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HomeMy WebLinkAboutOrdinances (O-10-1766)-03/03/2010ORDINANCE NO. 0-10-1766 AN ORDINANCE authorizing the issuance of "CITY OF COLLEYVILLE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFLTNDING BONDS, SERIES 2010"; pledging the net revenues of the City's Waterworks and Sewer System to the payment of the principal of and interest on said Bonds; enacting provisions incident and related to the issuance, payrnent, security and delivery of such bonds, including the approval and execution of a Paying AgendRegistrar Agreement, a Purchase Agreement and an Escrow Agreement, and the approval and distribution of an Official Statement pertaining thereto; providing for the redemption of the bonds being refunded; and providing an effective date. WHEREAS, the City Council of the City of Colleyville, Texas (the "City") has heretofore issued, sold, and delivered, and there is currently outstanding, obligations totaling in principal amount of $3,300,000 of the following issues or series (hereinafter collectively referred to as the "Refunded Obligations"), to wit: City of Colleyville, Texas, Waterworks and Sewer System Refunding and Improvement Revenue Bonds, Series 1996, dated March 15, 1996, scheduled to mature on January 1 in each of the years 2011 through 2017, inclusive, and aggregating in principal amount of $1,190,000 (the "Series 1996 Refunded Bonds"), City of Colleyville, Texas, Waterworks and Sewer System Revenue Bonds, Series 1998, dated July 1, 1998, scheduled to mature on January 1 in each of the years 2011 through 2018, inclusive, and aggegating in principal amount of $1,470,000 (the "Series 1998 Refunded Bonds"), City of Colleyville, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 2002, dated November 15, 2002, scheduled to mature on January 1 in each of the years 2013 through 2015, inclusive, and aggregating in principal amount of $640,000 (the "Series 2002 Refunded Bonds"), WHEREAS, pursuant to the provisions of V.T.C.A., Government Code, Chapter 1207, as amended, the City Council is authorized to issue refunding bonds and deposit the proceeds of sale directly with the place of payment for the Refunded Obligations, or other authorized depository, and such deposit, when made in accordance with said statute, and ordinances authorizing the issuance of the Refunded Obligations, shall constitute the making of firm banking and financial arrangements for their discharge and final payment; and WHEREAS, the City Council hereby finds and determines that refunding bonds should be issued at this time to refund the Refunded Obligations, and such refunding will result in the City saving approximately $548,187.64 in debt service payments on such indebtedness and provide net present value savings of approximately $242,642.62; and WHEREAS, the City Council hereby finds and determines that all of such refunding bonds can and should be issued on a parity with the outstanding and unpaid revenue bonds of the 765987013/11008805 City (hereinafter called and defined as "Previously Issued Bonds") payable from and secured by a first lien on and pledge of the Net Revenues of the System in that all the terms and conditions for the issuance of additional parity bonds can be met and satisfied; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF COLLEYVILLE, TEXAS: SECTION 1: Authorization-Designation-Princi~al AmountPurpose. Revenue refunding bonds of the City shall be and are hereby authorized to be issued in the aggregate principal amount of $3,120,000 to be designated and bear the title "CITY OF COLLEYVILLE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2010" (hereinafter referred to as the "Bonds"), for the purpose of refunding certain outstanding obligations payable from the revenues of the City's Waterworks and Sewer System (identified in the preamble hereof as the "Refunded Obligations") and paying the costs of issuance, in conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Government Code, Chapter 1207, as amended. SECTION 2: Full~~istered Obligations - Authorized Denominations - Stated Maturities - Date. The Bonds shall be issued as fully registered obligations, without coupons, shall be dated September 15, 2010 (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 January 1 in each of the years and in principal amounts (the "Stated Maturities") and bear interest at per annum rates in accordance with the following schedule: YEAR OF PRINCIPAL INTEREST MATURITY AMOUNT RATE 2011 $ 330,000 2.000% 2012 320,000 2.000% 2013 580,000 2.000% 2014 580,000 2.000% 2015 460,000 2.000% 2016 345,000 3.000% 2017 350,000 3.000% 2018 155,000 3.000% The Bonds shall bear interest on the unpaid principal amounts from the Issue Date at the per annum rate(s) 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 January 1 and July 1 in each year, commencing January 1, 201 l. SECTION 3: Terms of PaYment - Pa~~ eg nt/Re isg trar. The principal of, premium, if any, and the interest on the Bonds, due and payable by reason of maturity or otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter called the 765987013/11008805 2 "Holders") appearing on the registration and transfer books maintained by the Paying Agent/Registrar and the payrnent thereof shall be in any coin or currency of the United States of America, which at the time of payrnent is legal tender for the payment of public and private debts, and shall be without exchange or collection charges to the Holders. The selection and appointment of The Bank of New York Mellon Trust Company, 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, transfer and exchange of the Bonds (the "Security Register") shall at all times be kept and maintained on behalf of the City by the Paying Agent/Registrar, as provided herein and in accordance with the 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 authorized to execute and deliver such Agreement in connection with the delivery of the Bonds. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are paid and discharged, and any successor Paying Agent/Registrar shall be a commercial bank, trust company, financial institution or other entity qualified and authorized to serve in such capacity and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Bonds, the City agrees to promptly cause a written notice thereof to be sent to each Holder by United States Mail, first class postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Principal of and premium, if any, on the Bonds shall be payable at the Stated Maturities, only upon presentation and surrender of the Bonds to the Paying Agent/Registrar at its designated offices, initially in Dallas, Texas, or, with respect to a successor Paying Agent/Registrar, at the designated offices of such successor (the "Designated Payment/Transfer Office"). Interest on the Bonds shall be paid to the Holders whose names appear in the Security Register at the close of business on the Record Date (the 15th day of the month next preceding each interest payrnent 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 ar(ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payrnent shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payrnent was due. In the event of a non-payment of interest on one or more maturities on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment for such maturity or maturities (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds far the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, ~6s9s~oi.3n iooasos 3 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: Non-Redeemable. The Bonds shall not be subject to redemption prior to maturity. SECTION 5: Re~istration - Transfer - Exchange of Bonds - Predecessor Bonds. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each registered owner of the Bonds issued under and pursuant to the provisions of this Ordinance. Any Bond may, in accordance with its terms and the terms hereof, be transferred or exchanged for Bonds of other authorized denominations upon the Security Register by the Holder, in person or by his duly authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. Upon surrender for transfer of any Bond (other than the Initial Bonds authorized in Section 8 hereo~ at the Designated Payment/Transfer Office of the Paying Agent/Registrar, the Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or transferees, one or more new Bonds, executed on behalf of, and furnished by, the City of authorized denominations and having the same Stated Maturity and of a like aggregate principal amount as the Bond or Bonds surrendered for transfer. At the option of the Holder, Bonds (other than the Initial Bonds authorized in Section 8 hereo fl may be exchanged for other Bonds of authorized denominations and having the same Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the Bonds surrendered for exchange, upon surrender of the Bonds to be exchanged at the Designated Payment/Transfer Office of the Paying Agent/Registrar. Whenever any Bonds are surrendered for exchange, the Paying Agent/Registrar shall register and deliver new Bonds, executed on behalf of, and furnished by, the City, to the Holder requesting the exchange. All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the Designated Payment/Transfer Office of the Paying Agent/Registrar, or sent by United States Mail, first class postage prepaid, to the Holder and, upon the delivery thereof, the same shall be valid obligations of the City, evidencing the same obligation to pay, and entitled to the same benefits under this Ordinance, as the Bonds surrendered in such transfer or exchange. All transfers or exchanges of Bonds pursuant to this Section shall be made without expense or service charge to the Holder, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payrnent by the Holder requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined to be "Predecessor Bonds," evidencing all or a portion, as the case may be, of the same obligation to pay evidenced by the Bond or Bonds registered and delivered in the exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any 765987013/11008805 4 mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued, registered and delivered in lieu thereof pursuant to Section 28 hereof and such new replacement Bond shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond. SECTION 6: Book-Entrv-Only Transfers and Transactions. Notwithstanding the provisions contained in this Ordinance relating to the payment and transfer/exchange of the Bonds, the City hereby approves and authorizes the use of the "Book-Entry-Only" securities clearance, settlement, and transfer system provided by The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York ("DTC"), in accordance with the requirements and procedures identified in the DTC Operational Arrangements memorandum, as amended, the Blanket Issuer Letter of Representation, by and between the City and DTC, and the Letter of Representation from the Paying Agent/Registrar to DTC (collectively, the "Depository Agreement") relating to the Bonds. Pursuant to the Depository Agreement and the rules of DTC the Bonds shall be deposited with DTC who shall hold said Bonds for its participants (the "DTC Participants"). While the Bonds are held by DTC under the Depository Agreement, the Holder of the Bonds on the Security Register for all purposes, including payment and notices, shall be Cede & Co., as nominee of DTC, notwithstanding the ownership of each actual purchaser or owner of each Bond (the `Beneficial Owners") being recorded in the records of DTC and DTC Participants. In the event DTC determines to discontinue serving as securities depository for the Bonds or otherwise ceases to provide book-entry clearance and settlement of securities transactions in general or the City determines that DTC is incapable of properly discharging its duties as securities depository for the Bonds, the City covenants and agrees with the Beneficial Owners of the Bonds to cause Bonds to be printed in definitive form and provide for appropriate Bond certificates to be issued and delivered to DTC Participants and Beneficial Owners, as the case may be. Thereafter, Bonds in definitive form shall be assigned, transferred and exchanged on the appropriate Security Register maintained by the Paying Agent/Registrar, and payment of such Bonds shall be made in accordance with the provisions hereof other than this Section. SECTION 7: Execution - Registration. The Bonds shall be executed on behalf of the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the City Secretary. The signature of said officers on the Bonds may be manual or facsimile. Bonds bearing the manual or facsimile signatures of individuals who are or were the proper officers of the City on the 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. 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 765987013/11008805 5 substantially in the form provided in Section 9D, manually executed by an authorized officer, employee or representative of the Paying Agent/Registrar, and either such certificate upon any Bond duly signed shall be conclusive evidence, and the only evidence, that such Bond has been duly certified, registered and delivered. SECTION 8: Initial Bond(s). The Bonds herein authorized shall be initially issued either (i) as a single fully registered bond in the total principal amount shown in Section 1 hereof with principal installments to become due and payable as provided in Section 2 hereof and numbered T-1, or (ii) as multiple fully registered bonds, being one bond for each year of maturity in the applicable principal amount and denomination and to be numbered consecutively from T-1 and upward (hereinafter called the "Initial Bond(s)") and, in either case, the Initial Bond(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The Initial Bond(s) shall be the Bonds submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser(s). Any time after the delivery of the Initial Bond(s), the Paying Agent/Registrar, pursuant to written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial Bond(s) delivered hereunder and exchange therefor definitive Bonds of authorized denominations, Stated Maturities, principal amounts and bearing applicable interest rates for transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to and in accordance with such written instructions from the initial purchaser(s), or the designee thereof, and such other information and documentation as the Paying Agent/Registrar may reasonably require. SECTION 9: Forms. A. Forms Generallv. The Bonds, the Registration Certificate of Comptroller of Public Accounts of the State of Texas, the Registration Certificate of Paying Agent/Registrar, and the form of Assignment to be printed on each of the Bonds, shall be substantially in the forms set forth in this Section with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including insurance legends on insured Bonds and any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City or determined by the 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 Bond(s) shall be printed, lithographed, or engraved, typewritten, photocopied or otherwise reproduced in any other similar manner, all as determined by the officers executing such Bonds as evidenced by their execution thereof. B. Form of Definitive Bond. REGISTERED NO. REGISTERED $ 765987013/11008805 6 UNITED STATES OF AMERICA STATE OF TEXAS CITY OF COLLEYVILLE, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BOND SERIES 2010 Issue Date: Interest Rate: September 15, 2010 % Registered Owner: Principal Amount: Stated Maturity: CUSIP NO: 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 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, without right of 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 January 1 and July 1 of each year, commencing January 1, 2011. Principal of this Bond is payable at its Stated Maturity to the registered owner hereof, upon presentation and surrender, at the Designated Payment/Transfer Office of the Paying Agent/Registrar executing the registration certificate appearing hereon, or its successor. Interest is payable to the registered owner of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the 15'h day of the month next preceding each interest payment date and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Bond shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. This Bond is one of the series specified in its title issued in the aggregate principal amount of $3,120,000 (herein referred to as the `Bonds") for the purpose of refunding certain outstanding obligations payable from the revenues of the City's Waterworks and Sewer System (identified in the Ordinance) and paying costs of issuance, under and in strict conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Government Code, Chapter 1207, as amended, and pursuant to an Ordinance adopted by the governing body of the City (herein referred to as the "Ordinance"). The Bonds are special obligations of the City, and, together with the outstanding Previously Issued Bonds (identified and defined in the Ordinance), are payable solely from and equally and ratably secured by a first lien on and pledge of the Net Revenues (as defined in the 765987013/11008805 7 Ordinance) of the City's combined Waterworks and Sanitary Sewer System (the "System"). The Bonds do not constitute a legal or equitable pledge, charge, lien or encumbrance upon any property of the City or the System, except with respect to the Net Revenues. The holder hereof shall never have the right to demand payrnent of this obligation out of any funds raised or to be raised by taxation. Subject to satisfying the terms and conditions prescribed therefor, the City has reserved the right to issue additional revenue obligations payable from and equally and ratably secured by a parity lien on and pledge of the Net Revenues of the System, in the same manner and to the same extent as the Bonds. Reference is hereby made to the Ordinance, a copy of which is on file in the Designated Payment/Transfer Office of the Paying Agent/Registrar, and to all of the provisions of which the Holder by the acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the security for the Bonds; the properties constituting the System; the Net Revenues pledged to the payment of the principal of and interest on the Bonds; the nature and extent and manner of enforcement of the lien and pledge securing the payment of the Bonds; the terms and conditions for the issuance of additional revenue obligations; the terms and conditions relating to the transfer or exchange of this Bond; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders; the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon which the liens, pledges, charges and covenants made therein may be discharged at or prior to the maturity of this Bond, and this Bond deemed to be no longer Outstanding thereunder; and for the other terms and provisions contained therein. Capitalized terms used herein have the same meanings assigned in the Ordinance. This Bond, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and surrender at the Designated Payment/Transfer Office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by, the registered owner hereof, or his duly authorized agent. When a transfer on the Security Register occurs, one or more new fully registered Bonds of the same Stated Maturity, of authorized denominations, bearing the same rate of interest, and of the same aggregate principal amount will be issued by the Paying Agent/Registrar to the designated transferee or transferees. The City and the Paying Agent/Registrar, and any agent of either, may treat the registered owner 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, 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 payrnent date and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the 76598701.3/11008805 g Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. It is hereby certified, recited, represented and covenanted that the City is a duly organized and legally existing municipal corporation under and by virtue of the Constitution and laws of the State of Texas; that the issuance of the Bonds is duly authorized by law; that all acts, conditions and things required to exist and be done precedent to and in the issuance of the Bonds to render the same lawful and valid obligations of the City have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitution and laws of the State of Texas, and the Ordinance; that the Bonds do not exceed any constitutional or statutory limitation; and that due provision has been made for the payment of the principal of and interest on the Bonds by a pledge of the Net Revenues of the System as aforestated. In case any provision in this Bond or any application thereof shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions and applications shall not in any way be affected or impaired thereby. The terms and provisions of this Bond and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly executed under the official seal of the City as of the Issue Date. CITY OF COLLEYVILLE, TEXAS Mayor - COUNTERSIGNED• '~--~-.' i~ ~ Ci Secre ary ( AL) C. Form of Registration Certificate of Comptroller of Public Accounts to Appear on Initial Bond only. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS ) REGISTER NO. THE STATE OF TEXAS 765987013/11008805 9 I HEREBY CERTIFY that this Bond has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and duly registered by the Comptroller of Public Accounts of the State of Texas. WITNESS my signature and seal of office this (SEAL) Comptroller of Public Accounts of the State of Texas D. Form of Certificate of Pa~~ e~t/Re~istrar to Appear 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 Dallas, Texas, is the "Designated Payment/Transfer Office" for this Bond. