bond has been
duly certified, registered and delivered.
SECTION 8: Initial Bond(s). The Bonds herein authorized shall be initially issued
either (i) as a single fully registered bond in the total principal amount referenced in Section 1
hereof with principal installments to become due and payable as provided in Section 2 hereof
and numbered T-1, or (ii) as multiple fully registered bonds, being one bond for each year of
maturity in the applicable principal amount and denomination and to be numbered consecutively
from T-1 and upward (hereinafter called the "Initial Bond(s)") and, in either case, the Initial
Bond(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The
Initial Bond(s) shall be the Bonds submitted to the Office of the Attorney General of the State of
Texas for approval, certifled 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 AgenURegistrar may reasonably require.
SECTION 9: Forms. A. Fortes Generally. The Bonds, the Registration Certificate
of the Comptroller of Public Accounts of the State of Texas, the Certificate of Registration, 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 may have such letters, numbers,
or other marks of identification (including identifying numbers and letters of the Committee on
Uniform Securities Identification Procedures of the American Bankers Association) and such
legends and endorsements (including insurance legends in the event the Bonds, or any
maturities thereof, are purchased with insurance and any reproduction of an opinion of counsel)
thereon as may, consistently herewith, be established by the City or determined by the officers
executing such Bonds as evidenced by their execution thereof. Any portion of the text of any
Bonds may be set forth on the reverse thereof, with an appropriate reference thereto on the face
of the Bond.
The definitive Bonds and the Initial Bond(s) shall be printed, lithographed, or engraved,
typewritten, photocopied or otherwise reproduced in any other similar manner, all as determined
by the officers executing such Bonds as evidenced by their execution thereof.
45447933.2
B.
Form of Definitive Bond.
REGISTERED
REGISTERED
NO.
$
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF ALLEN, TEXAS,
WATERWORKS AND SEWER SYSTEM
REVENUE REFUNDING AND IMPROVEMENT BOND
SERIES 2004
Bond Date:
Interest Rate: Stated Maturity: CUSIP NO:
June 1, 2004
_% June 1, 20_
Registered Owner:
Principal Amount:
DOLLARS
The City of Allen (hereinafter referred to as the "City"), a body corporate and municipal
corporation in the County of Collin, State of Texas, for value received, hereby promises to pay
to the order of the Registered Owner named above, or the registered assigns thereof, solely
from the revenues hereinafter identified, on the Stated Maturity date specified above the
Principal Amount stated above (or so much thereof as shall not have been paid upon prior
redemption) and to pay interest (computed on the basis of a 360 -day year of twelve 30 -day
months) on the unpaid Principal Amount hereof from the Bond Date at the per annum rate of
interest specked above; such interest being payable on June 1 and December 1 of each year,
commencing December 1, 2004. 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 AgenURegistrar executing the registration certificate
appearing hereon, or its successor. Interest is payable to the registered owner of this Bond (or
one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose
name appears on the "Security Register' maintained by the Paying Agent/ Registrar at the close
of business on the "Record Date", which is the 15th day of the month next preceding each
interest payment date and interest shall be paid by the Paying Agent/ Registrar by check sent
United States Mail, first class postage prepaid, to the address of the registered owner recorded
in the Security Register or by such other method, acceptable to the Paying Agent(Registrar,
requested by, and at the risk and expense of, the registered owner. All payments of principal of,
premium, if any, and interest on this Bond shall be without exchange or collection charges to the
owner hereof and in any coin or currency of the United States of America which at the time of
payment is legal tender for the payment of public and private debts.
This Bond is one of the series speed in its title issued in the aggregate principal
amount of $6,710,000 (herein referred to as the "Bonds") for the purpose of refunding certain
outstanding obligations, paying costs of issuance and to provide funds in the amount of
$3,410,000 for providing money 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,
45447933.2
including V.T.C.A., Government Code, Chapter 1207 and Section 1502.051(c), and pursuant to
an Ordinance adopted by the City Council of the City (herein referred to as the "Ordinance").
The Bonds maturing on and after June 1, 2015 may be redeemed prior to their Stated
Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any
integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on
June 1, 2014 or on any date thereafter at the redemption price of par plus accrued interest
thereon to the redemption date.
At least thirty days prior to the date fixed for any redemption of Bonds, the City shall
cause a written notice of such redemption to be sent by United States Mail, first class postage
prepaid, to the registered owners of each Bond to be redeemed at the address shown on the
Security Register and subject to the terms and provisions relating thereto contained in the
Ordinance. If a Bond (or any portion of its principal sum) shall have been duly called for
redemption and notice of such redemption duly given, then upon such redemption date such
Bond (or the portion of its principal sum to be redeemed) shall become due and payable, and
interest thereon shall cease to accrue from and after the redemption date therefor, provided
moneys for the payment of the redemption price and the interest on the principal amount to be
redeemed to the date of redemption are held for the purpose of such payment by the Paying
Agent/Registrar.
In the event a portion of the principal amount of a Bond is to be redeemed and the
registered owner is someone other than Cede & Co., payment of the redemption price of such
principal amount shall be made to the registered owner only upon presentation and surrender of
such Bond to the Designated PaymentlTransfer Office of the Paying Agent/Registrar, and a new
Bond or Bonds of like maturity and interest rate in any authorized denominations provided by
the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to
the registered owner, without charge. If a Bond is selected for redemption, in whole or in part,
the City and the Paying Agent/Registrar shall not be required to transfer such Bond to an
assignee of the registered owner within 45 days of the redemption date therefor; provided,
however, such limitation on transferability shall not be applicable to an exchange by the
registered owner of the unredeemed balance of a Bond redeemed in part.
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
45447933.2 9
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.
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 AgenURegistrar, 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
AgenURegistrar to the designated transferee or transferees.
The City and the Paying AgenURegistrar, and any agent of either, may treat the
registered owner whose name appears on the Security Register (i) on the Record Date as the
owner entitled to payment of interest hereon, (ii) on the date of surrender of this Bond as the
owner entitled to payment of principal hereof at its Stated Maturity or its redemption, in whole or
in part, and (iii) on any other date as the owner for all other purposes, and neither the City nor
the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In
the event of non-payment of interest on a scheduled payment date and for thirty (30) days
thereafter, a new record date for such interest payment (a "Special Record Date") will be
established by the Paying Agent/Registrar, if and when funds for the payment of such interest
have been received from the City. Notice of the Special Record Date and of the scheduled
payment date of the past due interest (which shall be 15 days after the Special Record Date)
shall be sent at least five (5) business days prior to the Special Record Date by United States
Mail, first class postage prepaid, to the address of each Holder appearing on the Security
Register at the close of business on the last business day next preceding the date of mailing of
such notice.
It is hereby certified, recited, represented and covenanted that the City is a duly
organized and legally existing municipal corporation under and by virtue of the Constitution and
laws of the State of Texas; that the issuance of the Bonds is duly authorized by law, that all
acts, conditions and things required to exist and be done precedent to and in the issuance of the
Bonds to render the same lawful and valid obligations of the City have been properly done, have
happened and have been performed in regular and due time, forth 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.
45447933.2 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 as of the Bond Date.
CITY OF ALLEN, TEXAS
Mayor
COUNTERSIGNED:
City Secretary
(City Seal)
C '. Form of Registration Certificate of Comolroller of Public Accounts to Appear
on Initial Bond only
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER )
OF PUBLIC ACCOUNTS ) REGISTER NO.
THE STATE OF TEXAS )
I HEREBY CERTIFY that this Bond has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and duly registered by the Comptroller
of Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
(SEAL)
'NOTE TO PRINTER: Do Not Print on Definitive Bonds
45"7933.2 11
D. Form of Certificate of Paving Aaent/Reaistrar to appear on Definitive Bonds
only.
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued and registered under the provisions of the
within -mentioned Ordinance; the bond or bonds of the above entitled and designated series
originally delivered having been approved by the Attorney General of the State of Texas and
registered by the Comptroller of Public Accounts, as shown by the records of the Paying
Agent/Registrar.
The designated offices of the Paying Agent/Registrar in Dallas, Texas is the "Designated
Payment/Transfer Office" for this Bond.
Registration date:
E. Form of Assignment.
JPMORGAN CHASE BANK,
Dallas, Texas,
as Paying Agent/Registrar
By:
Authorized Signature
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto
(Print or typewrite name, address, and zip code of transferee:)
(Social Security or other identifying number.
1 the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints attorney to transfer the
within Bond on the books kept for registration thereof, with full power of substitution in the
premises.
DATED:
Signature guaranteed:
NOTICE: The signature on this
assignment must correspond with the
name of the registered owner as it
appears on the face of the within Bond in
every particular.
F. The Initial Bond(s) shall be in the form set forth in paragraph B of this Section,
except that the form of a single fully registered Initial Bond shall be modified as follows:
(i) immediately under the name of the bond the headings "Interest Rate
"Stated Maturity " and "CUSIP NO.— . shall be omitted;
(ii) Paragraph one shall read as follows:
45447933.2 12
The City of Allen (hereinafter referred to as the "City"), a body corporate and municipal
corporation in the County of Collin, State of Texas, for value received, hereby promises to pay
to the order of the Registered Owner named above, or the registered assigns thereof, solely
from the revenues hereinafter identified, the Principal Amount hereinabove stated on June 1 in
each of the years and in principal installments in accordance with the following schedule:
PRINCIPAL INTEREST
YEAR INSTALLMENTS RATE
(Information to be inserted from schedule in Section 2 hereof).
(or so much thereof as shall not have been prepaid prior to maturity) and to pay interest,
computed on the basis of a 360 -day year of twelve 30 -day months, on the unpaid principal
amounts hereof from the Bond Date at the per annum rates of interest speed above; such
interest being payable on June 1 and December 1 in each year, commencing December 1,
2004. Principal installments of this Bond are payable in the year of maturity or on a prepayment
date to the registered owner hereof by JPMorgan Chase Bank, Dallas, Texas (the "Paying
AgenURegistrar'), upon presentation and surrender, at its designated offices in Dallas, Texas
(the "Designated Payment transfer Office"). Interest is payable to the registered owner of this
Bond whose name appears on the "Security Register" maintained by the Paying
Agent/Registrar at the close of business on the "Record Date", which is the 15" day of the
month next preceding each interest payment date and interest shall be paid by the Paying
Agent'Registrar by check sent United States Mail, first class postage prepaid, to the address of
registered owner recorded in the Security Register or by such other method, acceptable to the
Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All
payments of principal of, premium, if any, and interest on this Bond shall be without exchange or
collection charges to the owner hereof and in any coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public and private
debts.
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 Refunding
and Improvement Bonds, Series 2004", dated June 1, 2004, authorized by this Ordinance.
"Bonds Similarly Secured" - Collectively, the Previously Issued Bonds, the Bonds and
Additional Parity Bonds.
45"7933.2 13
"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 bome, 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" - (i) direct noncallable obligations of the United States of
America, including obligations the principal of and interest on which are unconditionally
guaranteed by the United States of America, (ii) noncallable obligations of an agency or
instrumentality of the United States, including obligations unconditionally guaranteed or insured
by the agency or instrumentality and on the date of their acquisition or purchase by the City are
rated as to investment quality by a nationally recognized investment rating firm not less than
AAA or its equivalent and (iii) noncallable obligations of a state or an agency or a county,
municipality, or other political subdivision of a state that have been refunded and on the date of
their acquisition or purchase by the City, are rated as to investment quality by a nationally
recognized investment rating firth not less than AAA or its equivalent.
"Gross Revenues" - All income, receipts and revenues of every nature derived or
received from the operation and ownership (excluding refundable meter deposits, restricted gifts
and grants in aid of construction) of the System, including earnings and income derived from the
investment or deposit of moneys in any special funds or accounts created and established for
the payment and security of the Bonds Similarly Secured and other obligations payable solely
from and secured only by a lien on and pledge of the Net Revenues.
"Net Earnings" - The meaning assigned to such term in Section 18 hereof.
"Net Revenues" - Gross Revenues of the System, with respect to any period, after
deducting the System's Operating and Maintenance Expenses during such period.
"Operating and Maintenance Expenses" -AII 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
45447933.2 14
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.
"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
Refunding and Improvement Revenue Bonds, Series 1992", dated July 15, 1992, and originally
issued in the aggregate principal amount of $8,545,000, (2) "City of Allen, Texas, Waterworks
and Sewer System Revenue Bonds, Series 1995", dated September 1, 1995, originally issued
in the aggregate principal amount of $4,100,000, and (3) "City of Allen, Texas, Waterworks and
Sewer System Revenue Refunding and Improvement Bonds, Series 1999", dated February 1,
1999, originally issued in the principal amount of $12,545,000.
"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: Pledce. 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
454479332 15
shall constitute a first lien on the Net Revenues of the System and be valid and binding and fully
perfected from and after the date of adoption of this Ordinance without physical delivery or
transfer of control of the Net Revenues, the filing of this Ordinance or any other act; all as
provided in Chapter 1208 of the Texas Government Code.
Section 1208, Government Code, applies to the issuance of the Bonds and the pledge of
the Net Revenues granted by the City under this Section 11, and such pledge is therefore valid,
effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding
such that the pledge of the Net Revenues granted by the City under this Section 11 is to be
subject to the filing requirements of Chapter 9, Business & Commerce Code, then in order to
preserve to the registered owners of the Bonds the perfection of the security interest in said
pledge, the City agrees to take such measures as it determines are reasonable and necessary
under Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce
Code and enable a filing to perfect the security interest in said pledge to occur.
SECTION 12: System Fund. The City hereby covenants and agrees that Gross
Revenues of the System (excluding earnings and income derived from investments held in the
Bond Fund and Reserve Fund) shall be deposited as collected to the credit of a fund maintained
at an official depository of City funds and known on the books and records of the City as the
"Waterworks and Sewer System Fund" (herein called the "System Fund"), and such revenues of
the System shall be kept separate and apart from all other funds of the City. All revenues
deposited in the System Fund shall be pledged and appropriated to the extent required for the
following uses and in the order of priority shown:
(1) To the payment of all necessary and reasonable Operating and
Maintenance Expenses of the System as defined herein or required by statute to
be a first charge on and claim against the Gross Revenues thereof.
(2) To the payment of the amounts required to be deposited in the Bond
Fund for the payment of Debt Service on the Bonds Similarly Secured as the
same becomes due and payable.
(3) To the payment of the amounts required to be deposited in the
Reserve Fund to establish and maintain the Required Reserve in accordance
with the provisions of this Ordinance or any other ordinance relating to issuance
of Bonds Similarly Secured.
Any Net Revenues remaining in the System Fund after satisfying the foregoing
payments, or making adequate and sufficient provision for the payment thereof, may be
appropriated and used for any other City purpose now or hereafter permitted by law.
SECTION 13: Bond Fund. For purposes of providing funds to pay the principal of and
interest on the Bonds as the same becomes due and payable, the City agrees to maintain a
separate and special account or fund on the books and records of the City known as the "City of
Allen Interest and Sinking Revenue Bond Fund" (the "Bond Fund"), and all monies deposited to
the credit of such Fund shall be held in a special banking fund or account maintained at an
official depository of the City. In addition to the deposits to the Bond Fund for the payment of
the Previously Issued Bonds, the City covenants that there shall be deposited into the Bond
Fund prior to each principal and interest payment date from the Net Revenues an amount equal
to one hundred per centum (100%) of the interest on and the principal of the Bonds then falling
due and payable by reason of maturity or redemption, and such deposits to pay principal and
45an032 16
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.
SECTION 14: Reserve Fund. For purposes of accumulating and maintaining funds as a
reserve for the payment of the Bonds Similarly Secured, the City reaffirms its covenant with the
owners of the Previously Issued Bonds and agrees with the Holders of the Bonds to maintain a
separate and special fund or account at a depository of city funds to be known as the "City of
Allen Revenue Bond Reserve Fund" (the "Reserve Fund"), and all funds deposited therein
(excluding earnings and income derived or received from deposits or investments which may be
transferred to the System Fund established in Section 12 hereof during such periods as there is
on deposit in the Reserve Fund the Required Reserve) shall be used solely for the payment of
the principal of and interest on the Bonds Similarly Secured when (whether at maturity, upon a
mandatory redemption date or any interest payment date) other funds available for such
purposes are insufficient, and, in addition, may be used to the extent not required to maintain
the "Required Reserve", to pay, or provide for the payment of, the final principal amount of a
series of Bonds Similarly Secured so that such series of Bonds Similarly Secured is no longer
deemed to be "Outstanding" as such term is defined herein.
In accordance with the provisions of the ordinances authorizing the issuance of the
Previously Issued Bonds, the amount currently on deposit in the Reserve Fund exceeds
$1,271,045 (the "Old Reserve"). By reason of the issuance of the Bonds, the total amount
required to be accumulated and maintained in said Fund is hereby determined to be $1,195,766
(the "Required Reserve") which amount is less than the Old Reserve. Therefore, no additional
deposits shall be required to be made to the Reserve Fund by reason of the issuance of the
Bonds.
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, W 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
45417933.2 17
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
proposed Additional Parity Bonds, or, at the option of the City, by the deposit of monthly
installments, made on or before the 25th day of each month following the month of delivery of
the then proposed Additional Parity Bonds, of not less than 1/60th of the additional amount to be
maintained in said Fund by reason of the issuance of the Additional Parity Bonds then being
issued (or 1/60th of the balance of the additional amount not deposited immediately in cash).
During such time as the Reserve Fund contains the total Required Reserve, the City
may, at its option, withdraw all surplus in the Reserve Fund in excess of the Required Reserve
and deposit such surplus in the System Fund.
SECTION 15: Defidencies: Excess Net Revenues. (a) 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.
(b) Subject to making the required deposits to the Bond Fund and the Reserve Fund
when and as required by this Ordinance, or any ordinance authorizing the issuance of Additional
Parity Bonds, the excess Net Revenues may be used by the City for any lawful purpose.
SECTION 16: Payment of Bonds. While any of the Bonds are Outstanding, the
Finance Director (or other designated financial officer of the City) shall cause to be transferred
to the Paying Agent/Registrar, from funds on deposit in the Bond Fund, and, if necessary, in the
Reserve Fund, amounts sufficient to fully pay and discharge promptly as each installment of
interest and principal of the Bonds accrues or matures or comes due by reason of redemption
prior to maturity; such transfer of funds to be made in such manner as will cause immediately
available funds to be deposited with the Paying Agent/Registrar for the Bonds at the close of the
business day next preceding the date of payment for the Bonds.
SECTION 17: Investments - Security of Funds. (a) Money in any Fund established
pursuant to this Ordinance may, at the option of the City, be placed in time deposits or
certificates of deposit secured (to the extent not insured by the Federal Deposit Insurance
Corporation) by obligations of the type hereinafter described, or be invested, including
investments held in book -entry form, in direct obligations of the United States of America and
obligations guaranteed or insured by the United States of America, which, in the opinion of the
Attorney General of the United States, are backed by its full faith and credit or represent its
general obligations; provided that all such deposits and investments shall be made in such a
manner that the money required to be expended from any Fund will be available at the proper
time or times and provided further the maximum stated maturity for any investment acquired
with money in the Reserve Fund shall be limited to five (5) years from the date of the investment
45447933.2 18
of such money. Such investments (except State and Local Government Series investments
held in book entry form, which shall at all times be valued at cost) shall be valued in terms of
current market value within 45 days of the close of each Fiscal Year and, with respect to
investments held for the account of the Reserve Fund, within 30 days of the date of passage of
each ordinance authorizing the issuance of Additional Parity Bonds. All interest and income
derived from deposits and investments in the Bond Fund immediately shall be credited to, and
any losses debited to, the Bond Fund. All interest and interest income derived from deposits in
and investments of the Reserve Fund shall, subject to the limitations provided in Section 14
hereof, be credited to and deposited in the System Fund. All such investments shall be sold
promptly when necessary to prevent any default in connection with the Bonds.
