HomeMy WebLinkAboutOrdinances (O-02-1375)-11/19/2002
ORDINANCE NO. O-O~ -/375
AN ORDINANCE authorizing the issuance of "CITY OF COLLEYVILLE, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING
BONDS, SERIES 2002"; pledging the net revenues of the City's
Waterworks and Sewer System to the payment of the principal of and
interest on said Bonds; providing for the redemption of the bonds being
refunded; enacting provisions incident and related to the issuance,
payment, security and delivery of such bonds, including the approval and
execution of a Paying Agent/Registrar Agreement, a Purchase Contract
and the approval and distribution of an Official Statement pertaining
thereto; 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 $2,618,000 (collectively, the "Refunded Obligations") more particularly described as
follows:
(1) City of Colleyville, Texas, Waterworks and Sewer System Revenue
Bonds, Series 1975, dated January 1, 1975, scheduled to mature on January 1 in
each of the years 2003 through 2015, and aggregating in principal amount
$1,115,000;
(2) City of Colleyville, Texas, General Obligation Bonds, Series 1975,
dated January 1, 1975, scheduled to mature on January 1 in each of the years
2003 through 2015, and aggregating in principal amount $640,000;
(3) City of Colleyville, Texas, Waterworks and Sewer System Revenue
Bonds, Series 1975-A, dated July 1, 1975, scheduled to mature on January 1 in
each of the years 2003 through 2015, and aggregating in principal amount
$158,000; and
(4) City of Colleyville, Texas, Waterworks and Sewer System
Revenue Bonds, Series 1981, dated April 1, 1981, scheduled to mature on
January 1 in each of the years 2003 through 2014, and aggregating in principal
amount $705,000;
AND WHEREAS, pursuant to the provisions of V.T.C.A., Government Code, Chapter
1207, as amended, the City Council is authorized to issue refunding bonds and deposit the
proceeds of sale directly with any place of payment for the Refunded 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 $122,690.00 in debt service payments on such indebtedness and
provide present value savings of approximately $92,768.77; and
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WHEREAS, the City Council hereby finds and determines that all of such revenue bonds
can and should be issued on a parity with the outstanding and unpaid revenue bonds of the 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-Desiqnation-Principal AmountPurpose. Revenue refunding
bonds of the City shall be and are hereby authorized to be issued in the aggregate principal
amount of $2,580,000 to be designated and bear the title "CITY OF COLLEYVILLE, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2002"
(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: Fully Reqistered Obliqations - Authorized Denominations - Stated
Maturities - Date. The Bonds shall be issued as fully registered obligations, without coupons,
shall be dated November 15, 2002 (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(S)
2004 $195,000 2.00%
2005 200,000 2.00%
2006 205,000 2,50%
2007 205,000 3.00%
2008 215,000 3.00%
2009 215,000 3.10%
2010 225,000 3.30%
2011 235,000 3.50%
2012 245,000 3.50%
2013 255,000 3.70%
2014 255,000 3.90%
2015 130,000 4,00%
The Bonds shall bear interest on the unpaid principal amounts from the Issue Date at the
rate(s) per annum shown in the above schedule (calculated on the basis of a 360-day year of
twelve 30-day months). Interest on the Bonds shall be payable on January 1 and July 1 in each
year, commencing July 1, 2003.
SECTION 3: Terms of Payment - Payinq AqentJReqistrar. The principal of, premium, if
any, and the interest on the Bonds, due and payable by reason of maturity, redemption or
otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter
called the "Holders") appearing on the registration and transfer books maintained by the Paying
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Agent/Registrar and the payment thereof shall be in any coin or currency of the United States of
America, which at the time of payment is legal tender for the payment of public and private
debts, and shall be without exchange or collection charges to the Holders.
The selection and appointment of The Bank of New York Trust Company of Florida,
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
District 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 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
or redemption, only upon presentation and surrender of the Bonds to the Paying
Agent/Registrar at its designated offices in New York, New York (the "Designated
Paymentrrransfer Office"). Interest on the Bonds shall be paid to the Holders whose names
appear in the Security Register at the close of business on the Record Date (the 15th day of the
month next preceding each interest payment date) and shall be paid by the Paying
Agent/Registrar (i) by check sent United States Mail, first class postage prepaid, to the address
of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the
Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for
the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal
holiday, or a day when banking institutions in the City where the Designated Paymentrrransfer
Office of the Paying Agent/Registrar is located are authorized by law or executive order to close,
then the date for such payment shall be the next succeeding day which is not such a Saturday,
Sunday, legal holiday, or day when banking institutions are authorized to close; and payment on
such date shall have the same force and effect as if made on the original date payment was
due.
In the event of a non-payment of interest on one or more maturities on a scheduled
payment date, and for thirty (30) days thereafter, a new record date for such interest payment
for such maturity or maturities (a "Special Record Date") will be established by the Paying
Agent/Registrar, if and when funds for the payment of such interest have been received from
the City. Notice of the Special Record Date and of the scheduled payment date of the past due
interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5)
business days prior to the Special Record Date by United States Mail, first class postage
prepaid, to the address of each Holder of such maturity or maturities appearing on the Security
Register at the close of business on the last business day next preceding the date of mailing of
such notice.
SECTION 4: Redemption. (a) Optional Redemption. The Bonds having Stated
Maturities on and after January 1, 2013 shall be subject to redemption prior to maturity, at the
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option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple
thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on January 1, 2012
or on any date thereafter at the redemption price of par plus accrued interest to the date of
redemption.
(b) Exercise of Redemption Option, At least forty-five (45) days prior to a redemption
date for the Bonds (unless a shorter notification period shall be satisfactory to the Paying
Agent/Registrar), the City shall notify the Paying Agent/Registrar of the decision to redeem
Bonds, the principal amount of each Stated Maturity to be redeemed, and the date of
redemption therefor. The decision of the City to exercise the right to redeem Bonds shall be
entered in the minutes of the governing body of the City,
(c) Selection of Bonds for Redemption. If less than all Outstanding Bonds of the same
Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall
treat such Bonds as representing the number of Bonds Outstanding which is obtained by
dividing the principal amount of such Bonds by $5,000 and shall select the Bonds to be
redeemed within such Stated Maturity by lot.
(d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date for
the Bonds, a notice of redemption shall be sent by United States Mail, first class postage
prepaid, in the name of the City and at the City's expense, to each Holder of a Bond to be
redeemed in whole or in part at the address of the Holder appearing on the Security Register at
the close of business on the business day next preceding the date of mailing such notice, and
any notice of redemption so mailed shall be conclusively presumed to have been duly given
irrespective of whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii)
identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be
redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price,
(iv) state that the Bonds, or the portion of the principal amount thereof to be redeemed, shall
become due and payable on the redemption date specified, and the interest thereon, or on the
portion of the principal amount thereof to be redeemed, shall cease to accrue from and after the
redemption date, and (v) specify that payment of the redemption price for the Bonds, or the
principal amount thereof to be redeemed, shall be made at the Designated Payment/Transfer
Office of the Paying Agent/Registrar only upon presentation and surrender thereof by the
Holder, If a Bond is subject by its terms to prior redemption and has been called for redemption
and notice of redemption thereof has been duly given as hereinabove provided, such Bond (or
the principal amount thereof to be redeemed) shall become due and payable and interest
thereon shall cease to accrue from and after the redemption date therefor; provided moneys
sufficient for the payment of such Bond (or of the principal amount thereof to be redeemed) at
the then applicable redemption price are held for the purpose of such payment by the Paying
Agent/Registrar.