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Dallas, Texas, as Paying Agent/Registrar Registration date: By E. Form of Assi m~. Authorized Signature ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print or typewrite name, address, and zip code of transferee:) (Social Security or other identifying number ) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints 765987013/11008805 1 ~ attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: NOTICE: The signature on this assignment must correspond with the name of the Signature guaranteed: 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 para .g~aph B of this Section, except that the form of a sin lg e fullv registered Initial Bond shall be modified as follows: (i) immediately under the name of the bond the headings "Interest Rate ", "Stated Maturity " and "CUSIP NO.: " shall be omitted; (ii) Paragraph one shall read as follows: The City of 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 Registered Owner named above, or the registered assigns thereof, solely from the revenues hereinafter identified, the Principal Amount hereinabove stated on January 1 in each of the years and in principal installments in accordance with the following schedule: PRINCIPAL INTEREST YEAR iNSTALLMENTS RATES (Information to be inserted from schedule in Section 2 hereo~. (without right of redemption prior to maturity) and to pay interest, computed on the basis of a 360-day year of twelve 30-day months, on the unpaid principal amounts hereof from the Issue Date at the per annum rates of interest specified above; such interest being payable on January 1 and July 1 in each year, commencing January l, 2011. Principal installments of this Bond are payable in the year of maturity to the registered owner hereof by The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the "Paying Agent/Registrar"), upon presentation and surrender, at its designated offices in Dallas, Texas (the "Designated Payment/Transfer Office"). Interest is payable to the registered owner of this Bond whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the 15th day of the month next preceding each interest payment date and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of 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 payrnents 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 765987013/11008805 1 1 of the United States of America which at the time of payrnent is legal tender for the payment of public and private debts. SECTION 10: Definitions. For all purposes of this Ordinance and in particular for clarity with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of revenues to the payment of the Bonds, the following definitions are provided: "Additional Parity Obligations" - Bonds, notes, warrants, certificates of obligation or other evidences of indebtedness which the City reserves the right to issue or enter into, as the case may be, in the future under the terms and conditions provided in Section 19 of this Ordinance and which are equally and ratably secured by a first lien on and pledge of the Net Revenues of the System. "Average Annual Debt Service" - That average amount which, at the time of computation, will be required to pay the Debt Service of obligations when due and derived by dividing the total of such Debt Service by the number of years then remaining before final maturity. Capitalized interest payments provided from proceeds of Obligations Similarly Secured shall be excluded in making the aforementioned computation. "Bonds" - The "City of Colleyville, Texas Waterworks and Sewer System Revenue Refunding Bonds, Series 2010", dated September 15, 2010, authorized by this Ordinance. "City" - The City of Colleyville, located in the County of Tarrant, 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 Similarly Secured without a fixed numerical rate, that such obligations bear, or would have borne, interest at the highest rate reached, or that would have applied to such obligations (using the index or method for computing interest applicable to such obligations) during the twenty-four (24) month period next preceding the date of computation; and further assuming in the case of obligations required to be redeemed or prepaid as to principal prior to maturity, the principal amounts thereof will be redeemed prior to maturity in accordance with the mandatory redemption provisions applicable thereto. "Fiscal Year" - The twelve month financial accounting period for the System ending September 30th of each year; provided, however, the City, by ordinance, may change the Fiscal Year to another period of not less than twelve calendar months. "Government Obligations" - Direct noncallable obligations of the United States of America, including obligations the principal of and interest on which are 76598701.3/11008805 I Z unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations unconditionally guaranteed or insured by the agency or instrumentality and on the date of their acquisition or purchase by the City are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and on the date of their acquisition or purchase by the City, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. "Gross Revenues" - All income and revenues of every nature derived or received from the operation and ownership (excluding refundable meter deposits, gifts and grants in aid of construction, impact fees charged developers and special assessments against landowners) 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 Obligations Similarly Secured and other obligations payable solely from and secured only by a lien on and pledge of the Net Revenues. "Maintenance and Operating Expenses" - All current expenses of operating and maintaining the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service; provided, however, that only such repairs and extensions, as in the judgtnent of the City Council, reasonably and fairly exercised, are necessary to maintain the operations and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair obligations payable from Net Revenues shall be deducted in determining "Net Revenues". Depreciation charges shall not be considered Maintenance and Operating Expenses. Maintenance and Operating Expenses shall include payments under contracts for the purchase of water supply, treatment of sewage or other materials, goods or services for the System to the extent authorized by law and the provisions of such contract. "Net Earnings" - The meaning assigned to such term in Section 19 hereof. "Net Revenues" - Gross Revenues of the System, with respect to any period, after deducting the System's Maintenance and Operating Expenses during such period. "Obligations Similarly Secured" - Collectively, the Bonds, the Previously Issued Bonds and any Additional Parity Obligations, which shall be parity obligations equally and ratably secured by a first lien on and pledge of the Net Revenues of the System. "Outstanding" - When used in this Ordinance with respect to Bonds or Obligations Similarly Secured means, as of the date of determination, all Bonds or 765987013/ll008805 • 13 Obligations Similarly Secured theretofore issued and delivered under their respective authorizing ordinances, except: (1) those Bonds or Obligations Similarly Secured cancelled or received for cancellation by the appropriate paying agent therefor; (2) those Bonds or Obligations Similarly Secured paid or deemed to be duly paid by the City in accordance with the provisions of the ordinances governing their issuance and applicable laws; and (3) those Bonds or Obligations Similarly Secured that have been mutilated, destroyed, lost, or stolen and replacement Bonds have been registered and delivered in lieu thereof in accordance with applicable terms and provisions. "Previously Issued Bonds" - shall mean the Outstanding and unpaid revenue bonds of the City payable from and equally and ratably secured by a first lien on and pledge of the Net Revenues of the System, identified as follows: (1) City of Colleyville, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 2002, dated November 15, 2002, and originally issued in the principal amount of $2,580,000; and (4) City of Colleyville, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 2004, dated May 1, 2004, and originally issued in the principal amount of $1,710,000. "Required Reserve" - The amount required to be accumulated and maintained in the Reserve Fund under the provisions of Section 15. "System" - All properties, facilities and plants currently owned, operated and maintained by the City for the supply, treatment, transmission and distribution of potable water and the collection, treatment and disposal of water-carried wastes, together with all future extensions, improvements, replacements and additions thereto; provided, however, that notwithstanding the foregoing, and to the extent now or hereafter authorized or permitted by law, the term "System" shall not mean to include facilities of any kind which are declared not to be a part of the System and which are acquired or constructed by or on behalf of the City with the proceeds from the issuance of "Special Facilities Bonds", which are hereby defined as being special revenue obligations of the City which are not Bonds but which are payable from and secured by other liens on and pledges of any revenues, sources or payments, not pledged to the payment of the Obligations Similarly Secured including, but not limited to, special contract revenues or payments received from any other legal entity in connection with such facilities." ~6s9s~oi.3ii ioos8os 14 SECTION 11: Pledge. The City hereby covenants and agrees that all of the Net Revenues of the System, with the exception of those in excess of the amounts required to establish and maintain the special Funds created for the payrnent and security of the Obligations Similarly Secured, are hereby irrevocably pledged, equally and ratably, to the payment of the Previously Issued Bonds, the Bonds, and Additional Parity Obligations, if issued, and the interest thereon, as hereinafter provided. It is hereby ordained that the Obligations Similarly Secured, and the interest thereon, shall constitute a first lien on the Net Revenues of the System and be valid and binding and fully perfected from and after the date of adoption of this Ordinance without physical delivery or transfer or transfer of control of the Net Revenues, the filing of this Ordinance or any other act; all as provided in Chapter 1208 of the Texas Government Code. Section 1208, Government Code, applies to the issuance of the Bonds and the pledge of the Net Revenues of the System granted by the City under this Section 11, and such pledge is therefore valid, effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding such that the pledge of the Net Revenues of the System granted by the City under this Section 11 is to be subject to the filing requirements of Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in said pledge, the City agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce Code and enable a filing to perfect the security interest in said pledge to occur. SECTION 12: Rates and Charges. For the benefit of the Holders of the Bonds and in addition to all provisions and covenants in the laws of the State of Texas and in this Ordinance, the City hereby expressly stipulates and agrees, while any of the Bonds are Outstanding, to establish and maintain rates and charges for facilities and services afforded by the System that are reasonably expected, on the basis of available information and experience and with due allowance for contingencies, to produce Gross Revenues in each Fiscal Year sufficient: (1) To pay Maintenance and Operating Expenses, depreciation charges and replacement and betterment costs, (2) To produce Net Revenues sufficient to pay the current Debt Service on the Obligations Similarly Secured then Outstanding and the amounts required to be deposited in any reserve or contingency fund created for the payment and security of the Obligations Similarly Secured, or other evidences of indebtedness issued or incurred that are payable only from and secured solely by a lien on and pledge of the Net Revenues of the System, (3) To produce Net Revenues equal to at least 1.20 times the annual Debt Service for the Obligations Similarly Secured then Outstanding, and (4) To pay all other indebtedness payable from the Net Revenues and/or secured by a lien on the properties or the revenues of the System. SECTION 13: Water and Sewer System Fund. The City hereby covenants and agrees that Gross Revenues of the System (excluding earnings and income derived from investments 765987013/11008805 1 5 held in the Interest and Sinking 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 "Water and Sewer System Fund" (herein called the "System Fund"), and such revenues of the System shall be kept separate and apart from all other funds of the City. All revenues deposited in the System Fund shall be pledged and appropriated to the extent required for the following uses and in the order of priority shown: (1) To the payrnent of all necessary and reasonable Maintenance and Operating Expenses as defined herein or required by statute to be a first charge on and claim against the Gross Revenues thereof. (2) To the payrnent of the amounts required to be deposited in the Interest and Sinking Fund established and maintained for the payment of Debt Service on the Obligations Similarly Secured as the same becomes due and payable. (3) To the payment of the amounts required to be deposited in the Reserve Fund to accumulate and maintain therein the Required Reserve in accordance with the provisions of this Ordinance or any other ordinance relating to issuance of Obligations Similarly Secured. Any Net Revenues remaining in the System Fund after satisfying the foregoing payrnents, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other City purpose now or hereafter permitted by law. SECTION 14: Interest and Sinkin~d. For purposes of providing funds to pay current Debt Service on Obligations Similarly Secured when and as the same shall become due and payable, a separate and special account shall be established and maintained on the books and records of the City known as the "City of Colleyville Revenue Bond Interest and Sinking Fund" (the "Interest and Sinking Fund") and all funds deposited to the credit of such Fund shall be kept and maintained in a special banking account or fund maintained at an official depository of the City. In addition to the deposits to the Interest and Sinking Fund for the payment of the Previously Issued Bonds, the City covenants that there shall be deposited into the Interest and Sinking Fund prior to each principal and interest payment date from the Net Revenues an amount equal to one hundred per centum (100%) of the amount required to fully pay 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 15th day of each month, beginning on or before the 15th day of the month next following the delivery of the Bonds to the initial purchaser. If the Net Revenues in any month are then insufficient to make the required payments into the Interest and Sinking Fund, then the amount of any deficiency in the payment shall be added to the amount otherwise required to be paid into the Interest and Sinking Fund in the next month. The required monthly deposits to the Interest and Sinking Fund for the payment of principal of and interest on the Bonds shall continue to be made as hereinabove provided until (i) the total amount on deposit in the Interest and Sinking Fund and Reserve Fund is equal to the 765987013/11008805 1 6 amount required to fully pay and discharge all Obligations Similarly Secured then Outstanding (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 Interest and Sinking Fund, shall be deposited to the credit of the Interest and Sinking Fund and taken into consideration and reduce the amount of the monthly deposits hereinabove required to be deposited in the Interest and Sinking Fund from the Net Revenues of the System. SECTION 15: Reserve Fund. For purposes of accumulating and maintaining funds as a reserve for the payment of the Obligations Similarly Secured, the City agrees and covenants to create and maintain on the books and records of the City a separate and special fund or account known as the "Revenue Bond Reserve Fund" (the "Reserve Fund"), and all funds deposited to the credit of such Fund shall be kept and maintained in a special banking account or fund maintained at an official depository of the City. All funds deposited therein (excluding earnings and income derived or received from deposits or investments which may be transferred to the System Fund referred to in Section 13 hereof during such periods as there is on deposit in the Reserve Fund the Required Reserve) shall be used solely for the payment of the principal of and interest on the Obligations Similarly Secured when (whether at maturity, upon a mandatory redemption date or any interest payment date) other funds available for such purposes are insufficient, and, in addition, may be used to the extent not required to maintain the "Required Reserve", to pay, or provide for the payment of, the final principal amount of a series of Obligations Similarly Secured so that such series of Obligations Similarly Secured is no longer deemed to be "Outstanding" as such term is defined herein. The City hereby reaffirms that it will accumulate and, when accumulated, continuously maintain in the Reserve Fund an amount equal to the lesser of (i) the Average Annual Debt Service (calculated on a Fiscal Year basis) for all Obligations Similarly Secured then Outstanding, as determined on the date each series of Additional Parity Obligations are delivered or incurred, as the case may be, or (ii) the maximum amount in a reasonably required reserve fund that can be invested without restriction as to yield pursuant to Subsection (d) of Section 148 of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder - the "Required Reserve". In accordance with the provisions of the ordinances authorizing the issuance of the Previously Issued Bonds, the Required Reserve is $831,613.00 (the "Current Reserve") which is currently on deposit in the Reserve Fund. By reason of the issuance of the Bonds, the Required Reserve is hereby determined to be $585,334 which is less than the Current Reserve. Therefore, no additional deposits shall be required to be made to the Reserve Fund by reason of the issuance of the Bonds. When and so long as the cash and investments in the Reserve Fund total not less than the Required Reserve, no deposits need be made to the credit of the Reserve Fund; but, if and when the Reserve Fund at any time contains less than the Required Reserve, the City covenants and agrees to cure the deficiency in the Required Reserve by resuming monthly deposits to said Fund from the Net Revenues of the System; such monthly deposits to be in amounts equal to not less than 1/60th of the then total Required Reserve to be maintained in said Fund and to be made on 765987013/11008805 1 7 or before the 15th day of each month until the total Required Reserve then to be maintained in said Fund has been fully restored. The City further covenants and agrees that, subject only to the payments to be made to the Interest and Sinking Fund, the Net Revenues shall be applied and appropriated and used to establish and maintain the Required Reserve and to cure any deficiency in such amounts as required by the terms of this Ordinance and any other ordinance pertaining to the issuance of Additional Parity Obligations. During such time as the Reserve Fund contains the total Required Reserve, the City may, at its option, withdraw all surplus in the Reserve Fund in excess of the Required Reserve and deposit such surplus in the System Fund; provided, however, any surplus bond proceeds and investment earnings thereon in the Reserve Fund shall be transferred to the Interest and Sinking Fund. SECTION 16: Investments. Money deposited to the credit of any Fund referenced in this Ordinance may, at the option of the City, be invested in funds and obligations authorized and identified in V.T.C.A., Government Code, Chapter 2256, as enacted or hereafter amended; provided, however, the investment of moneys in the Interest and Sinking Fund and Reserve Fund shall be restricted to Government Obligations and time deposits or certificates of deposit secured (to the extent not insured by the Federal Deposit Insurance Corporation) by Government Obligations; provided that all such deposits and investments shall be made in such a manner that the money required to be expended from any Fund will be available at the proper time or times. Such investments (except State and Local Government Series investments held in book entry form, which shall at all times be valued at cost) shall be valued in terms of current market value within 45 days of the close of each Fiscal Year and, with respect to investments held for the account of the Reserve Fund, within 30 days of the date of passage of each ordinance authorizing the issuance of Additional Parity Obligations. All interest and income derived from deposits and investments in the Interest and Sinking Fund immediately shall be credited to, and any losses debited to, the Interest and Sinking Fund. All interest and interest income derived from deposits in and investments of the Reserve Fund shall, subject to the limitations provided in Section 15 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. SECTION 17: Deficiencies - Excess Net Revenues. (a) If on any occasion there shall not be sufficient Net Revenues of the System to make the required deposits into the Interest and Sinking Fund and the Reserve Fund, then such deficiency shall be cured as soon as possible from the next available unallocated Net Revenues of the System, or from any other sources available for such purpose, and such payments