(b) Money in all Funds created by this Ordinance, to the extent not invested, shall be
secured in the manner and to the fullest extent required by the laws of the State of Texas for the
security of public funds.
SECTION 18: Issuance of Additional Parity Obligations. Subject to the provisions
hereinafter appearing as to conditions precedent which must be satisfied, the City reserves the
right to issue, from time to time as needed, Additional Parity Bonds for any lawful purpose.
Such Additional Parity Bonds may be issued in such form and manner as now or hereafter
authorized by the laws of the State of Texas for the issuance of evidences of indebtedness or
other instruments, and should new methods or financing techniques be developed that differ
from those now available and in normal use, the City reserves the right to employ the same in
its financing arrangements provided only that the following conditions precedent for the
authorization and issuance of the same are satisfied, to wit:
(1) The Finance Director of the City (or other officer of the City then having the
primary responsibility for the financial affairs of the City) shall have executed a certificate stating
(a) that, to the best of his knowledge and belief, the City is not then in default as to any
covenant, obligation or agreement contained in any ordinance or other proceeding relating to
any obligations of the City payable from and secured by a lien on and pledge of the Net
Revenues of the System that would materially affect the security or payment of such obligations
and (b) either (i) payments into all special funds or accounts created and established for the
payment and security of all outstanding obligations payable from and secured by a lien on and
pledge of the Net Revenues of the System have been made and that the amounts on deposit in
such special funds or accounts are the amounts then required to be on deposit therein or (ii) the
application of the proceeds of sale of such obligations then being issued will cure any such
deficiency.
(2) The Additional Parity Bonds shall be scheduled to mature or be payable as to
principal on June 1 or December 1 (or both) in each year the same are to be outstanding or
during the term thereof.
(3) The City has secured a certificate or opinion of a Certified Public Accountant to
the effect that, according to the books and records of the City, the Net Earnings for the last
completed Fiscal Year, or for 12 consecutive months out of the 15 months, immediately
preceding the month the ordinance authorizing the issuance of the Additional Parity Bonds is
adopted are at least equal to 1.20 times the Average Annual Debt Service for all Outstanding
Bonds Similarly Secured after giving effect to the issuance of the Additional Parity Bonds then
being issued. In making a determination of the Net Earnings, theAccountantmay 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
45447933.2 19
Net Earnings are determined and, for purposes of satisfying the above Net Earnings test, make
a pro forma determination of the Net Earnings of the System for the period of time covered by
his certification or opinion based on such change in rates and charges being in effect for the
entire period covered by the Accountant's certificate or opinion.
As used in this Section, the term "Net Earnings" shall mean the Gross Revenues of the
System after deducting the Operating and Maintenance Expenses of the System, but not
depreciation charges or other expenditures which, under generally accepted accounting
principles, should be treated as capital expenditures.
SECTION 19: Refunding Bonds. The City reserves the right to issue refunding bonds to
refund all or any part of the Bonds Similarly Secured (pursuant to any law then available) upon
such terms and conditions as the City Council of the City may deem to be in the best interest of
the City and its inhabitants, and if less than all such Bonds Similarly Secured then outstanding
are refunded, the conditions precedent prescribed (for the issuance of Additional Parity Bonds)
set forth in subparagraph (3) of Section 18 hereof shall be satisfied and the Accountant's
certificate or opinion required in subparagraph (3) shall give effect to the Debt Service of the
proposed refunding bonds (and shall not give effect to the Debt Service of the Bonds Similarly
Secured being refunded following their cancellation or provision being made for their payment).
SECTION 20: Obligations of Inferior Lien and Pledge. The City hereby reserves the
right to issue obligations payable from and secured by a lien on and pledge of the Net
Revenues of the System, junior and subordinate in rank and dignity to the lien and pledge
securing the payment of the Bonds Similarly Secured, as may be authorized by the laws of the
State of Texas.
SECTION 21: Rates and Charges. For the benefit of the Holders of the Bonds and in
addition to all provisions and covenants in the laws of the State of Texas and in this Ordinance,
the City hereby expressly stipulates and agrees, while any of the Bonds are Outstanding, to
establish and maintain rates and charges for facilities and services afforded by the System that
are reasonably expected, on the basis of available information and experience and with due
allowance for contingencies, to produce Gross Revenues in each Fiscal Year sufficient:
(1) To pay Operating and Maintenance Expenses, depreciation
charges and replacement and betterment costs,
(2) To produce Net Revenues sufficient to pay the principal of and
interest on the Bonds Similarly Secured and the amounts required to be
deposited in any reserve or contingency fund created for the payment and
security of the Bonds Similarly Secured, and other obligations or evidences of
indebtedness issued or incurred that are payable only from and secured solely by
a lien on and pledge of the Net Revenues of the System, and
(3) To produce Net Revenues equal to at least 1.20 times the annual
Debt Service for the Fiscal Year on the Outstanding Bonds Similarly Secured.
(4) To pay all other indebtedness payable from the Net Revenues
and/or secured by a lien on the properties or the revenues of the System.
SECTION 22: Maintenance and Operation - Insurance. The City shall maintain the
System in good condition and operate the System in an efficient manner and at reasonable
45"7933.2 20
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.
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 wom out or otherwise unsuitable for use in the
operation of the System. The proceeds of any sale of properties of the System shall be
deposited in the System Fund.
SECTION 24: Records and Accounts. The City hereby covenants and agrees that so
long as any of the Bonds are Outstanding, it will keep and maintain separate and complete
records and accounts pertaining to the operations of the System in which complete and correct
entries shall be made of all transactions relating thereto, as provided by V.T.C.A.,
Government Code, Chapter 1502 or other applicable law. The Holders of any Bonds or any
duly authorized agent or agents of such Holders shall have the right at all reasonable times to
inspect such records, accounts and data relating thereto, and to inspect the System and all
properties comprising same. The City further agrees that following the close of each Fiscal
Year, it will cause an audit of such books and accounts to be made by an independent firm of
Certified Public Accountants. Each such audit, in addition to whatever other matters may be
thought proper by the accountant, shall particularly include the following:
(1) A statement of the income and expenses of the System for such
Fiscal Year.
(2) A balance sheet for the System as of the end of such Fiscal Year.
(3) A statement describing the sources and application of funds of the
System for such Fiscal Year.
(4) The Accountant's comments regarding the manner in which the
City has carried out the requirements of this Ordinance and any other ordinance
authorizing the issuance of Additional Parity Bonds and his recommendations for
any changes or improvements in the operations, records and accounts of the
System.
(5) A list of insurance policies in force at the end of the Fiscal Year
covering the properties of the System, setting out as to each policy the amount
thereof, the risk covered, the name of the insurer and the policy's expiration date.
Expenses incurred in making an annual audit of the operations of the System are to be
regarded as Operating and Maintenance Expenses. Copies of each annual audit shall be
furnished to the Executive Director of the Municipal Advisory Council of Texas at his office in
Austin, Texas, and, upon request, to the initial purchasers of the Bonds and subsequent Holders
of any of said Bonds. The audits herein required shall be made within 120 days following the
close of each Fiscal Year insofar as is possible.
45447933.2 21
SECTION 25: Special Covenants. The City further covenants and agrees by and
through this Ordinance as follows:
(t) It has the lawful power to pledge the Net Revenues of the System to the payment
of the Bonds to the extent provided herein and has lawfully exercised said power under the
Constitution and laws of the State of Texas, and that the Previously Issued Bonds, the Bonds
issued hereunder, together with the Additional Parity Bonds, shall be ratably secured in such
manner that no one bond shall have preference over any other bond of said issues.
(2) The Net Revenues of the System have not been in any manner pledged or
encumbered to the payment of any debt or obligation of the City or the System, save and except
for the Previously Issued Bonds and the Bonds.
(3) No free services of the System shall be allowed, and should the City or any of its
agents or instrumentalities make use of the services and facilities of the System, payment of the
reasonable value thereof shall be made by the City out of funds from sources other than the
revenues and income of the System.
(4) To the extent that it legally may and while any of the Bonds are Outstanding, no
franchise shall be granted for the installation or operation of any competing waterworks or sewer
system facilities.
(5) The City will comply with all of the terms and conditions of any and all franchises,
permits and authorizations applicable to or necessary with respect to the ownership and
operation of municipal facilities for the supply and distribution of potable water and the
collection, treatment and disposal of water -carried wastes, and which have been obtained from
any governmental agency; and the City has or will obtain and keep in full force and effect all
franchises, permits, authorizations and other requirements applicable to or necessary with
respect to the acquisition, construction, equipment, operation and maintenance of such
properties and facilities.
SECTION 26: Remedy in Event of Default. In addition to all rights and remedies
provided by the laws of the State of Texas, the City covenants and agrees particularly that in the
event the City (a) defaults in payments to be made to the Bond Fund or the Reserve Fund as
required by this Ordinance or (b) defaults in the observance or performance of any other of the
covenants, conditions or obligations set forth in this Ordinance, the Holders of any of the Bonds
shall be entitled to a writ of mandamus issued by a court of proper jurisdiction, compelling and
requiring the City and its officers to observe and perform any covenant, condition or obligation
prescribed in this Ordinance. No delay or omission to exercise any right or power accruing
upon any default shall impair any such right or power, or shall be construed to be a waiver of
any such default or acquiescence therein, and every such right and power may be exercised
from time to time and as often as may be deemed expedient.
The specific remedy herein provided shall be cumulative of all other existing remedies
and the specification of such remedy shall not be deemed to be exclusive.
SECTION 27: Special Obligations. The Bonds are special obligations of the City
payable from the pledged Net Revenues of the System and the Holders thereof shall never
have the right to demand payment thereof out of funds raised or to be raised by taxation.
4567933.2 22
SECTION 28: Satisfaction of Obligation of City. If the City shall pay or cause to be paid,
or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on
the Bonds, at the times and in the manner stipulated in this Ordinance, then the pledge of the
Net Revenues of the System under this Ordinance and all other obligations of the City to the
Holders shall thereupon cease, terminate, and become void and be discharged and satisfied.
Bonds or any principal amount(s) thereof shall be deemed to have been paid within the
meaning and with the effect expressed above in this Section when (1) money sufficient to pay in
full such Bonds or the principal amount(s) thereof at maturity or to the redemption date therefor,
together with all interest due thereon, shall have been irrevocably deposited with and held in
trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) non -callable
Government Obligations shall have been irrevocably deposited in trust with the Paying Agent/
Registrar, or an authorized escrow agent, which Government Obligations have been certified by
an independent accounting firm to mature as to principal and interest in such amounts and at
such times as will insure the availability, without reinvestment, of sufficient money, together with
any moneys deposited therewith, if any, to pay when due the principal of and interest on such
Bonds, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice
of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable
to the Paying Agent/Registrar have been made) the redemption date thereof. The City
covenants that no deposit of moneys or Government Obligations will be made under this
Section and no use made of any such deposit which would cause the Bonds to be treated as
"arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as
amended, or regulations adopted pursuant thereto.
Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow
agent, and all income from Government Obligations held in trust by the Paying Agent/Registrar
or an authorized escrow agent, pursuant to this Section which is not required for the payment of
the Bonds, or any principal amount(s) thereof, or interest thereon with respect to which such
moneys have been so deposited shall be remitted to the City or deposited as directed by the
City. Furthermore, any money held by the Paying Agent/Registrar for the payment of the
principal of and interest on the Bonds and remaining unclaimed for a period of four (4) 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 AgentlRegistrar to the City shall be subject to any applicable unclaimed
property laws of the State of Texas.
SECTION 29: Ordinance a Contract -Amendments. This Ordinance shall constitute a
contract with the Holders from time to time, be binding on the City, and shall not be amended or
repealed by the City so long as any Bond remains Outstanding except as permitted in this
Section and in Section 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 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 terns of payment of the
principal of, premium, If any, or interest on the Bonds, (2) give any preference to any Bond over
45447933.2 23
any other Bond, or (3) reduce the aggregate principal amount of Bonds or Bonds Similarly
Secured, as the case may be, required to be held for consent to any such amendment, addition,
or rescission.
SECTION 30: Mutilated - Destroyed - Lost and Stolen Bonds. In case any Bond shall
be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a
replacement Bond of like form and tenor, and in the same denomination and bearing a number
not contemporaneously outstanding, in exchange and substitution for such mutilated Bond, or in
lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the
City and after (i) the filing by the Holder thereof with the Paying Agent/ Registrar of evidence
satisfactory to the Paying Agent/ Registrar of the destruction, loss or theft of such Bond, and of
the authenticity of the ownership thereof and (ii) the furnishing to the Paying AgenURegistrar 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 new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost,
or stolen Bond shall constitute a replacement of the prior obligation of the City, whether or not
the mutilated, destroyed, lost, or stolen Bond shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Ordinance equally and ratably with all other
Outstanding Bonds.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement and payment of mutilated, destroyed,
lost, or stolen Bonds.
SECTION 31: Notices to Holders -Waiver. Wherever this Ordinance provides for notice
to Holders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to
the address of each Holder as it appears in the Security Register.
In any case where notice to Holders is given by mail, neither the failure to mail such
notice to any particular Holders, nor any defect in any notice so mailed, shall affect the
sufficiency of such notice with respect to all other Bonds. Where this Ordinance provides for
notice in any manner, such notice may be waived in writing by the Holder entitled to receive
such notice, either before or after the event with respect to which such notice is given, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 32: Cancellation. All Bonds surrendered for payment, redemption, transfer or
exchange, if surrendered to the Paying Agent/Registrar, shall be promptly cancelled by it and, if
surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already
cancelled, shall be promptly cancelled by the Paying Agent/Registrar. The City may at any time
deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or
registered and delivered which the City may have acquired in any manner whatsoever, and all
Bonds so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled
Bonds held by the Paying Agent/Registrar shall be destroyed as directed by the City.
4s447933.2 24
SECTION 33: Covenants to Maintain Tax-Exemot Status. (a) Definitions. When used
in this Section 33, the following terms have the following meanings:
"Closing Date" means the date on which the Bonds are first authenticated and delivered
to the initial purchasers against payment therefor.
'Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any,
effective on or before the Closing Date.
'Computation Date" has the meaning set forth in Section 1.148-1(b) of the Regulations.
'Gross Proceeds' means any proceeds as defined in Section 1.148-1(b) of the
Regulations, and any replacement proceeds as defined in Section 1.148-1(c) of the
Regulations, of the Bonds.
'Investment" has the meaning set forth in Section 1.148-1(b) of the Regulations.
'Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and which is not acquired to
carry out the governmental purposes of the Bonds.
"Rebate Amount has the meaning set forth in Section 1.148-1(b) of the Regulations.
"Regulations" means any proposed, temporary, or final Income Tax Regulations issued
pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue
Code of 1954, which are applicable to the Bonds. Any reference to any specific Regulation
shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation
designed to supplement, amend or replace the specific Regulation referenced.
"Yield" of (1) any Investment has the meaning set forth in Section 1.148-5 of the
Regulations and (2) the Bonds has the meaning set forth in Section 1.148-4 of the Regulations.
(b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed directly or indirectly with Gross
Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any
Bond to become includable in the gross income, as defined in section 61 of the Code, of the
owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
unless and until the City receives a written opinion of counsel nationally recognized in the field
of municipal bond law to the effect that failure to comply with such covenant will not adversely
affect the exemption from federal income tax of the interest on any Bond, the City shall comply
with each of the specific covenants in this Section.
(c) No Private Use or Private Payments. Except as permitted by section 141 of the
Code and the Regulations and rulings thereunder, the City shall at all times prior to the last
Stated Maturity of Bonds:
(1) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or
indirectly with Gross Proceeds of the Bonds (including property financed with
Gross Proceeds of the Refunded Bonds), and not use or permit the use of such
45447933.2 25
Gross Proceeds (inciuding all contractual arrangements with terms different than
those applicable to the general public) or any property acquired, constructed or
improved with such Gross Proceeds in any activity carried on by any person or
entity (including the United States or any agency, department and instrumentality
thereof) other than a state or local government, unless such use is solely as a
member of the general public; and
(2) not directly or indirectly impose or accept any charge or other
payment by any person or entity who is treated as using Gross Proceeds of the
Bonds (including property financed with Gross Proceeds of the Refunded 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
r
148(f) of the Code and the Regulations andulings thereunder.
(1) The City shall account for all Gross Proceeds (including all
receipts, expenditures and investments thereof) on its books of account
separately and apart from all other funds (and receipts, expenditures and
investments thereof) and shall retain all records of accounting for at least six
45"7933.2 26
years after the day on which the last Outstanding Bond is discharged. However,
to the extent permitted by law, the City may commingle Gross Proceeds of the
Bonds with other money of the City, provided that the City separately accounts
for each receipt and expenditure of Gross Proceeds and the obligations acquired
therewith.
(2) Not less frequently than each Computation Date, the City shall
calculate the Rebate Amount in accordance with rules set forth in section 148(f)
of the Code and the Regulations and rulings thereunder. The City shall maintain
such calculations with its official transcript of proceedings relating to the issuance
of the Bonds until six years after the final Computation Date.
(3) As additional consideration for the purchase of the Bonds by the
Underwriters and the loan of the money represented thereby and in order to
induce such purchase by measures designed to insure the excludability of the
interest thereon from the gross income of the owners thereof for federal income
tax purposes, the City shall pay to the United States out of an appropriate fund,
or if permitted by applicable Texas statute, regulation or opinion of the Attorney
General of the State of Texas, the Bond Fund the amount that when added to the
future value of previous rebate payments made for the Bonds equals (i) in the
case of a Final Computation Date as defined in Section 1.148-3(e)(2) of the
Regulations, one hundred percent (100%) of the Rebate Amount on such date;
and (it) in the case of any other Computation Date, ninety percent (90%) of the
Rebate Amount on such date. In all cases, the rebate payments shall be made
at the times, in the installments, to the place and in the manner as is or may be
required by section 148(f) of the Code and the Regulations and rulings
thereunder, and shall be accompanied by Form 8038-T or such other forms and
information as is or may be required by Section 148(f) of the Code and the
Regulations and rulings thereunder.
(4) The City shall exercise reasonable diligence to assure that no
errors are made in the calculations and payments required by paragraphs (2) and
(3), and If an error is made, to discover and promptly correct such error within a
reasonable amount of time thereafter (and in all events within one hundred eighty
(180) days after discovery of the error), including payment to the United States of
any additional Rebate Amount owed to it, interest thereon, and any penalty
imposed under Section 1.148-3(h) of the Regulations.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the
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 K the transaction had been at arm's length and had the Yeld of the Bonds not been
relevant to either party.
Q) Elections. The City hereby directs and authorizes the Mayor, City Manager,
Finance Director and City Secretary, either individually or jointly, to make elections permitted or
required pursuant to the provisions of the Code or the Regulations, as they deem necessary or
appropriate in connection with the Bonds, in the Certificate as to Tax Exemption or similar or
other appropriate certificate, form or document.
45447933.2 27
N Bonds Not Hedge Bonds. (1) At the time the original bonds refunded by the
Bonds were issued, the City reasonably expected to spend at least 85% of the spendable
proceeds of such bonds within three years after such bonds were issued and (2) not more than
50% of the proceeds of the original bonds refunded by the Bonds were invested in Nonpurpose
Investments having a substantially guaranteed Yield for a period of 4 years or more.
(1) Current Refunding. A portion of the Bonds is issued to pay and discharge in full
the Series 1992 Refunded Bonds and such payment of the Series 1992 Refunded Bonds will
occur within ninety (90) days after the issuance of the Bonds.
(m) Qualified Advance Refunding. A portion of the Bonds is issued to refund the
Series 1995 Refunded Bonds, and the Bonds will be issued more than 90 days before the
redemption of the Series 1995 Refunded Bonds. The City represents as follows:
(1) The Bonds are the first advance refunding of the Series 1995
Refunded Bonds within the meaning of section 149(d)(3) of the Code.