SECTION 5: Reqistration - Transfer - Exchanqe 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
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or request for exchange duly executed by the Holder or by his duly authorized agent, in form
satisfactory to the Paying Agent/ Registrar.
Upon surrender for transfer of any Bond (other than the Initial Bonds authorized in
Section 8 hereof) at the Designated Payment/Transfer Office of the Paying Agent/Registrar, the
Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or
transferees, one or more new Bonds, executed on behalf of, and furnished by, the City of
authorized denominations and having the same Stated Maturity and of a like aggregate principal
amount as the Bond or Bonds surrendered for transfer,
At the option of the Holder, Bonds (other than the Initial Bonds authorized in Section 8
hereof) may be exchanged for other Bonds of authorized denominations and having the same
Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the
Bonds surrendered for exchange, upon surrender of the Bonds to be exchanged at the
Designated Payment/Transfer Office of the Paying Agent/ Registrar, Whenever any Bonds are
surrendered for exchange, the Paying Agent/Registrar shall register and deliver new Bonds,
executed on behalf of, and furnished by, the City, to the Holder requesting the exchange.
All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the
Designated 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 othefWise herein provided, and except that
the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or
exchange of any tax or other governmental charges required to be paid with respect to such
transfer or exchange.
Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof
are hereby defined to be "Predecessor Bonds," evidencing all or a portion, as the case may be,
of the same obligation to pay evidenced by the Bond or Bonds registered and delivered in the
exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any
mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued,
registered and delivered in lieu thereof pursuant to Section 30 hereof and such new
replacement Bond shall be deemed to evidence the same obligation as the mutilated, lost,
destroyed, or stolen Bond.
Neither the City nor the Paying Agent/Registrar shall be required to issue or transfer to
an assignee of a Holder any Bond called for redemption, in whole or in part, within 45 days of
the date fixed for the redemption of such Bond; provided, however, such limitation on
transferability shall not be applicable to an exchange by the Holder of the unredeemed balance
of a Bond called for redemption in part,
SECTION 6: Book-Entry Only Transfers and Transactions, Notwithstanding the
provisions contained in Sections 3, 4 and 5 hereof relating to the payment, and
transfer/exchange of the Bonds, the City hereby approves and authorizes the use of
"Book-Entry Only" securities clearance, settlement and transfer system provided by The
Depository Trust Company (DTC), a limited purpose trust company organized under the laws of
the State of New York, in accordance with the operational arrangements referenced in the
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Blanket Issuer Letter of Representation, by and between the City and OTC (the "Depository
Agreement"),
Pursuant to the Depository Agreement and the rules of OTC, the Bonds shall be
deposited with OTC who shall hold said Bonds for its participants (the "OTC Participants").
While the Bonds are held by OTC 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 OTC, notwithstanding the ownership of each actual purchaser or owner of each
Bond (the "Beneficial Owners") being recorded in the records of OTC and OTC Participants,
In the event OTC 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 OTC is incapable of properly discharging its
duties as securities depository for the Bonds, the City covenants and agrees with the Holders of
the Bonds to cause Bonds to be printed in definitive form and provide for the Bond certificates to
be issued and delivered to OTC Participants and Beneficial Owners, as the case may be.
Thereafter, the Bonds in definitive form shall be assigned, transferred and exchanged on the
Security Register maintained by the Paying AgenURegistrar and payment of such Bonds shall
be made in accordance with the provisions of Sections 3, 4 and 5 hereof.
SECTION 7: Execution - Reqistration. 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
substantially in the form provided in Section 90, manually executed by an authorized officer,
employee or representative of the Paying AgenU 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
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exchange therefor definitive Bonds of authorized denominations, Stated Maturities, principal
amounts and bearing applicable interest rates for transfer and delivery to the Holders named at
the addresses identified therefor; all pursuant to and in accordance with such written
instructions from the initial purchaser(s), or the designee thereof, and such other information
and documentation as the Paying Agent/Registrar may reasonably require.
SECTION 9: Forms. (a). Forms Generally. The Bonds, the Registration Certificate of
the Comptroller of Public Accounts of the State of Texas, the Certificate of Registration, and the
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
$
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF COLLEYVILLE, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BOND
SERIES 2002
Issue Date:
November 15,2002
Interest Rate:
_%
Stated Maturity:
CUSIP NO:
Registered Owner:
Principal Amount:
DOLLARS
The City of Colleyville (hereinafter referred to as the "City"), a body corporate and
municipal corporation in the County of Tarrant, State of Texas, for value received, hereby
promises to pay to the order of the Registered Owner named above, or the registered assigns
thereof, solely from the revenues hereinafter identified, on the Stated Maturity date specified
above the Principal Amount stated above, (or so much thereof as shall not have been paid
upon prior redemption) and to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) on the unpaid Principal Amount hereof from the Issue Date at the per
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annum rate of interest specified above; such interest being payable on January 1 and July 1 of
each year, commencing July 1, 2003. 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; provided, however, while this Bond is registered to Cede &
Co., the payment of principal upon a partial redemption of the principal amount hereof may be
accomplished without presentation and surrender of this Bond. Interest is payable to the
registered owner of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance
hereinafter referenced) whose name appears on the "Security Register" maintained by the
Paying Agent/ Registrar at the close of business on the "Record Date", which is the 15th day of
the month next preceding each interest payment date and interest shall be paid by the Paying
Agent/ Registrar by check sent United States Mail, first class postage prepaid, to the address of
the registered owner recorded in the Security Register or by such other method, acceptable to
the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner.
All payments of principal of, premium, if any, and interest on this Bond shall be without
exchange or collection charges to the owner hereof and in any coin or currency of the United
States of America which at the time of payment is legal tender for the payment of public and
private debts.
This Bond is one of the series specified in its title issued in the aggregate principal
amount of $2,580,000 (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 maturing on and after January 1, 2013 may be redeemed prior to their Stated
Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any
integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on
January 1, 2012, or on any date thereafter, at the redemption price of par, together with accrued
interest to the date of redemption.