shall be in addition to the amounts required to be paid into said Funds during such month or months. (b) Subject to making the required deposits to the Interest and Sinking Fund and the Reserve Fund when and as required by this Ordinance, or any ordinance authorizing the issuance of Additional Parity Obligations, the excess Net Revenues of the System may be used by the City for any lawful purpose. SECTION 18: Payment of Bonds. While any of the Bonds are Outstanding, the Assistant City Manager/Chief Financial Officer (or other officer of the City then having the primary 765987013/11008805 1 g responsibility for the financial affairs of the City) shall cause to be transferred to the Paying Agent/Registrar, from funds on deposit in the Interest and Sinking Fund, and, if necessary, in the Reserve Fund, amounts sufficient to fully pay and discharge promptly each installment of interest on and principal of the Bonds as such installment accrues or matures; such transfer of funds must be made in such manner as will cause immediately available funds to be deposited with the Paying Agent/Registrar for the Bonds at the close of the business day next preceding the date a debt service payment is due on the Bonds. SECTION 19: Issuance of Additional Parit~gations-Refunding Bonds-Obli atg ions Secured by Inferior Lien. (a) Subject to the provisions hereinafter appearing as to conditions precedent which must be satisfied, the City reserves the right to issue, from time to time as needed, Additional Parity Obligations for any lawful purpose. Such Additional Parity Obligations 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 Assistant City Manager/Chief Financial Officer of the City (or other officer of the City then having the primary responsibility for the financial affairs of the City) shall have executed a certificate stating (a) that, to the best of his knowledge and belief, the City is not then in default as to any covenant, obligation or agreement contained in any ordinance or other proceeding relating to any obligations of the City payable from and secured by a lien on and pledge of the Net Revenues of the System that would materially affect the security or payment of such obligations and (b) either (i) payments into all special funds or accounts created and established for the payment and security of all outstanding obligations payable from and secured by a lien on and pledge of the Net Revenues of the System have been made and that the amounts on deposit in such special funds or accounts are the amounts then required to be on deposit therein or (ii) the application of the proceeds of sale of such obligations then being issued will cure any such deficiency. (2) The Additional Parity Obligations shall be scheduled to mature or be payable as to principal on January 1 or July 1(or both) in each year the same are to be outstanding or during the term thereof. (3) The City has secured a certificate or opinion of an independent Certified Public Accountant to the effect that, according to the books and records of the City, the Net Earnings, for the preceding Fiscal Year or for 12 consecutive months out of the 15 months immediately preceding the month the ordinance authorizing the issuance of the Additional Parity Obligations is adopted, are at least equal to 1.25 times the Average Annual Debt Service for all Obligations Similarly Secured then Outstanding after giving effect to the issuance of the Additional Parity Obligations then being issued. In making a determination of the 76598701.3/11008805 19 Net Earnings, the Accountant may take into consideration a change in the rates and charges for services and facilities afforded by the System that became effective at least sixty (60) days prior to the last day of the period for which Net Earnings are determined and, for purposes of satisfying the above Net Earnings test, make a pro forma determination of the Net Earnings of the System for the period of time covered by his certification or opinion based on such change in rates and charges being in effect for the entire period covered by the Accountant's certificate or opinion. As used in this Section, the term "Net Earnings" shall mean the Gross Revenues of the System after deducting the Maintenance and Operating Expenses of the System, but not depreciation charges or expenditures which, under generally accepted accounting principles, should be charged to capital expenditures. (b) The City reserves the right to issue refunding bonds to refund all or any part of the Obligations Similarly Secured (pursuant to any law then available) upon such terms and conditions as the City Council of the City may deem to be in the best interest of the City and its inhabitants, and if less than all such Obligations Similarly Secured then outstanding are refunded, the conditions precedent prescribed (for the issuance of Additional Parity Obligations) set forth in subparagraph (a)(3) of this Section shall be satisfied and the Accountant's certificate or opinion required in subparagraph (a)(3) shall give effect to the Debt Service of the proposed refunding bonds (and shall not give effect to the Debt Service of the Obligations Similarly Secured being refunded following their cancellation or provision being made for their payment). (c) The City hereby reserves the right to issue obligations payable from and secured by a lien on and pledge of the Net Revenues of the System, junior and subordinate in rank and dignity to the lien and pledge securing the payment of the Obligations Similarly Secured, as may be authorized by the laws of the State of Texas. SECTION 20: Security of Funds. All moneys on deposit in the funds for which this Ordinance makes provision (except any portion thereof as may be at any time properly invested) shall be secured in the manner and to the fullest extent required by the laws of Texas for the security of public funds, and moneys on deposit in such funds shall be used only for the purposes permitted by this Ordinance. SECTION 21: Maintenance and Operation - Insurance. The City shall maintain the System in good condition and operate the same in an efficient manner and at reasonable cost. In regard to the operations and properties of the System, the City also agrees to carry and maintain liability and property damage insurance of the kind and in the amounts carried by municipal corporations in Texas owning and operating similar facilities and providing like services; 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. 76598701.3/11008805 20 SECTION 22: Records - Accounts - Accounting Reports. The City hereby covenants and agrees that while any of the Bonds are Outstanding, it will keep and maintain separate and complete records and accounts pertaining to the operations of the System in which complete and correct entries shall be made of all transactions relating thereto, as provided by V.T.C.A., Government Code, Chapter 1503 or other applicable law. The Holders of any Bonds or any duly authorized agent or agents of such Holders shall have the right at all reasonable times to inspect such records, accounts and data relating thereto, and to inspect the System and all properties comprising same. The City further agrees that following the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of Certified Public Accountants. Each such audit, in addition to whatever other matters may be thought proper by the accountant, shall particularly include the following: (1) A statement of the income and expenses of the System for such Fiscal Year. (2) A balance sheet for the System as of the end of such Fiscal Year. (3) The Accountant's comments regarding the manner in which the City has carried out the requirements of this Ordinance and any other ordinance authorizing the issuance of Additional Parity Obligations and his recommendations for any changes or improvements in the operations, records and accounts of the System. Expenses incurred in making an annual audit of the operations of the System are to be regarded as Maintenance and Operating Expenses. Copies of each annual audit shall be furnished to the Executive Director of the Municipal Advisory Council of Texas at his office in Austin, Texas, and, upon request, to the initial purchasers of the Bonds and subsequent Holders of any of said Bonds. The audits herein required shall be made within 120 days following the close of each Fiscal Year insofar as is possible." SECTION 23: Remedies in Event of Default. In addition to all the 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 the payments to be made to the Interest and Sinking Fund or the Reserve Fund, or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this Ordinance, the Holder or Holders of any of the Bonds shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the governing body of the City and other officers of the City 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 or power may be exercised from time to time and as often as may be deemed expedient. The specific remedies herein provided shall be cumulative of all other existing remedies and the specification of such remedies shall not be deemed to be exclusive. 76598701.3/11008805 21 SECTION 24: Special Covenants. The City hereby further covenants as follows: (1) It has the lawful power to pledge the Net Revenues supporting this issue of Bonds and has lawfully exercised said powers under the Constitution and laws of the State of Texas, including said power existing under V.T.C.A, Government Code, Chapter 1502, as amended. (2) The Obligations Similarly Secured shall be equally and ratably secured by a lien on and a pledge of the Net Revenues of the System in a manner that one bond shall have no preference over any other bond. (3) Other than for the payment of the Previously Issued Bonds, the Refunded Obligations, the Bonds, and the outstanding "City of Colleyville, Texas, Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation, Series 2002", dated February 15, 2002, the Net Revenues of the System have not in any manner been pledged to the payrnent of any debt or obligation of the City or of the System. (4) While the Bonds remain Outstanding, the City will not sell or otherwise dispose of the System ar, except as authorized below, any substantial portion of the System or its component parts; provided, however, to the extent and in the manner authorized by law, the City may sell or dispose of any property, facilities and equipment not necessary or essential to the operations of the System or which is obsolete, damaged or surplus and the proceeds of sale of such property, facilities and equipment, if any, shall be deposited to the credit of the System Fund. (5) No free service of the System shall be allowed, and should the City or any of its agents or instrumentalities make use of the services and facilities of the System, payment of the reasonable value thereof shall be made by the City out of funds from sources other than the revenues and income of the System. (6) To the extent that it legally may, the City further covenants and agrees that, so long as any of the Obligations Similarly Secured, or any interest thereon, are Outstanding, no franchise shall be ganted for the installation or operation of any competing waterworks and sanitary sewer systems other than those owned by the City, and the operation of any such systems by anyone other than the City is hereby prohibited. SECTION 25: Special Obli atg ions. The Bonds are limited, special obligations of the City payable solely from and secured by a lien on and pledge of the Net Revenues of the System, and the Holders thereof shall never have the right to demand payment of the principal or interest on the Bonds from any funds raised or to be raised through taxation by the City. SECTION 26: Notices to Holders; Waiver. Wherever this Ordinance provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein 765987013/11008805 22 expressly provided) if in writing and mailed, 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 any other Holders. 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 AgentlRegistrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 27: Cancellation. All Bonds surrendered far payrnent, redemption, transfer, exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly cancelled by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already cancelled, shall be promptly cancelled by the Paying Agent/Registrar. The City may at any time deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or registered and delivered which the City may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled Bonds held by the Paying Agent/Registrar shall be destroyed as directed by the City. SECTION 28: Mutilated, Destroyed, Lost, and Stolen Bonds. In case any Bond shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a replacement Bond of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Bond, or in lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the City and after (i) the filing by the Holder thereof with the Paying Agent/Registrar of evidence satisfactory to the Paying AgendRegistrar of the destruction, loss or theft of such Bond, and of the authenticity of the ownership thereof and (ii) the furnishing to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the City and the Paying Agent/Registrar harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Bond shall be borne by the Holder of the Bond mutilated, or destroyed, lost or stolen. Every replacement Bond issued pursuant to this Section shall be a valid and binding obligation, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Bonds; notwithstanding the enforceability of payment by anyone of the destroyed, lost, or stolen Bonds. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost or stolen Bonds. SECTION 29: Satisfaction of Obligation of City. If the City shall pay or cause to be paid, or there shall otherwise be paid to the Holders, the principal of and interest on the Bonds, at 76598701.3/11008805 23 the times and in the manner stipulated in this Ordinance, then the pledge of any taxes, or Net Revenues of the System or other money, securities, and funds pledged under this Ordinance and all covenants, agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and become void and be discharged and satisfied, and the Paying AgentlRegistrar shall pay over or deliver all money held by it under this Ordinance to the City. 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, 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) 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. 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 payrnent of the Bonds, or any principal amount(s) thereof, or interest accruing 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 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. SECTION 30: Ordinance a Contract - Amendments - Outstanding Bonds. The City acknowledges that the covenants and obligations of the City herein contained are a material inducement to the purchase of the Bonds. This Ordinance shall constitute a contract with the Holders from time to time, binding on the City and its successors and assigns, and shall not be amended or repealed by the City so long as 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, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the written consent of Holders holding a majority in aggregate principal amount of the Bonds then Outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of Outstanding 765987013/11008805 24 Bonds, no such amendment, addition, or rescission shall (1) extend the time or times of payrnent of the principal of and interest on the Bonds, reduce the principal amount thereof or the rate of interest thereon, or in any other way modify the terms of payrnent of the principal of 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 required for consent to any such amendment, addition, or rescission. SECTION 31: Covenants to Maintain Tax-Exempt Status. (a) Definitions. When used in this Section 31, the following terms have the following meanings: "Closing Date" means the date on which the Bonds are first authenticated and delivered to the initial purchasers against payment therefor. "Code " means the Internal Revenue Code of 1986, as amended by all legislation, if any, effective on or before the Closing Date. "Computation Date" has the meaning set forth in Section 1.148-1(b) of the Regulations. "GYOSS Proceeds " means any proceeds as defined in Section 1.148-1(b) of the Regulations, and any replacement proceeds as defined in Section 1.148-1(c) of the Regulations, of the Bonds. "Investment" has the meaning set forth in Section 1.148-1(b) of the Regulations. "Nonpurpose Investment" means any investment property, as defined in Section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and which is not acquired to carry out the governmental purposes of the Bonds. "Rebate Amount" has the meaning set forth in Section 1.148-1(b) of the Regulations. "Regulations " means any proposed, temporary, or final Income Tax Regulations issued pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation designed to supplement, amend or replace the specific Regulation referenced. "Yield" of (1) any Investment has the meaning set forth in Section 1.148- 5 of the Regulations and (2) the Bonds has the meaning set forth in Section 1.148-4 of the Regulations. ~6s9g~o~.3ii ~oossos 25 (b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any Bond to become includable in the gross income, as defined in Section 61 of the Code, of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the City receives a written opinion of counsel nationally recognized in the field of municipal bond law to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any Bond, the City shall comply with each of the specific covenants in this Section. (c) No Private Use or Private Pavrnents. 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 contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereo~ 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 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 765987013/11008805 26 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 Hi er 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. (~ Not Federally Guaranteed. Except to the extent permitted by Section 149(b) of the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code and the Regulations and rulings thereunder. (g) Information Re~ort. 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 Arbitra~e Profits. Except to the extent otherwise provided in Section 148(~ of the Code and the Regulations and rulings thereunder: (1) The City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereo fl on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereo fl and shall retain all records of accounting for at least six years after the day on which the last outstanding Bond is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the Bonds with other money of the City, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. (2) Not less frequently than each Computation Date, the City shall calculate the Rebate Amount in accordance with rules set forth in Section 148(~ 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 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 from an appropriate fund, or if permitted by applicable Texas statute, regulation or opinion of the Attorney ~6s9a~oi.sii ioosaos 27 General of the State of Texas, out of the Bond Fund the amount that when added to the future value of previous rebate payments made for the Bonds equals (i) in the case of a Final Computation Date as defined in Section 1.148-3(e)(2) of the Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, the rebate payments shall be made at the times, in the installments, to the place and in the manner as is or may be required by Section 148(~ 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(~ of the Code and the Regulations and rulings thereunder. (4) The City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3), and if an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed under Section 1.148-3(h) of the Regulations. (i) Not to Divert Arbitrage Profits. Except to the extent permitted by Section 148 of the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that reduces the amount required to be paid to the United States pursuant to Subsection (h) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yield of the Bonds not been relevant to either party. (j) Elections. The City hereby directs and authorizes the Mayor, Mayor Pro Tem, City Manager, Assistant City Manager/Chief Financial Officer and City Secretary, 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 Hed~e Bonds. (1) At the time the original bonds refunded by the Bonds were issued, the City reasonably expected to spend at least 85% of the spendable proceeds of such bonds within three years after such bonds were issued and (2) not more than 50% of the proceeds of the original bonds refunded by the Bonds were invested in Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years or more. (1) Bonds Not Hedge 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 (2) not more than 50% of the proceeds of the original bonds refunded by the Bonds were invested in Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years or more. 765987013/11008805 28 (m) Qualified Advance Refundin~. The Bonds are issued in part to refund the Series 2002 Refunded Bonds, and the Bonds will be issued more than 90 days before the redemption of the Series 2002 Refunded Bonds. The City represents as follows: (1) The Bonds are the first advance refunding of the Series 2002 Refunded Bonds within the meaning of Section 149(d)(3) of the Code. (2) The Series 2002 Refunded Bonds are being called for redemption, and will be redeemed not later than the earliest date on which such bonds may be redeemed and on which the City will realize present value