(b) The Series 1995 Refunded Bonds are being called for redemption,
and will be redeemed not later than the earliest date on which such bonds may
be redeemed.
(c) The initial temporary period under section 148(c) of the Code will
end: (i) with respect to the proceeds of the Bonds not later than 30 days after the
date of issue of such Bonds; and (ii) with respect to proceeds of the Series 1995
Refunded Bonds on the Closing Date if not ended prior thereto.
(d) On and after the date of issue of the Bonds, no proceeds of the
Series 1995 Refunded Bonds will be invested in Nonpurpose Investments having
a Yield in excess of the Yield on such Series 1995 Refunded Bonds.
(e) The Bonds are being issued for the purposes stated in the
preamble of this Ordinance. There is a present value savings associated with
the refunding. In the issuance of the Bonds the City has neither:
(i) overburdened the tax-exempt bond market by issuing more bonds, issuing
bonds earlier or allowing bonds to remain outstanding longer than reasonably
necessary to accomplish the governmental purposes for which the Bonds were
issued; (ii) employed on 'abusive arbitrage device" within the meaning of Section
1.148-10(a) of the Regulations; nor (iii) employed a "device" to obtain a material
financial advantage based on arbitrage, within the meaning of section 149(d)(4)
of the Code, apart from savings attributable to lower interest rates and reduced
debt service payments in early years.
SECTION 34: Sale of Bonds - Official Statement Approval. The Bonds authorized by
this Ordinance are hereby sold by the City to First Southwest Company and Estrada Hinojosa &
Company, Inc. (herein referred to as the "Purchasers) in accordance with the Purchase
Contract, dated May 11, 2004, attached hereto as Exhibit B and incorporated herein by
reference as a part of this Ordinance for all purposes. The Mayor is hereby authorized and
directed to execute said Purchase Contract for and on behalf of the City and as the act and
deed of this Council, and in regard to the approval and execution of the Purchase Contract, the
Council hereby finds, determines and declares that the representations, warranties and
45447933.2 28
agreements of the City contained in the Purchase Contract are true and correct in all material
respects and shall be honored and performed by the City.
Furthermore, the use of the Official Statement by the Purchasers in connection with the
public offering and sale of the Bonds is hereby ratified, confirmed and approved in all respects.
The final Official Statement, which reflects the terms of sale, attached as Exhibit A to the
Purchase Contract (together with such changes approved by the Mayor, Mayor Pro Tem, City
Secretary, City Manager, or Finance Director, one or both of said officials), shall be and is
hereby in all respects approved and the Purchasers are hereby authorized to use and distribute
said final Official Statement, dated May 11, 2004, in the reoffering, sale and delivery of the
Bonds to the public. The Mayor and City Secretary are further authorized and directed to
manually execute and deliver for and on behalf of the City copies of said Official Statement in
final form as may be required by the Purchasers, and such final Official Statement in the form
and content manually executed by said officials shall be deemed to be approved by the City
Council and constitute the Official Statement authorized for distribution and use by the
Purchasers.
SECTION 35: Soecial Escrow Acreement Approval and Execution. The "Special
Escrow Agreement (the "Agreement") by and between the City and JPMorgan Chase Bank,
Dallas, Texas (the "Escrow AgenP), attached hereto as Exhibit C and incorporated herein by
reference as a part of this Ordinance for all purposes, is hereby approved as to form and
content, and such Agreement in substantially the form and substance attached hereto, together
with such changes or revisions as may be necessary to accomplish the refunding or benefit the
City, is hereby authorized to be executed by the Mayor and City Secretary for and on behalf of
the City and as the act and deed of this City Council; and such Agreement as executed by said
officials shall be deemed approved by the City Council and constitute the Agreement herein
approved.
Furthermore, appropriate officials of the City in cooperation with the Escrow Agent are
hereby authorized and directed to make the necessary arrangements for the purchase of the
Federal Securities referenced in the Agreement and the delivery thereof to the Escrow Agent on
the day of delivery of the Bonds to the Purchasers for deposit to the credit of the "SPECIAL
2004 CITY OF ALLEN, TEXAS, REVENUE REFUNDING BOND ESCROW FUND" (the
"Escrow Fund'); all as contemplated and provided in V.T.C.A. Government Code, Chapter 1207,
as amended, this Ordinance and the Agreement.
SECTION 36: Control and Custody of Bonds. The Mayor of the City shall be and is
hereby authorized to take and have charge of all necessary orders and records pending
investigation by the Attorney General of the State of Texas, including the printing and supply of
definitive Bonds, and shall take and have charge and control of the Initial Bond(s) pending the
approval thereof by the Attorney General, the registration thereof by the Comptroller of Public
Accounts and the delivery thereof to the Purchasers.
Furthermore, the Mayor, Mayor Pro Tem, City Secretary, City Manager and Finance
Director, any one or more of said officials, are hereby authorized and directed to furnish and
execute such documents and certifications relating to the City and the issuance of the Bonds,
including certifications as to facts, estimates, circumstances and reasonable expectations
pertaining to the use, expenditure and investment of the proceeds of the Bonds, as may be
necessary for the approval of the Attorney General, their registration by the Comptroller of
Public Accounts and the delivery of the Bonds to the Purchasers, and, together with the City's
financial advisor, bond counsel and the Paying AgentlRegistrar, make the necessary
45447933.2 29
arrangements for the delivery of the Initial Bond(s) to the Purchasers and the initial exchange
thereof for definitive Bonds.
SECTION 37: Redemption of Refunded Bonds. (a) The bonds of that series known as
"City of Allen, Texas, Waterworks and Sewer System Revenue Refunding and Improvement
Bonds, Series 1992", dated July 15, 1992, maturing in the years 2005 through 2012, and
aggregating in principal amount $695,000, shall be redeemed and the same are hereby called
for redemption on June 17, 2004, at the price of par and accrued interest to the date of
redemption. The City Secretary is hereby authorized and directed to file a copy of this
Ordinance, together with a suggested form of notice of redemption to be sent to bondholders,
with JPMorgan Chase Bank, Dallas, Texas (successor paying agent'registrar to Ameritrust
Texas, National Association), in accordance with the redemption provisions applicable to such
bonds; such suggested form of notice of redemption being attached hereto as Exhibit D and
incorporated herein by reference as a part of this Ordinance for all purposes.
(b) The bonds of that series known as "City of Allen, Texas, Waterworks and Sewer
System Revenue Bonds, Series 1995", dated September 1, 1995, maturing in the years 2006
through 2015, and aggregating in principal amount $2,615,000, shall be redeemed and the
same are hereby called for redemption on June 1, 2005, at the price of par and accrued interest
to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of
this Ordinance, together with a suggested form of notice of redemption to be sent to
bondholders, with JPMorgan Chase Bank, Dallas, Texas (successor paying agentlregistrar to
Texas Commerce Bank, National Association), in accordance with the redemption provisions
applicable to such bonds; such suggested form of notice of redemption being attached hereto
as Exhibit E and incorporated herein by reference as a part of this Ordinance for all purposes.
The redemption of the obligations described above being associated with the refunding
of such obligations, the approval, authorization and arrangements herein given and provided for
the redemption of such obligations on the redemption dates designated therefor and in the
manner provided shall be irrevocable upon the issuance and delivery of the Bonds; and the City
Secretary is hereby authorized and directed to make all arrangements necessary to notify the
holders of such obligations of the City's decision to redeem such obligations on the date and in
the manner herein provided and in accordance with the ordinances authorizing the issuance of
the obligations and this Ordinance.
SECTION 38: Proceeds of Sale. Immediately following the delivery of the Bonds, the
proceeds of sale thereof (less certain costs of issuance, the accrued interest received from the
Purchasers of the Bonds and the amounts to be deposited to the construction fund) shall be
deposited with the Escrow Agent for application and disbursement in accordance with the
provisions of the Agreement. The proceeds of sale of the Bonds not so deposited with the
Escrow Agent for the refunding of the Refunded Bonds shall be disbursed and deposited for
payment of costs of issuance and deposited in the construction fund and the Bond Fund in
accordance with written instructions from the City. Pending expenditure for authorized projects
and purposes, such proceeds of sale deposited in the construction fund may be invested in
authorized investments and, subject to the provisions of Section 33(h) hereof, any investment
earnings realized shall be expended for such authorized projects and purposes or deposited in
the Bond Fund as shall be determined by the City Council.
SECTION 39: Legal Opinion. The obligation of the Purchasers to accept delivery of the
Bonds is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P., Attorneys,
Dallas, Texas, approving such Bonds as to their validity, said opinion to be dated and delivered
45447933.2 30
as of the date of delivery and payment for such Bonds. A true and correct reproduction of said
opinion is hereby authorized to be printed on the definitive Bonds or an executed counterpart
thereof shall accompany the global Bonds deposited with the Depository Trust Company.
SECTION 40: CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Bonds shall be of no significance or effect as regards the legality
thereof and neither the City nor attorneys approving said Bonds as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds.
SECTION 41: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied,
is intended or shall be construed to confer upon any person other than the City, the Paying
AgentlRegistrar and the Holders, any right, remedy, or claim, legal or equitable, under or by
reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being
intended to be and being for the sole and exclusive benefit of the City, the Paying
AgentlRegistrar and the Holders.
SECTION 42: Inconsistent Provisions. All ordinances, orders or resolutions, or parts
thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby
repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain
controlling as to the matters contained herein.
SECTION 43: 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 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 Council hereby
declares that this Ordinance would have been enacted without such invalid provisions.
SECTION 45: 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 46: Continuing Disclosure Undertaking. (a)Definitions. As used in this
Section, the following terms have the meanings ascribed to such terms below:
SECTION 47: Continuing Disclosure Undertaking. (a) Definitions. As used in this
Section, the following terms have the meanings ascribed to such terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each person whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of the Rule
from time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
45441933.2 31
"SID" means any person designated by the State of Texas or an authorized department,
officer, or agency thereof as, and determined by the SEC or its staff to be, a state information
depository within the meaning of the Rule from time to time.
(b) Annual Reports. The City shall provide annually to each NRMSIR and any SID,
within six months after the end of each fiscal year (beginning with the fiscal year ending
September 30, 2004) financial information and operating data with respect to the City of the
general type included in the final Official Statement approved by Section 34 of this Ordinance,
being the information described in Exhibit F hereto. Financial statements to be provided shall
be (1) prepared in accordance with the accounting principles described in Exhibit F hereto and
(2) audited, if the City commissions an audit of such statements and the audit is completed
within the period during which they must be provided. If audited financial statements are not
available at the time the financial information and operating data must be provided, then the City
shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and
any SID with the financial information and operating data and will file the annual audit report
when and if the same becomes available.
If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change
(and of the date of the new fiscal year end) prior to the next date by which the City otherwise
would be required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may
be set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document, K it is available from the
MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
(c) Material Event Notices. The City shall notify any SID and either each NRMSIR or
the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such
event is material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
8. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner,
of any failure by the City to provide financial information or operating data in accordance with
subsection (b) of this Section by the time required by such Section.
(d) Limitations, Disclaimers, and Amendments. The City shall be obligated to
observe and perform the covenants specified in this Section while, but only while, the City
remains an 'obligated person" with respect to the Bonds within the meaning of the Rule, except
that the City in any event will give the notice required by subsection (c) hereof of any Bond calls
and defeasance that cause the City to be no longer such an "obligated person."
45447933.2 32
The provisions of this Section are for the sole benefit of the Holders and beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or
any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR
BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT,
FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY,
WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities laws.
Notwithstanding anything herein to the contrary, the provisions of this Section may be
amended by the City from time to time to adapt to changed circumstances resulting from a
change in legal requirements, a change in law, or a change in the identity, nature, status, or
type of operations of the City, but only if (1) the provisions of this Section, as so amended,
would have permitted an underwriter to purchase or sell Bonds in the primary offering of the
Bonds in compliance with the Rule, taking into account any amendments or interpretations of
the Rule to the date of such amendment, as well as such changed circumstances, and (2) either
(a) the Holders of a majority in aggregate principal amount (or any greater amount required by
any other provision of this Ordinance that authorizes such an amendment) of the outstanding
Bonds consent to such amendment or (b) a Person that is unaffiliated with the City (such as
nationally recognized bond counsel) determines that such amendment will not materially impair
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 the SEC amends or repeals
the applicable provisions of the Rule or a court of final jurisdiction determines that such
provisions are invalid, but only if and to the extent that reservation of the City's right to do so
would not prevent underwriters of the initial public offering of the Bonds from lawfully purchasing
or selling Bonds in such offering. If the City so amends the provisions of this Section, it shall
included with any amended financial information or operating data filed with each NRMSIR and
SID pursuant to subsection (b) of this Section an explanation, in narrative form, of the reasons
for the amendment and of the impact of any change in the type of financial information or
operating data so provided.
SECTION 48: Insurance. The Bonds have been sold with the principal of and interest
thereon being insured by Financial Security Assurance Inc. (hereinafter called "FSA") pursuant
to an Insurance Policy. In accordance with the terms and conditions applicable to insurance
45447933.2 33
provided by FSA, the City covenants and agrees that, in the event the principal and interest due
on the Bonds shall be paid by FSA pursuant to the policy referred to this Section, the
assignment and pledge of all funds and all covenants, agreements and other obligations of the
City to the Holders shall continue to exist and FSA shall be subrogated to the rights of such
Holders; and furthermore, the City covenants and agrees that:
(a) FSA shall be included as a third party beneficiary to this Ordinance.
(b) FSA shall be deemed to be a Holder of the Bonds for the purpose of exercising
any voting right or privilege or giving any consent or direction or taking any other action that the
Holders of the Bonds by it are entitled to take pursuant to Section 27 of this Ordinance.
(c) No amendment or supplement to this Ordinance may become effective without
prior consent of FSA.
Copies of any modification or amendment to this Ordinance shall be sent to Standard &
Poor's Credit Market Services and Moody's Investors Service, Inc. at least 10 days prior to the
effective date thereof.
(d) The rights granted to FSA under this Ordinance to request, consent to or direct
any action are rights granted to FSA in consideration of its issuance of the Insurance Policy.
Any exercise by FSA of such rights is merely an exercise of the FSA's contractual rights and
shall not be construed or deemed to be taken for the benefit or on behalf of the Holders nor
does such action evidence any position of FSA, positive or negative, as to whether Holder
consent is required in addition to consent of FSA.
(e) Claims upon the Insurance Policy and Payments by and to FSA. If, on the third
business day prior to the related scheduled interest payment date or principal payment date
("Payment Date") there is not on deposit with the Paying Agent/Registrar, after making all
transfers and deposits required under this Ordinance, moneys sufficient to pay the principal of
and interest on the Bonds due on such Payment Date, the Paying Agent shall give notice to
FSA and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy
of the amount of such deficiency by 12:00 noon, New York City time, on such business day. If,
on the second business day prior to the Payment Date, there continues to be a deficiency in the
amount available to pay the principal of and interest on the Bonds due on such Payment Date,
the Paying Agent/Registrar shall make a claim under the Insurance Policy and give notice to
FSA and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and
the allocation of such deficiency between the amount required to pay interest on the Bonds and
the amount required to pay principal of the Bonds, confirmed in writing to FSA and the Insurer's
Fiscal Agent by 12:00 noon, New York City time, on such second business day by filling in the
form of Notice of Claim and Certificate delivered with the Insurance Policy.
In the event the claim to be made is for a mandatory sinking fund redemption
installment, upon receipt of the moneys due, the Paying Agent/Registrar shall authenticate and
deliver to affected Holders who surrender their Bonds a new Bond or Bonds in an aggregate
principal amount equal to the unredeemed portion of the Bond surrendered. The Paying
Agent/Registrar shall designate any portion of payment of principal on Bonds paid by FSA,
whether by virtue of mandatory sinking fund redemption, maturity or other advancement of
maturity, on its books as a reduction in the principal amount of Bonds registered to the then
current Holder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond
to FSA, registered in the name of Financial Security Assurance Inc., in a principal amount equal
45447933.2 34
to the amount of principal paid (without regard to authorized denominations); provided that the
Paying Agent/Registrar's failure to so designate any payment or issue any replacement Bond
shall have no effect on the amount of principal or interest payable by the City on any Bond or
the subrogation rights of FSA.
The Paying Agent/Registrar shall keep a complete and accurate record of all funds
deposited by FSA into the Policy Payments Account (as defined below) and the allocation of
such funds to payment of interest on and principal paid in respect of any Bond. FSA shall have
the right to inspect such records at reasonable times upon reasonable notice to the Paying
Agent(Registrar.
Upon payment of a claim under the Insurance Policy the Paying Agent/Registrar shall
establish a separate special purpose trust account for the benefit of Holders referred to herein
as the "Policy Payments Account" and over which the Paying Agent/Registrar shall have
exclusive control and sole right of withdrawal. The Paying Agent/Registrar shall receive any
amount paid under the Insurance Policy in trust on behalf of Holders and shall deposit any such
amount in the Policy Payments Account and distribute such amount only for purposes of making
the payments for which a claim was made. Such amounts shall be disbursed by the Paying
AgenURegistrar to Holders in the same manner as principal and interest payments are to be
made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall
not be necessary for such payments to be made by checks or wire transfers separate from the
check or wire transfer used to pay debt service with other funds available to make such
payments.
Funds held in the Policy Payments Account shall not be invested by the Paying
Agent/Registrar and may not be applied to satisfy any costs, expenses or liabilities of the Paying
Agent/Registrar. Any funds remaining in the Policy Payments Account following a payment date
for a Bon shall promptly be remitted to FSA.
(f) FSA shall, to the extent it makes any payment of principal or interest on the
Bonds, become subrogated to the rights of the recipients of such payments in accordance with
the terms of the Insurance Policy. The obligation to FSA shall survive discharge or termination
of this Ordinance.
(g) FSA shall be entitled to pay principal or interest on the Bonds that shall become
Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are
defined in the Insurance Policy) and any amounts due on the Bonds as a result of acceleration
of the maturity thereof in accordance with this Ordinance, whether or not FSA has received a
Notice (as defined in the Insurance Policy) of Nonpayment or a claim upon the Insurance Policy.
(h) The notice address of FSA is: Financial Security Assurance Inc., 350 Park
Avenue, New York, New York 10022-6022, Attention: Managing Director — Surveillance.—Re:
Policy No. , Telephone: (212) 826-0100; Telecopier. (212) 339-3529. In each case in
which notice or other communication refers to an Event of Default then a copy of such notice or
other communication shall also be sent to the attention of General Counsel and shall be marked
to indicate'URGENT MATERIAL ENCLOSED."
(i) FSA shall be provided with the following information:
(1) Annual audited financial statements within 150 days after the end
of the City's fiscal year, together with a certification of the City that it is not aware
45447933.2 35
of any default or Event of Default under this Ordinance, and the City's annual
budget within 30 days after the approval thereof, together with such other
information, data or reports as FSA shall reasonably request from time to time;
(2) Notice of any draw upon the Reserve Fund within two business
days after knowledge thereof other than (i) withdrawals of amounts in excess of
the Reserve Requirement and (ii) withdrawals in connection with a refunding of
Bonds;
(3) Notice of any default within five business days after knowledge
thereof;
(4) Prior notice of the advance refunding or redemption of any of the
Bonds, including the principal amount, maturities and CUSIP numbers thereof;
(5) Notice of the resignation or removal of the Paying Agent/Registrar
and the appointment of, and acceptance of duties by, any successor thereto;
(6) Notice of the commencement of any proceeding by or against the
City commenced under the United States Bankruptcy Code or any other
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding");
(7) Notice of the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer of any
payment of principal of, or interest on, the Bonds;
(8) A full original transcript of all proceedings relating to the execution
of any amendment or supplement to this Ordinance; and
(9) All reports, notices and correspondence to be delivered under the
terms of this Ordinance.
