HomeMy WebLinkAboutOrdinances (O-01-1266)-02/06/2001
ORDINANCE NO.O ~(J/ ./J.tJ?
AN ORDINANCE authorizing the issuance of "CITY OF COLLEYVILLE. TEXAS.
MUNICIPAL DRAINAGE UTILITY SYSTEM REVENUE REFUNDING AND
IMPROVEMENT BONDS. SERIES 2001"; pledging the revenues of the
Drainage Utility System to the payment of the principal of and interest on
said Bonds; enacting provisions incident and related to the issuance,
payment, security and delivery of said bonds, including the approval and
execution of a Paying Agent/Registrar Agreement and a Special Escrow
Agreement and the approval and distribution of an Official Statement
pertaining thereto; providing for the redemption of certain outstanding bonds
of the City; and providing an effective date.
WHEREAS, the City of Colleyville, Texas (the "City") has duly issued and delivered. and
there is currently outstanding. the following described revenue obligations totaling in principal
amount $1 ,245.000 (hereinafter called the "Refunded Obligations"). payable from and secured by
a first lien on and pledge of the revenues of the City's Municipal Drainage Utility System (the
"System"), to wit: City of Colleyville. Texas. Municipal Drainage Utility System Revenue Bonds.
Series 1995. dated March 1. 1995, and scheduled to mature on February 15 in each of the years
2002 through 2015; and
WHEREAS. pursuant to the provisions of V. T.CA, Government Code, Chapter 1207, as
amended, the City Council is authorized to issue refunding bonds and deposit the proceeds of sale
directly with the place of payment for the Refunded Obligations, and such deposit, when made in
accordance with said statute, shall constitute the making of firm banking and financial
arrangements for the discharge and final payment of the Refunded Obligations; and
WHEREAS, the City Council hereby finds and determines that refunding bonds should be
issued at this time to refund the Refunded Obligations, and such refunding will result in a gross
dollar savings of approximately $52,958.09 and provide a present value savings of approximately
$41,798.80; and
WHEREAS, in combination with the revenue bonds issued to refund the Refunded
Obligations, the City Council further finds and determines that revenue bonds in the principal
amount of $1,680,000 should be issued to finance the costs of drainage improvements, including
the acquisition, construction and repair and structures, equipment and facilities for the City's
Municipal Drainage Utility System; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF COLLEYVILLE, TEXAS:
SECTION 1: Authorization-Desianation-Princioal Amount - Puroose. Revenue bonds of
the City shall be and are hereby authorized to be issued in the aggregate principal amount of
$3,025,000 to be designated and bear the title "CITY OF COLLEYVILLE, TEXAS, MUNICIPAL
DRAINAGE UTILITY SYSTEM REVENUE REFUNDING AND IMPROVEMENT BONDS, SERIES
2001" (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
884919.1
--,-------_..- -_.._--_..._._.._._~---_...---_._._-----~~_._-~~-,..__....__._-_.~-'"---~'---'--'------'
and referred to as the "Refunded Obligations"), paying costs of issuance, and to finance the costs
of drainage improvements, including the acquisition, construction and repair and structures,
equipment and facilities for the City's Municipal Drainage Utility System, in conformity with the
Constitution and laws of the State of Texas, including VTCA, Local Government Code, Section
402.051. as amended. and VTC.A., Government Code, Chapter 1207.
SECTION 2: Fullv Reaistered Obliaations - Authorized Denominations - Stated Maturities
_ Date. The Bonds shall be issued as fully registered obligations, without coupons, shall be dated
February 1. 2001 (the "Issue 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 February 15 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 Maturitv Amount Ratels)
2002 $ 85,000 4.00%
2003 140,000 4.00%
2004 140.000 4.25%
2005 145.000 4.25%
2006 150,000 4.25%
2007 160.000 4.00%
2008 165,000 4.00%
2009 170,000 4.10%
2010 175.000 4.20%
2011 185,000 4.30%
2012 195,000 4.40%
2013 200,000 4.50%
2014 210.000 4.60%
2015 220,000 4.70%
2016 100.000 4.80%
2017 105,000 5.00%
2018 110.000 5.00%
2019 115,000 5.00%
2020 125.000 5.00%
2021 130.000 5.00%
The Bonds shall bear interest on the unpaid principal amounts from the Issue 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 February 15 and August 15 in
each year, commencing February 15. 2002.
884919.1
-2-
SECTION 3: Terms of Pavment - Pavina Aaent/Reaistrar. 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 all such payments shall be in 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 U. S. Trust Company of Texas. N.A., Dallas, Texas to
serve as Paying Agent/Registrar for the Bonds is hereby approved and confirmed. Books and
records relating to the registration. payment, exchange and transfer of the Bonds (the "Security
Register") shall at all times be kept and maintained on behalf of the City by the Paying
Agent/Registrar, all as provided herein, in accordance with the terms and provisions of a "Paying
Agent/Registrar Agreement", substantially in the form attached hereto as Exhibit A, and such
reasonable rules and regulations as the Paying Agent/Registrar and the City may prescribe. The
Mayor and City Secretary are hereby authorized to execute and deliver such Agreement in
connection with the delivery of the Bonds. The City covenants to maintain and provide a Paying
Agent/Registrar at all times until the Bonds are paid and discharged, and any successor Paying
Agent/Registrar shall be a bank, trust company, financial institution or other entity qualified and
authorized to serve in such capacity and perform the duties and services of Paying
Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Bonds. the City agrees
to promptly cause a written notice thereof to be sent to each Holder by United States Mail, first
class postage prepaid, which notice shall also give the address ofthe new Paying Agent/Registrar.
Principal of and premium, if any, on the Bonds shall be payable at the Stated Maturities
or upon their earlier redemption, only upon presentation and surrender of the Bonds to the Paying
Agent/Registrar at its designated office in New York, New York (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 last business day of the month next
preceding each interest payment date) and shall be paid by the Paying Agent/Registrar (i) by
check sent United States Mail, first class postage prepaid, to the address of the Holder recorded
in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar.
requested by, and at the risk and expense of, the Holder. If the date for the payment of the
principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday, or a day on
which banking institutions in the City where the Paying Agent/Registrar is located are authorized
by law or executive order to close, then the date for such payment shall be the next succeeding
day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made
on the original date payment was due.
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 Recard 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 Recard Date and of the scheduled payment date of the past due
884919.1
-3-
__...______._____~_~..._________.,_.___._______..________.__.__'_n____.__
interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5)
business days prior to the Special Record Date by United States Mail, first class postage prepaid,
to the address of each Holder of such maturity or maturities appearing on the Security Register
at the close of business on the last business day next preceding the date of mailing of such notice.
SECTION 4: Redemotion. (a) Ootional Redemotion. The Bonds maturing on and after
February 15, 2012 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 February 15, 2011 or on any date
thereafter at the redemption price of par and accrued interest to the redemption date.
(b) Exercise of Redemotion Ootion. At leastforty-five (45) days prior to a redemption date
for the Bonds (unless a shorter notification period shall be satisfactory to the Paying
Agent/Registrar), the City shall notify the Paying Agent/Registrar of the decision to redeem Bonds.
the principal amount of each Stated Maturity to be redeemed, and the date of redemption therefor.
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 Redemotion. If less than all Outstanding Bonds of the same
Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall treat
such Bonds as representing the number of Bonds Outstanding which is obtained by dividing the
principal amount of such Bonds by $5,000 and shall select the Bonds to be redeemed within such
Stated Maturity by lot.
(d) Notice of Redemotion. Not less than thirty (30) days prior to a redemption date for
the Bonds, a notice of redemption shall be sent by United States Mail, first class postage prepaid,
in the name of the City and at the City's expense, to each Holder of a Bond to be redeemed in
whole or in part at the address of the Holder appearing on the Security Register at the close of
business on the business day next preceding the date of mailing such notice, and any notice of
redemption so mailed shall be conclusively presumed to have been duly given irrespective of
whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii) identify
the Bonds to be redeemed and, in the case of a portion of the principal amount to be redeemed.
the principal amount thereof to be redeemed, (Iii) state the redemption price, (iv) state that the
Bonds, or the portion of the principal amount thereof to be redeemed, shall become due and
payable on the redemption date specified, and the interest thereon, or on the portion of the
principal amount thereof to be redeemed, shall cease to accrue from and after the redemption
date, (v) specify that payment of the redemption price for the Bonds, or the principal amount
thereof to be redeemed, shall be made at the Designated Payment/Transfer Office of the Paying
Agent/Registrar only upon their presentation and surrender by the Holder, and (vi) state that the
redemption is conditioned upon there being on deposit in the Bond Fund on the redemption date
sufficient money to pay the full redemption price of the Bonds to be redeemed. If a Bond is subject
by its terms to prior redemption and has been called for redemption and a notice of redemption
has been duly given as hereinabove provided, such Bond (or the principal amount thereof to be
884919.1
-4-
redeemed) shall became 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 Bond (or
of the principal amount thereof to be redeemed) at the then applicable redemption price are held
for the purpose of such payment by the Paying Agent/Registrar.