debt service savings (determined without regard to administrative expenses) on the issue. (3) The initial temporary period under Section 148(c) of the Code will end: (i) with respect to the proceeds of the Bonds not later than 30 days after the date of issue of such Bonds; and (ii) with respect to proceeds of the Series 2002 Refunded Bonds on the Closing Date if not ended prior thereto. (4) On and after the date of issue of the Bonds, no proceeds of the Series 2002 Refunded Bonds will be invested in Nonpurpose Investments having a Yield in excess of the Yield on such Series 2002 Refunded Bonds. (5) 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. (n) Current Refunding. The Bonds are being issued in part to pay and discharge in full the Series 1996 Refunded Bonds and the Series 1998 Refunded Bonds (collectively, the "Current Refunded Obligations") and such payment of the Current Refunded Obligations will occur within ninety (90) days after the issuance of the Bonds. (o) Qualified Tax-Exempt Obli at~ ions. In accordance with the provisions of paragraph (3) of subsection (b) of Section 265 of the Code, the City hereby designates the Bonds to be "qualified tax exempt obligations" in that the Bonds are not "private activity bonds" as 76598701.3/ll 008805 2,9 defined in the Code and represents the amount of "tax-exempt obligations" to be issued by the City (including all subordinate entities of the City) for the calendar year in which the Bonds are issued will not exceed $30,000,000. SECTION 32: Sale of Bonds - Official Statement Approval. The Bonds authorized by this Ordinance are hereby sold by the City to Southwest Securities, Inc. and RBC Capital Markets Corporation (herein referred to collectively as the "Purchasers") in accordance with the Purchase Agreement, dated September 7, 2010, attached hereto as Exhibit B and incorporated herein by reference as a part of this Ordinance for all purposes. The Mayor or Mayor Pro Tem is hereby authorized and directed to execute said Purchase Agreement for and on behalf of the City and as the act and deed of the City Council, and in regard to the approval and execution of the Purchase Agreement, the City Council hereby finds, determines, and declares that the representations, warranties, and agreements of the City contained therein are true and correct in all material respects and shall be honored and performed by the City. Furthermore, the use of the Preliminary Official Statement by the Purchasers in connection with the public offering and sale of the Bonds is hereby ratified, confirmed, and approved in all respects. The Official Statement, dated September 7, 2010, prepared in the initial offering and sale of the Bonds by the City, is hereby approved as to form and content, and the City Council hereby finds that the information and data contained in said Official Statement, as amended, pertaining to the City and its financial affairs, is true and correct in all material respects, and no material facts have been omitted therefrom that are necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The use of such Official Statement, as amended, in the reoffering of the Bonds by the Purchasers is hereby approved and authorized; and proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to said Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. The Mayor and City Secretary are further authorized and directed to manually execute and deliver for and on behalf of the City copies of said Preliminary Official Statement and Official Statement in final form. SECTION 33: Control and Custody of Bonds. The Mayor of the City shall be and is hereby authorized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas, including the printing and supply of definitive Bonds, and shall take and have charge and control of the Initial Bond(s) pending the approval thereof by the Attorney General, the registration thereof by the Comptroller of Public Accounts and the delivery thereof to the Purchasers. Furthermore, the Mayor, Mayor Pro Tem, City Manager, Deputy City Manager, Assistant City Manager/Chief Financial Officer and City Secretary, any one or more of said officials, are hereby authorized and directed to furnish and execute such ageements, 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 765987013/ll 008805 3 ~ 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: Escrow Agreement Approval and Execution. The "Special Escrow AgreemenY' (the "Ageement") by and between the City and The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the `Bscrow 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 or Mayor Pro Tem and City Secretary for and on behalf of the City and as the act and deed of the 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 Escrowed Securities referenced in the Agreement and their delivery to the Escrow Agent on the day of delivery of the Bonds to the Purchasers for deposit to the credit of the "SPECIAL 2010 CITY OF COLLEYVILLE, TEXAS, REVENUE REFLTNDING BOND ESCROW FLTND" (the `Bscrow Fund"); all as contemplated and provided in V.T.C.A., Government Code, Chapter 1207, as amended, this Ordinance and the Agreement. SECTION 35: Redemption of Refunded Obligations. (a) The Series 1996 Refunded Bonds shall be redeemed and the same are hereby called for redemption on October 12, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to bondholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (successor paying agent/registrar to The Bank of New York, New York, New York), in accordance with the redemption provisions applicable to such bonds; such suggested form of notice of redemption being attached hereto as Exhibit D-1 and incorporated herein by reference as a part of this Ordinance for all purposes. (b) The Series 1998 Refunded Bonds shall be redeemed and the same are hereby called for redemption on October 12, 2010, at the price of par and accrued interest to the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to bondholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (successar paying agent/registrar to U.S. Trust Company of Texas, N.A., Dallas, Texas), in accordance with the redemption provisions applicable to such bonds; such suggested form of notice of redemption being attached hereto as Exhibit D-2 and incorporated herein by reference as a part of this Ordinance for all purposes. (c) The Series 2002 Refunded Bonds shall be redeemed and the same are hereby called for redemption on January 1, 2012, at the price of par and accrued interest to the date of 765987013/11008805 3 1 redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to bondholders, with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (successor paying agent/registrar to The Bank of New York Trust Company of Florida, N.A., Dallas, Texas), in accordance with the redemption provisions applicable to such bonds; such suggested form of notice of redemption being attached hereto as Exhibit D-3 and incorporated herein by reference as a part of this Ordinance for all purposes. The redemption of the obligations described above being associated with the refunding of such obligations, the approval, authorization and arrangements herein given and provided for the redemption of such obligations on the redemption date designated therefor and in the manner provided shall be irrevocable upon the issuance and delivery of the Bonds; and the City Secretary is hereby authorized and directed to make all arrangements necessary to notify the holders of such obligations of the City's decision to redeem such obligations on the date and in the manner herein provided and in accordance with the ordinances authorizing the issuance of the obligations and this Ordinance. SECTION 36: Proceeds of Sale. Immediately following the delivery of the Bonds, proceeds of sale in the sum of (i) $2,440,514.09 shall be deposited to the credit of the Escrow Fund for application in accordance with the Agreement and (ii) $7,013.52 shall be deposited to the credit of the Interest and Sinking Fund. The balance of the proceeds of sale of the Bonds shall be expended to pay costs of issuance in accordance with instructions from the City and any excess amount budgeted for such purposes shall be deposited to the credit of the Interest and Sinking Fund. On or immediately prior to the date of the delivery of the Bonds to the Purchasers, the Assistant City Manager/Chief Financial Officer shall also cause to be deposited with the Escrow Agent from moneys on deposit in the interest and sinking funds maintained for the payment of the Refunded Obligations the sum of $257,673.12, which, together with the proceeds of sale, will be sufficient to pay in full the Refunded Obligations to be redeemed on their respective redemption dates. SECTION 37: Continuin~ Disclosure Undertakin~. (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. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. 76598701.3/11008805 32 (b) Annual Reports. The City shall provide annually to the MSRB (1) within six months after the end of each fiscal year, beginning in and after 2010, financial information and operating data with respect to the City of the general type included in Official Statement and described in Exhibit E hereto, and (2) if not provided as part of such financial information and operating data, audited financial statements of the City, when and if available. Any financial statements so provided shall be prepared in accordance with the accounting principles described in Exhibit E hereto, or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation, and audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the City changes its fiscal year, it will notify the MSRB of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document available to the public on the MSRB's Internet Web site or filed with the SEC. (c) Material Event Notices. The City shall notify the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of Holders of the Bonds; Bond calls; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds; and 11. Rating changes. The City shall notify the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (b) of this Section by the time required by such Section. 765987013/11008805 3 3 (d) Filin~s with the MSRB. All financial information, operating data, financial statements, notices and other documents provided to the MSRB in accordance with this Section shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. (e) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, 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) of this Section of any Bond calls and defeasance that cause the City to be no longer such an "obligated person." The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON,IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED 1N 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 the Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. Notwithstanding anything herein to the contrary, the provisions of this Section may be amended by the City from time to time to adapt to changed circumstances that arise 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 765987013/11008805 34 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 Maturity Amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the Outstanding Bonds consent to such amendment or (b) a Person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Holders and beneficial owners of the Bonds. The provisions of this Section may also be amended from time to time or repealed by the City if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, but only if and to the extent that reservation of the City's right to do so would not prevent underwriters of the initial public offering of the Bonds from lawfully purchasing or selling Bonds in such offering. If the City so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with 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 38: Further Procedures. Any one or more of the Mayor, Mayor Pro Tem, City Manager, Assistant City Manager/Chief Financial Officer and City Secretary are hereby expressly authorized, empowered and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge and deliver in the name and on behalf of the City all agreements, instruments, certificates or other documents, whether mentioned herein or not, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance and the issuance, sale and delivery of the Bonds. In addition, prior to the delivery of the Bonds, the Mayor, Mayor Pro Tem, City Manager, Assistant City Manager/Chief Financial Officer or Bond Counsel to the City are each hereby authorized and directed to approve any changes or corrections to this Ordinance or to any of the documents authorized and approved by this Ordinance: (i) in order to cure any ambiguity, formal defect, or omission in the Ordinance or such other document, or (ii) as requested by the Attorney General of the State of Texas ar his representative to obtain the approval of the Bonds by the Attorney General. In the event that any officer of the City whose signature shall appear on any document shall cease to be such officer before the delivery of such document, such signature nevertheless shall be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. SECTION 39: Bond Counsel's O~inion. The obligation of the Purchasers to accept delivery of the Bonds is subject to being furnished a final opinion of Fulbright. & Jaworski L.L.P., Attorneys, Dallas, Texas, approving such Bonds as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for such Bonds. A true and correct reproduction of said opinion is hereby authorized to be printed on the definitive Bonds. SECTION 40: CUSIP Numbers. CUSIP numbers may be printed or typed on the definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the definitive Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving said Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds. 76598701.3/ 11008805 3 5 SECTION 41: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other than the City, the Paying AgendRegistrar 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 42: Inconsistent Provisions. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain controlling as to the matters contained herein. SECTION 43: Governing Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. SECTION 44: Incorporation of Findings and Determinations. The findings and determinations of the City Council contained in the preamble hereof are hereby incorporated by reference and made a part of this Ordinance for all purposes as if the same were restated in full in this Section. SECTION 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: Public Meeting. It is officially found, determined, and declared that the meeting at which this Ordinance is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Ordinance, was given, all as required by V.T.C.A., Government Code, Chapter 551, as amended. SECTION 48: Effective Date. This Ordinance shall take effect and be in force immediately from and after its second reading and final passage, and it is so ordained. [remainder of page left blank intentionallyJ 76598701.3/I 1008805 3 6 FIRST READING, August 17, 2010. SECOND AND FINAL READING, PASSED AND ADOPTED, September 7, 2010. CITY OF COLLEYVILLE, TEXAS ATTEST: ~~ Mayor ~ ~ ~ y Se ary (City Seal) APPROVED AS TO FORM: City Attorney 76598701.3/11008805 S-1 EXHIBIT A PAYING AGENT/REGISTRAR AGREEMENT 76598701.3/ 11008805 f~-1 PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT is entered into as of September 7, 2010 (this "Agreement"), by and between The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, a banking association duly organized and existing under the laws of the United States of America (the `Bank") and the City of Colleyville, Texas (the "Issuer"), RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of Colleyville, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 2010" (the "Securities"), dated September 15, 2010, such Securities scheduled to be delivered to the initial purchasers thereof on or about October 12, 2010; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof; and WHEREAS, the Bank has ageed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01 Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities, and, as Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof; all in accordance with this Agreement and the "Authorizing Document" (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 Authorizing Document. The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar far the Securities. Section 1.02 Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Annex A attached hereto. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of 9o~baibs.viioossos the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01 Defmitions. 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. "Authorizing Document" means the resolution, order, or ordinance of the governing body of the Issuer pursuant to which the Securities are issued, as the same may be amended or modified, including any pricing certificate related thereto, certified by the secretary or any other officer of the Issuer and delivered to the Bank. `Bank Office" means the designated office of the Bank at the address shown in Section 3.01 hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "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 Authorizing Document). "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 Authorizing Document. "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 90168165.1/ll008805 2 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 Authorizing Document 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 Ageement. ARTICLE THREE PAYING AGENT Section 3.01 Duties of Paving A~ent. As Paying Agent, the Bank shall pay, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the following address: First Class/ Re~istered/Certified Express Delivery Only By Hand Only The Bank of New York The Bank of New York Mellon The Bank of New York Mellon Mellon Trust Company, N.A. Trust Company, N.A. Trust Company, N.A. Global Corporate Trust Global Corporate Trust Global Corporate Trust P. O. Box 2320 2001 Bryan Street, 9th Floor Corporate Trust Window Dallas, Texas 75221-2320 Dallas, Texas 75201 101 Barclay Street, lst Floar East New York, New York 10286 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 (as defined in the Authorizing Document). All payments of principal and/or interest on the Securities to the registered owners shall be accomplished (1) by the issuance of checks, payable to the registered owners, drawn on the paying agent account provided in Section 5.05 hereof, sent by United States mail, first class postage prepaid, to the address appearing on the Security Register or (2) by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02 Pavment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Authorizing Document. 90168165.1 / 11008805 3 ARTICLE FOUR REGISTRAR Section 4.01 _S_ecurity Register - Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacements 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, such written instrument to be in a form satisfactory to the Bank and duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02 Securities. The Issuer shall provide additional Securities when needed to facilitate transfers or exchanges thereof. The Bank covenants that such additional Securities, if and when provided, 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 Securitv Re~ister. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04 List of 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 90168165.1/11008805 4 Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05 Return of Cancelled Securities. The Bank will, at such reasonable intervals as it determines, surrender to the Issuer, all 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 the Authorizing Document, 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, destroyed, lost or stolen, the Bank may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such mutilated, 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, destroyed, lost or stolen. Section 4.07 Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01 Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02 Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. 90168165.1/11008805 5 (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 the Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. ( fl 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. (g) The Bank is also authorized to transfer funds relating to the closing and initial delivery of the Securities in the manner disclosed in the closing memorandum or letter as prepared by the Issuer, Issuer's financial advisor or other agent. The Bank may act on a facsimile or e-mail transmission of the closing memorandum or letter acknowledged by the Issuer, the Issuer's financial advisor or other agent as the final closing memorandum or letter. The Bank shall not be liable for any losses, costs or expenses arising directly or indirectly from the Bank's reliance upon and compliance with such instructions. Section 5.03 Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04 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. 