At least thirty days prior to the date fixed for any redemption of Bonds, the City shall
cause a written notice of such redemption to be sent by United States Mail, first class postage
prepaid, to the registered owners of each Bond to be redeemed at the address shown on the
Security Register and subject to the terms and provisions relating thereto contained in the
Ordinance. If a Bond (or any portion of its principal sum) shall have been duly called for
redemption and notice of such redemption duly given, then upon such redemption date such
Bond (or the portion of its principal sum to be redeemed) shall become due and payable, and
interest thereon shall cease to accrue from and after the redemption date therefor, provided
moneys for the payment of the redemption price and the interest on the principal amount to be
redeemed to the date of redemption are held for the purpose of such payment by the Paying
Agent/Registrar.
In the event a portion of the principal amount of a Bond is to be redeemed and the
registered owner is someone other than Cede & Co., payment of the redemption price of such
principal amount shall be made to the registered owner only upon presentation and surrender of
such Bond to the Designated Payment/Transfer Office of the Paying Agent/Registrar, and a new
Bond or Bonds of like maturity and interest rate in any authorized denominations provided by
the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to
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the registered owner, without charge. If a Bond is selected for redemption, in whole or in part,
the City and the Paying Agent/Registrar shall not be required to transfer such Bond to an
assignee of the registered owner within 45 days of the redemption date therefor; provided,
however, such limitation on transferability shall not be applicable to an exchange by the
registered owner of the unredeemed balance of a Bond redeemed in part.
The Bonds are special obligations of the City, and, together with the outstanding
Previously Issued Bonds (identified and defined in the Ordinance), are payable solely from and
equally and ratably secured by a first lien on and pledge of the Net Revenues (as defined in the
Ordinance) of the City's combined Waterworks and 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 payment of this obligation out of any funds raised or to be
raised by taxation.
Subject to satisfying the terms and conditions prescribed therefor, the City has reserved
the right to issue additional revenue obligations payable from and equally and ratably secured
by a parity lien on and pledge of the Net Revenues of the System, in the same manner and to
the same extent as the Bonds,
Reference is hereby made to the Ordinance, a copy of which is on file in the Designated
Payment/Transfer Office of the Paying Agent/Registrar, and to all of the provisions of which the
Holder by the acceptance hereof hereby assents, for definitions of terms; the description of and
the nature and extent of the security for the Bonds; the properties constituting the System; the
Net Revenues pledged to the payment of the principal of and interest on the Bonds; the nature
and extent and manner of enforcement of the lien and pledge securing the payment of the
Bonds; the terms and conditions for the issuance of additional revenue obligations; the terms
and conditions relating to the transfer or exchange of this Bond; the conditions upon which the
Ordinance may be amended or supplemented with or without the consent of the Holders; the
rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and
provisions upon which the liens, pledges, charges and covenants made therein may be
discharged at or prior to the maturity or redemption of this Bond, and this Bond deemed to be no
longer Outstanding thereunder; and for the other terms and provisions contained therein,
Capitalized terms used herein have the same meanings assigned in the Ordinance,
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, or its redemption, in
whole or in part, and (iii) on any other date as the owner for all other purposes, and neither the
City nor the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the
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contrary. In the event of non-payment of interest on a scheduled payment date and for
thirty (30) days thereafter, a new record date for such interest payment (a "Special Record
Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of
such interest have been received from the City. Notice of the Special Record Date and of the
scheduled payment date of the past due interest (which shall be 15 days after the Special
Record Date) shall be sent at least five (5) business days prior to the Special Record Date by
United States Mail, first class postage prepaid, to the address of each Holder appearing on the
Security Register at the close of business on the last business day next preceding the date of
mailing of such notice.
It is hereby certified, recited, represented and covenanted that the City is a duly
organized and legally existing municipal corporation under and by virtue of the Constitution and
laws of the State of Texas; that the issuance of the Bonds is duly authorized by law; that all
acts, conditions and things required to exist and be done precedent to and in the issuance of the
Bonds to render the same lawful and valid obligations of the City have been properly done, have
happened and have been performed in regular and due time, 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:
City Secretary
(SEAL)
45247732.1
10
C. *Form of Reqistration Certificate of Comptroller of Public Accounts to Appear
on Initial Bond only,
REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER
OF PUBLIC ACCOUNTS
REGISTER NO,
THE STATE OF TEXAS
I HEREBY CERTIFY that this Bond has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and duly registered by the Comptroller
of Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
(SEAL)
*NOTE TO PRINTER: Do not print on definitive bonds
D. Form of Certificate of Payinq Aqent/Reqistrar to Appear on Definitive Bonds only,
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued and registered in the name of the Registered Owner
shown above under the provisions of the within-mentioned Ordinance; the bond or bonds of the
above entitled and designated series originally delivered having been approved by the Attorney
General of the State of Texas and registered by the Comptroller of Public Accounts, as shown
by the records of the Paying Agent/Registrar.
The designated offices of the Paying Agent/Registrar in New York, New York, is the
"Designated Payment/Transfer Office" for this Bond,
THE BANK OF NEW YORK TRUST
COMPANY OF FLORIDA, N.A.,
Dallas, Texas,
as Paying Agent/Registrar
Registration date:
By
Authorized Signature
45247732,1
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E. Form of Assiqnment.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto
(Print or typewrite name, address, and zip code of transferee:)
(Social Security or other identifying number ) the within
Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Bond on the books kept for registration thereof, with full power of
substitution in the premises.
DATED:
Signature guaranteed:
NOTICE: The signature on this
assignment must correspond with the
name of the registered owner as it
appears on the face of the within Bond in
every particular.
F. The Initial Bond(s) shall be in the form set forth in paragraph B of this Section,
except that the form of a single fully registered Initial Bond shall be modified as follows:
(i) immediately under the name of the bond the headings "Interest Rate " and
"Stated Maturity " shall both be omitted;
(ii) Paragraph one shall read as follows:
The City of Colleyville (hereinafter referred to as the "City"), a body corporate and
municipal corporation in the County of Tarrant, State of Texas, for value received, hereby
promises to pay to the order of the Registered Owner named above, or the registered assigns
thereof, solely from the revenues hereinafter identified, the Principal Amount hereinabove stated
on January 1 in each of the years and in principal installments in accordance with the following
schedule:
YEAR
PRINCIPAL
I NST ALLMENTS
INTEREST
RATE
(Information to be inserted from schedule in Section 2 hereof).
(or so much thereof as shall not have been prepaid prior to maturity) and to pay interest,
computed on the basis of a 360-day year of twelve 30-day months, on the unpaid principal
amounts hereof 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 July 1, 2003.
Principal installments of this Bond are payable in the year of maturity or on a prepayment date
to the registered owner hereof by The Bank of New York Trust Company of Florida, N.A.,
Dallas, Texas (the "Paying AgenURegistrar"), upon presentation and surrender, at its
designated offices in New York, New York (the "Designated PaymenUTransfer Office"). Interest
45247732.1
12
is payable to the registered owner of this Bond whose name appears on the "Security Register"
maintained by the Paying AgenURegistrar 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 AgenURegistrar 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 AgenURegistrar, requested by, and at the risk and expense
of, the registered owner. All payments of principal of, premium, if any, and interest on this Bond
shall be without exchange or collection charges to the owner hereof and in any coin or currency
of the United States of America which at the time of payment is legal tender for the payment of
public and private debts.