SECTION 5: Reaistration - Transfer - Exchanae of Bonds-Predecessor Bonds. The
Paying Agent/Registrar shall obtain, record. and maintain in the Security Register the name and
address of each and every owner of the Bonds issued under and pursuant to the provisions of this
Ordinance, or if appropriate. the nominee thereof. Any Bond may be transferred or exchanged
for Bonds of other authorized denominations by the Holder, in person or by his duly authorized
agent, upon surrender of such Bond to the Designated Payment/Transfer Office of 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 of any Bond for transfer at the Designated Payment/Transfer Office of the
Paying Agent/Registrar, one or more new Bonds shall be registered and issued to the assignee
or transferee of the previous Holder; such Bonds to be in authorized denominations, of like Stated
Maturity and of a like aggregate principal amount as the Bond or Bonds surrendered for transfer.
At the option of the Holder, Bonds 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 to the Holder requesting the exchange.
All Bonds issued in a transfer or exchange of Bonds shall be delivered to the Holders at
the Designated Payment/Transfer Office of the Paying Agent/Registrar or sent by United States
Mail, first class, postage prepaid to the Holders, and, upon the registration and delivery thereof,
the same shall be the valid obligations of the City, evidencing the same obligation to pay, and
entitled to the same benefits under this Ordinance, as the Bonds surrendered in such transfer or
exchange.
All transfers or exchanges of Bonds pursuant to this Section shall be made without
expense or service charge to the Holder. except as otherwise herein provided, and except that the
Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange
of any tax or other governmental charges required to be paid with respect to such transfer or
exchange.
Bonds 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 new Bond or Bonds registered and delivered in the
exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any
mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued,
884919.1
-5-
registered and delivered in lieu thereof pursuant to the provisions of Section 30 hereof and such
new replacement Bond shall be deemed to evidence the same obligation as the mutilated. lost,
destroyed, or stolen Bond.
Neither the City nor the Paying Agent/Registrar shall be required to issue or transfer to an
assignee of a Holder any Bond called for redemption, in whole or in part, within 45 days of the date
fixed for the redemption of such Bond; provided. however, such limitation on transferability shall
not be applicable to an exchange by the Holder of the unredeemed balance of a Bond called for
redemption in part.
SECTION 6: Book-Entrv Onlv Transfers and Transactions. Notwithstanding the provisions
contained in Sections 3, 4 and 5 hereof retating to the payment. redemption. 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") and, 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 recarded 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 cavenants and agrees with the Holders to cause
Bonds to be printed in definitive form and provide for the Bond certificates to be issued and
delivered to DTC Participants and Beneficial Owners, as the case may be. Thereafter, the Bonds
in definitive form shall be assigned, transferred and exchanged on the Security Register
maintained by the Paying Agent/Registrar and payment of such Bonds shall be made In
accardance with the provisions of Sections 3, 4 and 5 hereof.
SECTION 7: Execution - Reaistration. 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 Issue Date 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, as amended.
884919.1
-6-
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 90, 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 of $3.025.000 with principal
installments to become due and payable as provided in Section 2 hereof and numbered T-1, or
(ii) as multiple fully registered bonds, being one bond for each year of maturity in the applicable
principal amount and denomination and to be numbered consecutively from T-1 and upward
(hereinafter called the "Initial Bond(s)") and, in either case, the Initial Bond(s) shall be registered
in the name of the initial purchaser(s) or the designee thereof. The Initial Bond(s) shall be the
Bonds submitted to the Office of the Attorney General of the State of Texas for approval, certified
and registered by the Office of the Comptroller of Public Accounts of the State of Texas and
delivered to the initial purchaser(s). Any time after the delivery of the Initial Bond(s), the Paying
Agent/Registrar. pursuant to written instructions from the initial purchaser(s), or the designee
thereof, shall cancel the Initial Bond(s) delivered hereunder and exchange therefor definitive
Bonds of authorized denominations, Stated Maturities, principal amounts and bearing applicable
interest rates for transfer and delivery to the Holders named at the addresses identified therefor;
all pursuant to and in accordance with such written instructions from the initial purchaser(s), or the
designee thereof, and such other information and documentation as the Paying Agent/Registrar
may reasonably require.
SECTION 9: Forms. A. Forms Generallv. 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 are purchased with insurance
and any reproduction of an opinion of caunsel) thereon as may, consistently herewith, be
established by the City or determined by the officers executing such Bonds as evidenced by their
execution. 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 Bonds shall be printed, lithographed, or engraved.
typewritten, photocapied or otherwise reproduced in any other similar manner, all as determined
by the officers executing such Bonds as evidenced by their execution.
B.
Form of Definitive Bond.
884919.1
-7-
REGISTERED
NO.
REGISTERED
$
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF COLLEYVILLE, TEXAS,
MUNICIPAL DRAINAGE UTILITY SYSTEM
REVENUE REFUNDING AND IMPROVEMENT BOND
SERIES 2001
Issue Date:
February 1, 2001
Interest Rate:
Stated Maturity:
CUSIP NO:
Registered Owner:
Principal Amount:
DOLLARS
The City of Colleyville (hereinafter referred to as the "City"), a body corporate and
municipal corporation in the County of Tarrant, 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 Issue Date at the per annum rate of
interest specified above; such interest being payable on February 15 and August 15 of each year,
commencing February 15, 2002. Principal of this Bond is payable at its Stated Maturity or
redemption to the registered owner hereof, upon its presentation and surrender at the Designated
Payment/Transfer Office of the Paying Agent/Registrar executing the registration certificate
appearing hereon, or its successor; provided, however, while this Bond is registered to Cede &
Co., the payment of principal upon a partial redemption of the principal amount hereof may be
accomplished without presentation and surrender of this Bond. Interest is payable to the
registered owner of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance
hereinafter referenced) whose name appears on the "Security Register" maintained by the Paying
Agent/ Registrar at the close of business on the "Recard Date", which is the last business 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 recarded 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 cain or currency of the United States of America
which at the time of payment is legal tender for the payment of public and private debts.
This Bond is one of the series specified in its title issued in the aggregate principal amount
of $3,025,000 (herein referred to as the "Bonds") for the purpose of refunding certain outstanding
884919.1
-8-
obligations, paying costs of Issuance and to provide funds in the amount of $1.680.000 to finance
the costs of drainage improvements. including the acquisition, construction and repair of
structures, equipment and facilities for the City's Municipal Drainage Utility System. under and in
strict conformity with the Constitution and laws of the State of Texas, including V.T.CA. Local
Government Code, Section 402.051. as amended, and V.T.CA, Government Code, Chapter
1207, as amended, and pursuant to an Ordinance adopted by the governing body of the City
(herein referred to as the "Ordinance").
The Bonds maturing on and after February 15, 2012 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
February 15, 2011 or on any date thereafter at the redemption price of par plus accrued interest
to the date of redemption.
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 Payment/Transfer Office of the Paying Agent/Registrar. and a new
Bond or Bonds of like maturity and interest rate in any authorized denominations provided by the
Ordinance for the then unredeemed balance of the principal sum thereof will be issued to the
registered owner, without charge. If a Bond is selected for redemption, in whole or in part. the City
and the Paying Agent/Registrar shall not be required to transfer such Bond to an assignee of the
registered owner within 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, payable solely from and equally and ratably
secured by a first lien on and pledge of the Revenues (as defined in the Ordinance) of the City.s
Municipal Drainage Utility System (as defined in the Ordinance and 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 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.
884919.1
-9-
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 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; a description of and the
nature and extent of the security for the Bonds, including the Revenues pledged to the payment
of the Bonds and the lien and pledge securing the payment of the Bonds; conditions for the
issuance of additional revenue obligations; rights and conditions relating to transferability 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; provisions relating to the defeasance and discharge of the
liens. pledges, charges and covenants cantained in the Ordinance at or prior to the maturity or
redemption of this Bond; and for other terms and provisions contained therein. Capitalized terms
used herein have the same meanings assigned in the Ordinance.
This Bond, subject to limitations cantained in the Ordinance. may be transferred on the
Security Register only upon its presentation and surrender at the Designated Payment/Transfer
Office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar
duly executed by, the registered owner hereof. or his duly authorized agent. When a transfer on
the Security Register occurs, one or more new fully registered Bonds of the same Stated Maturity,
of authorized denominations, bearing the same rate of interest, and of the same aggregate
principal amount will be issued by the Paying Agent/Registrar to the designated transferee or
transferees.
The City and the Paying Agent/Registrar, and any agent of either, may treat the registered
owner hereof 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 Recard 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 Recard 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 Recard 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 cavenanted that the City is a duly organized
and legally existing municipal carporation under and by virtue of the Constitution and laws of the
884919.1
-10-
State of Texas; that the issuance of the Bonds is duly authorized by law; that all acts, conditions
and things required to exist and be done precedent to and in the issuance of the Bonds to render
the same lawful and valid obligations of the City have been properly done, have happened and
have been performed in regular and due time, form and manner as required by the Constitution
and laws of the State of Texas. and the Ordinance; that the Bonds do not exceed any
constitutional or statutory limitation; and that due provision has been made for the payment of the
principal of and interest on the Bonds by a pledge of the Revenues of the System as aforestated.
In case any provision in this Bond or any application thereof shall be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining provisions and applications
shall not in any way be affected or impaired thereby. The terms and provisions of this Bond and
the Ordinance shall be construed in accordance with and shall be governed by the laws of the
State of Texas.
IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly
executed under the official seal of the City as of the Issue Date.
CITY OF COLLEYVILLE, TEXAS
COUNTERSIGNED:
Mayor
City Secretary
(SEAL)
884919.1
-11-
C. *Form of Reaistration Certificate of Comotroller of Public Accounts to Aooear on Initial
Bond onlv.