90168165.1/11008805 6 Section 5.05 Monevs Held bv Bank - Paving Agent Account/Collateralization. A paying agent account shall at all times be kept and maintained by the Bank for the receipt, safekeeping, and disbursement of moneys received from the Issuer under this Agreement 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 paying agent accounts to the extent such money is not insured by the Federal Deposit Insurance Corporation. Payments made from such paying agent account shall be made by check drawn on such account unless the owner of the Securities shall, at its own expense and risk, request an alternative method of payment. Subject to the applicable unclaimed property laws of the State of Texas, any money deposited with the Bank for the payment of the principal of, 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 held by the Bank and disposed of only in accordance with Title 6 of the Texas Property Code, as amended. The Bank shall have no liability by virtue of actions taken in compliance with this provision. The Bank is not obligated to pay interest on any money received by it under this Agreement. This Agreement relates solely to money deposited for the purposes described herein, and the parties agree that the Bank may serve as depository for other funds of the Issuer, act as trustee under indentures authorizing other bond transactions of the Issuer, or act in any other capacity not in conflict with its duties hereunder. 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 connection with the exercise or perfortnance of any of its powers or duties under this Agreement. Section 5.07 Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the state and county where the administrative office of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction in the State of Texas to determine the rights of any Person claiming any interest herein. In the event the Bank becomes involved in litigation in connection with this Section, the Issuer, 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. The obligations of the Bank under this Agreement shall be performable at the principal corporate office of the Bank in the City of Dallas, Texas. 901681651/11008805 7 Section 5.08 DTC Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements", which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01 Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02 Assisnment. 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 the signature page hereof. Section 6.04 Effect of Headings. The Article and Section headings herein are for convenience of reference only and shall not affect the construction hereof. Section 6.05 Successors and Assi~ns. All covenants 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 Mer~er, Conversion, Consolidation, or Succession. Any corporation or association into which the Bank may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion, or consolidation to which the Bank shall be a party, or any corporation or association succeeding to all or substantially all of the corporate trust business of the Bank shall be the successor of the Bank as Paying Agent under this Agreement without the execution or filing of any paper or any further act on the part of either parties hereto. Section 6.08 Benefits of A~reement. 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 6.09 Entire Agreement. This Agreement and the Authorizing Document 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 Authorizing Document, the Authorizing Document shall govern. 90168165.1/11008805 g Section 6.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.11 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 has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. However, if the Issuer fails to appoint a successor Paying Agent/Registrar within a reasonable time, the Bank may petition a court of competent jurisdiction within the State of Texas to appoint a successor. Furthermore, the Bank and the 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 thereo~, together with the 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 6.12 Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. [Remainder of page left blank intentionally.J 9oi6a~6s.ii~ ioossos 9 EXHIBIT B PURCHASE AGREEMENT ~6s9s~oi.3iiioossos B-1 CITY OF COLLEYVILLE, TEXAS (Tarrant County) $3,120,000 WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2010 PURCHASE AGREEMENT September 7, 2010 The Honorable Mayor and Members of the Ciry Council Ciry of Colleyville Ciry Hall, 100 Main Street Colleyville, Texas 76034 Ladies and Gentlemen: The undersigned, Southwest Securities, Inc. (the `Bej~re.rentative'~ acting on its own behalf and on behalf of the other underwriters listed on Schedule I hereto (collecrively, the "Undenvriterr'), offers to enter into the following agreement with City of Colleyville, Texas (the "Lr.ruer') which, upon the Issuer's written acceptance of this offer, will be binding upon the Issuer and upon the Under~vriters. This offer is made subject to the Issuer's written acceptance hereof on or before 10:00 p.m., Central Time, on September 7, 2010, and, if not so accepted, will be subject to withdrawal by the Underwriters upon written norice delivered to the Issuer at any time prior to the acceptance hereof by the Issuer. Terms not otherwise defined in this Agreement shall have the same meanings set forth in the Ordinance (as defined herein) or in the Official Statement (as defined herein). 1. Purchase and Sale of the Bonds. Subject to the terms and condirions and in reliance upon the representations, warranries, and agreements set forth herein, the Underwriters hereby agree, jointly and severally, to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to the Undenvriters, all, but not less than all, of the Issuer's $3,120,000 Waterworks and Sewer System Revenue Refunding Bonds, Series 2010 (the `Bond.r'~. Inasmuch as this purchase and sale represents a negoriated transacrion, the Issuer understands, and hereby confirms, that the Underwriters are not acting as fiduciaries of the Issuer, but rather are acting solely in their capacity as Underwriters for their own accounts. The Representarive hereby represents that it has been duly authorized to execute this Agreement and to act hereunder on behalf of the Underwriters. The principal amount of the Bonds to be issued, the maturiries, redemprion provisions, and interest rates per annum are set forth in Schedule II hereto. The Bonds shall be as described in, and shall be issued and secured under and pursuant to the provisions of the ordinance authorizing the issuance and sale of the Bonds adopted by the Issuer on September 7, 2010 (the "Ordinance'~. The purchase price for the Bonds shall be $3,197,153.11 (representing the par amount of the Bonds, plus a net re-offering premium of $99,75635 and less an underwriting discount of $22,603.24), plus accrued interest calculated on the basis of a 360-day year of twelve 30-day months, from the dated date of the Bonds to the date of the Closing (as hereinafter defined). Delivered to the Issuer herewith are the Representative's a good faith corporate check payable to the order of the Issuer in the total amount of $32,600.00 (the "Check"). In the event that the Issuer accepts this Agreement for the Bonds, the Check shall be held uncashed by the Issuer until the time of Closing, at which time the Check shall be returned uncashed to the Representative. In the event that the Issuer does not accept the Bonds addressed by this Agreement, the Check shall be iminediately returned to the Representative. Should the Issuer fai.l to deliver the Bonds at the Closing, or should the Issuer be unable to sarisfy the conditions to the obligations of the Underwriters to purchase, accept delivery of and pay for the Bonds, as set forth in this Agreement, or should such obligations of the Underwriters be teiYiunated for any reason permitted by this Agreement, the Check for the undelivered Bonds shall irninediately be returned to the Representative. In the event that the Underwriters fail (other than for a reason permitted hereunder) to purchase, accept delivery of and pay for the Bonds at the Closing as herein provided, the Check for the undelivered Bonds shall be cashed and the amount thereof retained by the Issuer as and for fully liquidated damages for such faalure of the Underwriters, and, except as set forth in Sections 8 and 10 of this Agreement, no party shall have any further rights against the other hereunder. The Underwriters and the Issuer understand that in such event the Issuer's actual damages may be greater or may be less than such amount. Accordingly, the Underwriters hereby waive any right to claim that the Issuer's actual damages are less than such amount, and the Issuer's acceptance of this offer shall constitute a waiver of any right the Issuer may have to addirional damages from the Underwriters. The Representative hereby agrees not to stop payment on the Check or cause payment on the Check to be stopped unless the Issuer has breached any of the terms of this Agreement. 2. Public Offering. The Underwriters agree to make a bona fide public offering of all of the Bonds at a price not to exceed the public offering prices set forth on page 2 of the Official Statement and may subsequently change such offering prices without any requirement of prior norice. The Underwriters may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the public offering prices stated on page 2 of the Official Statement; provided that on or before the Closing, the Representative shall execute and deliver to Fulbright & Jaworski L.L.P., Dallas, Texas (`Bond Coun.rel'~ an issue price certificate for the Bonds prepared by Bond Counsel verifying the initial offering prices to the public at which the Underwriters reasonably expected to sell or in fact sold a substantial amount of each stated maturity of the Bonds to the public. 3. The O~cial Stutement. (a) The Issuer previously has delivered copies of the Preluiiinary Official Statement dated August 30, 2010 (the "Preliminary O~czal Statement") to the Undenvriters. The Issuer will prepare, or caused to be prepared, a final Official Statement relating to the Bonds, which will be (i) dated the date of this Agreement, (u) complete within the meaning of Rule 15c2-12 of the United States Securities and Exchange Coininission, as amended (the "Kule"), and (iu) substantially in the form of the most recent version of the Preliininary Official Statement provided to the Underwriters before the execution hereof but incorporating the terms of the offering of the Bonds, as permitted by the Rule. Such final Official Statement, including the cover page thereto, all exhibits, appendices, maps, charts, pictures, diagrams, reports, and statements included or incorporated therein or attached thereto, and all amendments and supplements thereto that may be authorized for use with respect to the Bonds, is herein referred to as the "O~cial Statement." Until the Official Statement has been prepared and is available for distribution, the Issuer shall provide to the Underwriters sufficient quantities (which may be in a"designated format" as defined in MSRB Rule G-32) of the Preliininary Official Statement as the Representative deems reasonably necessary to satisfy the obligations of the Underwriters under the Rule with respect to distribution to each potential customer, upon request, of a copy of the Preliminary Official Statement. (b) The Prelitninary Official Statement has been prepared for use by the Underwriters in connection with the public offering, sale, and distribution of the Bonds by the Underwriters. The Issuer hereby represents and warrants that the Preliminary Official Statement is deemed final by the Issuer as of its date, except for the omission of such information which is dependent upon the final pricing of the Bonds for complerion, all as permitted to be excluded by Secrion (b)(1) of the Rule. (c) The Issuer hereby authorizes the Official Statement and the information contained therein to be used by the Underwriters in connection with the public offering and the sale of the Bonds. The Issuer consents to the use by the Underwriters priar to the date hereof of the Preliininary Official Statement in connection with the public offering of the Bonds. The Issuer shall provide, or cause to be provided, to the Undenvriters as soon as pracricable after the date of the Issuer's acceptance of this Agreement (but, in any event, not later than within seven (7) business days after the Issuer's acceptance of this Agreement and in sufficient time to accompany any confirmation that requests payment from any customer) copies of the Official Statement which is complete as of the date of its delivery to the Undenvriters in such reasonable quantity as the Representative shall reasonably request in order for the Underwriters to comply with Secrion (b) (4) of the Rule and the rules of the Municipal Securities Rulemaking Board (the `2l~ISBB'~. (d) If, after the date of this Agreement to and including the date the Underwriters are no longer required to provide an Official Statement to potential customers who request the same pursuant to the Rule (the earlier of (i) ninety (90) days from the "end of the underwriting period" (as defined in the Rule) and (u) the time when the Official Statement is available to any person from the MSRB, but in no case less than 25 days after the "end of the underwriting period" for the Bonds), the Issuer becomes aware of any fact or event which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary to amend or supplement the Official Statement to comply with law, the Issuer will notify the Representarive (and for the purposes of this clause provide the Representative with such informarion as the Representative may from time to time reasonably request), and if, in the reasonable opinion of the Representative, such fact or event requires preparation and publication of a supplement or amendment to the Official Statement, the Issuer will forthwith prepare and furnish, at the Issuer's own expense (in a form and manner approved by the Representarive), a reasonable number of copies of either amendments or supplements to the Official Statement so that the statements in the Official Statement as so amended and supplemented will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or so that the Official Statement will comply with law; provided, however, that for all purposes of this Agreement and any certificate delivered by the Issuer in accordance herewith, the Issuer makes no representations with respect to the descriptions in the Preluivnary Official Statement or the Official Statement of The Depository Trust Company, New York, New York (`DTC') or its book-entry-only system. If such notification shall be subsequent to the Closing, the Issuer shall furnish such legal opuiions, certificates, instruinents and other documents as the Representative may reasonably deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. (e) The Representarive hereby agrees to file the Preliminary Official Statement and the Official Statement with the MSRB in the format prescribed by the MSRB on or before the Closing. Unless othenvise notified in writing by the Representauve, the Issuer can assume that the "end of the underwriting period" for purposes of the Rule is the date of the Closing. 4. Representations, Warranties, and Covenants of the Issuer. The Issuer hereby represents and warrants to and covenants with the Underwriters that: (a) The Issuer is a political subdivision and municipal corporation of the State of Texas (the "State'~, and has full legal right, power and authoriry to (i) enter into this Agreement, to adopt the Ordinance, to sell the Bonds, and to issue and deliver the Bonds to the Underwriters as provided herein and to carry out and consununate all other transactions described in the Ordinance, this Agreement, the escrow agreement relating to the Bonds (the `~.rcrow Agreement'~, the Continuing Disclosure Undertaking (as described in Section 6(i)(2) of this Agreement), and all documents required hereunder and thereunder to be executed and delivered by the Issuer, (ii) to sell, issue and deliver the Bonds to the Underwriters as provided herein, and (ui) to carry out and consummate the transactions described in this Agreement, the Escrow Agreement, the Ordinance, and the Official Statement, and the Issuer has complied, and will at the Closing be in compliance, in all material respects with the terms of the general laws of the State, including particularly Texas Government Code, Chapters 1207 and 1502 as amended, this Agreement, the Escrow Agreement, and the Ordinance as they pertain to such transactions; (b) By all necessary official action of the Issuer prior to or concurrently with the acceptance hereof, the Issuer has duly authorized all necessary action to be taken by it for (i) the adoption of the Ordinance and the issuance and sale of the Bonds (ii) the approval, execution and delivery of, and the performance by the Issuer of the obligations on its part, contained in the Bonds, the Ordinance, the Escrow Agreement, and this Agreement and (ui) the consummation by it of all other transactions described in the Official Statement, the Ordinance, the Escrow Agreement and this Agreement and any and all such other agreements and documents as may be required to be executed, delivered and/or received by the Issuer in order to carry out, give effect tq and consuininate the transacrions described herein and in the Official Statement; (c) The Ordinance, the Escrow Agreement and this Agreement constitute, legal, valid and binding agreements of the Issuer entided to the benefits of the Ordinance and enforceable in accordance with their terms, subject to principles of sovereign immunity, bankruptcy, insolvenry, reorganizarion, moratorium and other similar laws and principles of equiry relating to or affecting the enforcement of creditors' rights; upon the issuance, authenticarion and delivery of the Bonds as aforesaid, the Orclinance will provide for the payment of the Bonds solely from and secured by a lien on and pledge of the Net Revenues of the Issuer's Waterworks and Sewer System (the "Sy.rtem'); (d) To be best of its knowledge, the Issuer is not in material breach of or default in any material respect under any applicable constiturional provision, law or aciininistrarive regularion of the State or the United States, relating to the issuance of the Bonds, or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolurion, agreement or other instniinent to which the Issuer is a party or to which the Issuer is othenuise subject, and no event which would have a material and adverse effect upon the business or financial condition of the Issuer has occurred and is continuing which constitutes or with the passage of time or the giving of notice, or both, would consritute a default or event of default by the Issuer under any of the foregoing; and the execution and delivery of the Bonds, the Escrow Agreement, this Agreement or the adoption of the Ordinance, and compliance with the provisions on the Issuer's part contained therein, will not conflict with or consritute a material breach of or default under any consriturional provision, adn~iistrarive regulation relating to the issuance of bonds, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instnlment to which the Issuer is a party or to which the Issuer is or to which any of its property or assets are otherwise subject or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Ordinance; (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislarive body, board, agency or cominission having jurisdicrion of the matters which are required for the due authorization of, which would constitute a condirion precedent to, or the absence of which would materially adversely affect the due performance by the Issuer of its obligarions under this Agreement, the Escrow Agreement, the Ordinance, and the Bonds have been duly obtained, except for the approval of the Bonds by the Attorney General of the State of Texas and the registration of the Bonds by the Comptrollex of Public Accounts of the State of Texas (each of which will be obtained prior to Closing) and such approvals, consents and orders as may be required under the Blue Sky or securities laws of any jurisdicrion in connecrion with the offering and sale of the Bonds; (~ The Bonds and the Ordinance conform to the descriptions thereof contained in the Official Statement under the caprion `THE BONDS,"the proceeds of the sale of the Bonds will be applied generally as described in the Official Statement under the subcaprion `TI~JN OF FINANCING -U.re of Bond Proceed.r, " and the Undertaking conforms to the descriprion thereof contained in the Official Statement under the caption "CON"1INUING DISCLOS[IF~E OF INFOBMl1TION ; (g) There is no litigation, acrion, suit, proceeding, inquiry or invesrigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the Issuer, threatened against the Issuer, affecting the e~stence of the Issuer or the titles of its officers to their 4 respecrive offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the collecrion of the Net Revenues of the System pledged to the payment of principal of and interest on the Bonds pursuant to the Ordinance or in any way contesting or affecting the validity or enforceability of the Bonds, this Agreement, the Escrow Agreement, or contesting the exclusion from gross income of interest on the Bonds for federal income tas purposes, or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto, or contesting the powers of the Issuer or any authority for the issuance of the Bonds, the adoption of the Ordinance or the execution and delivery of the Escrow Agreement or this Agreement, nor, to the best knowledge of the Issuer, is there any basis therefor, wherein an unfavorable decision, niling or finding would materially adversely affect the validity or enforceabiliry of the Bonds, the Ordinance, the Escrow Agreement or this Agreement; (h) As of the date thereof, the Preluz~iary Official Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circuxnstances under which they were made, not misleading; (i) At the time of the Issuer's acceptance hereof and (unless the Official Statement is amended or supplemented pursuant to paragraph (d) of Section 3 of this Agreement) at all times subsequent thereto during the period up to and including twenty-five (25) days subsequent to the end of the underumting period, the Official Statement does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (j) If the Official Statement is supplemented or amended pursuant to paragraph (d) of Section 3 of this Agreement, at the time of each supplement or amendment thereto and (unless subsequendy again supplemented or amended pursuant to such paragraph) at all times subsequent thereto during the period up to and including twenty-five (25) days subsequent to the end of the underwriting period the Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which made, not misleading; (k) The Issuer will apply, or cause to be applied, the proceeds from the sale of the Bonds as provided in and subject to all of the terms and provisions of the Ordinance and will not take or omit to take any action which action or omission will adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds; (1) The Issuer will furnish such information and execute such instruments and take such action in cooperation with the Underwriters as the Representative, at the sole e~ense of the Underwriters, may reasonably request (A) to (y) qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdicrions in the United States as the Representarive may designate and (z) deterniine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and (B) to continue such qualifications in effect so long as required for the distriburion of the Bonds (provided, however, that the Issuer will not be required to qualify as a foreign corporation or to file any general or special consents to service of process under the laws of any jurisdiction) and will advise the Representative in a timely manner of receipt by the Issuer of any notification with respect to the suspension of the qualificarion of the Bonds for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose; (m) The financial statements of, and other financial information regarding the Issuer, in the Official Statement fairly present the financial posirion and results of the Issuer as of the dates and for the periods therein set forth. Prior to the Closing, the Issuer will not take any acrion within or under its control that will cause any adverse change of a material nature in such financial position, results of operations or condition, financial or otherwise, of the Issuer. The Issuer is not a party to any lirigation or other proceeding which, if decided adversely to the Issuer, would have a materially adverse effect on the fmancial condition of the Issuer; (n) Prior to the Closing, the Issuer will not offer or issue any bonds, notes or other obligations for borrowed money or incur any material liabilities (except in the ordinary course of business), direct or contingent, payable from or secured by any of the revenues which will secure the Bonds without the prior approval of the Representative, such approval not to be unreasonably withheld; and (o) Any certificate, signed by any official of the Issuex authorized to do so in connecrion with the transactions described in this Agreement, shall be deemed a representarion and warranry by the Issuer to the Underwriters as to the statements made therein. 