(j) To the extent permitted by law, the City shall pay or reimburse FSA any and all
charges, fees, costs, and expenses which FSA may reasonably pay or incur in connection with
(1) the administration, enforcement, defense or preservation of any rights of security in this
Ordinance, (2) the pursuit of any remedies under this Ordinance or otherwise afforded by law or
equity, (3) any amendment, waiver or other action with respect to, or related to, this Ordinance.
whether or not executed or completed, (4) the violation by the City or any law, rule or regulation,
or any judgment, order or decree applicable to it or (5) any litigation or other dispute in
connection with this Ordinance or the transactions contemplated hereby, other than amounts
resulting from the failure of FSA to honor its obligations under the Insurance Policy. The
obligation of the City to make the payments and reimbursements described in this paragraph (j)
shall be subject to annual appropriation by the City. FSA reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver or consent proposed in
respect to this Ordinance.
(k) After payment of expenses of the Paying Agent/Registrar, the application of
funds realized upon default shall be applied to payment of expenses of the City or rebate only
after the payment of debt service due and past due on the Bonds, together with replenishment
of the Reserve Fund.
45447933.2 36
(1) Unless FSA otherwise directs, upon the occurrence and continuance of an Event
of Default or the occurrence and continuance of an event which with notice or lapse of time or
both would constitute an Event of Default amounts on deposit in the Construction Fund shall not
be disbursed but shall instead be applied to the payment of debt service or redemption price of
the Bonds.
(m) No grace period for a covenant default shall exceed 30 days, nor be extended for
more than 60 days, without the prior written consent of FSA. No grace period shall be permitted
for payment defaults.
(n) Only (1) cash, (2) non -callable direct obligations of the United States of America
("Treasuries"), (3) evidences of ownership or proportionate interest in future interest and
principal payments on Treasuries held by a bank or trust company as custodian, under which
the owner of the investment is the real party in interest and has the right to proceed directly and
individually against the obligor and the underlying Treasuries are not available to any person
claiming through the custodian or to whom the custodian may be obligated, (4) pre -refunded
municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively, or (5) securities
eligible for "AAA" defeasance under then existing criteria of S&P or any combination thereof,
shall be authorized to be used to effect defeasance of the Bonds unless FSA otherwise
approves.
To accomplish defeasance the City shall cause to be delivered (i) a report of an
independent firm of nationally recognized certified public accountants or such other accountant
as shall be acceptable to FSA ("Accountant") verifying the sufficiency of the escrow established
to pay the Bonds in full on the maturity or redemption date ("Verification"), (ii) an Escrow Deposit
Agreement (which shall be acceptable in form and substance to FSA), and (!it) an opinion of
nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding"
under this Ordinance; each Verification and defeasance opinion shall be acceptable in form and
substance, and addressed, to the City, the Paying Agent/Registrar and FSA. FSA shall be
provided with final drafts of the above referenced documentation not less than five business
days prior to the funding of the escrow
Bonds shall be deemed "Outstanding" under this Ordinance unless and until they are in
fact paid and retired to the above criteria is met.
(o) Amounts paid by FSA under the Insurance Policy shall not be deemed paid for
purposes of this Ordinance and shall remain Outstanding and continue to be due and owing
until paid by the City in accordance with this Ordinance. The Ordinance shall not be discharged
unless all amounts due or to become due to FSA shall have been paid in full or duly provided
for.
(p) Each of the City and the Paying Agent/Registrar covenant and agree to take
such action (including, as applicable, filing of UCC financing statements and continuations
thereof) as is necessary from time to time to perfect or otherwise preserve the priority of the
pledge of the Net Revenues under applicable law.
(q) Notwithstanding satisfaction of other conditions to the issuance of Additional
Bonds contained in this Ordinance, no such issuance shall occur (1) should any Event of
Default (or any event which, once all notice or grace periods have passed, would constitute an
Event of Default) have occurred and be continuing unless such default shall be cured upon such
issuance and (2) unless the Reserve Fund is fully funded at its requirement (including the new
45447933.2 37
issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by
FSA.
(r) In determining whether any amendment, consent or other action to be taken, or
any failure to act, under this Ordinance would adversely affect the security of the Bonds or the
rights of the Holders, the Paying Agent/Registrar shall consider the effect of any such
amendment, consent, action or inaction as if there was no Insurance Policy.
(s) No contract shall be entered into nor any action taken by which the rights of FSA
or security for or sources of payment of the Bonds may be impaired or prejudiced in any
material respect except upon obtaining the prior written consent of FSA.
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 V.T.C.A., Government Code, Chapter 551, as
amended.
SECTION 50: Effective Date. This Ordinance shall take effective immediately upon its
passage and adoption on the date shown below.
[remainder of page left blank intentionally]
45"79M.2 38
PASSED AND ADOPTED, this May 11, 2004.
CITY OF ALLEN, TEXAS
ATTEST:
City Secretary
(City Seal)
45447933.2 39
PAYING AGENT/REGISTRAR AGREEMENT
THIS AGREEMENT entered into as of May 11, 2004 (this "Agreement"), by and between
the City of Allen, Texas (the "Issuer"), and JPMorgan Chase Bank, a New York banking
corporation duly organized and existing under the laws of the State of New York and authorized
to do business in the State of Texas (the "Bank").
RECITALS
WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of
Allen, Texas, Waterworks and Sewer System Revenue Refunding and Improvement Bonds,
Series 2004" (the "Securities"), dated June 1, 2004, which Securities are scheduled to be
delivered to the initial purchasers on or about June 17, 2004; and
WHEREAS, the Issuer has selected and the Bank has agreed to serve as Paying
Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest
on said Securities and with respect to the registration, transfer and exchange thereof by the
registered owners; and
WHEREAS, the Bank represents it has full power and authority to perform and serve as
Paying Agent/Registrar for the Securities;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE ONE
APPOINTMENT OF BANK AS
PAYING AGENT AND REGISTRAR
Section 1.01 Appointment. The Issuer hereby appoints the Bank to serve as Paying
Agent with respect to the Securities, and, as Paying Agent for the Securities, the Bank shall be
responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the
Securities as the same become due and payable to the registered owners thereof; all in
accordance with this Agreement and the "Bond Resolution" (hereinafter defined). The Issuer
hereby appoints the Bank as Registrar with respect to the Securities and, as Registrar for the
Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records
as to the ownership of said Securities and with respect to the transfer and exchange thereof as
provided herein and in the "Bond Resolution."
The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and
Registrar for the Securities.
Section 1.02 Compensation. As compensation for the Bank's services as Paying
Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in
Annex A attached hereto.
In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Bank in accordance with any
of the provisions hereof (including the reasonable compensation and the expenses and
disbursements of its agents and counsel).
45a49618.1 EXHIBIT A
ARTICLE TWO
DEFINITIONS
Section 2.01 Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
"Acceleration Date" on any Security means the date on and after which the
principal or any or all installments of interest, or both, are due and payable on any
Security which has become accelerated pursuant to the terms of the Security.
"Bank Office" means the principal office of the Bank as indicated in Section 3.01
hereof. The Bank will notify the Issuer in writing of any change in location of the Bank
Office.
"Bond Resolution" means the resolution, order, or ordinance of the governing
body of the Issuer pursuant to which the Securities are issued, certified by the Secretary
or any other officer of the Issuer and delivered to the Bank.
"Fiscal Year' means the fiscal year of the Issuer, ending September 30th.
"Holder" and "Security Holder" each means the Person in whose name a Security
is registered in the Security Register.
"Issuer Request" and "Issuer Order" means a written request or order signed in
the name of the Issuer by the Mayor, Mayor Pro Tem, City Manager, Finance Director or
City Secretary, any one or more of said officials, and delivered to the Bank.
"Legal Holiday" means a day on which the Bank is required or authorized to be
closed.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or government or
any agency or political subdivision of a government.
"Predecessor Securities" of any particular Security means every previous
Security evidencing all or a portion of the same obligation as that evidenced by such
particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed,
or stolen Security for which a replacement Security has been registered and delivered in
lieu thereof pursuant to Section 4.06 hereof and the Resolution).
"Redemption Date" when used with respect to any Security to be redeemed
means the date fixed for such redemption pursuant to the terms of the Bond Resolution.
"Responsible Officer" when used with respect to the Bank means the Chairman
or Vice -Chairman of the Board of Directors, the Chairman or Vice -Chairman of the
Executive Committee of the Board of Directors, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier,
any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of
the Bank customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular corporate trust
45^°9618.1 2 EXHIBIT A
matter, any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Security Register' means a register maintained by the Bank on behalf of the
Issuer providing for the registration and transfers of Securities.
"Stated Maturity" means the date specified in the Bond Resolution the principal of
a Security is scheduled to be due and payable.
Section 2.02 Other Definitions. The terms "Bank," "Issuer, and "Securities (Security)"
have the meanings assigned to them in the recital paragraphs of this Agreement.
The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties
and functions of this Agreement.
ARTICLE THREE
PAYING AGENT
Section 3.01 Duties of Paving Agent. As Paying Agent, the Bank shall, provided
adequate collected funds have been provided to it for such purpose by or on behalf of the
Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity,
Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the
Bank at the following address: P. 0. Box 2320, Dallas, Texas 75221-2320 or 2001 Bryan
Street, 98i Floor, Dallas, Texas 75201, Attention: Issuer Administrative Services.
As Paying Agent, the Bank shall, provided adequate collected funds have been provided
to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on
each Security when due, by computing the amount of interest to be paid each Holder and
making payment thereof to the Holders of the Securities (or their Predecessor Securities) on the
Record Date. All payments of principal and/or interest on the Securities to the registered
owners shall be accomplished (1) by the issuance of checks, payable to the registered owners,
drawn on the paying agent account provided in Section 5.05 hereof, sent by United States mail,
first class, postage prepaid, to the address appearing on the Security Register or (2) by such
other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk
and expense.
Section 3.02 Payment Dates. The Issuer hereby instructs the Bank to pay the principal
of and interest on the Securities at the dates specified in the Bond Resolution.
ARTICLE FOUR
REGISTRAR
Section 4.01 Security Register - Transfers and Exchanges. The Bank agrees to keep
and maintain for and on behalf of the Issuer at the Bank Office books and records (herein
sometimes referred to as the "Security Register") for recording the names and addresses of the
Holders of the Securities, the transfer, exchange and replacement of the Securities and the
payment of the principal of and interest on the Securities to the Holders and containing such
other information as may be reasonably required by the Issuer and subject to such reasonable
regulations as the Issuer and Bank may prescribe. All transfers, exchanges and replacement of
Securities shall be noted in the Security Register. The Bank represents and warrants its office
in Dallas, Texas will at all times have immediate access to the Security Register by electronic or
45449618.1 3 EXHIBIT A
other means and will be capable at all times of producing a hard copy of the Security Register at
its Dallas office for use by the Issuer.
Every Security surrendered for transfer or exchange shall be duly endorsed or be
accompanied by a written instrument of transfer, the signature on which has been guaranteed
by an officer of a federal or state bank or a member of the National Association of Securities
Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly
authorized in writing.
The Bank may request any supporting documentation it feels necessary to effect a
re -registration, transfer or exchange of the Securities.
To the extent possible and under reasonable circumstances, the Bank agrees that, in
relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof
will be completed and new Securities delivered to the Holder or the assignee of the Holder in
not more than three (3) business days after the receipt of the Securities to be cancelled in an
exchange or transfer and the written instrument of transfer or request for exchange duly
executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the
Paying AgenttRegistrar.
Section 4.02 Certificates. The Issuer shall provide an adequate inventory of printed
Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of
printed Securities will be kept in safekeeping pending their use and reasonable care will be
exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less
than the care maintained by the Bank for debt securities of other governments or corporations
for which it serves as registrar, or that is maintained for its own securities.
Section 4.03 Form of Security Register. The Bank, as Registrar, will maintain the
Security Register relating to the registration, payment, transfer and exchange of the Securities
in accordance with the Bank's general practices and procedures in effect from time to time. The
Bank shall not be obligated to maintain such Security Register in any form other than those
which the Bank has currently available and currently utilizes at the time.
The Security Register may be maintained in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 4.04 List of Security Holders. The Bank will provide the Issuer at any time
requested by the Issuer, upon payment of the required fee, a copy of the information contained
in the Security Register. The Issuer may also inspect the information contained in the Security
Register at any time the Bank is customarily open for business, provided that reasonable time is
allowed the Bank to provide an up-to-date listing or to convert the information into written form.
The Bank will not release or disclose the contents of the Security Register to any person
other than to, or at the written request of, an authorized officer or employee of the Issuer, except
upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and
prior to the release or disclosure of the contents of the Security Register, the Bank will notify the
Issuer so that the Issuer may contest the court order or such release or disclosure of the
contents of the Security Register.
45449618.1 4 EXHIBIT A
Section 4.05 Return of Cancelled Certificates. The Bank will, at such reasonable
intervals as it determines, surrender to the Issuer, Securities in lieu of which or in exchange for
which other Securities have been issued, or which have been paid.
Section 4.06 Mutilated. Destroyed. Lost or Stolen Securities. The Issuer hereby
instructs the Bank, subject to the provisions of Section 30 of the Bond Resolution, to deliver and
issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as
long as the same does not result in an overissuance.
In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank may
execute and deliver a replacement Security of like form and tenor, and in the same
denomination and bearing a number not contemporaneously outstanding, in exchange and
substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or
stolen Security, only upon the approval of the Issuer and after (i) the filing by the Holder thereof
with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such
Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of
indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All
expenses and charges associated with such indemnity and with the preparation, execution and
delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or
destroyed, lost or stolen.
Section 4.07 Transaction Information to Issuer. The Bank will, within a reasonable
time after receipt of written request from the Issuer, furnish the Issuer information as to the
Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or
exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in
exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to
Section 4.06.
ARTICLE FIVE
THE BANK
Section 5.01 Duties of Bank. The Bank undertakes to perform the duties set forth
herein and agrees to use reasonable care in the performance thereof.
Section 5.02 Reliance on Documents. Etc. (a) The Bank may conclusively rely, as
to the truth of the statements and correctness of the opinions expressed therein, on certificates
or opinions furnished to the Bank.
(b) The Bank shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the
pertinent facts.
(c) No provisions of this Agreement shall require the Bank to expend or risk its own
funds or otherwise incur any financial liability for performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity satisfactory to it against such risks or
liability is not assured to it.
(d) The Bank may rely and shall be protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note, security, or other paper or document believed by it to be genuine
45"9618.1 5 EXHIBIT A
and to have been signed or presented by the proper party or parties. Without limiting the
generality of the foregoing statement, the Bank need not examine the ownership of any
Securities, but is protected in acting upon receipt of Securities containing an endorsement or
instruction of transfer or power of transfer which appears on its face to be signed by the Holder
or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts
or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note, security, or other paper or document supplied by
Issuer.
(e) The Bank may consult with counsel, and the written advice of such counsel or
any opinion of counsel shall be full and complete authorization and protection with respect to
any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon.
(f) The Bank may exercise any of the powers hereunder and perform any duties
hereunder either directly or by or through agents or attorneys of the Bank.
Section 5.03 Recitals of Issuer. The recitals contained herein with respect to the
Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank
assumes no responsibility for their correctness.
The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security,
or any other Person for any amount due on any Security from its own funds.
Section 5.04 May Hold Securities. The Bank, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the
same rights it would have K it were not the Paying Agent/Registrar, or any other agent.
Section 5.05 Moneys Held by Bank — Paving Agent Account/Collateralization. A
paying agent account shall at all times be kept and maintained by the Bank for the receipt,
safekeeping and disbursement of moneys received from the Issuer hereunder for the payment
of the Securities, and money deposited to the credit of such account until paid to the Holders of
the Securities shall be continuously collateralized by securities or obligations which qualify and
are eligible under both the laws of the State of Texas and the laws of the United States of
America to secure and be pledged as collateral for fiduciary accounts to the extent such money
is not insured by the Federal Deposit Insurance Corporation. Payments made from such paying
agent account shall be made by check drawn on such fiduciary account unless the owner of
such Securities shall, at its own expense and risk, request such other medium of payment.
The Bank shall be under no liability for interest on any money received by it hereunder.
Subject to the applicable unclaimed property laws of the State of Texas, any money
deposited with the Bank for the payment of the principal, premium (if any), or interest on any
Security and remaining unclaimed for three years after final maturity of the Security has become
due and payable will be paid by the Bank to the Issuer, and the Holder of such Security shall
thereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to
such moneys shall thereupon cease.
Section 5.06 Indemnification. To the extent permitted by law, the Issuer agrees to
indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred
without negligence or bad faith on its part, arising out of or in connection with its acceptance or
administration of its duties hereunder, including the cost and expense against any claim or
45449818.' 6 EXHIBIT A
liability in connection with the exercise or performance of any of its powers or duties under this
Agreement.
Section 5.07 Interoleader. The Issuer and the Bank agree that the Bank may seek
adjudication of any adverse claim, demand, or controversy over its person as well as funds on
deposit, in either a Federal or State District Court located in the State and County where the
administrative offices of the Issuer is located, and agree that service of process by certified or
registered mail, return receipt requested, to the address referred to in Section 6.03 of this
Agreement shall constitute adequate service. The Issuer and the Bank further agree that the
Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction in the State
of Texas to determine the rights of any Person claiming any interest herein.
Section 5.08 DT Services. It is hereby represented and warranted that, in the event
the Securities are otherwise qualified and accepted for "Depository Trust Company" services or
equivalent depository trust services by other organizations, the Bank has the capability and, to
the extent within its control, will comply with the "Operational Arrangements," which establishes
requirements for securities to be eligible for such type depository trust services, including, but
not limited to, requirements for the timeliness of payments and funds availability, transfer
turnaround time, and notification of redemptions and calls.
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01 Amendment. This Agreement may be amended only by an agreement in
writing signed by both of the parties hereto.
Section 6.02 Assignment. This Agreement may not be assigned by either party without
the prior written consent of the other.
Section 6.03 Notices. Any request, demand, authorization, direction, notice, consent,
waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or
the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses
shown on page 9.
Section 6.04 Effect of Headings. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
Section 6.05 Successors and Assigns. All covenants and agreements herein by the
Issuer shall bind its successors and assigns, whether so expressed or not.
Section 6.06 Severability. In case any provision herein shall be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 6.07 Benefits of Agreement. Nothing herein, express or implied, shall give to
any Person, other than the parties hereto and their successors hereunder, any benefit or any
legal or equitable right, remedy, or claim hereunder.
Section 6.08 Entire Agreement. This Agreement and the Bond Resolution constitute
the entire agreement between the parties hereto relative to the Bank acting as Paying
45449818.1 7 EXHIBIT A
Agent/Registrar and if any conflict exists between this Agreement and the Bond Resolution, the
Bond Resolution shall govern.
Section 6.09 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall constitute one
and the same Agreement.
Section 6.10 Termination. This Agreement will terminate (i) on the date of final
payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be
earlier terminated by either party upon sixty (60) days written notice; provided, however, an
early termination of this Agreement by either party shall not be effective until (a) a successor
Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and
(b) notice given to the Holders of the Securities of the appointment of a successor Paying
Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an
early termination of this Agreement shall not occur at any time which would disrupt, delay or
otherwise adversely affect the payment of the Securities.
Upon an early termination of this Agreement, the Bank agrees to promptly transfer and
deliver the Security Register (or a copy thereof), together with other pertinent books and records
relating to the Securities, to the successor Paying AgenttRegistrar designated and appointed by
the Issuer.
The provisions of Section 1.02 and of Article Five shall survive and remain in full force
and effect following the termination of this Agreement.
Section 6.11 Govemina Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Texas.