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 Accaunts
of the State of Texas
(SEAL)
*NOTE TO PRINTER: Do not print on definitive bonds
D. Form of Certificate of Pavina Aaent/Reaistrar to Aooear on Definitive Bonds onlv.
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued and registered in the name of the Registered Owner
shown above under the provisions of the within-mentioned Ordinance; the bond or bonds of the
above entitled and designated series originally delivered having been approved by the Attorney
General of the State of Texas and registered by the Comptroller of Public Accounts. as shown by
the records of the Paying Agent/Registrar.
The designated offices of the Paying Agent/Registrar in New York, New York is the
"Designated Payment/Transfer Office" for this Bond.
U. S. TRUST COMPANY OF TEXAS, NA,
Dallas, Texas,
as Paying Agent/Registrar
Registration date:
By
Authorized Signature
884919.1
-12-
E.
Form of Assianment.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto
(Print or typewrite name. address, and zip code of transferee:)
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 oaraaraoh B of this Section. exceot
that the form of a sinale fullv reaistered Initial Bond shall be modified as follows:
(i) immediately under the name of the bond the headings "Interest Rate_" and
"Stated Maturity _" shall both be omitted";
(ii) Paragraph one shall read as follows:
The City of Colleyville (hereinafter referred to as the "City"). a body corporate and
municipal corporation in the County of Tarrant, 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 February 15 in each of the years and in principal installments in accordance with the following
schedule:
YEAR
PRINCIPAL
INSTALLMENTS
INTEREST
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
884919.1
-13-
from the Issue Date at the per annum rates of interest specified above; such interest being
payable on February 15 and August 15 in each year. commencing February 15. 2002. Principal
installments of this Bond are payable in the year of maturity or on a prepayment date to the
registered owner hereof by U. S. Trust Company of Texas, N.A., Dallas, Texas (the "Paying
Agent/Registrar"), upon presentation and surrender, at its designated offices in New York. New
York (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 "Recard Date", which is the last business 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:
"Act" - Subchapter C of Chapter 402 of the Local Government Code, as
amended.
"Additional Bonds" - Revenue bonds or other evidences of indebtedness
issued or entered into, as the case may be, in the future in accordance with the
terms and conditions provided in Section 18 hereof and, by their terms, are equally
and ratably secured by a parity lien on and pledge of the Revenues of the System.
"Average Annual Debt Service" - An amount which, at the time of
camputation, 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 accaunt in determining the total Debt Service.
Capitalized interest payments provided from bond proceeds shall be excluded in
making the aforementioned camputation.
"Bond Insurance Policy" - the municipal bond new issue insurance policy
issued by the Bond Insurer that guarantees payment of principal of and interest on
the Bonds.
Bond Insurer - Financial Guaranty Insurance Company, a New York stock
insurance company, or any successor thereto.
"Bonds" - The "City of Colleyville, Texas, Municipal Drainage Utility System
Revenue Refunding and Improvement Bonds, Series 2001" authorized by this
Ordinance.
884919.1
-14-
"Bonds Similarly Secured" - Collectively. the Bonds and Additional Bonds.
"City" - The incorporated municipality known as the City of Colleyville
located in Tarrant County, Texas.
"Debt Service" - As of any particular date of computation, with respect to
any obligations and with respect to any period. the aggregate of the amounts to be
paid or set aside by the City as of such date or in such period for the payment
of the principal of, premium, if any. and interest (to the extent not capitalized) on
such obligations; assuming, in the case of obligations without a fixed numerical
rate, that such obligations bear, or would have borne, interest at the highest rate
of (i) the actual rate on the date of calculation, or if the indebtedness is not yet
outstanding, the initial rate (if established and binding), (ii) if the indebtedness has
been outstanding for at least twelve months, the average rate over the twelve
months immediately preceding the date of calculation and (iii) (A) if interest on the
indebtedness is excludable from gross income under the applicable provisions of
the Internal Revenue Code, the most recently published Bond Buyer "Revenue
Bond Index" (or comparable index if no longer published) plus 50 basis points, or
(B) if interest is not so excludable, the interest rate on direct U. S. Treasury
Obligations with comparable maturities plus 50 basis points; provided. however,
that for purposes of any rate covenant measuring actual debt service during a test
period. variable rate indebtedness shall be deemed to bear interest at the actual
rate per annum applicable during the test period..
"Fiscal Year" - The twelve month financial 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 recagnized 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.
"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:
884919.1
-15-
(1) 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) Bonds or Bonds Similarly Secured paid or deemed
to be paid in accordance with the provisions of Section 28 hereof;
and
(3) Bonds or Bonds Similarly Secured that have been
mutilated, destroyed, lost, or stolen and replacement bonds have
been registered and delivered in lieu thereof.
"Required Reserve" - The total amount required to be accumulated and
maintained in the Reserve Fund under the provisions of Section 14 hereof.
"Revenues" - All income, receipts and revenues of every nature derived or
received from the operation and ownership (excluding restricted gifts, grants in aid
of construction and any amounts received from drainage charges specifically
provided by ordinance for contribution to the funding of future drainage system
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
Revenues of the System.
"Municipal Drainage Utility System" or "System" - All land, easements and
interest in land, together with all structures, equipment and facilities used in
draining benefitted property (within the meaning of the Act), including, but not
limited to, bridges, catch basins, channels, conduits, creeks. culverts, detention
ponds, ditches, draws, flumes, pipes, pumps, sloughs, treatment works. and
appurtenances to those items, whether natural or artificial, or using force or gravity.
that are used to draw off surface water from land, carry the water away, callect,
store, or treat the water, or divert the water into natural or artificial watercourses.
SECTION 11: Pledae. The City hereby covenants and agrees that the 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 Bonds and Additional 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 such pledge ofthe Revenues securing the payment of the
Bonds Similarly Secured and interest thereon shall canstitute a first lien on such Revenues and
be valid and binding in accardance with the terms hereof without any filing or recording thereof
(except in the official records of the City) or physical delivery of such Revenues or further act by
the City.
884919.1
-16-
SECTION 12: Svstem Fund. The City hereby covenants and agrees that the 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 "Drainage Utility
System Fund" (herein called the "System Fund"). 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:
First: 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.
Second: 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.
Revenues remaining in the System Fund after satisfying the foregoing payments, or
making adequate and sufficient provision for the payment thereof, may be transferred to the City's
general fund or used for any other 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 Similarly Secured as the same becames due and payable. the City agrees
to create or maintain a special accaunt on the books and records of the City known as the "City
of Colleyville Drainage Utility System Revenue Bond Interest and Sinking Fund" (the "Bond
Fund"). All monies deposited to the credit of such Fund shall be held in a fund or account
maintained at an official depository of the City. The City covenants that there shall be deposited
into the Bond Fund prior to each principal and interest payment date from the Revenues an
amount equal to one hundred per centum (100%) of the interest on and the principal of the Bonds
then falling due and payable by reason of maturity or redemption, and such deposits to pay
principal and accrued interest on the Bonds shall be made in substantially equal monthly
installments on or before the 10th day of each month, beginning the month next following the
delivery of the Bonds to the initial purchaser(s).
The required monthly deposits to the Bond Fund for the payment of principal of and interest
on the Bonds shall cantinue 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 Revenues of the
System.
884919.1
-17-
SECTION 14: Reserve Fund. (a) For purposes of accumulating and maintaining a
reserve amount for the payment of the Bonds Similarly Secured, the City agrees and cavenants
to create and maintain a special fund or account on its books and recards known as the "City of
Colleyville Drainage Utility System Revenue Bond Reserve Fund" (the "Reserve Fund"). All
moneys deposited to the credit of such Fund shall be held in a fund or accaunt maintained at an
official depository of City funds. All funds deposited to the credit of the Reserve Fund (excluding
investment or deposit earnings and income 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 (i) 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, (Ii) to pay principal
of and interest on Bonds Similarly Secured held by an Insurer, or evidenced by an instrument of
assignment entitling an Insurer to payment of principal of and interest on Bonds Similarly Secured.
as a result of payments or draws made on a surety bond or insurance policy held for the account
of the Reserve Fund and such payments will result in (x) the principal of and/or interest on such
Bonds Similarly Secured to be paid and (y) the restoration and replenishment of the surety bond
or insurance policy caverage representing all or a portion of the Required Reserve, and (iii), 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.
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 $223,987.00 (the "Required Reserve") which
amount is hereby found to equal or exceed the Average Annual Debt Service for the Bonds
(calculated on a Fiscal Year basis as of the date the Bonds are to be delivered). The Required
Reserve shall be established and maintained with Revenues of the System, the proceeds of sale
of Bonds Similarly Secured or by depositing to the credit of the Reserve Fund, to the extent
permitted by law, one or more surety bonds or insurance policies issued by a company or
institution having a rating in the highest rating category by two nationally recognized rating
agencies or services, or any cambination thereof. The City hereby covenants and agrees the
Required Reserve shall be initially funded in full on the date of the delivery of the Bonds with
surety bond caverage provided by a surety bond issued by Financial Guaranty Insurance
Company as provided below.