5. Closing. (a) At 10:00 a.m. Central time, on October 12, 2010, or at such other time and date as shall have been mutually agreed upon by the Issuer and the Representarive (the "Clo.ring'~, the Issuer will, subject to the terms and conditions hereof, deliver the Bonds to the Representarive, duly executed and authenticated and the Representative will, subject to the terms and conditions hereof, accept such delivery and pay the purchase price of the Bonds, as set forth in Section 1 of this Agreement, by a wire transfer, payable in immediately available funds, to the order of the Issuer. Payment for the Bonds as aforesaid shall be made at the offices of the Paying Agent/Registrar, or such other place as shall have been mutually agreed upon by the Issuer and the Representarive. The inirial Bond shall be registered in the name of the Representative. (b) Delivery of the Bonds in definitive form shall be made to DTC. The defmitive Bonds shall be delivered in fully registered form, bearing CUSIP numbers without coupons, with one cerrificate for each maturity of the Bonds, registered in the name of Cede & Co., all as provided in the Ordinance, and shall be made available to the Representarive at least one business day before Closing for purposes of inspecrion (i) at DTC or (u) at the Paying Agent/Registrar, if the definitive Bonds are to be held in safekeeping for DTC by the Paying Agent/Registrar pursuant to DTC's FAST System. 6. Closing Conditions. The Undenvriters have entered into this Agreement in reliance upon the representations, warranties and agreements of the Issuer contained herein, and in reliance upon the representations, warranties and agreements to be contained in the documents and instrt~ments to be delivered at the Closing and upon the performance by the Issuer of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriters' obligations under this Agreement to purchase, to accept delivery of and to pay for the Bonds shall be condirioned upon the performance by the Issuer of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the followixig additional conditions, including the delivery by the Issuer of such docutnents as are enumerated herein, in form and substance reasonably satisfactory to the Representative: (a) The representations and warranties of the Issuer contained herein shall be true, complete and correct in all material respects on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing; (b) The Issuer shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing; (c) At the time of the Closing, (i) this Agreement, the Escrow Agreement, the Ordinance and the Bonds shall be in full force and effect and shall not have been amended, modified or supplemented, and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Representative; and (u) all acrions of the Issuer required to be taken by the Issuer shall be performed in order for Bond Counsel and counsel to the Undenuriters to deliver their respective opinions referred to hereafter; (d) At the time of the Closing, all official acrion of the Issuer relating to the Bonds, this Agreement, the Escrow Agreement, the Ordinance, and the Official Statement shall be in full force and effect and shall not have been amended, modified or supplemented, except as may have been agreed to by the Representarive; (e) At or prior to the Closing, the Ordinance shall have been duly adopted by the governing body of the Issuer and the Issuer shall have duly executed and delivered and the Paying Agent/Registrar shall have duly authenticated the definitive Bonds; (~ At the time of the Closing, there shall not have occurred any change or any development involving a prospecrive change in the condirion, fmancial or otherwise, or in the revenues or operations of the Issuer, from that set forth in the Official Statement that in the reasonable judgment of the Representative, is material and adverse and that makes it, in the reasonable judgment of the Representative, unpracricable to market the Bonds on the terms and in the manner described in the Official Statement; (~ The Issuer shall not currently be in default on the payment of principal or interest on any of its outstanding obligations for borrowed money; (h) All steps to be taken and all instruments and other documents to be executed, and all other legal matters in connection with the transactions described in this Agreement shall be reasonably sarisfactory in legal form and effect to the Issuer and the Representative; (i) At or prior to the Closing, the Representarive shall have received one (1) copy of each of the following documents: (1) The Official Statement, and each supplement or amendment thereto, if any, as may have been agreed to by the Representative, or a conformed copy thereof; (2) The Ordinance (including the Undertaking of the Issuer which satisfies the requirements of secrion (b)(5)(i) of the Rule) with such supplements or amendments as may have been agreed to by the Representative; (3) the approving opinion of Bond Counsel with respect to the Bonds, in substantially the form attached to the Official Statement; (4) a supplemental opinion of Bond Counsel addressed to the Issuer and the Underwriters, substantially to the effect that: (i) the Bonds are exempted securiries within the meaning of Section 3(a)(2) of the Securiries Act of 1933, as amended (the "~933 Act'~, and it is not necessary, in connection with the offering and sale of the Bonds, to register the Bonds under the 1933 Act or to qualify the Ordinance under the Trust Indenture Act of 1939, as amended (the "Tru.rt Indenture Act'~; and (u) such firm was not requested to participate, and did not take part, in the preparation of the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independendy to verify any of the informarion contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information under the caprions and subcaptions "PI~1N OF FINANCING-Bcfunded BondJ", "THE BONDS" (excluding the information under the subcaptions "Book-Entry-Only System" and "Registered Owners' Remedies"), "SELECTED PROVISIONS OF THE BOND ORDINANCE," "TAX MAZZEB.S" and "CONI7NUING DISCL,OSUKE OF INFORM~TION" (excluding the information under the subcaption "Compliance with Prior Undertakings"), and the subcaptions "Registrarion and Qualification of Bonds for Sale", "Legal Investments and Eligibility to Secure Public Funds in Texas" and "Legal Opinions" (except for the last sentence of the first paragraph thereo~ under the caprion "OTHEK INFOBMATION", and such firm is of the opinion that the inforxnarion relating to the Bonds and the legal issues contained under such captions and subcaptions is an accurate and fair description of the laws and legal issues addressed therein and, with respect to the Bonds, such information conforms to the Ordinance; (5) An opinion, dated the date of the Closing and addressed to the Underwriters, of counsel for the Underwriters, to the effect that: (i) the Bonds are exempted securities under the 1933 Act and the Trust Indenture Act and it is not necessary, in connecrion with the offering and sale of the Bonds, to register the Bonds under the 1933 Act and the Ordinance need not be qualified under the Trust Indenture Act; and (u) based upon their participation in the preparation of the Official Statement as counsel for the Underwriters and their participation at conferences at which the Official Statement was discussed, but without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, such counsel has no reason to believe that the Official Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except for any financial, forecast, technical and starisrical statements and data included in the Official Statement and the infortnarion regarding DTC and its book-entry system, in each case as to which no view need be expressed); (6) A certificate, dated the date of Closing, of an appropriate official of the Issuer to the effect that (i) the representarions and warranties of the Issuer contained herein are true and correct in all material respects on and as of the date of Closing as if made on the date of Closing; (u) no lirigation or proceeding against the Issuer is pencling or, to the best of his or her knowledge, threatened in any court or adiniiustrative body, nor to such person's knowledge is there a basis for litigation which would (a) contest the right of the Councilmembers or officials of the Issuer to hold and exercise their respective posirions, (b) contest the due organization and valid existence of the Issuer, (c) contest the validity, due authorization and execution of the Bonds, this Agreement, the Escrow Agreement, or the Ordinance or (d) attempt to enjoin or otherwise prevent the Issuer from functioning and collecting System revenues, pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof; (iii) all official acrions of the Issuer relating to the Official Statement, the Bonds, this Agreement, the Escrow Agreement, and the Ordinance have been duly taken by the Issuer, are in full force and effect and have not been modified, amended or repealed, and (iv) to the best of his or her knowledge, no event affecting the Issuer has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in arder to make the statements and information therein, in light of the circumstances under which made, not misleading in any material respect as of the time of Closing, and the informarion contained in the Official Statement is correct in all material respects and, as of the date of the Official Statement did not, and as of the date of the Closing does not, contain any untrue statement of a material fact ox omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (7) A certificate of the Issuer in form and substance sarisfactory to Bond Counsel setting forth the facts, estimates and circumstances in existence on the date of the Closing, which establish that it is not e~ected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and any applicable regulations (whether final, temporary or proposed) issued pursuant to the Code; (8) The approving opinion of the Attorney General of the State of Texas and the registration cerrificate of the Comptroller of Public Accounts of the State of Texas in respect of the inirial Bond; (9) Evidence satisfactory to the Representarive that the Bonds have been assigned a raring of "AA+" by Standard & Poor's Ratings Services, a Standard and Poor's Financial Services LLC business and a rating of "AAA" by Fitch Ratings, and that such ratings are in effect as of the date of Closing; (10) The Escrow Agreement duly executed on behalf of the Issuer and The Bank of New York Mellon Trust Company, N.A. (the `~.rcrozv Agent'~, and evidence acceptable to the Representative of the purchase by the Issuer or the Escrow Agent of United States Treasury Securities, as described in the Escrow Agreement and the deposit thereof to the escrow fund described therein; (11) A copy of a special report prepared by Grant Thornton LLP, independent certified public accountants (the "Tlerification Agent") addressed to the Issuer, Bond Counsel and the Undenvriters, verifying (i) the arithmetical computations of the adequary of the maturing principal and interest on the federal securities and uninvested cash on hand under the Escrow Agreement to pay, when due, the principal of and interest on the Refunded Bonds, and (u) the computation of the yield with respect to the federal securities and the Bonds; and (12) Such additional legal opinions, certificates, instruinents and other documents as maj~ be required by the Ordinance or as Bond Counsel, the Representarive or counsel to the Underwriters may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the Issuer's representarions and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Issuer on or prior to the date of the Closing of all the respecrive agreements then to be performed and conditions then to be satisfied by the Issuer. All of the opuiions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance reasonably sarisfactory to the Representative. If the Issuer shall be unable to sarisfy the conditions to the obligarions of the Undenvriters to purchase, to accept delivery of and to pay for the Bonds contained in this Agreement, or if the obligarions of the Underwriters to purchase, to accept delivery of and to pay for each series of the Bonds shall be terminated for any reason permitted by this Agreement, as it relates to such series of the Bonds, this Agreement shall ternunate and neither the Underwriters nor the Issuer shall be under any further obligation hereunder, except that the respecrive obligarions of the Issuer and the Underwriters set forth in Secrion 1 (with respect to the Check) and Section 8 hereof shall continue in full force and effect. 7. Termindtion. The Representative shall have the right to cancel the Undenvriters' obligation (as evidenced by a written notice to the Issuer texxninating the obligation of the Underwriters to accept delivery of and pay for the Bonds) to purchase the Bonds if, between the date of this Agreement and the Closing, the market price or marketability of the Bonds shall be materially adversely affected, in the reasonable judgment of the Representative, by the occurrence of any of the following: (a) legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasuty Department of the United States or the Internal Revenue Service or favorably reported for passage to either House of the Congress by any coininittee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), pxess release, statement or other form of norice by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to impose, direcdy or indirecdy, federal income taxation upon interest received on obligarions of the general character of the Bonds; (b) legislation shall be introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injuncrion issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Coiniiussion, or any other governmental agency having jurisdicrion of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registrarion under or other requirements of the 1933 Act, ox that either of the Ordinance is not exempt from qualificarion under or other requirements of the Trust Indenture Act, or that the issuance, offering, or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as described herein or in the Official Statement or otherwise, is or would be in violation of the federal securiries law as amended and then in effect; (c) a general suspension of tracling in securities on the New York Stock Exchange or other national securities exchange, the establishment of minimum prices on either such exchange, the establishment of material restricrions (not in force as of the date hereo~ upon trading securiries generally by any governmental authoriry or any national securities exchange, a general banking moratorium declared by federal, State of New York, ox State officials authorized to do so; (d) the New York Stock Exchange or other narional securities exchange or any governmental authority, shall impose, as to the Bonds or as to obligarions of the general character of the Bonds, any material restricrions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriters; (e) any amendment to the federal or state Constiturion ar acrion by any federal or state court, legislarive body, regulatory body, or other authority materially adversely affecting the tas status of the Issuer, its property, income securities (or interest thereon), or the validity or enforceabiliry of the pledge of Net Revenues of the System to pay principal of and interest on the Bonds; (~ any event occurring, or information becoming known which, in the reasonable judgment of the Representarive, makes untrue in any material respect any material statement or informarion contained in the Official Statement, or any amendment or supplement thereto, or has the effect that the Official Statement contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circuxnstances under which they were made, not misleading; (~ there shall have occurred since the date of tlus Agreement any materially adverse change in 10 the affairs or financial condition of the Issuer, except for changes which the Official Statement discloses are expected to occur; (h) the United States shall have either become engaged in new hostiliries that did not e~st prior to the date hereof or issued a declaration of war or a national emergency, or there shall have occurred a new material outbreak or escalation of hostilities or a national or international calamity or crisis, financial or otherwise, the effect of such outbreak, calamity or crisis on the financial markets of the United States being such as, in the reasonable opuuon of the Representative, would materially and adversely affect the ability of the Underwriters to market the Bonds; (i) any fact or event shall e~st or have existed that, in the Representative's reasonable judgment, requires or has required an amendment of or supplement to the Official Statement and the Issuer has failed to amend or supplement the Official Statement in compliance with this Agreement; (j) there shall have occurred or any published notice shall have been given of any intended review for downgrade, downgrading, suspension, withdrawal, or negative change in credit watch status by any national rating service to the underlying rating accorded any of the Issuer's obligarions secured in a like manner as the Bonds (including the ratings to be accorded the Bonds); (k) any state blue sky or securities commission or other governmental agency or body in any jurisdiction in which at least 10% of the principal amount of the Bonds have been offered and sold shall have withheld registrarion, exemprion or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating thereto; and With respect to the condition described in subparagraph (d) above, the Underwriters are not aware of any current, pending or proposed law or rule change imposing such restricrions or moratorium as of the date of execution of this Agreement which would permit the Underwriters to invoke their terinination rights thereunder. 8. Expenses. (a) The Underwriters shall be under no obligation to pay, and the Issuer shall pay, any expenses incident to the performance of the Issuer's obligarions hereunder, including, but not limited to (i) the cost of prepararion and printing of the Bonds, (u) the fees and disbursements of Bond Counsel; (ui) the fees and disbursements of the Financial Advisor to the Issuer; (iv) the fees and disbursements of any other engineers, accountants, and other experts, consultants or advisers retained by the Issuer; (v) the fees for bond rarings; (vi) the costs of preparing, printing and mailing the Preluninary Official Statement and the Official Statement; (vii) the fees and expenses of the Paying Agent/Registrar, the Escrow Agent and the Verification Agent; (vui) any bond inusurance fees or premiuxns, if any; (ix) advertising expenses (except any advertising expenses of the Underwriters as set forth below); (x) the out-of-pocket, miscellaneous and closing expenses, including the cost of travel, of the officers and trustees of the Issuer; and (~) any other expenses mutually agreed to by the Issuer and the Representative to be reasonably considered expenses of the Issuer which are incident to the transactions described herein. (b) The Underwriters shall pay (i) the cost of preparation and printing of this Agreement, the Blue Sky Survey and Legal Investment Memorandum, if any; (u) all adverrising expenses in connecrion with the public offering of the Bonds; and (ui) all other expenses incurred by it in connecrion with the public offering of the Bonds, including the fees and disbursements of counsel retained by the Underwriters. 