45449618.1 8 EXHIBIT A
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
[SEAL]
Attest:
JPMORGAN CHASE BANK
BY
Title:
Address: 2001 Bryan Street, a Floor
Dallas, Texas 75201
Title:
(CITY SEAL) CITY OF ALLEN, TEXAS
BY
Attest: Mayor
Address: 305 Century Parkway
Allen, Texas 75013
City Secretary
45°°9618.1 9 EXHIBIT A
EXHIBIT B
$6,710,000
CITY OF ALLEN, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING
AND IMPROVEMENT BONDS,
SERIES 2004
PURCHASECONTRACF
May 11, 2004
The Honorable Mayor and Members of the City Council
City of Allen
One Allen Civic Plaze
305 Century Parkway
Allen, Texas 75013
Dear Mayor and Members of the City Council:
Ladies and Gentlemen:
First Southwest Company and Estrada Hinojosa & Company, Inc. ( the "Underwriters"), offer to
enter into the following agreement with the City of Allen, Texas (hereinafter called the "Issuer") which, upon
the Issuer's written acceptance of this offer, will be binding upon the Underwriters and the Issuer. This offer
is made subject to the Issuer's written acceptance hereof on or before 10:00 P.M., Central Time, on the date
hereof, and, if not so accepted, will be subject to withdrawal by the Underwriters upon notice delivered to the
Issuer at any time prior to the acceptance hereof by the Issuer. Terms not otherwise defined in this Purchase
Contract shall have the same meanings set forth in the Ordinance (as defined herein) or in the Official
Statement (as defined herein). First Southwest Company represents that it has been duly authorized to
execute this Purchase Contract and has been duly authorized to act hereunder as the Authorized
Representative. All actions that may be taken by the Underwriters may be taken by the Authorized
Representative alone.
1. Purchase and Sale of Bonds. (a) Subject to the temts and conditions and in rehance
upon the representations, warranties and agreements set forth herein, the Underwriters hereby agree to
purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to the Underwriters, all, but not less
than all, of an aggregate of $6,710,000 in principal amount of City of Allen, Texas Waterworks and Sewer
System Revenue Refunding and Improvement Bonds, Series 2004 (the "Bonds").
(b) The principal amount of the Bonds to be issued, the dated date therefor, the maturities,
redemption provisions and interest rates per annum are set forth in Schedule I hereto. The Bonds shall be
as described in, and shall be issued and secured under and pursuant to the provisions of the Ordinance
adopted by the City Council of the Issuer on May 11, 2004 (the "Ordinance").
(c) The purchase price for the Bonds shall be $6,892,352.06 (representing the aggregate principal
amount of the Bonds of $6,710,000, plus a net reoffering premium of $238,918.95, and less an Underwriters'
discount of $56,566.89), plus accrued interest on the Bonds from the dated date of the Bonds to, but not
including, the Closing Date (as hereinafter defined)).
(d) Delivered to the Issuer herewith is a corporate check of the Authorized Representative
payable to the order of the Issuer in the amount of $67,100. In the event the Issuer accepts this offer, such
check shall be held uncashed by you until the time of Closing, at which time such check shall be returned
uncashed to the Authorized Representative. In the event that the Issuer does not accept this Purchase
Contract, such check will be immediately returned to the Authorized Representative. Should the Issuer fail
to deliver the Bonds m the Closing, or should the Issuer be unable to satisfy the conditions of the obligations
of the Underwriters to purchase, accept delivery of and pay for the Bonds, as set forth in this Purchase
Contract (unless waived by the Underwriters), or should such obligations of the Underwriters be terminated
for any reason permitted by this Purchase Contract, such check shall immediately be returned to the
Authorized Representative. In the event that the Underwriters fail (other than for a reason permitted
hereunder) to purchase, accept delivery of and pay for the Bonds at the Closing as herein provided, such
check shall be cashed and the amount thereof retained by the Issuer as and for fully liquidated damages for
such failure of the Underwriters, and, except as set forth in Sections 8 and 10 hereof, no party shall have any
further rights against the other hereunder. The Underwriters and the Issuer understand that in such event
the Issuer's actual damages may be greater or may be less than such amount. Accordingly, the Underwriters
hereby waives any right to claim that the Issuer's actual damages are less than such amount, and the Issuer's
acceptance of this offer shall constitute a waiver of any right the Issuer may have to additional damages from
the Underwriters.
2. Public Offering. The Underwriters agree to make a bona fide public offering of all of the
Bonds at prices not to exceed the respective public offering prices set forth on the cover page of the Official
Statement and in Schedule I attached hereto and may subsequently change such offering prices without any
requirement of prior notice. The Underwriters may offer and sell Bonds to certain dcalcrs (including dealers
depositing Bonds into investment trusts) and others at prices lower than the respective public offering prices
stated on the cover page of the Official Statement, provided however, that at least ten percent (10%) of the
principal amount of the Bonds of each maturity shall be sold to the "public" (exclusive of dealers, brokers and
investment bankers, etc.) at the offering price set forth on the cover page of the Official Statement. On or
before Closing, the Authorized Representative shall execute an Issue Price Certificate prepared by Bond
Counsel verifying the initial offering prices to the public at which a substantial amount of each stated maturity
of the Bonds was sold to the public.
3. The Official Statement.
(a) The Preliminary Official Statement of the Issuer, dated May 3, 2004, including the cover page
and Appendices thereto, relating to the Bonds (the "Preliminary Official Statement"), as amended to conform
-2-
to the terms of this Purchase Contract and with changes and amendments to the date hereof as have been
mutually agreed to by the Issuer and the Underwriters, is referred to herein as the "Official Statement."
(b) The Preliminary Official Statement has been prepared for use in connection with the public
offering, sale and distribution of the Bonds by the Underwriters. The Issuer hereby represents and warrants
that the Preliminary Oficial Statement delivered to the Underwriters prior to the date of this Purchase
Contract was deemed final by the Issuer as of its date within the meaning, and for the purposes, of Rule 15c2-
12 under the Securities Exchange Act of 1934 (the "Rule").
(c) The Issuer hereby authorizes the Official Statement and the information therein contained
to be used by the Underwriters in connection with the public offering and the sale of the Bonds. The Issuer
consents to and unifies the use by the Underwriters prior to the date hereof of the Preliminary Official
Statement in connection with public offering of the Bonds. The Issuer shall provide, or cause in be provided,
to the Underwriters as soon as practicable after the date of the Issuer's acceptance of this Purchase Contract
(but, many event, not later than within seven business days after the Issuer's acceptance of this Purchase
Contract ands sufficient time to accompany any confirmation that requests payment from any customer)
copies of the Official Statement which is complete as of the date of its delivery to the Underwriters in such
quantity as the Underwriters shall request in order for the Underwriters to comply with Section (b)(4) of the
Rule and the rales of the Municipal Securities Rulemaking Board.
(d) If, after the date of this Purchase Contract up to and including the dale the Underwriters are
no longer required pursuant to the Rule to provide an Official Statement to potential customers who request
an Official Statement (the earlier of (i) 90 days from the "end of the underwriting period" (as defined in the
Rule) and (d) the time when the Official Statement is available to any person from a nationally recognized
municipal securities information repository, but in no case less than 25 days after the "end of the underwriting
period" for the Bonds), the Issuer becomes aware of any fact or event that might or would cause the Official
Statement, as then supplemented or amended, to contain any untrue statement of a material fact or no omit
to state a material fact required to be stated therein or necessary to make the statements therein, in the light
of the circumstances when the Official Statement is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Oficial Statement to comply with law, the Issuer will notify the
Authorized Representative (and for the purposes of this clause provide the Authorized Representative with
such information as it may from time to time request), and if, in the reasonable opinion of the Authorized
Representative, such fact or event requires preparation and publication of a supplement or amendment to the
Official Statement, the Issuer will forthwith prepare and furnish, at the Issuer's own expense (in a forth and
manner approved by the Authorized Representative), a reasonable number of copies of amendments or
supplements to the Official Statement so that the statements in the Official Statement as so amended and
supplemented will not, in light of the circumstances when the Oficial Statement is delivered to a purchaser,
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not be misleading or so that the Official Statement will comply
with law. If such notification shall be subsequent to the Closing, the Issuer shall famish such legal opinions,
certificates, instruments and other documents as the Authorized Representative may deem necessary to
evidence the truth and accuracy of such supplement or amendment to the Official Statement.
(e) The Underwriters hereby agree to timely file the Official Statement with a nationally
recognized information repository. Unless otherwise notified in writing by the Authorized Representative,
-3-
the Issuer can assume that the 'end of the underwriting period" for purposes of the Rule is the date of the
Closing.
(t) To the best knowledge and belief of the Issuer, the Official Statement contains information,
including financial information or operating data, concerning every entity, enterprise, fund, account or person
relating to the Issuer that is material to an evaluation of the offering of the Bonds. The Issuer has not failed
to substantially comply in all material respects with any undertaking specified in paragraph (b)(5)(i) of the
Rule within the last five years.
4. Representations, Warranties and Covenants of the Issuer. The Issuer hereby
represents and warrants to and covenants with the Underwriters that:
(a) The Issuer is a home -rule municipality and a body corporate and politic of the State of Texas
and has on the date hereof and on the date of Closing will have full legal right, power and authority to enter
into this Purchase Contract and to discharge the Issuer$ obligations being refinanced by the Bonds, to sell
the Bonds, and to issue and deliver the Bonds to the Underwriters as provided herein and to tarty out and
consummate all other transactions contemplated by the Ordinance and this Purchase Contract;
(b) By all necessary official action of the Issuer prior in or concurrently with the acceptance
hereof, the Issuer bas duly authorized all necessary action to be taken by it for (i) the adoption of the
Ordinance and the issuance and sale of the Bonds, (u) the approval, execution and delivery of, and the
performance by the Issuer on its part of the obligations contained in the Bonds and the Ordinance, (iii) the
execution and delivery of the Escrow Agreement and this Purchase Contract and compliance on its part with
the provisions thereof, and (iv) the consummation by it of all other transactions described in the Official
Statement, the Ordinance, the Escrow Agreement, this Purchase Contract and any and all such other
agreements and documents as may be required to be executed, delivered and/or received by the Issuer in
order to carry out, give effect to, and consummate the transactions contemplated herein and in the Official
Statement;
(c) The Bonds, when issued, delivered and paid for, in accordance with the Ordinance and this
Purchase Contract, will constitute legal, valid and binding obligations of the Issuer entitled to the benefits of
the Ordinance and be enforceable in accordance with thew terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws and principles of equity relating to or affecting the
enforcement of creditors rights;
(d) The Issuer is not in breach of or default under any applicable constitutional provision, law or
administrative regulation of the Store or the United States or any applicable judgment or decree that would
have a material adverse effect upon the business or financial condition of the Issuer; or any loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or to which the
Issuer is otherwise subject; and no event has occurred and is continuing that constitutes, or with the passage
of time or the giving of notice, or both, would constitute, a default or event of default by the Issuer under any
such instrument; and the execution, delivery and sale of the Bonds and the adoption of the Ordinance and
compliance with the provisions on the issuer's part contained therein and in this Purchase Contract, will not
conflict with or constitute a breach of or default under any constitutional provision, administrative regulation,
judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which
-4-
the Issuer is a party or to which the Issuer is otherwise subject or under the terms of any such law, regulation
or instrument, except as provided by the Bonds and the Ordinance;
(e) All authorizations, approvals, licenses, permits, consents and orders of any governmental
authority, legislative body, board, agency or commission having jurisdiction of the matter that are required for
the due authorization of, that would constitute a condition precedent to, or the absence of which would
materially adversely affect the due performance by the Issuer of its obligations ander the Ordinance and the
Bonds have been duly obtained, except for the approval of the Bonds by the Texas Attorney General and the
registration of the Bonds by the Comptroller of Public Accounts of the State of Texas, which approval and
registration shall be obtained prior to the Closing, or any state securities law approvals;
(f) The Bonds and the Ordinance conform to the descriptions thereof contained in the Official
Statement under the caption "TRE BONDS", the proceeds of the sale of the Bonds will be applied generally
as described in the Official Statement under the captions "PLAN OF FINANCING" and "SOURCES AND
USES OF FUNDS", and the Undertaking (as defined in Section 60)(2) hereof) conforms to the description
thereof contained in the Official Statement under the caption "CONTINUING DISCLOSURE OF
INFORMATION';
(g) There is no litigation, action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, government agency, public board or body, pending or, to the best knowledge of the
Issuer, after due inquiry made to employees, officers and agents of the Issuer, threatened against the Issuer,
affecting the existence of the Issuer or the titles of its officers to their respective offices, or affecting or
seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the setting of rates and
collection of revenues of the Issuer's System pledged or to be pledged to the payment of principal of and
interest on the Bonds, pursuant to the Ordinance or in any way contesting or affecting the validity or
enforceability of the Bonds or the issuance and sale thereof or of the Ordinance, the Escrow Agreement or
this Purchase Contract, or contesting the exclusion from gross income of interest on the Bonds for federal
income tax purposes, or contesting many way the completeness or accuracy of the Preliminary Official
Statement or the Official Statement or any supplement or amendment thereto, or contesting the powers of
the Issuer or any authority for the issuance or sale of the Bonds, the adoption of the Ordinance or the
exmution and delivery of the Escrow Agreement or this Purchase Contract and the performance by the
Issuer of its obligations thereunder, nor, to the best knowledge of the Issuer, is there any basis therefor,
wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or
enforceability of the Bonds, Ordinance, the Escrow Agreement or this Purchase Contract.
(h) As of the date thereof, the Preliminary Official Statement did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading;
(i) At the time of the Issuer's acceptance hereof and (unless the Official Statement is amended
or supplemented pursuant to paragraph (d) of Section 3 of this Purchase Contract) at all times subsequent
thereto during the period up to and including twenty-five (25) days subsequent to the "end of the underwriting
period," the Official Statement does not and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
-5-
6) If the Official Statement is supplemented or amended pursuant to paragraph (d) of Section
3 of this Purchase Contract, at the time of each supplement or amendment thereto and (unless subsequently
again supplemented or amended pursuant to such paragraph) at all times subsequent thereto during the period
up to and including thirty (30) days subsequent to the Closing, the Official Statement as so supplemented or
amended will not contain any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances under which
made, not misleading; and
(k) The Issuer will apply, or cause to be applied, the proceeds from the sale of the Bonds as
provided in and subject to all of the terms and provisions of the Ordinance and will not take or omit to take
any action which action or omission will adversely affect the exclusion from gross income for federal income
tax purposes of the interest on the Bonds;
(1) The Issuer will famish such information and execute such instruments and take such action
in cooperation with the Underwriters as the Underwriters may reasonably request, at no expense to the
Issuer,(A) to (i) qualify the Bonds for offer and sale under the Blue Sky or other securities laws and
regulations of such states and other jurisdictions in the United Stales as the Underwriters may designate and
(ii) determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions
and (B) to continue such qualifications in effect so long as required for the distribution of the Bonds (provided,
however, that the Issuer will not be required to qualify as a foreign corporation or to file any general or special
consents to service of process under the laws of any jurisdiction) and will advise the Underwriters
immediately of receipt by the Issuer of any notification with respect to the suspension of the qualification of
the Bonds for sale in my jurisdiction or the initiation or threat of any proceeding for that purpose;
(m) The financial statements of, and other financial information regarding, the Issuer in the
Official Statement fairly present the financial position and results of operations of the Issuer as of the dates
and for the periods therein set forth. Prior to the Closing, there will be no adverse change of a material nature
in such financial position, results of operations or condition, financial or otherwise, of the Issuer. Except as
described in the Official Statement, the Issuer is not a party to any litigation or other proceeding pending or,
to its knowledge, threatened that, if decided adversely to the Issuer, would have a materially adverse effect
on the financial condition of the Issuer,
(n) Prior to the Closing the Issuer will not offer or issue any bonds, notes or other obligations for
borrowed money or incur any material liabilities, direct or contingent, payable from or secured by the revenues
of the System, without the prior approval of the Authorized Representative;
(o) Any certificate, signed by any official of the Issuer authorized to do so in connection with the
transactions contemplated by this Purchase Contract, shall be deemed a representation and warranty by the
Issuer to the Underwriters as to the statements made therein; and
(p) The Issuer covenants that between the date hereof and the Closing it will take no actions
which will cause the representations and warranties made in this Section to be mime as of the Closing.
By delivering an executed copy of the Official Statement to the Authorized Representative, the Issuer
shall be deemed to have reaffirmed, with respect to such Official Statement, the representations, warranties
and covenants set forth above with respect to the Preliminary Official Statement.
-6-
5. Closing.
(a) At 10:00 a.m., Central Time, on lune 17, 2004, or at such other time and date as shall have
been mutually agreed upon by the Issuer and the Authorized Representative (the "Closing Date"), the Issuer
will, subject to the terms and conditions hereof, deliver to the Underwriters the initial Bond registered in the
name of the Authorized Representative, in temporary form, together with the other documents hereinafter
mentioned, and will have available for immediate exchange definitive Bonds deposited with The Depository
Trust Company, New York, New York, duly executed and authenticated in the form and manner
contemplated below, and the Underwriters will, subject to the terms and conditions hereof, accept such
delivery and pay the purchase price of the Bonds, as set forth in Section 1 hereof, in immediately available
funds by wine transfer to or for the account of the Issuer (such events being referred to herein as the
"Closing"). Concurrently with such payment by the Underwriters, the Issuer shall relmn to the Authorized
Representative the check referred to in Section 1 hereof. Payment for the Bonds as aforesaid shall be made
at the offices of JPMorgan Chase Bank, Dallas, Texas (the "Paying Agent/Registrar"), or at such other place
as shall have been mutually agreed upon by the Issuer and the Authorized Representative.
(b) Delivery of the definitive Bonds in exchange for the initial Bond shall be made to the
Underwriters through The Depository Trust Company, New York, New York, utilizing the book -entry only
form of issuance, and the Issuer agrees to take such actions as are necessary on its part to allow for the use
of such book -entry only system. The definitive Bonds shall be delivered in fully registered form, bearing
CUSIP numbers, without coupons, with one definitive Bond for each maturity registered in the time of
CEDE & CO., and shall be made available to the Underwriters for purposes of inspection at least one
business day before the Closing.