As and when Additional 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 Bonds is 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 (i) by depositing to the credit of the
Reserve Fund (immediately after the delivery of the then proposed Additional Bonds) cash or an
884919.1
-18-
additional surety bond or insurance policy or revised surety bond or revised insurance policy with
coverage in an amount sufficient to provide for the new Required Reserve to be fully or partially
funded, or (ii) at the option of the City, by making monthly deposits from funds In the System Fund
on or before the 10th day of each month following the month of delivery of the then proposed
Additional 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 Bonds then being issued (or 1/60th of the balance of
the additional amount not deposited immediately in cash or provided by a surety bond or insurance
policy).
When and so long as the cash and investments In the Reserve Fund and/or coverage
afforded by a surety bond or insurance policy held for the account of the Reserve Fund total not
less than the Required Reserve. no deposits need be made to the credit of the Reserve Fund; but,
if and when the Reserve Fund at any time contains less than the Required Reserve (or so much
thereof as shall then be required to be cantained therein if Additional Bonds have been issued and
the City has elected to accumulate all or a portion of the Required Reserve with Revenues), the
City covenants and agrees to cause monthly deposits to be made to the Reserve Fund on or
before the 10th day of each month (beginning the month next following the month the deficiency
in the Required Reserve occurred by reason of a draw on the Reserve Fund or as a result of a
reduction in the market value of investments held for the account of the Reserve Fund) from
Revenues of the System in an amount equal to either (i) 1/12th of the Required Reserve until the
total Required Reserve then required to be maintained in said Fund has been fully restored or (ii)
the amounts to pay principal of and interest on Bonds Similarly Secured held by an Insurer, or
evidenced by an instrument of assignment entitling an Insurer to payment of principal of and
interest on Bonds Similarly Secured, as a result of payments or draws made on a surety bond or
insurance policy held for the account of the Reserve Fund and such payments will result in (x) the
principal of and/or interest on such Bonds Similarly Secured to be paid and (y) the restoration and
replenishment of the surety bond or insurance pOlicy coverage representing all or a portion of the
Required Reserve. The City further covenants and agrees that, subject only to payments to be
made to the Bond Fund, the Revenues of the System shall be applied and appropriated and used
to establish and maintain the Required Reserve and to cure any deficiency in such amounts as
required by the terms of this Ordinance and any other ordinance pertaining to the issuance of
Additional Bonds.
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 resulting from the investment of the
Required Reserve and deposit such investment earnings in the System Fund or the Bond Fund.
The City hereby designates its depository bank or banks as the custodian of the Reserve Fund.
Furthermore, the "Debt Service Reserve Fund Policy Agreement" (the "Reserve Fund
Policy Agreement") by and between the City and the Financial Guaranty Insurance Company,
attached hereto as Exhibit B and incorporated herein by reference as a part of this Ordinance for
all purposes, is hereby approved as to form and cantent, and such Reserve Fund Policy
Agreement in substantially the form and substance attached hereto, together with such changes
or revisions as may be necessary to comply with Texas law, is hereby authorized to be executed
by an authorized official of City for and on behalf of the City and as the act and deed of this
884919.1
-19-
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) To the extent amounts deposited to the credit of any Funds referenced herein are
not invested. such uninvested amounts 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 Obliaations. Subject to the provisions hereinafter
appearing as to canditions precedent which must be satisfied, the City reserves the right to issue.
from time to time as needed, Additional Bonds for any authorized purpose. including the issuance
of refunding bonds. Such Additional 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 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 her 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 Revenues of the System that would materially affect the security or payment
of such obligations and (b) either (i) payments into all special Funds maintained for
the payment and security of all outstanding obligations payable from and secured
by a lien on and pledge of the Revenues of the System have been made and that
the amounts on deposit in such special Funds equal or exceed 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 Bonds shall be scheduled to mature or be payable
as to principal on February 15 or August 15 (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, accarding to the books and records of the City, the
Revenues for the last completed Fiscal Year, or for 12 consecutive months out of
the 18 months, immediately preceding the date of issuance of the Additional Bonds
(the date of issuance being the date of delivery of all or a portion of the Additional
Bonds to the initial purchasers) are at least equal to (i) 1.25 times the Average
Annual Debt Service for all Outstanding Bonds Similarly Secured after giving effect
to the issuance of the Additional Bonds then being issued and (i1) 1.10 times the
maximum annual Debt Service payment to be paid in a Fiscal Year for the
Outstanding Bonds Similarly Secured after giving effect to the issuance of the
884919.1
-21-
Additional Bonds then being issued. In making a determination of the Revenues,
the Accountant may take into consideration a change in the charges for services
afforded by the System that became effective at least sixty (60) days prior to the
last day of the period for which Revenues are determined and, for purposes of
satisfying the above Revenues test. make a pro forma determination of the
Revenues of the System for the period of time covered by his certification or
opinion based on such change in charges being in effect for the entire period
covered by the certificate or opinion of the Accountant.
SECTION 19: Refundina 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 canditions 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 Bonds) set forth in
subparagraph (3) of Section 18 hereof shall be satisfied and the certificate or opinion of the
Accountant 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: Obliaations of Inferior Lien and Pledae. The City hereby reserves the right
to issue obligations payable from and secured by a lien on and pledge of the 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: Drainaae Charaes. For the benefit of the Holders of the Bonds and in
accordance with the provisions of the Act and other applicable laws of the State of Texas, the City
hereby expressly stipulates and agrees, while any of the Bonds are Outstanding, to establish,
maintain and impose drainage charges for services afforded by the System that are reasonably
expected, on the basis of available information and experience and with due allowance for
cantingencies, to produce Revenues in each Fiscal Year:
(1) 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 Revenues of the
System,
(2) in an amount equivalent to at least 1.25 times the annual Debt
Service for the Fiscal Year on the Bonds Similarly Secured then Outstanding, and
(3) to pay all other indebtedness payable from and/or secured in whole or
in part by a lien on and pledge of the Revenues of the System.
884919.1
-22-
SECTION 22: Insurance. In regard to the operations and properties ofthe System, the City
also agrees to carry and maintain liability and property damage insurance of the kind and in the
amounts customarily carried by municipal corporations in Texas on such kind of properties;
provided. however, the City in lieu of and/or in combination with carrying such insurance may
self-insure against such perils and risks by establishing self-insurance reserves. Annually each
year not later than the end of each Fiscal Year, the City shall prepare or cause to be prepared by
a person competent and knowledgeable in such matters a written evaluation of the adequacy of
such self-insurance and/or insurance coverage and of any recommended changes in regard to
the City's insurance/self-insurance policies, practices and procedures.
SECTION 23: Sale or Lease of Prooerties. 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 of the System which is obsolete. damaged
or worn out or otherwise unsuitable. 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 while
any Bonds remain Outstanding, it will keep and maintain separate and complete records and
accaunts pertaining to the receipt and disbursement of Revenues of the System in accordance
with generally accepted accaunting principles, as well as an inventory or list of System properties.
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 the
inventory of System properties. The City further agrees that annually an audit of the books and
accounts of the System shall 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 receipts and disbursements of the System for
such Fiscal Year.
(2) A balance sheet for the System as of the end of such Fiscal Year.
(3) The Accauntant'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 Bonds and his recommendations for any
changes or improvements in the operations, recards and accounts of the System.
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 15% or more in principal amount of said
Bonds. Such required annual audit of the financial records and accaunts of the City shall be
completed, insofar as possible, within 120 days following the close of each Fiscal Year and may
be a part of the annual audit made of all City records and accounts.
884919.1
-23-
SECTION 25: Soecial Covenants. The City further covenants and agrees by and through
this Ordinance as follows:
(1) It has the lawful power to pledge the 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 ofTexas, including the Act, and
that the Bonds issued hereunder, together with the Additional Bonds, shall be
ratably secured in such manner that no one bond shall have preference over any
other bond of said issues.
(2) The 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 Bonds.
(3) To exercise and pursue with due diligence available remedies
provided by law for the collection of delinquent drainage charges, including the
power under Section 402.050 of the Act to discontinue all utility services,
particularly water and sewer services provided by the City to a user of benefitted
property who is delinquent in the payment of drainage charges.
SECTION 26: Remedv 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 caurt of proper jurisdiction, campelling 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.
Notwithstanding the above and foregoing, the City agrees and covenants that (i) in
determining whether a payment default has occurred or whether a payment on the Bonds has
been made under this Ordinance, no effect shall be given to payments made under the Bond
Insurance Policy, (ii) the Bond Insurer shall receive immediate notice of any payment default and
notice of any other default known to the Paying Agent/Registrar or any other fiduciary acting on
behalf of the Holders within 30 days of such entity's knowledge thereof, and (iii) for all purposes
of this Section, except the giving of notice of default to Holders, the Bond Insurer shall be deemed
to be the sole holder of the Bonds it has insured for so long as it has not failed to comply with its
payment obligations under the Bond Insurance Policy. Furthermore, should the City fail to make
the deposits to the Reserve Fund to restore in full the caverage afforded by the Surety Bond in
884919.1
-24-
accordance with the Debt Service Reserve Fund Policy Agreement, the Bond Insurer shall be
entitled to exercise any and all remedies available at law or under this Ordinance other than (i)
acceleration of the maturity of the Bonds or (ii) remedies which would adversely affect the Holders.
SECTION 27: SoecialObliaations. The Bonds are special obligations of the City payable
from the pledged Revenues and the Holders thereof shall never have the right to demand payment
thereof out of funds raised or to be raised by taxation.