9. Notices. Any notice or other communication to be given to the Issuer under this Agreement may be given by delivering the same in writing to the City of Colleyville, Texas, City Hall, 100 Main Street, Colleyville, Texas 76034, Attenrion: City Secretary, and any notice or other communication to be given to the 11 Undenvriters under this Agreement may be given by delivering the same in writing to Southwest Securiries, Inc., 1201 Elm Street, Suite 3500, Dallas, Texas 75270, Attenrion: Dan Almon. 10. Pctrties in Interest. This Agreement as heretofore specified shall constitute the entire agreement between us and is made solely for the benefit of the Issuer and the Underwriters (including successors or assigns of the Underwriters) and no other person shall acquire ar have any right hereunder or by virtue hereof. This Agreement may not be assigned by the Issuer. All of the Issuer's representations and warranties contained in this Agreement shall remain operarive and in full force and effect, regardless of (i) any investigations made by or on behalf of any of the Underwriters; (u) delivery of and payment for the Bonds pursuant to this Agreement; and (iu) any termination of this Agreement. 11. Effectiveness. This Agreement shall become effective upon the acceptance hereof by the Issuer and shall be valid and enforceable at the time of such acceptance. 12. Choice of Law. This Agreement shall be governed by and construed in accordance with the law of the State of Texas. 13. Seve~-c1l~zlzty. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdicrion or jurisdicrions, or in all jurisdictions because it conflicts with any provision or provisions of any Constitution, statute, rule of public poliry, or any other reason, such circumstances shall not have the effect of rendering the provision in quesrion invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Agteement invalid, inoperative or unenforceable to any extent whatever. 14. Business Day. For purposes of this Agreement, "business day" means any day on which the New York Stock Exchange is open for trading. 15. Sectton Hed[~ings. Section headings have been inserted in this Agreement as a matter of convenience of reference only, and it is agreed that such secrion headings are not a part of this Agreement and will not be used in the interpretation of any provisions of this Agreement. 16. Counter'pdrts. This Agreement may be executed in several counterparts each of which shall be regarded as an original (with the same effect as if the signatures thereto and hereto were upon the same document) and all of which shall constitute one and the same document. 17. No Personal Lzabilzty. None of the members of the City Council, nor any officer, agent, or employee of the Issuer, shall be charged personally by the Underwriters with any liability, or be held liable to the Underwriters under any term or provision of this Agreement, or because of execution or attempted execution, or because of any breach or attempted or alleged breach, of this Agreement. If you agree with the foregoing, please sign the enclosed counterpart of this Agreement and return it to the Representarive. This Agreement shall become a binding agreement between you and the Underwriters when at least the counterpart of this letter shall have been signed by or on behalf of each of the parties hereto. 12 Respectfully submitted, SOUTHWFST SECURTITES, INC. By: '/'/n.s i/// ~dX ~~9, v ~/ Name: ael . Wadsworth Tide Senior Vice President Illate:_ August 30, 2010 ~REPRFSF.NTAT7VF.'S SiGNATURE PAG.F., FOR THE CITP QF COT.I.EXVII.T,E, TEX.AS WATERWORKS AND SEWER SYSTFM REVFNUE R.F..FiJNDING BONDS, SERIFS 2010 PLI.RCHASF...AGRF_.F,MFNT] ACCEPTANCE ACCEPTED at ~_ [a.m. p.m. CST this 7th day of September, 2010. CITY OF COLLEYVILLE, TEXAS By: v~-' Name: David Kelly Tide: Mayor [ISSUER'S SIGNATURE PAGE FOR THE CITY OF COLLEYVILLE, T~XAS WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2010 PURCHASE AGREEMENT] SCHEDULE I LIST OF UNDERWRITERS Southwest Securities, Inc. RBC Capital Markets Corporation I-1 SPECIAL ESCROW AGREEMENT THIS SPECIAL ESCROW AGREEMENT (the "Agreement"), made and entered into as of September 7, 2010, by and between the City of Colleyville, Texas (the "Issuer") and The Bank of New York Mellon Trust Company, N.A., a banking association organized and existing under the laws of the United States of America, or its successors or assigns hereunder (the "Bank" or "Escrow Agent"), WITNESSETH: WHEREAS, the City Council of the Issuer has heretofore issued, sold, and delivered, and there is currently outstanding obligations of the following issue or series (hereinafter called the "Refunded Obligations"), to wit: City of Colleyville, Texas, Waterworks and Sewer System Refunding and Improvement Revenue Bonds, Series 1996, dated March 15, 1996, scheduled to mature on January 1 in each of the years 2011 through 2017, inclusive, and aggregating in principal amount of $1,190,000 (the "Series 1996 Refunded Bonds"), City of Colleyville, Texas, Waterworks and Sewer System Revenue Bonds, Series 1998, dated July 1, 1998, scheduled to mature on January 1 in each of the years 2011 through 2018, inclusive, and aggregating in principal amount of $1,470,000 (the "Series 1998 Refunded Bonds"), City of Colleyville, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 2002, dated November 15, 2002, scheduled to mature on January 1 in each of the years 2013 through 2015, inclusive, and aggregating in principal amount of $640,000 (the "Series 2002 Refunded Bonds"); and AND WHEREAS, in accardance with the provisions of Texas Government Code, Chapter 1207, as amended (the "Act"), the Issuer is authorized to sell refunding bonds in an amount sufficient to provide for the payrnent of obligations to be refunded, deposit the proceeds of such refunding bonds with any place of payment for the obligations being refunded, or other authorized depository, and enter into an escrow or similar agreement with such depository for the safekeeping, investment, reinvestment, administration and disposition of such deposit, upon such terms and conditions as the parties may agree, provided such deposits may be invested only in (i) direct noncallable obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations unconditionally guaranteed or insured by the agency or instrumentality and on the date of their acquisition or purchase by the Issuer are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and on the date of their acquisition or purchase by the Issuer, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent (hereinafter called the "Governmental Securities") that 90169620.1 / I 1008805 mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payrnent of the Refunded Obligations; and WHEREAS, the ordinances authorizing the Series 1996 Refunded Bonds and the Series 1998 Refunded Bonds restrict the escrowed securities eligible for deposit to direct obligations of the United States of America, including obligations the principal of and interest on are unconditionally guaranteed by the United States of America (the "Federal Securities"); and WHEREAS, the Refunded Obligations are scheduled to mature, or be redeemed, and interest thereon is payable on the dates and in the manner set forth in Exhibit A attached hereto and incorporated herein by reference as a part of this Agreement for all purposes; and WHEREAS, the Issuer, pursuant to an ordinance (the "Ordinance") duly passed and adopted by the City Council of the Issuer on September 7, 2010, authorized the issuance of bonds known as "City of Colleyville, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 2010," dated September 15, 2010 (the "Bonds"), and such Bonds are being issued to refund, discharge and make final payment of the principal of and interest on the Refunded Obligations; and WHEREAS, upon the delivery of the Bonds, the proceeds of sale, together with other available funds of the Issuer to be deposited with the Bank, are to be used in part to purchase the Governmental Securities and Federal Securities listed and identified in Exhibit B attached hereto and incorporated herein by reference as a part of this Agreement for all purposes (together with substituted securities therefor in accordance with the provisions of Section 11 hereof hereinafter referred to as the "Escrowed Securities"); and WHEREAS, the Escrowed Securities shall be held and deposited to the credit of the "Escrow Fund" to be established and maintained by the Bank in accordance with this Agreement; and WHEREAS, the Escrowed Securities, together with the beginning cash balance in the Escrow Fund, shall mature and the interest thereon shall be payable at such times to insure the existence of monies sufficient to pay the principal amount of the Refunded Obligations and the accrued interest thereon, as the same shall become due in accordance with the terms of the ordinances authorizing the issuance of the Refunded Obligations and as set forth in Exhibit A attached hereto; and WHEREAS, the Issuer has completed all arrangements for the purchase of the Escrowed Securities listed in Exhibit B and the deposit and credit of the same to the Escrow Fund as provided herein; and WHEREAS, the Bank is a banking association organized and existing under the laws of the United States of America, possessing trust powers and is fully qualified and empowered to enter into this Agreement and authorized to do business in the State of Texas; and WHEREAS, in Section 34 of the Ordinance, the City Council duly approved and authorized the execution of this Agreement; and 90169620.1/11008805 2 WHEREAS, the Issuer 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 ordinances authorizing the Refunded Obligations, the Act, the Bond Ordinance and this Agreement; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and to secure the payment of the principal of and the interest on the Refunded Obligations as the same shall become due, the Issuer and the Bank hereby mutually undertake, promise and agree as follows: SECTION 1: Receipt of Refunded Bond Ordinances. Receipt of copies of the ordinances 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/Fundin~. There is hereby created by the Issuer with the Bank a special segregated and irrevocable trust fund designated "SPECIAL 2010 CITY OF COLLEYVILLE, TEXAS, REFLTNDING BOND ESCROW FLTND" (hereinafter called the "Escrow Fund") for the benefit of the holders of the Refunded Obligations, and, immediately following the delivery of the Bonds, the Issuer agrees and covenants to cause to be deposited with the Bank the following amounts: $674,943.00 For the purchase of Escrowed Securities listed in Exhibit B to be held for the account of the Escrow Fund (from Bond proceeds); $2,698,187.21 For deposit in the Escrow Fund as a beginning cash balance (representing $2,440,514.09 from Bond proceeds and $257,673.12 from a transfer from Refunded Obligations debt service funds). The Bank hereby accepts the Escrow Fund and further agrees to receive said moneys, apply the same as set forth herein, and to hold the cash and Escrowed Securities deposited and credited to the Escrow Fund for application and disbursement for the purposes and in the manner provided in this Ageement. SECTION 3: Escrow Fund Sufficiency WarrantX. The Issuer hereby represents that the cash and Escrowed Securities, together with the interest to be earned thereon, deposited to the credit of the Escrow Fund will be sufficient to pay the principal of and premium and interest on the Refunded Obligations as the same shall become due and payable, and such Refunded Obligations, and the interest thereon, are to mature or be redeemed and shall be paid at the times and in the amounts set forth and identified in Exhibit A attached hereto. FURTHERMORE, the Bank acknowledges receipt of a copy of the Ordinance which also provides for the redemption of the Series 1996 Refunded Bonds and Series 1998 Refunded Bonds on October 12, 2010 and the Series 2002 Refunded Bonds on January 1, 2012, at the redemption price of par plus accrued interest, all in accordance with the provisions of the notice 9o~696zo.vi~oosaos 3 requirements applicable to said Refunded Obligations and the notice requirements contained in the respective ordinances authorizing such Refiznded Obligations. The Bank agrees to cause notices 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: Pledge of Escrow. The Bank agrees that all cash and Escrowed Securities, together with any income or interest earned thereon, held in the Escrow Fund shall be and is hereby irrevocably pledged to the payment of the principal of and interest on the Refunded Obligations which will mature and become due on and after the date of this Agreement, and such funds in the Escrow Fund shall be applied solely in accordance with the provisions of this Agreement. SECTION 5: Escrow Insufficiencv - Issuer Warranty to Cure. If, for any reason, the funds on hand in the Escrow Fund shall be insufficient to make the payments set forth in Exhibit A attached hereto, as the same becomes due and payable, the Issuer 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 Issuer by the fastest means possible, but the Bank shall in no manner be responsible for the Issuer's failure to make such deposits. SECTION 6: Escrow Fund Securities - Se~re a~. The Bank shall hold said moneys and Escrowed Securities in the Escrow Fund at all times as a special and separate trust fund for the benefit of the holders of the Refunded Obligations, wholly segregated from other moneys and securities on deposit with the Bank; shall never commingle said Escrowed Securities and moneys with other moneys or securities of the Bank; and shall hold and dispose of the assets therein only as set forth herein. Nothing herein contained shall be construed as requiring the Bank to keep the identical moneys, or any part thereof, in said Escrow Fund, if it is impractical, but moneys of an equal amount, except to the extent such are represented by the Escrowed Securities, shall always be maintained on deposit in the Escrow Fund by the Bank, as escrow agent; and a special account evidencing such facts shall at all times be maintained on the books of the Bank. SECTION 7: Escrow Fund Collections/Payments. The Bank shall from time to time collect and receive the principal of and interest on the Escrowed Securities as they respectively mature and become due and credit the same to the Escrow Fund. On or before each principal and/or interest payrnent 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 Issuer, shall cause to be withdrawn from the Escrow Fund the amount required to pay the accrued interest on the Refunded Obligations due and payable on said payment date and the principal of the Refunded Obligations due and payable on said payment date or redemption date, as the case may be, and the amount withdrawn from the Escrow Fund shall be immediately transmitted and deposited with the paying agent for the Refunded Obligations to be paid with such amount. The paying agent for the Refunded Obligations is the Bank. 901696201/11008805 ~ 4 If any Refunded Obligation or interest coupon 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 payrnent thereof and interest thereon. All cash required by the provisions hereof to be set aside or held in trust for the payrnent 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 Issuer. Notwithstanding the above and foregoing, any remittance of funds from the Bank to the Issuer shall be subject to any applicable unclaimed property laws of the State of Texas. SECTION 8: Disposal of Refunded Obli ations. All Refunded Obligations cancelled on account of payment by the Bank shall be cremated or otherwise destroyed by the Bank, and an appropriate certificate of destruction furnished the Issuer. SECTION 9: Escrow Fund Encumbrance. The escrow created hereby shall be irrevocable and the holders of the Refunded Obligations shall have an express lien on all moneys and Escrowed Securities in the Escrow Fund until paid out, used and applied in accordance with this Agreement. Unless disbursed in payment of the Refunded Obligations, all funds and the Escrowed Securities received by the Bank for the account of the Issuer hereunder shall be and remain the property of the Escrow Fund and the Issuer and the owners of the Refunded Obligations shall be entitled to a preferred claim and shall have a first lien upon such funds and Escrowed Securities enjoyed by a trust beneficiary. The funds and Escrowed Securities received by the Bank under this Agreement shall not be considered as a banking deposit by the Issuer and the Bank and the Issuer shall have no right or title with respect thereto, except as otherwise provided herein. Such funds and Escrowed Securities shall not be subject to checks or drafts drawn by the Issuer. SECTION 10: Absence of Bank Claim - Lien on Escrow Fund. The Bank shall have no lien whatsoever upon any of the moneys ar Escrowed Securities in the Escrow Fund for payment of services rendered hereunder, services rendered as paying agent/registrar for the Refunded Obligations, or for any costs or expenses incurred hereunder and reimbursable from the Issuer. SECTION 11: Substitution - Reinvestments. (a) The Bank shall be authorized to accept initially and temporarily cash and/or substituted Escrowed Securities pending the delivery of the Escrowed Securities identified in the Exhibit B attached hereto, or shall be authorized to redeem the Escrowed Securities and reinvest the proceeds thereof, together with other moneys held in 90169620.1/11008805 5 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 accounting firm to the effect that (i) the initial and/or temporary substitution of cash and/or securities for one or more of the Escrowed Securities identified in Exhibit B pending the receipt and delivery thereof to the Escrow Agent ar(ii) the redemption of one or more of the Escrowed Securities and the reinvestment of such funds in one or more substituted securities (which shall be noncallable direct obligations of the United States of America), together with the interest thereon and other available moneys then held in the Escrow Fund, will, in either case, be sufficient without reinvestment to pay, as the same become due in accordance with Exhibit A, the principal of, and interest on, the Refunded Obligations which have not previously been paid, and (2) with respect to an early redemption of Escrowed Securities and the reinvestment of the proceeds thereof, an unqualified opinion of nationally recognized municipal bond counsel to the effect that (a) such investment will not cause interest on the Bonds or Refunded Obligations to be included in the gross income for federal income tax purposes, under the Code and related regulations as in effect on the date of such investment, or otherwise make the interest on the Bonds or the Refunded Obligations subject to Federal income taxation and (b) such reinvestment complies with the Constitution and laws of the State of Texas and with all relevant documents relating to the issuance of the Refunded Obligations and the Bonds. (b) If on the date and in the amount shown in Exhibit C attached hereto there exists cash in the Escrow Fund, the Bank and the Issuer agree at least fifteen (15) days prior to such date, to subscribe for the purchase of United States Treasury Securities - State and Local Government Series (SLGS) bearing zero interest (0%) and on such date, in the amount and scheduled to mature as provided in Exhibit C and subscription forms prepared therefor as may be then required by the United States Department of the Treasury; provided that the then existing rules and regulations and policy of United States Department of the Treasury permit and authorize such investments. Should the policy, rules and regulations of the United States Department of Treasury not permit or authorize the purchase of such SLGS at such time or times, such cash balance or balances shall remain uninvested and held in trust for the benefit of the holders of the Refunded Obligations and used for the payment of the Refunded Obligations on the dates and in the amount such moneys would have been expended had such SLGS been acquired and matured. SECTION 12: Restriction Re: Escrow Fund Investments/Re-Investment. Except as provided in Section 11 hereof, moneys in the Escrow Fund will be invested only in the Escrowed Securities listed in Exhibit B and neither the Issuer nor the Bank shall reinvest any moneys deposited in the Escrow Fund except as specifically provided by this Agreement. 