6. Closing Conditions. The Underwriters have entered into this Purchase Contract in reliance
upon the representations, warranties and agreements of the Issuer contained herein, and in reliance upon the
representations, warranties and agreements to be contained in the documents and instruments to be delivered
at the Closing and upon the performance by the Issuer of its obligations hereunder, both as of the date hereof
and as of the date of the Closing. Accordingly, the Underwriters' obligations under this Purchase Contract
to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the
Issuer of its obligations to be performed hereunder and order such documents and instruments at or prior to
the Closing, and shall also be subject to the following additional conditions, including the delivery by the Issuer
of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Authorized
Representative:
(a) The representations and warranties of the Issuer contained herein shall be true, complete and
correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing;
(b) The Issuer shall have performed and complied with all agreements and conditions required
by this Purchase Contract to be performed or complied with by it prior to or at the Closing;
(c) At the time of the Closing, (i) the Bonds and the Ordinance shall be in full force and effect
and shall not have been amended, modified or supplemented, and the Official Statement shall not have been
-7-
supplemented or amended, except in any such case as may have been agreed to by the Authorized
Representative; and (h) all actions of the Issuer required to be taken by the Issuer shall be performed in order
for Bond Counsel to deliver its opinions referred to hereafter;
(d) At the time of the Closing, all official action of the Issuer relating to this Purchase Contract,
the Escrow Agreement, the Bonds and the Ordinance shall be in full force and effect and shall not have been
amended, modified or supplemented, in any material respect, except as may have been approved by the
Authorized Representative; and in the event of any (without regard to materiality) amendment, modification
or supplement, the Authorized Representative shall have received, in appropriate form, evidence of any
amendment, modification or supplement;
(e) At or prior to the Closing, the Ordinance shall have been duly adopted and filed in the official
records of the Issuer, the Issuer shall have duly executed and delivered the Bonds and the Paying
Agent/Registrar shall have been duly authenticated the Bonds in accordance with the Ordinance;
(t) At the time of the Closing, there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or in the revenues or operations of the
Issuer, from that set forth in the Official Statement that, in the reasonable judgement of the Authorized
Representative, is material and adverse and that makes it, in the reasonable judgment of the Authorized
Representative, impracticable to market the Bonds on the terms and in the manner contemplated in the
Official Statement;
(g) The Issuer shall not have failed to pay principal or interest when due on any of its outstanding
obligations for borrowed money;
(h) All steps to be taken and all instruments and other documents to be executed and all other
legal matters in connection with the transactions contemplated by this Purchase Contract shall be reasonably
satisfactory in legal form and effect in the Authorized Representative;
(i) At or prior to the Closing, the municipal bond insurance policy to be provided by Financial
Security Assurance Inc. (the "Insurer") shall have been duly executed, issued and delivered;
0) At or prior to the Closing, the Underwriters shall have received one (1) copy of each of the
following documents:
(1) The Official Statement, and each supplement or amendment, if any, thereto, executed on
behalf of the Issuer by the Mayor and City Secretary of the Issuer;
(2) The Ordinance certified by the City Secretary as having been duly adopted by the Issuer and
as being in effect, with such changes or amendments as may have been agreed to by the Authorized
Representative, and such Ordinance containing therein the agreement of the Issuer to provide certain periodic
information and notices of material events in accordance with Rule 15c2-12, as described in the Official
Statement under the caption "CONTINUING DISCLOSURE OF INFORMATION' (the "Undertaking");
(3) The opinion of Fulbright & Jaworski L.L.P., Bond Counsel, in substantially the form and
substance of Appendix C to the Official Statement, dated the date of Closing;
-8-
(4) The supplemental opinion dated the date of the Closing, of Bond Counsel, addressed to the
Underwriters to the effect that:
(i) the Bonds are exempt securities within the meaning of Section 3(ax2) of the Securities
Act of 1933, as amended, and it is not necessary in connection with the offering and sale of
the Bonds to register the Bonds under the Securities Act of 1933, as amended, or to qualify
the Ordinance or any other document under the Trust Indenture Act of 1939, as amended,
and
(ii) except to the extent noted therein, said firm has not assumed any responsibility with
respect to the Official Statement or undertaken independently to verify any of the
information contained therein except that in its capacity as Bond Counsel, such firm has
reviewed the information appearing under captions or subcaptions "Plan of Financing," "The
Bonds" (except under the subcaptions "Payment Record," and "Default and Remedies"),"Tax
Matters", "Other Pertinent Information - Legal Matters' (except the last two sentences of
the first paragraph thereof), "Other Pertinent Information - Legal Investments and Eligibility
to Secure Public Fonds in Texas" and "Continuing Disclosure of Information" (except under
the subcaption "Compliance with Prior Agreements") and such firm is of the opinion that the
information relating to the Bonds and legal matters contained under such captions and
subcaptions is an accurate and fair description of the laws and legal issues addressed therein
and, with respect to the Bonds, such information conforms to the Ordinance.
(iii) The Underwriters am entitled to rely upon the opinion of Bond Counsel delivered in
accordance with the provisions of Section 60)(3) of this Purchase Contract;
(5) An opinion of McCall, Parkhurst & Horton L.L.P., Underwriters' Counsel, addressed to the
Underwriters, and dated the date of Closing in substantially the form attached hereto as Exhibit A;
(6) Opinion or certificates, dated on or prior to the date of Closing, of the Attorney General of
the State of Texas, approving the Bonds as required by law and the registration certificates of the Comptroller
of Public Accounts of the State of Texas;
(7) A certificate, dated the date of the Closing, signed by the City Manager and the Finance
Director of the Issuer, to the effect that (i) the representations and warranties of the Issuer contained herein
are true and correct in all material respects on and as of the date of Closing as if made on the date of Closing;
(ii) no litigation or proceeding against the Issuer is pending or, to the knowledge of such persons, threatened
in any court to restrain or enjoin the issuance or delivery of the Bonds, attempting to limit, enjoin or otherwise
restrict or prevent the Issuer from functioning, or setting rates and collecting or applying the revenues of the
System pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or
many way contesting or affecting the validity, due authorization and execution of this Purchase Contract, the
Escrow Agreement, the Bonds or the Ordinance, or contesting the powers, authority or existence of the
Issuer or the right and authority of members of the City Council and other officials of the Issuer to hold and
exercise their respective positions, or contesting in any way the accuracy, completeness or fairness of the
Official Statement (but in lieu of or in conjunction with such certificate, the Authorized Representative may,
in its sole discretion, accept certificates or opinions of general counsel to the Issuer that, in his or her opinion,
the issues raised in any such pending or threatened litigation are without substance or that the contentions of
-9-
all plaintiffs therein are without merit); (iii) no event affecting the Issuer has occurred since the date of the
Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be
used or which it is necessary to disclose therein in order to make the statements and information therein, in
the light of the circumstances under which they were made, not misleading in any material respect; (iv) the
descriptions and statements of or pertaining to the Issuer contained in its Official Statement, on the date of
sale of the Bonds and on the date of the delivery of the Bonds, were and are true and correct in all material
respects; (v) insofar as the Issuer and its affairs, including its financial affairs, are concerned, such Official
Statement did not and does not contain an anwe statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; (vi) insofar as the descriptions and statements including financial
data, of or pertaining to entities, other than the Issuer, and their activities contained in the Official Statement
are concerned, such statements and data have been obtained from sources which the Issuer believes to be
reliable; and (vii) there has not been any material and adverse change in the affairs or financial condition of
the Issuer since the latest date as to which audited financial information is available;
(8) A certificate of the Issuer in form and substance satisfactory to Bond Counsel and counsel
to the Underwriters (a) setting forth the facts, estimates and circumstances in existence on the date of the
Closing that establish that the proceeds of the Bonds are not expected to be used in a manner that would
cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of
1986, as amended (the "Code"), and any applicable regulations (whether food, temporary or proposed), issued
pursuant to the Code, and (b) certifying that to the best of the knowledge and belief of the Issuer there are
no other facts, estimates or circumstances that would materially change the conclusions, representations and
expectations contained in such certificate;
(9) A copy of a special report prepared by Grant Thomson LLP, independent certified public
accountants, addressed to the City, Bond Counsel and the Underwriters, verifying (i) the arithmetical
computations of the adequacy of the maturing principal and interest on the Escrowed Securities and
uninvested cash on hand under the Escrow Agreement to pay, when due, the principal of and interest on the
Refunded Bonds, and (ii) the computation of the yield with respect to the Escrowed Securities and the Bonds.
(10) An executed copy of the Escrow Agreement;
(11) An opinion of the city attorney for the Issuer addressed to the Issuer and the Underwriters,
substantially in the form and substance attached hereto as Exhibit B;
(12) Evidence satisfactory to the Authorized Representative that the Bonds have been rated
"Aaa", by Moody's and "AAA" by S&P and that such ratings are in effect as of the date of Closing;
(13) A copy of the municipal bond insurance policy issued by the Insurer for the Bonds; opinion
of counsel to the Insurer in form and substance satisfactory to the Authorized Representative; and a
certificate of the Insurer with respect to the accuracy of the statements contained in the Official Statement
regarding the municipal bond insurance policy for the Bonds;
(14) Such additional legal opinions, certificates, instruments and other documents as the
Underwriters may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the
date of the Closing, of the Issuer's representations and warranties contained herein and of the statements and
-10-
information contained in the Official Statement and the due performance or satisfaction by the Issuer on or
prior to the date of the Closing of all the respective agreements then to be performed and conditioned then
to be satisfied by the Issuer.
AS of the opinions, letters, certificates, instruments and other documents mentioned above or
elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but
only if, they are in form and substance reasonably satisfactory to the Authorized Representative.
If the Issuer shall be unable to satisfy the conditions to the obligation of the Underwriters to purchase,
to accept delivery of and to pay for the Bonds contained in this Purchase Contract, or if the obligation of the
Underwnters to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason
permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriters nor
the Issuer shall be under any further obligation hereunder, except that (i) the check of the Authorized
Representative referred to in Section 1 hereof shall be immediately returned to the Authorized Representative
by the Issuer and (ii) the respective obligations of the Issuer and the Underwriters set forth in Sections 4 and
8 hereof shall continue in full force and effect.
7. Termination. The Underwriters shall have the right to cancel their obligation to purchase
the Bonds if, between the date of this Purchase Contract and the Closing, in the reasonable ,judgment of the
Authorized Representative, the market price or marketability of the Bonds shall be materially adversely
affected by the occurrence of any of the following:
(a) Legislation shall be enacted by or introduced in the Congress of the United States or
recommended to the Congress for passage by the President of the United States, or the Treasury Department
of the United States or the Internal Revenue Service or any member of the Congress or favorably reported
for passage to either House of the Congress by any committee of such House to which such legislation her
been referred for consideration, a decision by a court of the United States or of the State or the United States
Tax Court shall be tendered, or an order, ruling, regulation (final, temporary or proposed), press release,
statement or other form of notice by or on behalf of the Treasury Department of the United States, the
Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all
of which would be to impose, directly or indirectly, federal income taxation upon revenues or other income
of the general character to be derived by the Issuer pursuant to the Ordinance, or upon interest received on
obligations of the general character of the Bonds or the interest on the Bonds as described in the Official
Statement, or other action or events shall have transpired which may have the purpose or effect, directly or
indirectly, of changing the federal income in consequences of any of the transactions contemplated herein;
(b) Legislation introduced in or enacted (or resolution passed) by the Congress or an order,
decree, or injunction issued by any court of competent jurisdiction, or an order, Wiling, regulation (final,
temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities
and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the
effect that obligations of the general character of the Bonds, including any or all underlying arrangements,
are not exempt from mgistration under or other requirements of the 1933 Act, or that the Ordinance is not
exempt from qualification under or other requirements of the Trust Indenture Act, or that the issuance,
offering, or sale of obligations of the general character of the Bonds, including any or all underlying
arrangements, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation
of the federal securities law as amended and then in effect;
-11-
(c) Any state blue sky or securities commission or other governmental agency or body of a
jurisdiction in which 25% or more of the Bonds have been sold shall have withheld registration, exemption
or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating
thereto;
(d) A general suspension of trading in securities on the New York Stock Exchange or the
American Stock Exchange, the establishment of material restrictions (not in force as of the date hemof) upon
trading securities generally by any governments] authority or any national securities exchange, or a general
banking moratorium declared by federal, State of New York, or State of Texas officials authorized to do so;
(e) The imposition of any material restrictions not now in force, or a material increase of those
now in force, by any national securities exchange or any governmental authority, as to the Bonds or as to
obligations of the general character of the Bonds, or with respect to the extension of credit by, or the charge
to the net capital requirements of, the Underwriters;
(f) Any amendment to the federal or State Constitution or action by any federal or state coon,
legislative body, regulatory body, or other authority materially adversely affecting the tax status of the Issuer,
its property, income or securities (or interest thereon);
(g) Any fact or event shall exist or have existed, or any event occurring or information becoming
known, which makes untrue or incorrect many material respect any statement or information contained in
the Official Statement, or has the effect that the Official Statement contains any untrue statement of material
fact or omits to state a material fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
(h) There shall have occurred since the date of this Purchase Contract any materially adverse
change in the affairs or financial condition of the Issuer;
(i) Them shall have occurred (r) a material outbreak of hostilities (including, without limitation,
an act of terrorism), (ii) a material other national or international calamity or crisis, financial or otherwise, or
any material adverse change in the financial, political or economic conditions affecting the United States,
including, but not limited to, an escalation of hostilities that existed prior to the date hereof or (iii) a financial
crisis, the effect of which on the financial markets of the United States is such as, in the reasonable judgment
of the Authorized Representative, would materially adversely affect the market for, or market price of, the
Bonds;
0) There shall have occurred any downgrading, or my notice shall have been given of (A) any
intended or potential downgrading or (B) any review or possible change that does not indicate a possible
upgrade, in the rating accorded any of the Issuer's obligations (including the rating to be accorded the Bonds)
by any nationally recognized statistical rating organization as such term is defined for purposes of Rule
436(8)(2) under the 1933 Act; and
(k) The purchase of and payment for the Bonds by the Underwriters, or the resale of the Bonds
by the Underwriters, on the terms and conditions herein provided shall be prohibited by any applicable law,
governmental authority, board, agency or commission, which prohibition shall not be due to the malfeasance,
misfeasance or nonfeasance of the Underwriters.
-12-
Expenses.
(a) The Underwriters shall be under no obligation to pay, and the Issuer shall pay, any expenses
incident to the performance of the Issuer's obligations hereunder, including, but not limited to (i) the cost of
preparation, printing and delivery of the Preliminary Official Statement and the Official Statement, (ii) the cost
of preparation and printing of the Bonds, (iii) the fees and disbursements of Bond Counsel; (iv) the fees and
disbursements of the Financial Advisor to the Issuer, (v) the fees and disbursements of Grant Thornton, LLP,
for providing the verification report described in the Official Statement and any other engineers, accountants,
and other experts, consultants or advisers retained by the Issuer; (vi) the premium for the municipal bond
insurance policy pertaining to the Bonds; (vii) the fees, if any, for bond ratings and (viii) the examination fee
of the Texas Attorney General..
(b) The Underwriters shall pay (i) the cost of preparation and printing of this Purchase Contract;
(ii) all advertising expenses in connection with the public offering of the Bonds; and (iii) all other expenses
incurred by the Underwriters in connection with the public offering of the Bonds, including the fees and
disbursements of Underwriters' Counsel.
9. Notices. Any notice or other communication to be given to the Issuer under this Purchase
Contract may be given by delivering the same in writing at One Allen Civic Plaza, 305 Century Parkway,
Allen, Texas 75013, Attention: Finance Director, and any notice or other communication to be given to the
Authorized Representative ander this Purchase Contract may be given by delivering the same in writing to
First Southwest Company, 1001 Main Street, Suite 802, Lubbock, Texas 79401, Atm: Vince Viaille.
10. Parties In Interest. This Purchase Contract as heretofore specified shall constitute the
entire agreement between us and is made solely for the benefit of the Issuer and the Underwriters (including
successors or assigns of the Underwriters) and no other person shall acquire or have any right hereunder or
by virtue thereof This Purchase Contract may not be assigned by the Issuer. All of the Issuer's
representations, warranties and agreements contained in this Purchase Contract shall remain operative and
in full force and effect, regardless of (i)any investigations made by or on behalf of the Underwriters; (ii)
delivery of and payment for the Bonds pursuant to this Purchase Contract; and (iii) any termination of this
Purchase Contract.
I1. No Personal Liability. None of the members of the City Council, nor any officer, agent,
or employee of the Issuer, shall be charged personally by the Underwriter with any liability, or be held liable
to the Underwriter under any term or provision of this Contract, or because of execution or attempted
execution, or because any breach or attempted or alleged breach, of this Contract.
12. Effectiveness. This Purchase Contract shall become effective upon the acceptance hereof
by the Issuer and shall be valid and enforceable at the time of such acceptance.
13. CHOICE OF LAW. THIS PURCHASE CONTRACT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS
14. Severability. If any prevision of this Purchase Contract shall be held or deemed to be or
shall, in fact, be invalid, inoperative or unamorccable m applied many particular case many jurisdiction or
-13-
jurisdictions, or in all jurisdictions because it conflicts with any provisions of any Constitution, statute, rule of
public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in
question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other
provision or provisions of this Purchase Contract invalid, inoperative or unenforceable to any extent whatever.
15. Business Day. For purposes of this Purchase Contract, "business day' means any day on
which the New York Stock Exchange is open for trading.
16. Section Headings. Section headings have been inserted in this Purchase Contract as a
matter of convenience of reference only, and its agreed that such section headings are not a part of this
Purchase Contract and will not be used in the interpretation of any provisions of this Purchase Contract.
17. Counterparts. This Purchase Contract may be executed in several counterparts each of
which shall be regarded as an original (with the same effect as if the signatures thereto and hereto were upon
the same document) and all of which shall constitute one and the same document.
18. Status of the Underwriters. It is understood and agreed that for all purposes of this
Purchase Contract and the transactions contemplated hereby the Underwriters have, in their role as
Underwriters, acted solely as independent contractors and have not acted as financial or investment advisors,
fiduciaries or agents to or for the Issuer, whether directly or indirectly through any person. The Issuer
recognizes that the Underwriters expect to profit from the acquisition and potential distribution of the Bonds.
If you agree with the foregoing, please sign the enclosed counterpart of this Purchase Contract and
return it to the Authorized Representative. This Purchase Contract shall become a binding agreement
between you and the Underwriters when at least the counterpart of this Purchase Contract shall have been
signed by or on behalf of each of the parties hereto.
[The remainder of this page is left blank intentionally]
-14-
Very truly yours,
First Southwest Company
Estrada Hinojosa & Company, Inc.
By: FIRST SOUTHWEST COMPANY
as Authorized Representative for the Underwriters Identified Above
Accepted and agreed to as of the date hereof.
CITY OF ALLEN, TEXAS
Mayor
Authorized Officer
Signature page for Purchase Contract
SCHEDULE 1
CITY OF ALLEN, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING
AND IMPROVEMENT BONDS
SERIES 2004
Dated Date: June 1, 2004
Maturity (6-1) Amount ($) Rate (%) Price or Yield (%)
2005
265,000
4.750
1.550
2006
465,000
4.750
2.180
2007
490,000
4.750
2.700
2008
495,000
4.750
3.120
2009
380,000
4.750
3.480
2010
400,000
5.000
3.750
2011
425,000
5.000
4.000
2012
445,000
5.000
4.200
2013
445,000
5.000
4.340
2014
470,000
4.750
4.460
2015
490,000
5.000
4.590
2016
175,000
5.000
4.670
2017
185,000
5.000
4.750
2018
195,000
5.000
4.820
2019
205,000
5.000
4.880
2020
215,000
5.000
4.970
2021
225,000
5.000
5.030
2022
235,000
5.000
5.050
2023
245,000
5.000
5.100
2024
260,000
5.000
5.130
Interest on the Bonds is payable on December 1, 2004, and on each June 1 and December 1
thereafter.
The Bonds maturing on and after lune 1, 2015, are subject to redemption at the option of the Issuer,
in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on June 1, 2014, or any date
thereafter, at the par value thereof plus seemed interest to the date of redemption.
No Text
Exhibit A
Proposed Form of Underwriters' Counsel Opinion of
McCall, Parkhurst & Horton L.L.P.
June 17. 2004
First Southwest Company
1001 Main Street
Suite 802
Lubbock, Texas 79401-3322
Esnuda Hinojosa & Company, Inc.
1717 Main Street
Suite 4740
LB 47
Dallas, Texas 75201
Re: $6,710,000 City of Allen, Texas, Waterworks and Sewer System Revenue Refunding and
Improvement Bonds, Series 2004
Ladies and Gentlemen:
We have acted as counsel for you as the underwriter of the bonds described above (the "Bonds"),
issued under and pursuant to an ordinance (the "Ordinance') of the City of Allen, Texas (the "Issuer"),
authorizing the issuance of the Bonds, which Bonds you are purchasing pursuant to a Purchase Contract,
dated May 11, 2004. All capitalized undefined terns used herein shall have the meaning set forth in the
Purchase Contract.
In connection with this opinion letter, we have considered such matters of law and of fact, and have
relied upon such certificates and other information fumished to us, as we have deemed appropriate as a basis
for our opinion set forth below. We are not expressing any opinion or views herein on the authorization,
issuance, delivery, validity of the Bonds and we have assumed, but not independently verified, that the
signatures on all documents and certificates that we have examined are genuine.