SECTION 28: Satisfaction of Obliaation of City. If the City shall payor 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
Revenues of the System under this Ordinance and all other obligations of the City to the Holders
shall thereupon cease, terminate, and become void and be discharged and satisfied.
Bonds or any principal amount(s) thereof shall be deemed to have been paid within the
meaning and with the effect expressed above in this Section when (i) money sufficient to pay in
full such Bonds or the principal amount(s) thereof at maturity or to the redemption date therefor.
together with all interest due thereon, shall have been irrevocably deposited with and held in trust
by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) non-callable Government
Obligations shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an
authorized escrow agent, which Government Obligations have been certified by an independent
accounting firm to mature as to principal and interest in such amounts and at such times as will
insure the availability, without reinvestment, of sufficient money, together with any moneys
deposited therewith. if any, to pay when due the principal of and interest on such Bonds. or the
principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice of redemption
has been duly given or waived or if irrevocable arrangements therefor acceptable to the Paying
Agent/Registrar have been made) the redemption date thereof. The City covenants that no
deposit of moneys or Government Obligations will be made under this Section and no use made
of any such deposit which would cause the Bonds to be treated as "arbitrage bonds" within the
meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or regulations
adopted pursuant thereto.
Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow agent.
and all income from Government Obligations held in trust by the Paying Agent/Registrar or an
authorized escrow agent, pursuant to this Section which is not required for the payment of the
Bonds, or any principal amount(s) thereof, or interest thereon with respect to which such moneys
have been so deposited shall be remitted to the City or deposited as directed by the City.
Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of
and interest on the Bonds and remaining unclaimed for a period of three (3) years after the Stated
Maturity, or applicable redemption date, of the Bonds such moneys were deposited and are held
in trust to pay shall, upon the request of the City, be remitted to the City against a written receipt
therefor. Notwithstanding the above and foregoing, any remittance of funds from the Paying
Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of the State
of Texas.
884919.1
-25-
In the event of an advance refunding of the Bonds under this Section, the City agrees and
covenants to cause to be delivered to the Bond Insurer a verification report of an independent
nationally recognized certified public accountant. If a forward supply contract is employed in
connection with the refunding, (i) such verification report shall expressly state that the adequacy
of the escrow to accomplish the refunding relies solely on the initial escrowed investments and the
maturing principal thereof and interest thereon and does not assume performance under or
compliance with the forward supply cantract and (Ii) the applicable escrow agreement shall provide
that in the event of any discrepancy or difference between the terms of the forward supply contract
and the escrow agreement (or the authorizing document, if no separate escrow agreement is
utilized). the terms of the escrow agreement or authorizing document, if applicable. shall be
controlling.
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 while any Bond remains Outstanding except as permitted in this Section. 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. to cure any
ambiguity. inconsistency, or formal defect or omission herein and to provide additional security for
the payment of the Bonds Similarly Secured. In addition, the City may. with the written consent
from the Bond Insurer and owners holding a majority in aggregate principal amount of the Bonds
Similarly Secured then Outstanding (excluding Bonds Similarly Secured acquired by or held for
the account of the City) affected thereby, amend, add to, or rescind any of the provisions of this
Ordinance; provided that, without the written consent of all Holders of Bonds then Outstanding.
no such amendment, addition, or rescission shall (1) extend the time or times of payment of the
principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof, the
redemption price therefor, or the rate of interest thereon, or in any other way modify the terms of
payment of the principal of, premium, if any, or interest on the Bonds, (2) give any preference to
any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds or Bonds
Similarly Secured, as the case may be, required to be held for consent to any such amendment.
addition, or rescission.
Notice of any amendment requiring the consent of the Bond Insurer and all Holders of the
Bonds shall be furnished to any rating agency rating the Bonds at least 15 days prior to the
execution or adoption of such amendment. Additionally, the Bond Insurer shall be furnished a full
transcript of all proceedings relating to the execution of any amendment or supplement to this
Ordinance.
SECTION 30: Mutilated - Destroved - 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 Agent/Registrar of
884919.1 -26-
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: Covenants to Maintain Tax-Exemot Status. (a) Definitions. When used in
this Section, the following terms shall 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)
ofthe 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 /nvestment" 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.
"Regu/ations" means any proposed, temporary. or final Income Tax
Regulations issued pursuant to Sections 1 03 and 141 through 150 of the Code,
and 1 03 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
884919.1
-27-
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 caunsel 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 Pavments. 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 Obligations), and not use or permit the use of
such Gross Proceeds (including all cantractual arrangements with terms different
than those applicable to the general public) or any property acquired, constructed
or improved with such Gross Proceeds in any activity carried on by any person or
entity (including the United States or any agency, department and instrumentality
thereof) other than a state or local government, unless such use is solely as a
member of the general public; and
(2) not directly or indirectly impose or accept any charge or other
payment by any person or entity who is treated as using Gross Proceeds of the
Bonds or any property the acquisition, construction or improvement of which is to
be financed or refinanced directly or indirectly with such Gross Proceeds (including
property financed with Gross Proceeds of the Refunded Obligations), 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
884919.1
-28-
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 Hiaher 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 Federallv 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 Reoort. 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 Arbitraae Profits. Except to the extent otherwise provided in section
148(f) of the Code and the Regulations and rulings thereunder:
(1) The City shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of accaunt separately and
apart from all other funds (and receipts, expenditures and investments thereof) and
shall retain all recards of accaunting for at least six years after the day on which
the last Outstanding Bond is discharged. However, to the extent permitted by law,
the City may cammingle 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
Purchasers and the loan of the money represented thereby and in order to induce
884919.1
-29-
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 the Bond Fund or its
general fund, as permitted by applicable Texas statute, regulation or opinion of the
Attorney General of the State of Texas, 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 (il) 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 discaver 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 Arbitraae Profits. Except to the extent permitted by section 148 of the
Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the earlier
of the Stated Maturity or final payment of the Bonds, enter into any transaction that reduces the
amount required to be paid to the United States pursuant to Subsection H of this Section because
such transaction results in a smaller profit or a larger loss than would have resulted if the
transaction had been at arm's length and had the Yield of the Bonds not been relevant to either
party.
OJ Elections. The City hereby directs and authorizes the City Manager and Director
of Finance, 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.
(k) Bonds Not Hedae Bonds. 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 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.
884919.1
-30-
(I) Qualified Advance Refundina. The Bonds are issued in part to refund the Refunded
Obligations, and the Bonds will be issued more than 90 days before the redemption of the
Refunded Obligations. The City represents as follows:
(a) The Bonds are the first advance refunding of the Refunded Obligations,
within the meaning of section 149(d)(3) of the Code.
(b) The Refunded Obligations are being called for redemption, and will be
redeemed not later than the earliest date on which such issue may be redeemed
at par or at a premium of 3 percent or less and on which the City will realize
present value debt service savings (determined without regard to administrative
expenses) on the issue.
(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 Refunded
Obligations on the Closing Date if not ended prior thereto.
(d) On and after the date of issue of the Bonds, no proceeds of the
Refunded Obligations will be invested in Nonpurpose Investments having a Yield
in excess of the Yield on such Refunded Obligations.
(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 32: Sale of the Bonds. Pursuant to a public sale for the Bonds. the bid
submitted by PaineWebber Incarporated (herein referred to as the "Purchasers") is declared to
be the best bid received producing the lowest true interest cost rate to the City; such bid is hereby
accepted and incorporated herein by reference as a part of this Ordinance for all purposes and
the sale of the Bonds to said Purchasers at the price of 99% of par and accrued interest to the
date of delivery, is hereby approved and canfirmed. Delivery of the Bonds to the Purchasers shall
occur as soon as possible upon payment being made therefor in accardance with the terms of
sale.
SECTION 33: Control and Custodv of Bonds. The Mayor shall be and is hereby
authorized to take and have charge of all necessary orders and records pending investigation by
884919.1
-31-
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 initial purchasers.
Furthermore, the Mayor, Mayor Pro Tem, City Secretary, City Manager, and Director of
Finance, anyone or more of said officials, are hereby authorized and directed to furnish and
execute such agreements, documents and certifications relating to the City and the issuance. sale
and delivery 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, the registration by the
Comptroller of Public Accounts and the delivery of the Bonds to the Purchasers, and. together with
the City's bond counsel and the Paying Agent/Registrar, make the necessary arrangements for
the delivery of the Initial Bond(s) to the Purchasers and the initial exchange thereof for definitive
Bonds.
SECTION 34: Official Statement The use of the Preliminary Official Statement, dated
January 25. 2001, in the offering and sale of the Bonds is hereby ratified, confirmed and approved
in all respects, and the City Council hereby finds that the information and data contained in said
Preliminary Official Statement pertaining to the City and its financial affairs is true and correct in
all material respects and no material facts have been omitted therefrom which are necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading. The final Official Statement, which reflects the terms of sale (together with such
changes approved by the Mayor, City Manager, City Secretary, or Director of Finance, anyone
or more of said officials), shall be and is hereby in all respects approved and the Purchasers are
hereby authorized to use and distribute said final Official Statement, dated February 6, 2001, in
the reoffering, sale and delivery of the Bonds to the public.