SECTION 10: Definitions. For all purposes of this Ordinance and in particular for clarity
with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of
revenues to the payment of the Bonds, the following definitions are provided:
"Additional Parity 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 2002", dated November 15, 2002, 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
45247732.1
13
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
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 judgment of the City Council,
reasonably and fairly exercised, are necessary to maintain the operations and
render adequate service to the City and the inhabitants thereof, or such as might
be necessary to meet some physical accident or condition which would otherwise
impair obligations payable from Net Revenues shall be deducted in determining
"Net Revenues". Depreciation charges shall not be considered Operating and
Maintenance Expenses. Operating and Maintenance Expenses shall include
payments under contracts for the purchase of water supply, 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.
"Outstanding" - When used in this Ordinance with respect to Bonds or
Obligations Similarly Secured means, as of the date of determination, all Bonds
or Obligations Similarly Secured theretofore issued and delivered under their
respective authorizing ordinances, except:
45247732.1
14
(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 Bonds, Series 1994, dated June 1, 1994, and
originally issued in the principal amount of $2,860,000;
(2) City of Colleyville, Texas, Waterworks and Sewer
System Refunding and Improvement Revenue Bonds, Series
1996, dated March 15, 1996, and originally issued in the principal
amount of $4,220,000; and
(3) City of Colleyville, Texas, Waterworks and Sewer
System Revenue Bonds, Series 1998, dated July 1, 1998, and
originally issued in the principal amount of $2,825,000..
"Obligations Similarly Secured" - Collectively, the Bonds, the Previously
Issued Bonds and any Additional Parity Obligations, which shall be parity
obligations being equally and ratably secured by and payable from a lien on and
pledge of the Net Revenues of the System.
"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
45247732.1
15
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."
SECTION 11: Pledqe. 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 payment 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 Charqes. 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, and
(3) To produce Net Revenues equal to at least 1.20 times the annual
Debt Service for the Obligations Similarly Secured then Outstanding.
(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.
45247732.1
16
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
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 payment 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 payment 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
payments, or making adequate and sufficient provision for the payment thereof, may be
appropriated and used for any other City purpose now or hereafter permitted by law."
SECTION 14: Interest and Sinkinq Fund. 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 amount required to fully pay and discharge all Obligations Similarly Secured then
Outstanding (principal and interest) or (ii) the Bonds are no longer Outstanding.
45247732.1
17
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 amount currently on deposit in the Reserve Fund is $841,430.70
(the "Current Reserve"). By reason of the issuance of the Bonds, the Required Reserve is
hereby determined to be $845,486.00. Beginning on or before the 15th day of the month next
following the month the Bonds are delivered to the initial purchasers and on or before the 15th
day of each following month until the Required Reserve has been fully accumulated, there shall
be deposited into the Reserve Fund from the Net Revenues of the System an amount equal to
at least 1/60th of the difference between the Required Reserve and the Current Reserve.
When and so long as the cash and investments in the Reserve Fund total not less than
the Required Reserve, no deposits need be made to the credit of the Reserve Fund; but, if and
when the Reserve Fund at any time contains less than the Required Reserve, 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 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
45247732.1
18
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.
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 Director
of Finance 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 AgenURegistrar 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 Parity Obliqations-Refundinq Bonds-Obliqations
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
45247732.1
19
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 Director of Finance 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
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
45247732.1
20
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.
SECTION 22: Records - Accounts - Accountinq 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
VTC.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
45247732.1
21
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 Operating and Maintenance Expenses. Copies of each annual audit shall be
furnished to the Executive Director of the Municipal Advisory Council of Texas at his office in
Austin, Texas, and, upon request, to the initial purchasers of the Bonds and subsequent Holders
of any of said Bonds. The audits herein required shall be made within 120 days following the
close of each Fiscal Year insofar as is possible."
SECTION 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.
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 (Limited Pledge) Revenue Certificates
of Obligation, Series 1999", dated April 15, 1999 and "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 payment 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 or, 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
45247732.1
22
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 granted 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: SpecialObliqations. 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
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 AgenURegistrar, 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 for payment, redemption, transfer,
exchange, or replacement, if surrendered to the Paying AgenURegistrar, shall be promptly
cancelled by it and, if surrendered to the City, shall be delivered to the Paying AgenURegistrar
and, if not already cancelled, shall be promptly cancelled by the Paying AgenURegistrar. The
City may at any time deliver to the Paying AgenURegistrar 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
AgenURegistrar. All cancelled Bonds held by the Paying AgenURegistrar shall be destroyed as
directed by the City.
SECTION 28: Mutilated, Destroved, Lost, and Stolen Bonds. In case any Bond shall be
mutilated, or destroyed, lost or stolen, the Paying AgenURegistrar 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
45247732.1
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City and after (i) the filing by the Holder thereof with the Paying AgenURegistrar of evidence
satisfactory to the Paying AgenURegistrar of the destruction, loss or theft of such Bond, and of
the authenticity of the ownership thereof and (ii) the furnishing to the Paying AgenURegistrar of
indemnification in an amount satisfactory to hold the City and the Paying AgenURegistrar
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 Obliqation of City. If the City shall payor cause to be paid,
or there shall otherwise be paid to the Holders, the principal of and interest on the Bonds, at 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
AgenURegistrar 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 or to the redemption date therefor,
together with all interest due thereon, shall have been irrevocably deposited with and held in
trust by the Paying AgenURegistrar, or an authorized escrow agent, or (ii) Government
Obligations shall have been irrevocably deposited in trust with the Paying AgenU Registrar, or
an authorized escrow agent which Government Obligations have been certified by an
independent accounting firm to mature as to principal and interest in such amounts and at such
times as will insure the availability, without reinvestment, of sufficient money, together with any
moneys deposited therewith, if any, to pay when due the principal of and interest on such
Bonds, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice
of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable
to the Paying AgenURegistrar have been made) the redemption date thereof. The City
covenants that no deposit of moneys or Government Obligations will be made under this
Section and no use made of any such deposit which would cause the Bonds to be treated as
"arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as
amended, or regulations adopted pursuant thereto.
Any moneys so deposited with the Paying Agent/Registrar, or an authorized escrow
agent, and all income from Government Obligations held in trust by the Paying AgenURegistrar
or an authorized escrow agent, pursuant to this Section which is not required for the payment of
the Bonds, or any principal amount(s) thereof, or interest 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 AgenURegistrar for the
payment of the principal of and interest on the Bonds and remaining unclaimed for a period of
three (3) years after the Stated Maturity, or applicable redemption date, of the Bonds such
45247732.1
24
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 - Outstandinq 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
Bonds, no such amendment, addition, or rescission shall (1) extend the time or times of
payment 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 payment 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.
"Gross Proceeds" means any proceeds as defined in Section 1.148-1 (b)
of the Regulations, and any replacement proceeds as defined in Section
1.148-1 (c) of the Regulations, of the Bonds.