Based on and subject to the foregoing, we are of the opinion that, under existing laws, the Bonds are
not subject to the registration requirements of the Securities Act of 1933, as amended, and the Ordinance is
not required to be qualified under the Trust Indenture Act of 1939, as amended.
Because the primary purpose of our professional engagement as your counsel was not to establish
factual matters, and because of the wholly or partially nonlegal character of many of the determinations
involved in the preparation of the Official Statement dated May 11, 2004 (the "Official Statement") and
because the information in the Official Statement under the headings "Bond Insurance;' "Book -Entry -Only
System," "Tax Matters " " Continuing Disclosure of Information — Compliance with Prior Agreements" and
the Appendices thereto were prepared by others who have been engaged to review or provide such
information, we are not passing on and do not assume any responsibility for the information contained under
such headings ands the Appendices, and except as set forth in the last sentence of this paragraph, we are
not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Official Statement (including any appendices, schedules and exhibits thereto) and
we make no representation that we have independently verified the accuracy, completeness or fairness of
such statements. In the course of our participation to the preparation of the Official Statement as your
counsel, we had discussions with representatives of the Issuer, including its Financial Advisor and Bond
Counsel, regarding the contents of the Official Statement. In the course of such activities, no facts came to
our attention which would lead us to believe that the Official Statement (except for the financial statements
and other financial and statistical data contained therein, the information set forth under the headings 'Bond
Insurance,' 'Book -Entry -Only System," "Tax Matters," " Continuing Disclosure of Information — Compliance
with Prior Agreements" and the Appendices thereto, as to which we express no opinion), as of its dale
contained any untrue statement of a material fact or omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they wen made, not misleading.
This opinion letter may be relied upon by only you and only in connection with the transaction to which
reference is made above and may not be used or relied upon by any other person for any purposes
whatsoever without our prior written consent.
Respectfully,
Exhibit B
Proposed Form of Opinion of City Attorney
June 17, 2004
First Southwest Company
1001 Main Street
Suite 802
Lubbock, Texas 79401-3322
Estrada Hirmosa & Company, Inc.
1717 Main Street
Suite 4740
LB 47
Dallas, Texas 75201
Re: $6,710,000 City of Allen, Texas Waterworks and Sewer System Revenue Refunding and
Improvement Bonds, Series 2004
Ladies and Gentlemen:
I am counsel for the City of Allen, Texas (the "Issuer") and have acted as such in connection with
the issuance of the City of Allen, Texas General Obligation Refunding and Improvement Bonds, Series 2004,
in the aggregate principal amount of $6,710,000 (the "Bonds"), pursuant to the provisions of an ordinance duly
adopted by the City Council of the Issuer on May 11, 2004 (the "Ordinance'). Capitalized terms not otherwise
defined in this opinion have the meanings assigned in the Purchase Contract.
In my capacity as counsel to the Issuer, I have reviewed such agreements, documents, certificates,
opinions, letters, and other papers as I have deemed necessary or appropriate in rendering the opinions set
forth below.
In making my review, I have assumed the authenticity of all documents and agreements submitted
to me as originals conformity to the originals of all documents and agreements submitted to me as certified
or photostatic copies, the authenticity of the originals of such latter documents and agreements, and the
accuracy of the statement contained in such documents.
Based upon the foregoing, and subject to the qualifications and exceptions hereinafter set forth, I am
of the opinion that under the applicable laws of the United States of America and the State of Texas in force
and effect on the date hereof:
The execution and delivery of the Purchase Contract and the Bonds and the adoption of the
Ordinance and compliance with the provisions of each of such agreements or instruments does not
constitute a breach of or default under any applicable law or administrative regulation of the State
of Texas or the United States or any applicable judgment or decree or, to the best of my knowledge,
any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument
to which the Issuer is a party or is otherwise subject; and
Except as disclosed in the Official Statement, no litigation is pending, or, to my knowledge, threatened,
in any court in any way (a) challenging the titles of the Mayor or any of the other members of the
City Council to their respective offices; (b) seeking to restrain or enjoin the issuance or delivery of
any of the Bonds, or levy, collection or application of the ad valorem taxes pledged or to be pledged
to pay the principal of and interest on the Bonds; (c) contesting or affecting the validity or
enfomeability, of the Bonds, the Ordinance or the purchase Contract; (d) contesting the powers of
the Issuer or any authority for the issuance of the Bonds, or the adoption of the Ordinance; or (e) that
would have a material and adverse effect on the financial condition of the Issuer.
This opinion is famished solely for your benefit and may be relied upon only by the addresses hereof
or anyone to whom specific permission is given in writing by me.
Very truly yours,
SPECIAL ESCROW AGREEMENT
THE STATE OF TEXAS
COUNTY OF COLLIN
THIS SPECIAL ESCROW AGREEMENT (the "Agreement"), made and entered into as
of May 11, 2004, by and between the City of Allen, Texas, a duly incorporated municipal
corporation in Collin County, Texas (the "City') acting by and through the Mayor and City
Secretary, and JPMorgan Chase Bank, Dallas, Texas, a banking association organized and
existing under the laws of the State of New York and authorized to do business in the State of
Texas, or its successors or assigns hereunder (the "Bank"),
WITNESSETH:
WHEREAS, the City Council of the City of Allen, Texas (the "City") has heretofore
issued, sold, and delivered, and there is currently outstanding, obligations totaling in principal
amount $3,310,000 (collectively, the "Refunded Obligations") more particularly described as
follows:
(1) City of Allen, Texas, Waterworks and Sewer System Revenue
Refunding and Improvement Bonds, Series 1992, dated July 15, 1992,
scheduled to mature on June 1 in each of the years 2005 through 2012, and
aggregating in principal amount $695,000 (the "Series 1992 Refunded Bonds');
(2) City of Allen, Texas, Waterworks and Sewer System Revenue
Bonds, Series 1995, dated September 1, 1995, scheduled to mature on June 1 in
each of the years 2006 through 2015, and aggregating in principal amount
$2,615,000 (the "Series 1995 Refunded Bonds");
AND WHEREAS, in accordance with the provisions of V.T.C.A., Government Code,
Chapter 1207, as amended (the "Act"), the City is authorized to sell refunding bonds in an
amount sufficient to provide for the payment of obligations to be refunded, deposit the proceeds
of such refunding bonds with any place of payment for the obligations being refunded, or other
authorized depository, and enter into an escrow or similar agreement with such depository for
the safekeeping, investment, reinvestment, administration and disposition of such deposit, upon
such terms and conditions as the parties may agree, provided such deposits may be invested
only in (i) direct noncallable obligations of the United States of America, including obligations the
principal of and interest on which are unconditionally guaranteed by the United States of
America, (ii) noncallable obligations of an agency or instrumentality of the United States,
including obligations unconditionally guaranteed or insured by the agency or instrumentality and
on the date of their acquisition or purchase by the City are rated as to investment quality by a
nationally recognized investment rating firm not less than AAA or its equivalent and
(iii) noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refunded and on the date of their acquisition or purchase
by the City, are rated as to investment quality by a nationally recognized investment rating firm
not less than AAA or its equivalent that mature and/or bear interest payable at such times and in
such amounts as will be sufficient to provide for the scheduled payment of the Refunded
Obligations; and
45449620.1 Exhibit C
WHEREAS, in accordance with the provisions of the ordinance authorizing the Refunded
Obligations, the deposits to refund and defease such Refunded Obligations shall be invested
only in direct obligations of the United States of America, including obligations the principal of
and interest on are unconditionally guaranteed by the United States of America (the "Escrowed
Securities"); and
WHEREAS, the Refunded Obligations are scheduled to mature, or be redeemed, and
interest thereon is payable on the dates and in the manner set forth in Exhibit A attached hereto
and incorporated herein by reference as a part of this Agreement for all purposes; and
WHEREAS, the City on the 11' day of May, 2004, pursuant to an ordinance (the "Bond
Ordinance") finally passed and adopted by the City Council, authorized the issuance of bonds
known as "City of Allen, Texas, Waterworks and Sewer System Revenue Refunding and
Improvement Bonds, Series 2004" (the "Bonds"), and such Bonds are being issued in part to
refund, discharge and make final payment of the principal of and interest on the Refunded
Obligations; and
WHEREAS, upon the delivery of the Bonds, a portion of the proceeds of sale, together
with other available funds of the City, are to be deposited with the Bank and used in part to
purchase the Escrowed Securities listed and identified in Exhibit B attached hereto and
incorporated by reference as a part of this Agreement for all purposes; and
WHEREAS, the Escrowed Securities shall be held and deposited to the credit of the
"Escrow Fund" to be established and maintained by the Bank in accordance with this
Agreement; and
WHEREAS, the Escrowed Securities, together with the beginning cash balance in the
Escrow Fund, shall mature and the interest thereon shall be payable at such times to insure the
existence of monies sufficient to pay the principal amount of the Refunded Obligations and the
accrued interest thereon, as the same shall become due in accordance with the terms of the
ordinance authorizing the issuance of the Refunded Obligations and as set forth in Exhibit A
attached hereto; and
WHEREAS, the City has completed all arrangements for the purchase of the Escrowed
Securities listed in Exhibit B and the deposit and credit of the same to the Escrow Fund as
provided herein; and
WHEREAS, the Bank is a banking association organized and existing under the laws of
the State of New York, possessing trust powers and is fully qualified and empowered to enter
into this Agreement and authorized to do business in the State of Texas; and
WHEREAS, in Section 35 of the Bond Ordinance, the City Council duly approved and
authorized the execution of this Agreement; and
WHEREAS, the City and the Escrow Agent, as the case may be, shall take all action
necessary to call, pay, redeem and retire said Refunded Obligations in accordance with the
provisions thereof, including, without limitation, all actions required by the ordinance authorizing
the Refunded Obligations, the Act, the Bond Ordinance and this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and
to secure the payment of the principal of and the interest on the Refunded Obligations as the
45449620.1 2 Exhibit C
same shall become due, the City and the Bank hereby mutually undertake, promise and agree
as follows:
SECTION 1: Receipt of Refunded Bond Ordinances. Receipt of a copy of the
ordinance authorizing the issuance of the Refunded Obligations and the Bond Ordinance are
hereby acknowledged by the Bank. Reference herein to or citation herein of any provision of
said documents shall be deemed an incorporation of such provision as a part hereof in the
same manner and with the same effect as if it were fully set forth herein.
SECTION 2: Escrow Fund Creation/Funding. There is hereby created by the City with
the Bank a special segregated and irrevocable trust fund designated 'SPECIAL 2004 CITY OF
ALLEN, TEXAS, REVENUE REFUNDING BOND ESCROW FUND" (hereinafter called the
"Escrow Fund') for the benefit of the holders of the Refunded Obligations, and, immediately
following the delivery of the Bonds, the City agrees and covenants to cause to be deposited with
the Bank the following amounts:
$2,705,754.00 For the purchase of Escrowed Securities identified in Exhibit B to
be held for the account of the Escrow Fund
$696,958.43 For deposit in the Escrow Fund as a beginning cash balance.
The Bank hereby accepts the Escrow Fund and further agrees to receive said moneys,
apply the same as set forth herein, and to hold the cash and Escrowed Securities deposited and
credited to the Escrow Fund for application and disbursement for the purposes and in the
manner provided in this Agreement.
SECTION 3: Escrow Fund Sufficiency Warranty. The City hereby represents that the
cash and Escrowed Securities, together with the interest to be earned thereon, deposited to the
credit of the Escrow Fund will be sufficient to pay the principal of and premium and interest on
the Refunded Obligations as the same shall become due and payable, and such Refunded
Obligations, and the interest thereon, are to mature or be redeemed and shall be paid at the
times and in the amounts set forth and identified in Exhibit A attached hereto.
FURTHERMORE, the Bank acknowledges receipt of a copy of the Bond Ordinance
which also provides for the redemption of the Series 1992 Refunded Obligations on June 17,
2004 at the redemption price of par plus accrued interest thereon and the Series 1995
Refunded Obligations on June 1, 2005 at the redemption price of par plus accrued interest
thereon; all in accordance with the provisions of the notice requirements applicable to said
Refunded Obligations and the notice requirements contained in the respective ordinances
authorizing such Refunded Obligations.
The Bank agrees to cause a notice of redemption pertaining to the Refunded Obligations
to be sent to the registered owners thereof appearing on the registration books at least thirty
(30) days prior to the respective redemption date therefor.
SECTION 4: Pledge of Escrow. The Bank agrees that all cash and Escrowed
Securities, together with any income or interest earned thereon, held in the Escrow Fund shall
be and is hereby irrevocably pledged to the payment of the principal of and interest on the
Refunded Obligations which will mature and become due on and after the date of this
Agreement, and such funds initially deposited and to be received from maturing principal and
45449620.1 3 Exhibit C
interest on the Escrowed Securities in the Escrow Fund shall be applied solely in accordance
with the provisions of this Agreement.
SECTION 5: Escrow Insufficiency - City Warranty to Cure. If, for any reason, the funds
on hand in the Escrow Fund shall be insufficient to make the payments set forth in Exhibit A
attached hereto, as the same becomes due and payable, the City shall make timely deposits to
the Escrow Fund, from lawfully available funds, of additional funds in the amounts required to
make such payments. Notice of any such insufficiency shall be immediately given by the Bank
to the City by the fastest means possible, but the Bank shall in no manner be responsible for the
City's failure to make such deposits.
SECTION 6: Escrow Fund Securities/Segregation. The Bank shall hold said Escrowed
Securities and moneys in the Escrow Fund at all times as a special and separate trust fund for
the benefit of the holders of the Refunded Obligations, wholly segregated from other moneys
and securities on deposit with the Bank; shall never commingle said Escrowed Securities and
moneys with other moneys or securities of the Bank; and shall hold and dispose of the assets
therein only as set forth herein. Nothing herein contained shall be construed as requiring the
Bank to keep the identical moneys, or any part thereof, in said Escrow Fund, if it is impractical,
but moneys of an equal amount, except to the extent such are represented by the Escrowed
Securities, shall always be maintained on deposit in the Escrow Fund by the Bank, as escrow
agent; and a special account evidencing such facts shall at all times be maintained on the looks
of the Bank.
SECTION 7: Escrow Fund Collections/Payments. The Bank shall from time to time
collect and receive the principal of and interest on the Escrowed Securities as they respectively
mature and become due and credit the same to the Escrow Fund. On or before each principal
and/or interest payment date or redemption date, as the case may be, for the Refunded
Obligations shown in Exhibit A attached hereto, the Bank, without further direction from anyone,
including the City, shall cause to be withdrawn from the Escrow Fund the amount required to
pay the accrued interest on the Refunded Obligations due and payable on said payment date
and the principal of the Refunded Obligations due and payable on said payment date or
redemption date, as the case may be, and the amount withdrawn from the Escrow Fund shall be
immediately transmitted and deposited with the paying agent for the Refunded Obligations to be
paid with such amount. The paying agent for the Refunded Obligations is the Bank.
If any Refunded Obligation thereon shall not be presented for payment when the
principal thereof or interest thereon shall have become due, and if cash shall at such times be
held by the Bank in trust for that purpose sufficient and available to pay the principal of such
Refunded Obligation and interest thereon it shall be the duty of the Bank to hold said cash
without liability to the holder of such Refunded Obligation for interest thereon after such maturity
or redemption date, in trust for the benefit of the holder of such Refunded Obligation, who shall
thereafter be restricted exclusively to said cash for any claim of whatever nature on his part on
or with respect to said Refunded Obligation, including for any claim for the payment thereof and
interest thereon. All cash required by the provisions hereof to be set aside or held in trust for
the payment of the Refunded Obligations, including interest thereon, shall be applied to and
used solely for the payment of the Refunded Obligations and interest thereon with respect to
which such cash has been so set aside in trust.
Subject to the provisions of the last sentence of Section 25 hereof, cash held by the
Bank in trust for the payment and discharge of any of the Refunded Obligations and interest
thereon which remains unclaimed for a period of three (3) years after the stated maturity date or
4W9620.1 4 Exhibit C
redemption date of such Refunded Obligations shall be returned to the City. Notwithstanding
the above and foregoing, any remittance of funds from the Bank to the City shall be subject to
any applicable unclaimed property laws of the State of Texas.
SECTION 8: Disposal of Refunded Obligations. All Refunded Obligations cancelled on
account of payment by the Bank shall be disposed of or otherwise destroyed by the Bank, and
an appropriate certificate of destruction furnished the City.
SECTION 9: Escrow Fund Encumbrance. The escrow created hereby shall be
irrevocable and the holders of the Refunded Obligations shall have an express lien on all
moneys and Escrowed Securities in the Escrow Fund until paid out, used and applied in
accordance with this Agreement.
Unless disbursed in payment of the Refunded Obligations, all funds and the Escrowed
Securities received by the Bank for the account of the City hereunder shall be and remain the
property of the Escrow Fund and the City and the owners of the Refunded Obligations shall be
entitled to a preferred claim and shall have a first lien upon such funds and Escrowed Securities
enjoyed by a trust beneficiary. The funds and Escrowed Securities received by the Bank under
this Agreement shall not be considered as a banking deposit by the City and the Bank and the
City shall have no right or title with respect thereto, except as otherwise provided herein. Such
funds and Escrowed Securities shall not be subject to checks or drafts drawn by the City.
SECTION 10: Absence of Bank Claim/Lien on Escrow Fund. The Bank shall have no
lien whatsoever upon any of the moneys or Escrowed Securities in the Escrow Fund for
payment of services rendered hereunder, services rendered as paying agent/registrar for the
Refunded Obligations, or for any costs or expenses incurred hereunder and reimbursable from
the City.
SECTION 11: Substitution of Investments/Reinvestments. The Bank shall be authorized
to accept initially and temporarily cash and/or substituted Escrowed Securities pending the
delivery of the Escrowed Securities identified in the Exhibit B attached hereto, or shall be
authorized to redeem the Escrowed Securities and reinvest the proceeds thereof, together with
other moneys held in the Escrow Fund in noncallable direct obligations of the United States of
America provided such early redemption and reinvestment of proceeds does not change the
repayment schedule of the Refunded Obligations appearing in Exhibit A and the Bank receives
the following:
(1) an opinion by an independent certified public accountant to the effect
that (i) the initial and/or temporary substitution of cash and/or securities for one or
more of the Escrowed Securities identified in Exhibit B pending the receipt and
delivery thereof to the Escrow Agent or (ii) the redemption of one or more of the
Escrowed Securities and the reinvestment of such funds in one or more
substituted securities (which shall be noncallable direct obligations of the United
States of America), together with the interest thereon and other available moneys
then held in the Escrow Fund, will, in either case, be sufficient, without
reinvestment, to pay, as the same become due in accordance with Exhibit A, the
principal of, and interest on, the Refunded Obligations which have not previously
been paid, and
(2) with respect to an early redemption of Escrowed Securities and the
reinvestment of the proceeds thereof, an unqualified opinion of nationally
a 19620.1 5 Exhibit C
recognized municipal bond counsel to the effect that (a) such investment will not
cause interest on the Bonds or Refunded Obligations to be included in the gross
income for federal income tax purposes, under the Code and related regulations
as in effect on the date of such investment, or otherwise make the interest on the
Bonds or the Refunded Obligations subject to Federal income taxation and (b)
such reinvestment complies with the Constitution and laws of the State of Texas
and with all relevant documents relating to the issuance of the Refunded
Obligations and the Bonds.
SECTION 12: Restriction on Escrow Fund Investments - Reinvestment. Except as
provided in Section 11 hereof, moneys in the Escrow Fund will be invested only in the Escrowed
Securities listed in Exhibit B and neither the City nor the Bank shall reinvest any moneys
deposited in the Escrow Fund except as specifically provided by this Agreement.