SECTION 35: Proceeds of Sale. Immediately following the delivery of the Bonds,
proceeds of sale in the sum of (i) $1 ,600,000.00 shall be deposited to the credit of the construction
fund, (ii) $1 ,293,579.64 shall be deposited to the credit of the Escrow Fund, (ii) shall be disbursed
to pay the surety bond premium in the amount of $7,839.54 referenced in Section14 hereof and
(ili) the $15,679.13 shall be deposited to the credit of the Bond Fund. The balance of the proceeds
of sale of the Bonds shall be expended to pay casts of issuance, including municipal bond
insurance premium, and any excess amount budgeted for such purpose shall be deposited to the
credit of the Bond Fund. Pending expenditure for authorized projects and purposes, such
proceeds of sale deposited in the canstruction fund may be invested in authorized investments
and, subject to the provisions of Section 31 (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. All money deposited to the credit of the Construction Fund.
pending disbursement and expenditure for authorized projects and purposes, shall be and is
hereby pledged to the payment of the principal of and interest on the Bonds; provided, however,
the pledge and encumbrance of the proceeds of sale of the Bonds deposited to the credit of the
Construction Fund shall be terminated and released on amounts withdrawn and disbursed by the
884919.1
-32-
City without filing any release or further action by the City other than the act of withdrawing or
disbursing such amount from the Construction Fund.
SECTION 36: Soecial Escrow Aareement Aooroval and Execution. The "Special Escrow
Agreement" (the "Agreement") by and between the City and The Bank of New York, New York.
New York (the "Escrow Agent"). 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 2001
CITY OF COLLEYVILLE. TEXAS, MUNICIPAL DRAINAGE SYSTEM REVENUE REFUNDING
BOND ESCROW FUND" (the "Escrow Fund"); all as cantemplated and provided in V.T.C.A.,
Government Code, Chapter 1207. as amended, this Ordinance and the Agreement.
SECTION 37: Redemotion of Refunded Obliaations. The bonds of that series known as
"City of Colleyville, Texas, Municipal Drainage Utility System Revenue Bonds, Series 1995", dated
March 1, 1995. maturing in the years 2005 through 2015, and aggregating in principal amount
$1,055,000, shall be redeemed and the same are hereby called for redemption on February 15,
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 capy of this Ordinance, together with a suggested form
of notice of redemption to be sent to bondholders, with The Bank of New York, New York. New
York (successor paying agent/registrar to The Frost National Bank, Austin, Texas), 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.
The redemption of the obligations described above being associated with the advance
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 dates and in
the manner herein provided and in accordance with the ordinances authorizing the issuance of
the obligations and this Ordinance.
SECTION 38: 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
884919.1
-33-
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 39: Cancellation. All Bonds surrendered for payment, redemption, transfer or
exchange, if surrendered to the Paying Agent/Registrar, shall be promptly cancelled by it and, if
surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already
cancelled, shall be promptly cancelled by the Paying Agent/Registrar. The City may at any time
deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or registered
and delivered which the City may have acquired in any manner whatsoever, and all Bonds so
delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled Bonds held by
the Paying Agent/Registrar shall be destroyed as directed by the City.
SECTION 40: Leaal Ooinion. The obligation of the Purchasers to accept delivery of the
Bonds is subjectto being furnished a final opinion of Fulbright & Jaworski L.L.P., Attorneys, Dallas,
Texas, approving such Bonds as to their validity, said opinion to be dated and delivered as of the
date of delivery and payment for such Bonds. A true and correct reproduction of said opinion or
an executed caunterpart thereof is hereby authorized to be either printed on definitive printed
obligations or deposited with DTC along with the global certificates for the implementation and use
of the Book Entry Only System used in the settlement and transfer of the Bonds.
SECTION 41: 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 incarrectly printed or typed on the definitive Bonds.
SECTION 42: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied. is
intended or shall be construed to canfer upon any person other than the City, the Paying
Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by
reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being
intended to be and being for the sole and exclusive benefit of the City, the Paying Agent/Registrar
and the Holders.
SECTION 43: Inconsistent Provisions. All ordinances, orders or resolutions, or parts
thereof, which are in canflict or incansistent with any provision of this Ordinance are hereby
884919.1
-34-
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 44: Governina 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 45: Severabilitv. 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 provision.
SECTION 46: 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 47: Continuina Disclosure Undertakina. (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.
"NRMS/R' 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.
"SEe" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department.
officer, or agency thereof as, and determined by the SEC or its staff to be, a state information
depository within the meaning of the Rule from time to time.
(b) Annual Reports. The City shall provide annually to each NRMSIR and any SID,
within six months after the end of each fiscal year (beginning with the fiscal year ending
September 30, 2001) 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 E hereto. Financial statements to be provided shall be
(1) prepared in accordance with the accaunting principles described in Exhibit E 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.
884919.1
-35-
If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change
(and of the date of the new fiscal year end) prior to the next date by which the City otherwise
would be required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may
be set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document. if it is available from the
MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
(c) Material Event Notices. The City shall notify any SID and either each NRMSIR or
the MSRB, in a timely manner. of any of the following events with respect to the Bonds, if such
event is material within the meaning of the federal securities laws:
1.
2.
3.
4.
5.
6.
Bonds;
7.
8.
9.
10.
and
Principal and interest payment delinquencies;
Non-payment related defaults;
Unscheduled draws on debt service reserves reflecting financial difficulties;
Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
Adverse tax opinions or events affecting the tax-exempt status of the
Modifications to rights of holders of the Bonds;
Bond calls;
Defeasances;
Release, substitution, or sale of property securing repayment of the Bonds;
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 cavenants specified in this Section while, but only while. the City remains an
"obligated person" with respect to the Bonds within the meaning of the Rule, except that the City
in any event will give the notice required by subsection (c) hereof of any Bond calls and
defeasance that cause the City to be no longer such an "obligated person."
The provisions of this Section are for the sole benefit of the Holders and beneficial owners
of the Bonds, and nothing in this Section, express or implied. shall give any benefit or any legal
or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide
only the financial information, operating data, financial statements, and notices which it has
expressly agreed to provide pursuant to this Section and does not hereby undertake to provide
any other information that may be relevant or material to a camplete presentation of the City's
financial results, condition, or prospects or hereby undertake to update any information provided
884919.1
-36-
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.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances resulting from a change in legal requirements, a change in law. or a
change in the identity, nature, status, or type of operations of the City, but only if (1) the provisions
of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds
in the primary offering of the Bonds in compliance with the Rule, taking into account any
amendments or interpretations of the Rule to the date of such amendment, as well as such
changed circumstances, and (2) either (a) the Holders of a majority in aggregate principal amount
(or any greater amount required by any other provision of this Ordinance that authorizes such an
amendment) of the Outstanding Bonds consent to such amendment or (b) a Person that is
unaffiliated with the City (such as nationally recognized bond counsel) determines that such
amendment will not materially impair the interests of the Holders and beneficial owners of the
Bonds. The provisions of this Section may also be amended from time to time or repealed by the
City if the SEC amends or repeals the applicable provisions of the Rule or a court of final
jurisdiction determines that such provisions are invalid, but only if and to the extent that reservation
of the City's right to do so would not prevent underwriters of the initial public offering of the Bonds
from lawfully purchasing or selling Bonds in such offering. If the City so amends the provisions
of this Section, it shall include with any amended financial information or operating data 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: Covenants With Resoect to Insurance. The Bonds have been offered and
sold with the principal of and interest thereon being insured by the Bond Insurer. In accardance
with the terms and conditions applicable to insurance provided by the Bond Insurer. the City
covenants and agrees as follows:
884919.1
-37-
(a) The Bond Insurer shall be provided with the following information:
(i) within 120 days after the end of each Fiscal Year, a
budget for the succeeding year and annual audited financial
statements. a statement of the amount on deposit in the Reserve
Fund as of the last valuation, and, if not presented In the audited
financial statements, a statement of the Revenues pledged to the
payment of the Bonds in each such Fiscal Year;
(ii) the official statement or other disclosure, if any.
prepared in connection with the issuance of Additional Bonds and
any other obligations of the City within 30 days after the sale
thereof;
(iii) notice of any draw upon or deficiency due to market
fluctuation in the amount, if any, on deposit In the Reserve Fund;
(iv) notice of the redemption, other than mandatory sinking
fund redemption, of any of the Bonds, or of any advance refunding
of the Bonds, including the principal amount, maturities and CUSIP
numbers thereof;
(v) simultaneously with the delivery of the annual audited
financial statements, the following information and/or statements
shall also be furnished: (A) the number of System uses of the each
of the Fiscal Year, (B) notification of the withdrawal of any system
user comprising 5% or more of system sales measured in terms of
revenue dollars since the last reporting date, (C) any significant
plant retirements or expansions planned or undertaken since the
last reporting date, (D) maximum and average daily usage for the
Fiscal Year, (E) updated capital plans for expansion and
improvement projects and (F) results of annual engineering
inspections, if any, occurring at the end of the Fiscal Year;
(vi) such additional information as the Bond Insurer may
reasonably request from time to time.