"Investment" has the meaning set forth in Section 1.148-1 (b) of the
Regulations.
"Nonpurpose Investment" means any investment property, as defined in
section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested
and which is not acquired to carry out the governmental purposes of the Bonds.
"Rebate Amount" has the meaning set forth in Section 1.148-1 (b) of the
Regulations.
"Regulations" means any proposed, temporary, or final Income Tax
Regulations issued pursuant to Sections 1 03 and 141 through 150 of the Code,
45247732.1
25
and 103 of the Internal Revenue Code of 1954, which are applicable to the
Bonds. Any reference to any specific Regulation shall also mean, as
appropriate, any proposed, temporary or final Income Tax Regulation designed
to supplement, amend or replace the specific Regulation referenced.
"Yield" of (1) any Investment has the meaning set forth in Section 1.148-
5 of the Regulations and (2) the Bonds has the meaning set forth in Section
1.148-4 of the Regulations.
(b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed directly or indirectly with Gross
Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any
Bond to become includable in the gross income, as defined in section 61 of the Code, of the
owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
unless and until the City receives a written opinion of counsel nationally recognized in the field
of municipal bond law to the effect that failure to comply with such covenant will not adversely
affect the exemption from federal income tax of the interest on any Bond, the City shall comply
with each of the specific covenants in this Section.
(c) No Private Use or Private Payments. Except as permitted by section 141 of the
Code and the Regulations and rulings thereunder, the City shall at all times prior to the last
Stated Maturity of Bonds:
(1) exclusively own, operate and possess all property the
acquisition, construction or improvement of which is to be financed
or refinanced directly or indirectly with Gross Proceeds of the
Bonds (including property financed with Gross Proceeds of the
Refunded 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 thereof) other than a state or local government,
unless such use is solely as a member of the general public; and
(2) not directly or indirectly impose or accept any charge
or other payment by any person or entity who is treated as using
Gross Proceeds of the Bonds or any property the acquisition,
construction or improvement of which is to be financed or
refinanced directly or indirectly with such Gross Proceeds
(including property financed with Gross Proceeds of the Refunded
Obligations), other than taxes of general application within the City
or interest earned on investments acquired with such Gross
Proceeds pending application for their intended purposes.
(d) No Private Loan. Except to the extent permitted by section 141 of the Code and
the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the Bonds to
make or finance loans to any person or entity other than a state or local government. For
purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a
45247732.1
26
person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is
sold or leased to such person or entity in a transaction which creates a debt for federal income
tax purposes; (2) capacity in or service from such property is committed to such person or entity
under a take-or-pay, output or similar contract or arrangement; or (3) indirect benefits, or
burdens and benefits of ownership, of such Gross Proceeds or any property acquired,
constructed or improved with such Gross Proceeds are otherwise transferred in a transaction
which is the economic equivalent of a loan.
(e) Not to Invest at Hiqher Yield. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the
final Stated Maturity of the Bonds directly or indirectly invest Gross Proceeds in any Investment
(or use Gross Proceeds to replace money so invested), if as a result of such investment the
Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money
replaced thereby), whether then held or previously disposed of, exceeds the Yield of the Bonds.
(f) Not Federallv Guaranteed. Except to the extent permitted by section 149(b) of
the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any
action which would cause the Bonds to be federally guaranteed within the meaning of section
149(b) of the Code and the Regulations and rulings thereunder.
(g) Information Report. The City shall timely file the information required by section
149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and
in such place as the Secretary may prescribe.
(h) Rebate of Arbitraqe Profits. Except to the extent otherwise provided in section
148(f) of the Code and the Regulations and rulings thereunder:
(1) The City shall account for all Gross Proceeds (including all
receipts, expenditures and investments thereof) on its books of account
separately and apart from all other funds (and receipts, expenditures and
investments thereof) and shall retain all records of accounting for at least six
years after the day on which the last Outstanding Bond is discharged. However,
to the extent permitted by law, the City may commingle Gross Proceeds of the
Bonds with other money of the City, provided that the City separately accounts
for each receipt and expenditure of Gross Proceeds and the obligations acquired
therewith.
(2) Not less frequently than each Computation Date, the City shall
calculate the Rebate Amount in accordance with rules set forth in section 148(f)
of the Code and the Regulations and rulings thereunder. The City shall maintain
such calculations with its official transcript of proceedings relating to the issuance
of the Bonds until six years after the final Computation Date.
(3) As additional consideration for the purchase of the Bonds by the
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 out of the Interest and
Sinking Fund or its general fund, as permitted by applicable Texas statute,
regulation or opinion of the Attorney General of the State of Texas, the amount
that when added to the future value of previous rebate payments made for the
45247732.1
27
Bonds equals (i) in the case of a Final Computation Date as defined in Section
1.148-3(e)(2) of the Regulations, one hundred percent (100%) of the Rebate
Amount on such date; and (ii) in the case of any other Computation Date, ninety
percent (90%) of the Rebate Amount on such date. In all cases, the rebate
payments shall be made at the times, in the installments, to the place and in the
manner as is or may be required by section 148(f) of the Code and the
Regulations and rulings thereunder, and shall be accompanied by Form 8038- T
or such other forms and information as is or may be required by Section 148(f) of
the Code and the Regulations and rulings thereunder.
(4) The City shall exercise reasonable diligence to assure that no
errors are made in the calculations and payments required by paragraphs (2) and
(3), and if an error is made, to discover and promptly correct such error within a
reasonable amount of time thereafter (and in all events within one hundred eighty
(180) days after discovery of the error), including payment to the United States of
any additional Rebate Amount owed to it, interest thereon, and any penalty
imposed under Section 1.148-3(h) of the Regulations.
(i) Not to Divert Arbitraqe 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.
U) Elections. The City hereby directs and authorizes the Mayor, Mayor Pro Tem,
City Manager, Director of Finance 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 Hedqe 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.
(I) Current Refundinq. The Bonds are issued exclusively to refund the Refunded
Obligations, and the Bonds will be issued less than 90 days before the redemption of the
Refunded Obligations.
(m) Qualified Tax Exempt Obliqations. 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 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 $10,000,000.