SECTION 13: Excess Funds. If at any time through redemption or cancellation of the
Refunded Obligations there exists or will exist excesses of interest on or maturing principal of
the Escrowed Securities in excess of the amounts necessary hereunder for the Refunded
Obligations, the Bank may transfer such excess amounts to or on the order of the City, provided
that the City delivers to the Bank the following:
(1) an opinion by an independent certified public accountant that after
the transfer of such excess, the principal amount of securities in the Escrow
Fund, together with the interest thereon, and other available monies then held in
the Escrow Fund, will be sufficient to pay, as the same become due and without
reinvestment, in accordance with Exhibit A, the principal of, and interest on, the
Refunded Obligations which have not previously been paid, and
(2) an unqualified opinion of nationally recognized municipal bond
counsel to the effect that (a) such transfer will not cause interest on the Bonds or
the Refunded Obligations to be included in gross income for federal income tax
purposes, under the Code and related regulations as in effect on the date of such
transfer, or otherwise make the interest on the Bonds or the Refunded
Obligations subject to Federal income taxation, and (b) such transfer complies
with the Constitution and laws of the State of Texas and with all relevant
documents relating to the issuance of the Refunded Obligations or the Bonds.
SECTION 14: Collateralization. The Bank shall continuously secure the monies in the
Escrow Fund not invested in Escrowed Securities by a pledge of direct obligations of the United
States of America, in the par or face amount at least equal to the principal amount of said
uninvested monies to the extent such money is not insured by the Federal Deposit Insurance
Corporation.
SECTION 15: Absence of Bank's Liability for Investments. The Bank shall not be liable
or responsible for any loss resulting from any investment made in the Escrowed Securities or
substitute securities as provided in Section 11 hereof.
SECTION 16: Bank's Compensation - Escrow Administration/Settlement of Paving
Agent's Charges. The City agrees to pay the Bank for the performance of services hereunder
and as reimbursement for anticipated expenses to be incurred hereunder the amount of
$ and, except for reimbursement of costs and expenses incurred by the Bank
4sa49620.1 6 Exhibit C
pursuant to Sections 3, 11 and 19 hereof, the Bank hereby agrees said amount is full and
complete payment for the administration of this Agreement.
The City also agrees to deposit with the Bank on the effective date of this Agreement,
the sum of $ , which represents the total charge due the Bank as paying agent
for the Refunded Obligations and the Bank acknowledges and agrees that above amount is and
represents the total amount of compensation due the Bank for services rendered as paying
agent for the Refunded Obligations. The Bank hereby agrees to pay, assume and be fully
responsible for any additional charges that it may incur in the performance of its duties and
responsibilities as paying agent for the Refunded Obligations.
SECTION 17: Escrow Acent's Duties / Responsibilities/Liability. The Bank shall not be
responsible for any recital herein, except with respect to its organization and its powers and
authority. As to the existence or nonexistence of any fact relating to the City or as to the
sufficiency or validity of any instrument, paper or proceedings relating to the City, the Bank shall
be entitled to rely upon a certificate signed on behalf of the City by its City Secretary or Mayor
and/or City Secretary of the City as sufficient evidence of the facts therein contained. The Bank
may accept a certificate of the City Secretary under the City's seal, to the effect that a resolution
or other instrument in the form therein set forth has been adopted by the City Council of the
City, as conclusive evidence that such resolution or other instrument has been duly adopted and
is in full force and effect.
The duties and obligations of the Bank shall be determined solely by the express
provisions of this Agreement and the Bank shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Bank.
In the absence of bad faith on the part of the Bank, the Bank may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon any
certificate or opinion furnished to the Bank, conforming to the requirements of this Agreement;
but notwithstanding any provision of this Agreement to the contrary, in the case of any such
certificate or opinion or any evidence which by any provision hereof is specifically required to be
furnished to the Bank, the Bank shall be under a duty to examine the same to determine
whether it conforms to the requirements of this Agreement.
The Bank shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Officers of the Bank unless it shall be proved that the Bank was negligent
in ascertaining or acting upon the pertinent facts.
The Bank shall not be liable with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the holders of not less than a majority in
aggregate principal amount of all said Refunded Obligations at the time outstanding relating to
the time, method and place of conducting any proceeding for any remedy available to the Bank
not in conflict with the intent and purpose of this Agreement. For the purposes of determining
whether the holders of the required principal amount of said Refunded Obligations have
concurred in any such direction, Refunded Obligations owned by any obligor upon the Refunded
Obligations, or by any person directly or indirectly controlling or controlled by or under direct or
indirect common control with such obligor, shall be disregarded, except that for the purposes of
determining whether the Bank shall be protected in relying on any such direction only Refunded
Obligations which the Bank knows are so owned shall be so disregarded.
4�9(120.1 7 Exhibit C
The term "Responsible Officers" of the Bank, as used in this Agreement, shall mean and
include the Chairman of the Board of Directors, the President, any Vice President and any
Second Vice President, the Secretary and any Assistant Secretary, the Treasurer and any
Assistant Treasurer, and every other officer and assistant officer of the Bank customarily
performing functions similar to those performed by the persons who at the time shall be officers,
respectively, or to whom any corporate trust matter is referred, because of his knowledge of and
familiarity with a particular subject; and the term "Responsible Officer' of the Bank, as used in
this Agreement, shall mean and include any of said officers or persons.
SECTION 18: Limitation Re: Bank's Duties/Resoonsibilities/Liabilifies to Third Parties.
The Bank shall not be responsible or liable to any person in any manner whatever for the
sufficiency, correctness, genuineness, effectiveness, or validity of this Agreement with respect
to the City, or for the identity or authority of any person making or executing this Agreement for
and on behalf of the City. The Bank is authorized by the City to rely upon the representations of
the City with respect to this Agreement and the deposits made pursuant hereto and as to the
City's right and power to execute and deliver this Agreement, and the Bank shall not be liable in
any manner as a result of such reliance. The duty of the Bank hereunder shall only be to the
City and the holders of the Refunded Obligations. Neither the City nor the Bank shall assign or
attempt to assign or transfer any interest hereunder or any portion of any such interest. Any
such assignment or attempted assignment shall be in direct conflict with this Agreement and be
without effect.
SECTION 19: Interpleader. In the event conflicting demands or notices are made upon
the Bank growing out of or relating to this Agreement or the Bank in good faith is in doubt as to
what action should be taken hereunder, the Bank shall have the right at its election to:
(1) Withhold and stop all further proceedings in, and performance of,
this Agreement with respect to the issue in question and of all instructions
received hereunder in regard to such issue; and
(2) File a suit in interpleader and obtain an order from a court of
appropriate jurisdiction requiring all persons involved to interplead and litigate in
such court their several claims and rights among themselves.
In the event the Bank becomes involved in litigation in connection with this Section, the
City, to the extent permitted by law, agrees to indemnify and save the Bank harmless from all
loss, cost, damages, expenses and attorney fees suffered or incurred by the Bank as a result
thereof. The obligations of the Bank under this Agreement shall be performable at the corporate
office of the Bank in the City of Dallas, Texas.
The Bank may advise with legal counsel in the event of any dispute or question
regarding the construction of any of the provisions hereof or its duties hereunder, and in the
absence of negligence or bad faith on the part of the Bank, no liability shall be incurred by the
Bank for any action taken pursuant to this Section and the Bank shall be fully protected in acting
in accordance with the opinion and instructions of legal counsel that is knowledgeable and has
expertise in the field of law addressed in any such legal opinion or with respect to the
instructions given.
SECTION 20: Accounting - Annual Report. Promptly after September 30th of each
year, commencing with the year 2004, while the Escrow Fund is maintained under this
Agreement, the Bank shall forward to the City, to the attention of the Director of Finance, or
45449620.1 8 Exhibit C
other designated official of the City, a statement in detail of the Escrowed Securities and monies
held, and the current income and maturities thereof, and the withdrawals of money from the
Escrow Fund for the preceding 12 month period ending September 30th of each year.
SECTION 21: Notices. Any notice, authorization, request or demand required or
permitted to be given hereunder shall be in writing and shall be deemed to have been duly given
when mailed by registered or certified mail, postage prepaid addressed as follows:
CITY OF ALLEN, TEXAS
305 Century Parkway
Allen, Texas 75013
Attention: Director of Finance
JPMORGAN CHASE BANK
2001 Bryan Street, a Floor
Dallas, Texas 75201
Attention: Issuer Administrative Services
The United States Post Office registered or certified mail receipt showing delivery of the
aforesaid shall be conclusive evidence of the date and fact of delivery.
Any party hereto may change the address to which notices are to be delivered by giving
to the other parties not less than ten (10) days prior notice thereof.
SECTION 22: Performance Date. Whenever under the terms of this Agreement the
performance date of any provision hereof, including the date of maturity of interest on or
principal of the Refunded Obligations, shall be a Sunday or a legal holiday or a day on which the
Bank is authorized by law to close, then the performance thereof, including the payment of
principal of and interest on the Refunded Obligations, need not be made on such date but may
be performed or paid, as the case may be, on the next succeeding business day of the Bank
with the same force and effect as if made on the date of performance or payment and with
respect to a payment, no interest shall accrue for the period after such date.
SECTION 23: Warranty of Parties Re: Power to Execute and Deliver Escrow
Agreement. The City covenants that it will faithfully perform at all times any and all covenants,
undertakings, stipulations and provisions contained in this Agreement, in any and every said
Refunded Obligation as executed, authenticated and delivered and in all proceedings pertaining
thereto as said Refunded Obligations shall have been modified as provided in this Agreement.
The City covenants that it is duly authorized under the Constitution and laws of the State of
Texas to execute and deliver this Agreement, that all actions on its part for the payment of said
Refunded Obligations as provided herein and the execution and delivery of this Agreement have
been duly and effectively taken and that said Refunded Obligations and coupons in the hands of
the holders and owners thereof are and will be valid and enforceable obligations of the City
according to the import thereof as provided in this Agreement.
SECTION 24: Severability. If any one or more of the covenants or agreements provided
in this Agreement on the part of the parties to be performed should be determined by a court of
4e 4%20.1 9 Exhibit C
competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and
construed to be severable from the remaining covenants and agreements herein contained and
shall in no way affect the validity of the remaining provisions of this Agreement. In the event
any covenant or agreement contained in this Agreement is declared to be severable from the
other provisions of this Agreement, written notice of such event shall immediately be given to
each national rating service (Moody's Investors Service, Standard & Poor s Corporation or Fitch
Investors Service) which has rated the Refunded Obligations on the basis of this Agreement.
SECTION 25: Termination. This Agreement shall terminate when the Refunded
Obligations, including interest due thereon, have been paid and discharged in accordance with
the provisions of this Agreement. If any Refunded Obligations are not presented for payment
when due and payable, the nonpayment thereof shall not prevent the termination of this
Agreement. Funds for the payment of any nonpresented Refunded Obligations and accrued
interest thereon shall upon termination of this Agreement be held by the Bank for such purpose
in accordance with Section 7 hereof. Any moneys or Escrowed Securities held in the Escrow
Fund at termination and not needed for the payment of the principal of or interest on any of the
Refunded Obligations shall be paid or transferred to the City.
SECTION 26: Time of the Essence. Time shall be of the essence in the performance of
obligations from time to time imposed upon the Bank by this Agreement.
SECTION 27: Successors/Assigns. (a) Should the Bank not be able to legally
serve or perform the duties and obligations under this Agreement, or should the Bank be
declared to be insolvent or closed for any reason by federal or state regulatory authorities or a
court of competent jurisdiction, the City, upon being notified or discovering the Bank's inability or
disqualification to serve hereunder, shall forthwith appoint a successor to replace the Bank, and
upon being notified of such appointment, the Bank shall (i) transfer all funds and securities held
hereunder, together with all books, records and accounts relating to the Escrow Fund and the
Refunded Obligations, to such successor and (ii) assign all rights, duties and obligations under
this Agreement to such successor. If the City should fail to appoint such a successor within
ninety (90) days from the date the City discovers, or is notified of, the event or circumstance
causing the Bank's inability or disqualification to serve hereunder, the Bank, or a bondholder of
the Refunded Obligations, may apply to a court of competent jurisdiction to appoint a successor
or assigns of the Bank and such court, upon determining the Bank is unable to continue to
serve, shall appoint a successor to serve under this Agreement and the amount of
compensation, if any, to be paid to such successor for the remainder of the tern of this
Agreement for services to be rendered both for administering the Escrow Fund and for paying
agent duties and responsibilities for the Refunded Obligations.
(b) Furthermore, the Bank may resign and be discharged from performing its duties and
responsibilities under this Agreement upon notifying the City in writing of its intention to resign
and requesting the City to appoint a successor. No such resignation shall take effect until a
successor has been appointed by the City and such successor has accepted such appointment
and agreed to perform all duties and obligations hereunder for a total compensation equal to the
unearned proportional amount paid the Bank under Section 16 hereof for the administration of
this Agreement and the unearned proportional amount of the paying agents fees for the
Refunded Obligations due the Bank.
Any successor to the Bank shall be a bank, trust company or other financial institution
that is duly qualified under applicable law (the Act or other appropriate statute) to serve as
escrow agent hereunder and authorized and empowered to perform the duties and obligations
45448620.1 10 Exhibit C
contemplated by this Agreement and organized and doing business under the laws of the
United States or the State of Texas, having its principal office and place of business in the State
of Texas, having a combined capital and surplus of at least $5,000,000 and be subject to the
supervision or examination by Federal or State authority.
Any successor or assigns to the Bank shall execute, acknowledge and deliver to the City
and the Bank, or its successor or assigns, an instrument accepting such appointment
hereunder, and the Bank shall execute and deliver an instrument transferring to such successor,
subject to the terms of this Agreement, all the rights, powers and trusts created and established
and to be performed under this Agreement. Upon the request of any such successor Bank, the
City shall execute any and all instruments in writing for more fully and certainly vesting in and
confirming to such successor Bank all such rights, powers and duties. The term "Bank" as used
herein shall be the Bank and its legal assigns and successor hereunder.
SECTION 28: Escrow Agreement - Amendment/Modification. This Agreement shall be
binding upon the City and the Bank and their respective successors and legal representatives
and shall inure solely to the benefit of the holders of the Refunded Obligations, the City, the
Bank and their respective successors and legal representatives. Furthermore, no alteration,
amendment or modification of any provision of this Agreement shall (1) alter the firm financial
arrangements made for the payment of the Refunded Obligations or (2) be effective unless (i)
prior written consent of such alteration, amendment or modification shall have been obtained
from the holders of all Refunded Obligations outstanding at the time of such alteration,
amendment or modification and (ii) such alteration, amendment or modification is in writing and
signed by the parties hereto; provided, however, the City and the Bank may, without the consent
of the holders of the Refunded Obligations, amend or modify the terms and provisions of this
Agreement to cure in a manner not adverse to the holders of the Refunded Obligations any
ambiguity, formal defect or omission in this Agreement. If the parties hereto agree to any
amendment or modification to this Agreement, prior written notice of such amendment or
proposed modification, together with the legal documents amending or modifying this
Agreement, shall be furnished to each national rating service (Standard & Poor's Corporation,
Moody's Investors Service or Fitch Investors Service) which has rated the Refunded Obligations
on the basis of this Agreement, prior to such amendment or modification being executed.
SECTION 29: Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
SECTION 30: Executed Counterparts. This Agreement may be executed in several
counterparts, all or any of which shall be regarded for all purposes as one original and shall
constitute and be but one and the same instrument.
SECTION 31: Governing Law. This Agreement shall be governed by the laws of the
State of Texas and shall be effective as of the date of the delivery of the Bonds.
454496201 11 Exhibit C
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
executed by their duly authorized officers and their corporate seals to be hereunto affixed and
attested as of the date first above written.
CITY OF ALLEN, TEXAS
Mayor
ATTEST:
City Secretary
(City Seal)
JPMORGAN CHASE BANK,
as Escrow Agent
ATTEST:
Authorized Signer
(Bank Seal)
45449620.1 12 Exhibit C
EXHIBIT D
NOTICE OF REDEMPTION
CITY OF ALLEN, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE
REFUNDING AND IMPROVEMENT BONDS
SERIES 1992
DATED JULY 15, 1992
NOTICE IS HEREBY GIVEN that all bonds of the above series maturing on and after
June 1, 2005 and aggregating in principal amount $695,000 have been called for redemption on
June 17, 2004 at the redemption price of par and accrued interest to the date of redemption,
such bonds being identified as follows:
Year of
Principal Amount
Maturity
Outstanding CUSIP Number
2005
$140,000
2006
150,000
2007
160,000
2008
150,000
2009
20,000
2010
25,000
2011
25,000
2012
25,000
ALL SUCH BONDS shall become due and payable on June 17, 2004and interest
thereon shall cease to accrue from and after said redemption date and payment of the
redemption price of said bonds shall be paid to the registered owners of the bonds only upon
presentation and surrender of such bonds to JPMorgan Chase Bank (successor paying
agent/registrar to Ameritrust Texas, National Association) at its designated offices at its
designated offices at the following address:
First Class/
Registered/Certified Express Delivery/Courier By Hand Only
JPMorgan Chase Bank JPMorgan Chase Bank JPMorgan Chase Bank
Institutional Trust Services Institutional Trust Services Room 234 -North Building
P. O. Box 2320 2001 Bryan Street, 9' Floor Institutional Trust Securities Window
Dallas, Texas 75221-2320 Dallas, Texas 75201 55 Water Street
New York, New York 10041
THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for
the redemption of said bonds and pursuant to an ordinance by the City Council of the City of
Allen, Texas.
JPMORGAN CHASE BANK
Address: 2001 Bryan Street, 8" Floor
Dallas, Texas 75201
45447933.2
EXHIBIT E
NOTICE OF REDEMPTION
CITY OF ALLEN, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE BONDS
SERIES 1995
DATED SEPTEMBER 1, 1995
NOTICE IS HEREBY GIVEN that all bonds of the above series maturing on and after
June 1, 2006 and aggregating in principal amount $2,615,000 have been called for redemption
on June 1, 2005 at the redemption price of par and accrued interest to the date of redemption,
such bonds being identified as follows:
Year of
Principal Amount
Maturity
Outstanding CUSIP Number
2006
$200,000
2007
210,000
2008
225,000
2009
235,000
2010
250,000
2011
265,000
2012
280,000
2013
300,000
2014
315,000
2015
335,000
ALL SUCH BONDS shall become due and payable on June 1, 2005, and interest
thereon shall cease to accrue from and after said redemption date and payment of the
redemption price of said bonds shall be paid to the registered owners of the bonds only upon
presentation and surrender of such bonds to JPMorgan Chase Bank (successor paying
agent/registrar to Texas Commerce Bank, National Association) at its designated offices at its
designated offices at the following address:
First Class/
Registered/Certified Express Delivery/Courier By Hand Only
JPMorgan Chase Bank JPMorgan Chase Bank JPMorgan Chase Bank
Institutional Trust Services Institutional Trust Services Room 234 -North Building
P. O. Box 2320 2001 Bryan Street, 9"' Floor Institutional Trust Securities Window
Dallas, Texas 75221-2320 Dallas, Texas 75201 55 Water Street
New York, New York 10041
THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for
the redemption of said bonds and pursuant to an ordinance by the City Council of the City of
Allen, Texas.
JPMORGAN CHASE BANK
Address: 2001 Bryan Street, 8" Floor
Dallas, Texas 75201
5. IM*
Exhibit F
to
Ordinance
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 47 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Section are as specified (an included in the Appendix or under
the headings of the Official Statement referred to) below:
1. The portions of the financial statements of the City appended to the Official
Statement as Appendix E, but for the most recently concluded fiscal year.
2. The information contained under the heading 'Investment Policies -Current
Investments" in the Official Statement and in Tables 1 through 12 of Appendix A to the Official
Statement.
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in
the notes to the financial statements referred to in paragraph 1 above
45447939.2