(b) If, on the third day preceding any interest payment date for the Bonds
there is not on deposit with the Paying Agent/Registrar sufficient moneys available
to pay all principal of and interest on the Bonds due on such date, the Paying
Agent/Registrar shall immediately notify the Bond Insurer and State Street Bank
and Trust Company, N.A., New York, New York, or its successor as its Fiscal
Agent (the "Fiscal Agent") of the amount of such deficiency. If, by said interest
payment date, the City has not provided the amount of such deficiency, the Paying
Agent/Registrar shall simultaneously make available to the Bond Insurer and to the
Fiscal Agent the registration books for the Bonds maintained by the Paying
Agent/Registrar. In addition, (A) the Paying Agent/Registrar shall provide the Bond
Insurer with a list of the Holders entitled to receive principal or interest payments
from the Bond Insurer under the terms of the Bond Insurance Policy and shall
884919.1
-38-
make arrangements for the Bond Insurer and its Fiscal Agent (1) to mail checks or
drafts to Holders entitled to receive full or partial interest payments from the Bond
Insurer and (2) to pay principal of the Bonds surrendered to the Fiscal Agent by the
Holders entitled to receive full or partial principal payments from the Bond Insurer;
and (B) the Paying Agent/Registrar shall, at the time it makes the registration
books available to the Bond Insurer pursuant to (A) above, notify Holders entitled
to receive the payment of principal of and interest on the Bonds from the Bond
Insurer (1) as to the fact of such entitlement, (2) that the Bond Insurer will remit to
them all or part of the interest payments coming due subject to the terms of the
Bond Insurance Policy, (3) that, except as provided in paragraph (c) below, in the
event that any Holder is entitled to receive full payment of principal from the Bond
Insurer. such Holder must tender his Bond with the instrument of transfer in the
form provided on the Bond executed in the name of the Bond Insurer and (4) that,
except as provided in paragraph (c) below, in the event that such Holder is entitled
to receive partial payment of principal from the Bond Insurer, such Holder must
tender his Bond for payment first to the Paying Agent/Registrar, which shall note
on such Bond the portion of principal paid by the Paying Agent/Registrar. and then,
with an acceptable form of assignment executed in the name of the Bond Insurer,
to the Fiscal Agent, which will then pay the unpaid portion of principal to the Holder
subject to the terms of the Bond Insurance Policy.
(c) In the event that the Paying Agent/Registrar has notice that any
payment of principal of or interest on a Bond has been recovered from a Holder
pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in
accordance with the final, nonappealable order of a court having competent
jurisdiction, the Paying Agent/Registrar shall, at the time it provides notice to the
Bond Insurer, notify all Holders that in the event that any Holder's payment is so
recovered, such Holder will be entitled to payment from the Bond Insurer to the
extent of such recovery, and the Paying Agent/Registrar shall furnish to the Bond
Insurer its records evidencing the payments of principal of and interest on the
Bonds which have been made by the Paying Agent/Registrar and subsequently
recovered from the Holders, and the dates on which such payments were made.
(d) The Bond Insurer shall, to the extent it makes payments of principal of
and interest on the Bonds, become subrogated to the rights of the recipients of
such payments in accardance with the terms ofthe Bond Insurance Policy and, to
evidence such subrogation, (1) in the case of subrogation as to claims for past due
interest, the Paying Agent/Registrar shall note the Bond Insurer's rights as
subrogee on the registration books maintained by the Paying Agent/Registrar upon
receipt from the Bond Insurer of proof of the payment of interest thereon to the
Holders of such Bonds and (2) in the case of subrogation as to claims for past due
principal, the Paying Agent/Registrar shall note the Bond Insurer's rights as
subrogee on the registration books for the Bonds maintained by the Paying
Agent/Registrar upon receipt of proof of the payment of principal thereof to the
Holders of such Bonds. Notwithstanding anything in this Ordinance or the Bonds
to the cantrary, the Paying Agent/Registrar shall make payment of such past due
interest and past due principal directly to the Bond Insurer to the extent that the
Bond Insurer is a subrogee with respect thereto.
884919.1
-39-
(e) The notice addresses for the Bond Insurer and the Fiscal Agent are as
follows:
Financial Guaranty Insurance Company
115 Broadway
New York, New York 10006
Attention: Risk Management
State Street Bank and Trust Company, N.A.
61 Broadway
New York, New York 10006
Attention: Corporate Trust Department
(f) The Bond Insurer shall be included as a part in interest and as a party
entitled to (1) notify the City, the Paying Agent/Registrar, orany applicable receiver
of the occurrence of an event of default and (2) request the Paying Agent/Registrar
or receiver to intervene in judicial proceedings that affect the Bonds or the security
therefor. The Paying Agent/Registrar or receiver shall be required to accept notice
of default from the Bond Insurer.
(g) In the event of a payment default, the Paying Agent/Registrar shall, to
the extent there are no other available funds held under this Ordinance, use the
remaining funds in the construction fund for the Bonds to pay principal of and
interest on the Bonds.
(h) Any acceleration of the Bonds or any annulmentthereof shall be subject
to the prior written consent of the Bond Insurer (if it has not failed to comply with
its payment obligations under the Bond Insurance Policy).
SECTION 49: Public Meetina. 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.
884919.1
-40-
SECTION 50: Effective Date. This Ordinance shall take effect and be in force immediately
from and after its third reading and final passage. and it is so ordained.
FIRST READING, January 16. 2001.
SECOND AND FINAL READING, PASSED AND ADOPTED February 6, 2001.
CITY OF COLLEYVILLE, TEXAS
ATTEST:
c~~~~
(City Seal)
884919.1
-41-
:.".:\"\16\-\ ~
PAYING AGENT/REGISTRAR AGREEMENT
THIS AGREEMENT entered into as of February 6. 2001 (this "Agreement"). by and between
the City of Colleyville, Texas (the "Issuer"), and U. S. TJst Company of Texas, NA. a banking
association duly organized and existing under the laws of the United States of America (the "Bank").
RECITALS
WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of
Colleyville, Texas, Municipal Drainage Utility System Revenue Refunding and Improvement Bonds,
Series 2001" (the "Securities"), dated February 1. 2001. which Securities are scheduled to be
delivered to the initial purchasers on or about March 13. 2001; and
WHEREAS, the Issuer has selected and the Bank has agreed to serve as Paying
Agent/Registrar in cannection 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. Aooointment. 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. Comoensation. 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 accardance with any of
888151.1
If.. \-\\0\ \ ~
the provisions hereof (including the reasonable compensation and the expenses and disbursements
of its agents and counsel).
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 on page 9 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, City Manager, Director of Finance 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.
888151.1
-2-
. '.. .~ " >>.
i.J\f'\<.-' .
"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 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 Pavina Aaent. 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 offices:
Bv Hand:
Bv Mail:
U. S. Trust Company of Texas, N.A.
30 Broad Street
B-Level
New York. New York 10006-1906
U. S. Trust Company of Texas. N.A.
P. O. Box 84
Bowling Green Station
New York, New York 10274-0084
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
fiduciary 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.
888151.1
-3-
t}\1\O\\ ~
Section 3.02. Pavment 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 Reaister - Transfers and Exchanaes. 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 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. All transfers, exchanges and replacement of Securities shall be noted in the Security
Register.
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 campleted 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 Agent/Registrar.
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 Reaister. 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
888151.1
-4-
~'r\\-o\\ ~
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 Securitv 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 caurt order or such release or disclosure of the contents
of the Security Register.
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, Destroved. 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 destrc.yed, 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.
888151.1
-5-
V-\-\\\)\\ ~
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 canclusively 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 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 counselor any
opinion of counsel shall be full and camplete 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.
888151.1
-6-
~\\-\\i;)\\ 1\
\,.,
Section 5.04. Mav 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 if it were not the Paying Agent/Registrar. or any other agent.
Section 5.05. Monevs Held bv Bank - Fiduciarv Account/Collateralization. A fiduciary
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 fiduciary 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 liability
in cannection 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 either the
Bank Office or 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 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
888151.1
-7-
~\\\~\\ 1\
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. Assianment. 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 Headinas. The Article and Section headings herein are for
convenience only and shall not affect the canstruction hereof.
Section 6.05. Successors and Assians. All cavenants and agreements herein by the Issuer
shall bind its successors and assigns, whether so expressed or not.
Section 6.06. Severabilitv. 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 Aareement. 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 Aareement. This Agreement and the Bond Resolution constitute the
entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar
and if any conflict exists between this Agreement and the Bond Resolution, the Bond Resolution
shall govern.
Section 6.09. Counteroarts. 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.
888151.1
-8-
EAHiD11 A
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 Agent/Registrar 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. Governina Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
U.S. TRUST COMPANY OF TEXAS, N.A.
BY
Title:
[SEAL]
Attest:
Address:
2001 Ross Avenue, Suite 2700
Dallas, Texas 75201
Title:
CITY OF COLLEYVILLE, TEXAS.
BY
Mayor
(CITY SEAL)
Address:
5400 Bransford Road
Colleyville, Texas 76034
Attest:
City Secretary
888151.1
-9-
EXHIBII tl
SPECIAL ESCROW AGREEMENT
~\;-jIBjl B
COUNTY OF TARRANT
s
s
s
THE STATE OF TEXAS
THIS SPECIAL ESCROW AGREEMENT (the "Agreement"), made and entered into as of
February 6, 2001. by and between the City of Colleyville, Texas, a duly incorporated municipal
corporation in Tarrant County. Texas (the "City") acting by and through the Mayor and City
Secretary, and The Bank of New York, New York, New York, a state banking corporation 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 Colleyville, Texas (the "City") has heretofore
issued, sold, and delivered, and there is currently outstanding. obligations totaling in principal
amount $1.245,000 (the "Refunded Obligations") more particularly described as follows: City of
Colleyville, Texas, Municipal Drainage Utility System Revenue Bonds, Series 1995. dated March 1.