90169620.1/11008805 6 SECTION 13: Excess Funds. If at any time through redemption or cancellation of the Refunded Obligations there exists or will exist excesses of interest on or maturing principal of the Escrowed Securities in excess of the amounts necessary hereunder for the Refunded Obligations, the Bank may transfer such excess amounts to or on the order of the Issuer, provided that the Issuer delivers to the Bank the following: (1) an opinion by an independent certified public accounting firm that after the transfer of such excess, the principal amount of securities in the Escrow Fund, together with any interest thereon and other available monies then held in the Escrow Fund, will be sufficient 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) an unqualified opinion of nationally recognized municipal bond counsel to the effect that (a) such transfer will not cause interest on the Bonds or the Refunded Obligations to be included in gross income for federal income t~ purposes, under the Code and related regulations as in effect on the date of such transfer, or otherwise make the interest on the Bonds or the Refunded Obligations subject to Federal income taxation, and (b) such transfer complies with the Constitution and laws of the State of Texas and with all relevant documents relating to the issuance of the Refunded Obligations or the Bonds. SECTION 14: Collateralization. The Bank shall continuously secure the monies in the Escrow Fund not invested in Escrowed Securities by a pledge of direct obligations of the United States of America, in the par or face amount at least equal to the principal amount of said uninvested monies to the extent such money is not insured by the Federal Deposit Insurance Corporation. SECTION 15: Absence of Bank's Liabilitv Re: Investments. The Bank shall not be liable or responsible for any loss resulting from any investment made in the Escrowed Securities or substitute securities as provided in Section 11 hereof. SECTION 16: Bank's Compensation - Escrow Administration Settlement of Pavin~ A~ents' Charges. The Issuer agrees to pay the Bank for the performance of services hereunder and as reimbursement for anticipated expenses to be incurred hereunder the amount of $750 and, except for reimbursement of costs and expenses incurred by the Bank pursuant to Sections 3, 11, and 19 hereof, the Bank hereby agrees said amount is full and complete payment for the administration of this Agreement. The Issuer also agees to deposit with the Bank on the effective date of this Agreement, the sum of $900, which represents the total charge due the Bank as paying agent for the Refunded Obligations 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. 90169620.1/ll 008805 7 SECTION 17: Escrow A~ent's Duties - Responsibilities - Liability. The Bank shall not be responsible for any recital herein, except with respect to its organization and its powers and authority. As to the existence or nonexistence of any fact relating to the Issuer or as to the sufficiency or validity of any instrument, paper or proceedings relating to the Issuer, the Bank shall be entitled to rely upon a certificate signed on behalf of the Issuer by its Mayor, Mayor Pro Tem or Assistant City Manager/Chief Financial Officer as sufficient evidence of the facts therein contained. The Bank may accept a certificate of the City Secretary under the Issuer'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 Issuer, as conclusive evidence that such resolution or other instrument has been duly adopted and is in full force and effect. The duties and obligations of the Bank shall be determined solely by the express provisions of this Agreement and the Bank shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Bank. In the absence of bad faith on the part of the Bank, the Bank may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificate or opinion furnished to the Bank, conforming to the requirements of this Agreement; but notwithstanding any provision of this Agreement to the contrary, in the case of any such certificate or opinion or any evidence which by any provision hereof is specifically required to be furnished to the Bank, the Bank shall be under a duty to examine the same to determine whether it conforms to the requirements of this Agreement. The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Bank unless it shall be proved that the Bank was negligent in ascertaining or acting upon the pertinent facts. The Bank shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in aggregate principal amount of all said Refunded Obligations at the time outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Bank not in conflict with the intent and purpose of this Agreement. For the purposes of determining whether the holders of the required principal amount of said Refunded Obligations have concurred in any such direction, Refunded Obligations owned by any obligor upon the Refunded Obligations, or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with such obligor, shall be disregarded, except that far 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 901696201/11008805 8 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/Responsibilities - 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 Issuer, or for the identity or authority of any person making or executing this Agreement for and on behalf of the Issuer. The Bank is authorized by the Issuer to rely upon the representations of the Issuer with respect to this Agreement and the deposits made pursuant hereto and as to the Issuer'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 Issuer and the holders of the Refunded Obligations. Neither the Issuer nor the Bank shall assign or attempt to assign or transfer any interest hereunder or any portion of any such interest. Any such assignment or attempted assignment shall be in direct conflict with this Agreement and be without effect. This Agreement shall not create an obligation on the part of the Bank to calculate or in any way verify the sufficiency or projected future sufficiency of the maturing principal of and interest on the Escrow Securities, any substitute Escrow Securities and other money held by the Bank pursuant to this Agreement to pay the Refunded Obligations. SECTION 19: Interpleader. In the event conflicting demands or notices are made upon the Bank growing out of or relating to this Ageement or the Bank in good faith is in doubt as to what action should be taken hereunder, the Bank shall have the right at its election to: (1) Withhold and stop all further proceedings in, and performance of, this Agreement with respect to the issue in question and of all instructions received hereunder in regard to such issue; and (2) File a suit in interpleader and obtain an order from a court of appropriate jurisdiction in the State of Texas 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 Ageement, the Issuer 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 principal corporate office of the Bank in the city of Dallas, Texas. The foregoing indemnification shall survive the termination of this Agreement or the resignation or removal of the Bank. 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. 90169620.1 / 11008805 9 SECTION 20: Accountin~ - Report. Promptly following the February 15, 2011 redemption date for the Refunded Obligations, the Bank shall forward by letter to the Issuer, to the attention of the Assistant City Manager/Chief Financial Officer, or other designated official of the Issuer, a statement in detail of the Escrowed Securities and monies held, and the income and maturities thereof, and disbursements from the Escrow Fund for the payment of the Refunded Obligations. 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 100 Main Street Colleyville, Texas 76034 Attention: Assistant City Manager/Chief Financial Officer THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. 2001 Bryan Street, 11 th Floor Dallas, Texas 75201 Attention: Issuer Administrative Services The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten (10) days prior notice thereof. SECTION 22: Performance Date. Whenever under the terms of this Agreement the performance date of any provision hereof, including the date of maturity of interest on or principal of the Refunded Obligations, shall be a Sunday or a legal holiday or a day on which the Bank is authorized by law to close, then the performance thereof, including the payment of principal of and interest on the Refunded Obligations, need not be made on such date but may be performed or paid, as the case may be, on the next succeeding business day of the Bank with the same force and effect as if made on the date of performance or payment and with respect to a payment, no interest shall accrue for the period after such date. SECTION 23: Warranty of Parties Re: Power to Execute and Deliver Escrow A~reement. The Issuer 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 Issuer 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 Issuer according to the import thereof as provided in this Agreement. 9oi696zo.v~ ioosaos 10 SECTION 24: Severabilitv. If any one or more of the covenants or ageements 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 contained in this Agreement is declared to be severable from the other provisions of this Agreement, written notice of such event shall immediately be given to each national rating service (Moody's Investors Service, Inc. ["Moody's"], Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ["S&P"] or Fitch Inc. ["Fitch"]) which has rated the Refunded Obligations on the basis of this Agreement. SECTION 25: Termination. This Agreement shall terminate when the Refunded Obligations, including interest due thereon, have been paid and discharged in accordance with the provisions of this Agreement. If any Refunded Obligations are not presented for payment when due and payable, the nonpayment thereof shall not prevent the termination of this Agreement. Funds for the payment of any nonpresented Refunded Obligations and accrued interest thereon shall upon termination of this Agreement be held by the Bank for such purpose in accordance with Section 7 hereof. Any moneys or Escrowed Securities held in the Escrow Fund at termination and not needed for the payment of the principal of or interest on any of the Refunded Obligations shall be paid or transferred to the Issuer. SECTION 26: Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Bank by this Agreement. SECTION 27: Successors/Assigns. (a) Should the Bank not be able to legally serve or perform the duties and obligations under this Agreement, or should the Bank be declared to be insolvent or closed for any reason by federal or state regulatory authorities or a court of competent jurisdiction, the Issuer, 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 Issuer should fail to appoint such a successor within ninety (90) days from the date the Issuer 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, at the expense of the Issuer, 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 Issuer in writing of its intention to resign and requesting the Issuer to appoint a successor. No such resignation shall take effect until a successor has been appointed by the Issuer and such successor has accepted such appointment and agreed to perform all duties and obligations hereunder for a total compensation 9oi6962o.iiiioossos 11 equal to the unearned proportional amount paid the Bank under Section 16 hereof for the administration of this Agreement and the unearned proportional amount of the paying agents fees for the Refunded Obligations due the Bank. Any successor to the Bank shall be a bank, trust company or other financial institution that is duly qualified under applicable law (the Act, or other appropriate statute) to serve as escrow agent hereunder and authorized and empowered to perform the duties and obligations 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 Issuer 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 Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Bank all such rights, powers and duties. The term `Bank" as used herein shall be the Bank and its legal assigns and successor hereunder. SECTION 28: Escrow Agreement Amendment/Modification. This Agreement shall be binding upon the Issuer 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 Issuer, the Bank and their respective successors and legal representatives. Furthermore, no alteration, amendment or modification of any provision of this Ageement (1) shall alter the firm financial arrangements made for the payment of the Refunded Bonds or (2) shall 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 Issuer 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 agee 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 (S&P, Moody's or Fitch) which has rated the Refunded Obligations on the basis of this Agreement, prior to such amendment or modification being executed. SECTION 29: Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. SECTION 30: Executed Counterparts. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. 90169620.1/11008805 I Z SECTION 31: Governin~Law. This Agreement shall be governed by the laws of the State of Texas and shall be effective as of the date of the delivery of the Bonds. [Remainder of page intentionally left blank] 90169620.1 / 11008805 13 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Attest: Title: ~ ~~~at~ Attest: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Dallas, Texas By: ,~. .. ~enior Asss~cia!t~ Address: 2001 Bryan Street, 1.1 ~ Floor Dallas, Texas 75201 CITY OF COLLEYVILLE, TEXAS By: Mayor Address: ~ f'~--T t_a~- ~ ' y Secr 100 Main Street Colleyville, Texas 76034 90168145.1/11008805 S-1 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Dallas, Texas By: Title: th Address: 2001 Bryan Street, 11 Floor Dallas, Texas 75201 Attest: Title: CITY OF COLLEYVILLE, TEXAS --~ By: ~ c~ Mayor ~.--' Address: 100 Main Street Colleyville, Texas 76034 Attest: ~~ 9oi6sibs.iiiioossos S-1 EXHIBIT D-1 NOTICE OF REDEMPTION CITY OF COLLEYVILLE, TEXAS, WATERWORKS AND SEWER SYSTEM REFUNDING AND IMPROVEMENT REVENUE BONDS SERIES 1996 Dated March 15, 1996 NOTICE IS HEREBY GIVEN that the bonds of the above series maturing on and after January 1, 2011 and aggregating in principal amount $1,190,000 have been called for redemption on October 12, 2010 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 Outstanding CUSIP Number 2011 $140,000 2012 $150,000 2013 $160,000 201'7* $740,000 * term bond The above bonds shall become due and payable on October 12, 2010, 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 Yark Mellon Trust Company, N.A. (successor paying agent/registrar to The Bank of New York, New York, New York) at its designated offices at the following offices: First Class/ Re~istered/Certified Express Deliverv/Courier By Hand Only The Bank of New York Mellon The Bank of New York Mellon The Bank of New Yark Mellon Trust Trust Company, N.A. Trust Company, N.A. Company, N.A. Global Corporate Trust Global Corporate Trust Global Corporate Trust P.O. Box 396 111 Sanders Creek Pkwy. Corporate Trust Window East Syracuse, NY 13057 East Syracuse, NY 13057 101 Barclay Street, 1 st Floor East New York, NY 10286 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 MELLON TRUST COMPANY, N.A. 2001 Bryan Street, 11 th Floor Dallas, Texas 75201 76598701.3/11008805 ~-1 EXHIBIT D-2 NOTICE OF REDEMPTION CITY OF COLLEYVILLE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS SERIES 1998 Dated July 1, 1998 NOTICE IS HEREBY GIVEN that the bonds of the above series maturing on and after January 1, 2011 and aggregating in principal amount $1,470,000 have been called for redemption on October 12, 2010 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 Outstandin~ 2011 $150,000 2012 $160,000 2013 $170,000 2014 $175,000 2015 $185,000 2016 $200,000 2018 * $430,000 * term bond CUSIP Number The above bonds shall become due and payable on October 12, 2010, and interest thereon shall cease to accrue from and after said redemption date and payrnent 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 Mellon Trust Company, N.A. (successor paying agent/registrar to U.S. Trust Company of Texas, N.A., Dallas, Texas) at its designated offices at the following offices: First Class/ Re~istered/Certified The Bank of New York Mellon Trust Company, N.A. Global Corporate Trust P.O. Box 396 East Syracuse, NY 13057 Exnress Deliverv/Courier The Bank of New York Mellon Trust Company, N.A. Global Corporate Trust 111 Sanders Creek Pkwy. East Syracuse, NY 13057 Bv Hand Only The Bank of New York Mellon Trust Company, N.A. Global Corporate Trust Corporate Trust Window 101 Barclay Street, lst Floor East New York, NY 10286 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 MELLON TRUST COMPANY, N.A. 2001 Bryan Street, 11 th Floor Dallas, Texas 75201 765987013/11008805 D-2 EXHIBIT D-3 NOTICE OF REDEMPTION CITY OF COLLEYVILLE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS SERIES 2002 Dated November 15, 2002 NOTICE IS HEREBY GIVEN that the bonds of the above series maturing on and after January 1, 2013 and aggregating in principal amount $640,000 have been called for redemption on January 1, 2012 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 Outstanding CUSIP Number 2013 $255,000 2014 $255,000 2015 $130,000 The above bonds shall become due and payable on January 1, 2012, 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 Mellon Trust Company, N.A. (successor paying agent/registrar to The Bank of New York Trust Company of Florida, N.A., Dallas, Texas) at its designated offices at the following offices: First Class/ Registered/Certified The Bank of New York Mellon Tnzst Company, N.A. Global Corporate Trust P.O. Box 396 East Syracuse, NY 13057 Exnress Deliverv/Courier The Bank of New York Mellon Trust Company, N.A. Global Corporate Trust 111 Sanders Creek Pkwy. East Syracuse, NY 13057 By Hand Onlv The Bank of New York Mellon Trust Company, N.A. Global Corporate Trust Corporate Trust Window 101 Barclay Street, 1 st Floor East New York, NY 10286 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 MELLON TRUST COMPANY, N.A. 2001 Bryan Street, l lth Floor Dallas, Texas 75201 765987013/11008805 D-3 EXHIBIT E DESCRIPTION OF ANNUAL FINANCIAL 1NFORMATION The following information is referred to in Section 37 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 City's annual financial statements; portions of which are appended to the Official Statement as Appendix B, but for the most recently concluded fiscal year. 2. The information contained in Tables 1 through 10 in the Official Statement. Accounting Principles The accounting principles referred to in such Section are generally those described in Appendix B to the Official Statement, as such principles may be changed from time to time to comply with state law or regulation. 765987013/ ll 008805 E-1 CERTIEICATE OF CITY SECRETARY THE STATE OF TEXAS § § COUNTY OF TARRANT § § CITY OF COLLEYVILLE § I, the undersigned, City Secretary of the City of Colleyville, Texas, DO HEREBY CERTIFY as follows: 1. That on the 17`h day of August, 2010, a regular meeting of the City Council of the City of Colleyville, Texas was held at a meeting place within the City; the duly constituted members of the Council being as follows: DAVID KELLY JON AYERS CAROL WOLLTN MICHAEL MUHM STAN HALL TOM HART MTKE TAYLOR MAYOR MAYOR PRO TEM ) ) ) COUNCIL MEMBERS ) ) all of said persons were present at said meeting, except the following: None. Among other business considered at said meeting, the attached ordinance entitled: "ORDINANCE NO.O-10-1766 AN ORDINANCE authorizing the issuance of "CITY OF COLLEYVILLE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2010"; pledging the net revenues of the City's Waterworks arid Sewer System to the payment of the principal of and interest on said Bonds; enacting provisions incident and related to the issuance, payment, security and delivery of such bonds, including the approval and execution of a Paying AgentJRegistrar Agreement, a Purchase Agreement and an Escrow Agreement, and the approval and distribution of an Official Statement pertaining thereto; providing for the redemption of the bonds being refunded; and providing an effective date." (the "Ordinance") 90144532.1/I l OD8805 was introduced and submitted to the Council for first reading. After presentation and due consideration of the Ordinance, and upon a motion being duly made and seconded, the Ordinance was approved on first reading by the Council by the following vote: 7 voted "For" 0 voted "Against" 0 abstained all as shown in the official minutes of the Council for the meeting held on the aforesaid date. 2. On the 7th day of September, 2010; a regular meeting of the City Council of the City of Colleyville, Texas was held at a meeting place within the City; the duly constituted members of the Council being as follows: DAVID KELLY JON AYERS CAROL WOLLIN MICHAEL MUHM STAN HALL TOM HART MIKE TAYLOR MAYOR MAYOR PRO TEM COUNCIL MEMBERS all of said persons were present at said meeting, except the following: None. Among other business considered at said meeting, the Ordinance was approved on second reading and finally passed and adopted by the Council to be effective immediately by the following vote: 7 voted "For" 0 voted "Against" 0 abstained all as shown in the official minutes of the Council for the meeting held on the aforesaid date. 3. That the attached Ordinance is a true and correct copy of the original on file in the official records of the City; the duly qualified and acting members of the City Council of the City on the date of the aforesaid meeting are those persons shown above and, according to the records of my office, advance notice of the time, place, and purpose of the meeting was given to each member of the Council; and that said meeting, and the deliberation of the aforesaid public business, was open to the public and written notice of said meeting, including the subject of the above entitled ordinance, was posted and given in advance thereof in compliance with the provisions of Chapter 551, Texas Government Code, as amended. [Remainder ofpage intentionally left blank] 90144532.1/11008805 2 1N WITNESS WHEREOF, I have hereunto signed my name officially and affixed the seal of said City, this the 7~' day of September, 2010. U J`J of Colleyville, Texas (City Seal) 90144532.1/11008805