SECTION 32: Sale of Bonds - Official Statement Approval. The Bonds authorized by
this Ordinance are hereby sold by the City to Estrada Hinojosa & Company, Inc. and SWS
45247732.1
28
Securities, Inc. (herein referred to collectively as the "Purchasers") in accordance with the
Purchase Contract, dated November 19, 2002, attached hereto as Exhibit B and incorporated
herein by reference as a part of this Ordinance for all purposes. The Mayor is hereby
authorized and directed to execute said Purchase Contract for and on behalf of the City and as
the act and deed of this Council, and in regard to the approval and execution of the Purchase
Contract, the Council hereby finds, determines and declares that the representations, warranties
and 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, dated November 12, 2002,
by the Purchasers in connection with the public offering and sale of the Bonds is hereby ratified,
confirmed and approved in all respects. The final Official Statement, being a modification and
amendment of the Preliminary Official Statement to reflect the terms of sale (together with such
changes approved by the Mayor, Mayor Pro Tem, City Manager, Deputy City Manager, Director
of Finance, or City Secretary, anyone or more of said officials), shall be and is hereby in all
respects approved and the Purchasers are hereby authorized to use and distribute said final
Official Statement, dated November 19, 2002, in the reoffering, sale and delivery of the Bonds
to the public. The Mayor and City Secretary are further authorized and directed to manually
execute and deliver for and on behalf of the City copies of said Preliminary Official Statement
and Official Statement in final form as may be required by the Purchasers, and such final Official
Statement in the form and content manually executed by said officials shall be deemed to be
approved by the City Council and constitute the Official Statement authorized for distribution
and use by the Purchasers.
SECTION 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, Director
of Finance and City Secretary, anyone or more of said officials, are hereby authorized and
directed to furnish and execute such agreements, documents and certifications relating to the
City and the issuance, sale and delivery of the Bonds, including certifications as to facts,
estimates, circumstances and reasonable expectations pertaining to the use, expenditure and
investment of the proceeds of the Bonds, as may be necessary for the approval of the Attorney
General, the registration by the Comptroller of Public Accounts and the delivery of the Bonds to
the Purchasers, and, together with the City's bond counsel and the Paying AgenURegistrar,
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: Proceeds of Sale. Immediately following the delivery of the Bonds,
proceeds of sale in the sum of (i) $2,456,000.00 shall be deposited to with The Bank of New
York Trust Company of Florida, N.A., Dallas, Texas (the "Deposit Agent") to pay the redemption
price of the Refunded Obligations on January 1, 2003, and (ii) $10,362.14 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, including municipal bond insurance premium, and
any excess amount budgeted for such purpose shall be deposited to the credit of the Interest
and Sinking Fund.
45247732.1
29
On or immediately prior to the date of the delivery of the Bonds to the Purchasers, the
Director of Finance shall also cause to be deposited with the Deposit Agent from moneys on
deposit in the interest and sinking funds maintained for the payment of the Refunded
Obligations an amount which, together with the proceeds of sale, will be sufficient to pay in full
the Refunded Obligations to mature and be redeemed on January 1, 2003.
SECTION 35: Redemption of Refunded Obliqations. (a) The bonds of that series
known as "City of Colleyville, Texas, Waterworks and Sewer System Revenue Bonds, Series
1975", dated January 1, 1975, maturing in the years 2004 through 2015, being bonds numbered
191 through 400, each in the denomination of $5,000, and aggregating in principal amount
$1,050,000, shall be redeemed and the same are hereby called for redemption on January 1,
2003, at the price of par and accrued interest to the date of redemption. The City Secretary is
hereby authorized and directed to file a notice of redemption with GMAC Commercial Mortgage,
the registered owner of such bonds, in accordance with the redemption provisions applicable to
such bonds; such suggested form of notice of redemption being attached hereto as Exhibit C
and incorporated herein by reference as a part of this Ordinance for all purposes.
(b) The bonds of that series known as "City of Colleyville, Texas, General Obligation
Bonds, Series 1975", dated January 1, 1975, maturing in the years 2004 through 2015, being
bonds numbered 110 through 229, each in the denomination of $5,000, and aggregating in
principal amount $600,000, shall be redeemed and the same are hereby called for redemption
on January 1, 2003, at the price of par and accrued interest to the date of redemption. The City
Secretary is hereby authorized and directed to file a notice of redemption with GMAC
Commercial Mortgage, the registered owner of such bonds, in accordance with the redemption
provisions applicable to such bonds; such suggested form of notice of redemption being
attached hereto as Exhibit D and incorporated herein by reference as a part of this Ordinance
for all purposes.
(c) The bonds of that series known as "City of Colleyville, Texas, Waterworks and
Sewer System Revenue Bonds, Series 1975-A", dated July 1, 1975, maturing in the years 2004
through 2015, being bonds numbered 100 through 250, each in the denomination of $1,000,
and aggregating in principal amount $151,000, shall be redeemed and the same are hereby
called for redemption on January 1, 2003, at the price of par and accrued interest to the date of
redemption. The City Secretary is hereby authorized and directed to file a notice of redemption
with (1) GMAC Commercial Mortgage, the registered owner of such bonds, and (2) JPMorgan
Chase Bank, Dallas, Texas (successor to First National Bank, Colleyville, Texas), in accordance
with the redemption provisions applicable to such bonds; such suggested form of notice of
redemption being attached hereto as Exhibit E and incorporated herein by reference as a part of
this Ordinance for all purposes.
(d) The bonds of that series known as "City of Colleyville, Texas, Waterworks and
Sewer System Revenue Bonds, Series 1981", dated April 1, 1981, maturing in the years 2004
through 2014, being bonds numbered 746 through 1,400, each in the denomination of $1,000,
and aggregating in principal amount $655,000, shall be redeemed and the same are hereby
called for redemption on January 1, 2003, at the price of par and accrued interest to the date of
redemption. The City Secretary is hereby authorized and directed to file a notice of redemption
with (1) GMAC Commercial Mortgage, the registered owner of such bonds, and (2) The Bank of
New York Trust Company of Florida, N.A. (successor to First National Bank of Fort Worth,
Texas), in accordance with the redemption provisions applicable to such bonds; such suggested
form of notice of redemption being attached hereto as Exhibit F and incorporated herein by
reference as a part of this Ordinance for all purposes.
45247732.1
30
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: Bond Counsel's Opinion. The obligation of the Purchasers to accept
delivery of the Bonds is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P.,
Attorneys, Dallas, Texas, approving such Bonds as to their validity, said opinion to be dated and
delivered as of the date of delivery and payment for such Bonds. A true and correct
reproduction of said opinion is hereby authorized to be printed on the definitive Bonds.
SECTION 37: CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Bonds shall be of no significance or effect as regards the legality
thereof and neither the City nor attorneys approving said Bonds as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds.
SECTION 38: 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
AgenURegistrar 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
AgenURegistrar and the Holders.
SECTION 39: 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 40: Governinq 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 41: Incorporation of Findinqs 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 42: Severability. If any provision of this Ordinance or the application thereof
to any circumstance shall be held to be invalid, the remainder of this Ordinance and the
application thereof to other circumstances shall nevertheless be valid, and the Council hereby
declares that this Ordinance would have been enacted without such invalid provision.
SECTION 43: Construction of Terms. If appropriate in the context of this Ordinance,
words of the singular number shall be considered to include the plural, words of the plural
number shall be considered to include the singular, and words of the masculine, feminine or
neuter gender shall be considered to include the other genders.
45247732.1
31
SECTION 44: Continuinq Disclosure Undertakinq. (a) Definitions. As used in this
Section, the following terms have the meanings ascribed to such terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each person whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of the Rule
from time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department,
officer, or agency thereof as, and determined by the SEC or its staff to be, a state information
depository within the meaning of the Rule from time to time.