1995, and scheduled to mature on February 15 in each of the years 2002 through 2015; 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 the place of payment for the obligations being refunded and enter into an escrow or
similar agreement with such place of payment 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 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, (hereinafter called the "Federal Securities") 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 Refunded Obligations; 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 61h day of February, 2001. pursuant to an ordinance (the "Bond
Ordinance") finally passed and adopted by the City Council, authorized the issuance of bonds
known as "City of Colleyville, Texas, Municipal Drainage Utility System Revenue and Refunding
Improvement Bonds, Series 2001" (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
888543.1
l~H\B\1 B
WHEREAS, upon the delivery of the Bonds, 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
Federal 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 Federal 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 Federal 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 ordinances
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 Federal
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 state banking association organized and existing under the laws
of the State of New York and authorized to transact business in the State of Texas, possessing trust
powers and is fully qualified and empowered to enter into this Agreement; and
WHEREAS, in Section 36 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 cansideration of the mutual agreements herein contained. and to
secure the payment of the principal of and the interest on the Refunded Obligations as the same
shall become due, the City and the Bank hereby mutually undertake, promise and agree as follows:
SECTION 1: Receiot 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/Fundina. There is hereby created by the City with the
Bank a special segregated and irrevocable trust fund designated "SPECIAL 2001 CITY OF
COLLEYVILLE, TEXAS, MUNICIPAL DRAINAGE UTILITY SYSTEM REVENUE REFUNDING
BOND ESCROW FUND" (hereinafter called the "Escrow Fund") for the benefit of the holders of the
888543.1
-2-
,_i\HlBIT B
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:
$1.293,579.00
for the purchase of Federal Securities identified in Exhibit B to be
held for the account of the Escrow Fund
$
0.64
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 Federal 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 Sufficiencv Warranty. The City hereby represents that the cash
and Federal 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 the Bond Ordinance which provides
for the redemption of the Refunded Obligations maturing on and after February 15. 2005 on
February 15, 2004 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 ordinance 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 redemption date therefor.
SECTION 4: Pledae of Escrow. The Bank agrees that all cash and Federal Securities,
together with any incame 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 became due on and after the date of this Agreement, and such funds initially
deposited and to be received from maturing principal and interest on the Federal Securities in the
Escrow Fund shall be applied solely in accardance with the provisions of this Agreement.
SECTION 5: Escrow Insufficiencv - 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 becames 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.
888543.1
-3-
U}HBll B
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:
$1.292,442.00
for the purchase of Federal Securities identified in Exhibit B to be
held for the account of the Escrow Fund
$
0.76
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 Federal 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 Sufficiencv Warrantv. The City hereby represents that the cash
and Federal 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 the Bond Ordinance which provides
for the redemption of the Refunded Obligations maturing on and after February 15, 2005 on
February 15, 2004 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 ordinance 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 redemption date therefor.
SECTION 4: Pledae of Escrow. The Bank agrees that all cash and Federal 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 became due on and after the date of this Agreement. and such funds initially
deposited and to be received from maturing principal and interest on the Federal Securities in the
Escrow Fund shall be applied solely in accordance with the provisions of this Agreement.
SECTION 5: Escrow Insufficiencv - 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 becames 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.
888543.1
-3-
l~\1\B\1 B
SECTION 6: Escrow Fund Securities/Seareaation. The Bank shall hold said Federal
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 Federal 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 Federal Securities, shall always be
maintained on deposit in the Escrow Fund by the Bank, as trustee; and a special account
evidencing such facts shall at all times be maintained on the books of the Bank.
SECTION 7: Escrow Fund Collections/Pavments. The Bank shall from time to time collect
and receive the principal of and interest on the Federal 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 anll 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 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: Disoosal of Refunded Obliaations. All Refunded Obligations cancelled on
account of payment by the Bank shall be disposed of or otherwise destroyed by the Bank.
888543.1
-4-
l..i\i"\lciIT B
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 Federal
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 Federal
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 Federal Securities
enjoyed by a trust beneficiary. The funds and Federal 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
Federal 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 Federal 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 Federal Securities pending the delivery
of the Federal Securities identified in the Exhibit B attached hereto, or shall be authorized to redeem
the Federal 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 accauntant to the effect that
(i) the initial and/or temporary substitution of cash and/or securities for one or more
of the Federal 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 Federal
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 Federal Securities and the'
reinvestment of the proceeds thereof, an unqualified opinion of nationally recagnized
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
888543.1
-5-
EXHI81 T B
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 Federal
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
Federal Securities in excess of the amounts necessary hereunderforthe 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 recagnized 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 incame 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 Federal 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 Federal Securitres or
substitute securities as provided in Section 11 hereof.
SECTION 16: Bank's Comoensation - Escrow Administration/Settlement of Pavina Aaent's
Charaes. 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 $3,200.00 and,
except for reimbursement of costs and expenses incurred by the Bank pursuant to Sections 3, 11
888543.1
-6-
EXHIBIT B
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 $2,050.00 and the Bank acknowledges and agrees that such 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.
The City acknowledges and agrees that the above amount deposited with the Escrow
Agent to cover paying agents' charges and expenses does not include amounts which shall
become due and payable for services rendered as registrar and transfer agent for fully registered
Refunded Obligations, and the City agrees to pay directly to each "registrar" for the Refunded
Obligations all reasonable casts, expenses and charges incurred in connection with the
maintenance of the registration books and recards and the transfer of such fully registered
obligations as and when such costs, expenses and charges are incurred and against written
invoices, statements or bills submitted therefor.
SECTION 17: Escrow Aaent's Duties / Resoonsibilities/Liabilitv. 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 Manager 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 carrectness of the opinions expressed therein. upon any
certificate or opinion furnished to the Bank, canforming 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 canforms
to the requirements of this Agreement.
888543.1
-7-
:.......
'\hiOI \ ~
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.
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/Liabilities 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 canflict with this Agreement and be without effect.
SECTION 19: Interoleader. In the event canflicting 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:
(a) 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
888543.1
-8-
lAHIBIT B
(b) 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 Jacksonville. Florida.
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: Accountina - Annual Reoort. Promptly after September 30th of each year,
commencing with the year 2001, 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 other designated
official of the City, a statement in detail of the Federal 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 COLLEYVILLE, TEXAS
5400 Bransford Road
Colleyville, Texas 76034
Attention: Director of Finance
THE BANK OF NEW YORK
10161 Centurion Parkway, 2nd Floor
Jacksonville, Florida 32256
Attention: Corporate Trust Department
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.
888543.1
-9-
t~H\B\1 B
----------.-... - - -- - -- --- - -- - -~,,----~_._._--_.._._-- -- --- --.....------- .._---------_._._-_._-----~-_._~--_.-
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: Warrantv of Parties Re: Power to Execute and Deliver Escrow Aareement.
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 anyone 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
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 cantained 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 Federal 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.
888543.1
-10-
t1rHB\1 B
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/Assians. (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 term 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 campensation 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 campany 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
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.
888543.1
-11-
0-\-\18\1 B
SECTION 28: Escrow Aareement - 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 Headinas. The Section headings herein are for convenience only
and shall not affect the construction hereof.
SECTION 30: Executed Counteroarts. 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. 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.
888543.1
-12-
L'\HIB\1 B
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 COLLEYVILLE, TEXAS
ATTEST:
Mayor
City Secretary
(City Seal)
THE BANK OF NEW YORK,
as Escrow Agent
ATTEST:
Title:
Authorized Signer
(Bank Seal)
888543.1
-13-
EXHIBIT B
EXHIBIT C
NOTICE OF REDEMPTION
CITY OF COLLEYVILLE, TEXAS,
MUNICIPAL DRAINAGE UTILITY SYSTEM REVENUE BONDS
SERIES 1995
DATED MARCH 1, 1995
NOTICE IS HEREBY GIVEN that all bonds of the above series maturing on and after
February 15, 2005 and aggregating in principal amount $1.055,000 have been called for
redemption on February 15, 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
Maturitv Outstandina CUSIP Number
2005 $ 70,000 194622 AJ5
2006 75,000 194622 AK2
2007 80,000 194622 ALO
2008 85,000 194622 AM8
2009 90,000 194622 AN6
2010 95,000 194622 AP1
2011 100,000 194622 AQ9
2012 105,000 194622 AR7
2013 110,000 194622 AS5
2014 120,000 194622 AT3
2015 125,000 194622 AUO
ALL SUCH BONDS shall become due and payable on February 15, 2004, 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 The Bank of New York, New York, New York (successor paying
agent/registrar to The Frost National Bank, Austin, Texas) at its designated offices at the following
address: 1301 Fannin Street, Suite 2215, Houston, Texas 77002, Attention: Information Services.
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
Colleyville, Texas.
THE BANK OF NEW YORK, New York, New York
Address: 10161 Centurion Parkway, 2nd Floor
Jacksonville, Florida 32256
884919.1
Exhibit D
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 (and included in the Appendix or under
the headings of the Official Statement referred to) below:
1. The financial statements of the City appended to the Official Statement as
Appendix B, but for the most recently concluded fiscal year.
2. The information under Tables 1 through 5 in the Official Statement
Accounting Principles
The accounting principles referred to in such Section are the generally accepted
accaunting principles as applicable to governmental units as prescribed by The Government
Accounting Standards Board.
884919.1