(b) Annual Reports. The City shall provide annually to each NRMSIR and
any SID, within six months after the end of each fiscal year (beginning with the fiscal year
ending September 30, 2002) financial information and operating data with respect to the City of
the general type included in the final Official Statement approved by Section 15 of this
Ordinance, being the information described in Exhibit G hereto. Financial statements to be
provided shall be (1) prepared in accordance with the accounting principles described in Exhibit
G hereto and (2) audited, if the City commissions an audit of such statements and the audit is
completed within the period during which they must be provided. If audited financial statements
are not available at the time the financial information and operating data must be provided, then
the City shall provide unaudited financial statements for the applicable fiscal year to each
NRMSIR and any SID with the financial information and operating data and will file the annual
audit report when and if the same becomes available.
If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change
(and of the date of the new fiscal year end) prior to the next date by which the City otherwise
would be required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may
be set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document, if it is available from the
MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
(c) Material Event Notices. The City shall notify any SID and either each
NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the
Bonds, if such event is material within the meaning of the federal securities laws:
(1 )
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Principal and interest payment delinquencies;
Non-payment related defaults;
Unscheduled draws on debt service reserves reflecting financial difficulties;
Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
Modifications to rights of holders of the Bonds;
Bond calls;
45247732.1
32
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds; and
(11) Rating changes.
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner,
of any failure by the City to provide financial information or operating data in accordance with
subsection (b) of this Section by the time required by such Section.
(d) Limitations. Disclaimers, and Amendments. The City shall be obligated to
observe and perform the covenants specified in this Section while, but only while, the City
remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except
that the City in any event will give the notice required by subsection (c) hereof of any Bond calls
and defeasance that cause the City to be no longer such an "obligated person."
The provisions of this Section are for the sole benefit of the Holders and beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or
any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR
BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT,
FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY,
WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities laws.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances resulting from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the City, but only if (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or
sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account
any amendments or interpretations of the Rule to the date of such amendment, as well as such
changed circumstances, and (2) either (a) the Holders of a majority in aggregate principal
amount (or any greater amount required by any other provision of this Ordinance that authorizes
such an amendment) of the Outstanding Bonds consent to such amendment or (b) a Person
that is unaffiliated with the City (such as nationally recognized bond counsel) determines that
such amendment will not materially impair the interests of the Holders and beneficial owners of
45247732.1
33
the Bonds. The provisions of this Section may also be amended from time to time or repealed
by the City if the SEC amends or repeals the applicable provisions of the Rule or a court of final
jurisdiction determines that such provisions are invalid, but only if and to the extent that
reservation of the City's right to do so would not prevent underwriters of the initial public offering
of the Bonds from lawfully purchasing or selling Bonds in such offering. If the City so amends
the provisions of this Section, it shall include with any amended financial information or
operating data filed with each NRMSIR and SID pursuant to subsection (b) of this Section an
explanation, in narrative form, of the reasons for the amendment and of the impact of any
change in the type of financial information or operating data so provided.
SECTION 45: The Bonds have been sold with the principal of and interest thereon being
insured by Financial Security Assurance Inc. (hereinafter called "FSA") pursuant to an Insurance
Policy. In accordance with the terms and conditions applicable to insurance provided by FSA,
the City covenants and agrees that, in the event the principal and interest due on the Bonds
shall be paid by FSA pursuant to the policy referred to this Section, the assignment and pledge
of all funds and all covenants, agreements and other obligations of the City to the Holders shall
continue to exist and FSA shall be subrogated to the rights of such Holders; and furthermore,
the City covenants and agrees that:
(a) FSA shall be included as a third party beneficiary to this Ordinance.
(b) FSA shall be deemed to be a Holder of the Bonds for the purpose of
exercising any voting right or privilege or giving any consent or direction or taking any other
action that the Holders of the Bonds by it are entitled to take pursuant to Section 23 of this
Ordinance.
(c) No amendment or supplement to this Ordinance may become effective
without prior consent of FSA.
Copies of any modification or amendment to this Ordinance shall be sent to Standard &
Poor's Credit Market Services and Moody's Investors Service, Inc. at least 10 days prior to the
effective date thereof.
(d) The rights granted to FSA under this Ordinance to request, consent to or
direct any action are rights granted to FSA in consideration of its issuance of the Insurance
Policy. Any exercise by FSA of such rights is merely an exercise of the FSA's contractual rights
and shall not be construed or deemed to be taken for the benefit or on behalf of the Holders nor
does such action evidence any position of FSA, positive or negative, as to whether Holder
consent is required in addition to consent of FSA.
(e) Claims upon the Insurance Policy and Payments by and to FSA. If, on
the third business day prior to the related scheduled interest payment date or principal payment
date ("Payment Date") there is not on deposit with the Paying AgenURegistrar, after making all
transfers and deposits required under this Ordinance, moneys sufficient to pay the principal of
and interest on the Bonds due on such Payment Date, the Paying Agent shall give notice to
FSA and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy
of the amount of such deficiency by 12:00 noon, New York City time, on such business day. If,
on the second business day prior to the Payment Date, there continues to be a deficiency in the
amount available to pay the principal of and interest on the Bonds due on such Payment Date,
the Paying AgenURegistrar shall make a claim under the Insurance Policy and give notice to
FSA and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and
45247732.1
34
the allocation of such deficiency between the amount required to pay interest on the Bonds and
the amount required to pay principal of the Bonds, confirmed in writing to FSA and the Insurer's
Fiscal Agent by 12:00 noon, New York City time, on such second business day by filling in the
form of Notice of Claim and Certificate delivered with the Insurance Policy.
In the event the claim to be made is for a mandatory sinking fund redemption
installment, upon receipt of the moneys due, the Paying AgenURegistrar shall authenticate and
deliver to affected Holders who surrender their Bonds a new Bond or Bonds in an aggregate
principal amount equal to the unredeemed portion of the Bond surrendered. The Paying
AgenURegistrar shall designate any portion of payment of principal on Bonds paid by FSA,
whether by virtue of mandatory sinking fund redemption, maturity or other advancement of
maturity, on its books as a reduction in the principal amount of Bonds registered to the then
current Holder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond
to FSA, registered in the name of Financial Security Assurance Inc., in a principal amount equal
to the amount of principal paid (without regard to authorized denominations); provided that the
Paying AgenURegistrar's failure to so designate any payment or issue any replacement Bond
shall have no effect on the amount of principal or interest payable by the City on any Bond or
the subrogation rights of FSA.
The Paying AgenURegistrar shall keep a complete and accurate record of all funds
deposited by FSA into the Policy Payments Account (as defined below) and the allocation of
such funds to payment of interest on and principal paid in respect of any Bond. FSA shall have
the right to inspect such records at reasonable times upon reasonable notice to the Paying
AgenURegistrar.
Upon payment of a claim under the Insurance Policy the Paying AgenURegistrar shall
establish a separate special purpose trust account for the benefit of Holders referred to herein
as the "Policy Payments Account" and over which the Paying AgenURegistrar shall have
exclusive control and sole right of withdrawal. The Paying AgenURegistrar shall receive any
amount paid under the Insurance Policy in trust on behalf of Holders and shall deposit any such
amount in the Policy Payments Account and distribute such amount only for purposes of making
the payments for which a claim was made. Such amounts shall be disbursed by the Paying
AgenURegistrar to Holders in the same manner as principal and interest payments are to be
made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall
not be necessary for such payments to be made by checks or wire transfers separate from the
check or wire transfer used to pay debt service with other funds available to make such
payments.
Funds held in the Policy Payments Account shall not be invested by the Paying
AgenURegistrar and may not be applied to satisfy any costs, expenses or liabilities of the Paying
AgenURegistrar. Any funds remaining in the Policy Payments Account following a payment date
for a Bon shall promptly be remitted to FSA.
(f) FSA shall, to the extent it makes any payment of principal or interest on
the Bonds, become subrogated to the rights of the recipients of such payments in accordance
with the terms of the Insurance Policy. The obligation to FSA shall survive discharge or
termination of this Ordinance.
(g) FSA shall be entitled to pay principal or interest on the Bonds that shall
become Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such
terms are defined in the Insurance Policy) and any amounts due on the Bonds as a result of
45247732.1
35
acceleration of the maturity thereof in accordance with this Ordinance, whether or not FSA has
received a Notice (as defined in the Insurance Policy) of Nonpayment or a claim upon the
Insurance Policy.
(h) The notice address of FSA is: Financial Security Assurance Inc., 350
Park Avenue, New York, New York 10022-6022, Attention: Managing Director -- Surveillance.--
Re: Policy No. ,Telephone: (212) 826-0100; Telecopier: (212) 339-3529. In each case in
which notice or other communication refers to an Event of Default then a copy of such notice or
other communication shall also be sent to the attention of General Counsel and shall be marked
to indicate 'URGENT MATERIAL ENCLOSED."
(i) FSA shall be provided with the following information:
(1) Annual audited financial statements within 150 days after
the end of the City's fiscal year, together with a certification of the City that it is
not aware of any default or Event of Default under this Ordinance, and the City's
annual budget within 30 days after the approval thereof, together with such other
information, data or reports as FSA shall reasonably request from time to time;
(2) Notice of any draw upon the Reserve Fund within two
business days after knowledge thereof other than (i) withdrawals of amounts in
excess of the Required Reserve and (ii) withdrawals in connection with a
refunding of Bonds;
(3) Notice of any default within five business days after
knowledge thereof;
(4) Prior notice of the advance refunding or redemption of any
of the Bonds, including the principal amount, maturities and CUSIP numbers
thereof;
(5) Notice of the resignation or removal of the Paying
AgenURegistrar and the appointment of, and acceptance of duties by, any
successor thereto;
(6) Notice of the commencement of any proceeding by or
against the City commenced under the United States Bankruptcy Code or any
other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(an "Insolvency Proceeding");
(7) Notice of the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer of any
payment of principal of, or interest on, the Bonds;
(8) A full original transcript of all proceedings relating to the
execution of any amendment or supplement to this Ordinance; and
(9) All reports, notices and correspondence to be delivered
under the terms of this Ordinance.
45247732.1
36
U) The City shall payor reimburse FSA any and all charges, fees, costs, and
expenses which FSA may reasonably payor incur in connection with (1) the administration,
enforcement, defense or preservation of any rights of security in this Ordinance, (2) the pursuit
of any remedies under this Ordinance or otherwise afforded by law or equity, (3) any
amendment, waiver or other action with respect to, or related to, this Ordinance whether or not
executed or completed, (4) the violation by the City or any law, rule or regulation, or any
judgment, order or decree applicable to it or (5) any litigation or other dispute in connection with
this Ordinance or the transactions contemplated hereby, other than amounts resulting from the
failure of FSA to honor its obligations under the Insurance Policy. FSA reserves the right to
charge a reasonable fee as a condition to executing any amendment, waiver or consent
proposed in respect to this Ordinance.
(k) After payment of expenses of the Paying AgenURegistrar, the application
of funds realized upon default shall be applied to payment of expenses of the City or rebate only
after the payment of debt service due and past due on the Bonds, together with replenishment
of the Reserve Fund.
(I) Unless FSA otherwise directs, upon the occurrence and continuance of
an Event of Default or the occurrence and continuance of an event which with notice or lapse of
time or both would constitute an Event of Default amounts on deposit in the construction fund
shall not be disbursed but shall instead be applied to the payment of debt service or redemption
price of the Bonds.
(m) No grace period for a covenant default shall exceed 30 days, nor be
extended for more than 60 days, without the prior written consent of FSA. No grace period shall
be permitted for payment defaults.
(n) Only (1) cash, (2) non-callable direct obligations of the United States of
America ("Treasuries"), (3) evidences of ownership or proportionate interest in future interest
and principal payments on Treasuries held by a bank or trust company as custodian, under
which the owner of the investment is the real party in interest and has the right to proceed
directly and individually against the obligor and the underlying Treasuries are not available to
any person claiming through the custodian or to whom the custodian may be obligated, (4) pre-
refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively, or (5)
securities eligible for "AAA" defeasance under then existing criteria of S&P or any combination
thereof, shall be authorized to be used to effect defeasance of the Bonds unless FSA otherwise
approves.
To accomplish defeasance the City shall cause to be delivered (i) a report of an
independent firm of nationally recognized certified public accountants or such other accountant
as shall be acceptable to FSA ("Accountant") verifying the sufficiency of the escrow established
to pay the Bonds in full on the maturity or redemption date ("Verification"), (ii) an Escrow Deposit
Agreement (which shall be acceptable in form and substance to FSA), and (iii) an opinion of
nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding"
under this Ordinance; each Verification and defeasance opinion shall be acceptable in form and
substance, and addressed, to the City, the Paying AgenURegistrar and FSA. FSA shall be
provided with final drafts of the above referenced documentation not less than five business
days prior to the funding of the escrow
Bonds shall be deemed "Outstanding" under this Ordinance unless and until they are in
fact paid and retired to the above criteria is met.
45247732.1
37
(0) Amounts paid by FSA under the Insurance Policy shall not be deemed
paid for purposes of this Ordinance and shall remain Outstanding and continue to be due and
owing until paid by the City in accordance with this Ordinance. The Ordinance shall not be
discharged unless all amounts due or to become due to FSA shall have been paid in full or duly
provided for.
(p) Each of the City and the Paying AgenURegistrar covenant and agree to
take such action (including, as applicable, filing of UCC financing statements and continuations
thereof) as is necessary from time to time to perfect or otherwise preserve the priority of the
pledge of the Net Revenues under applicable law.
(q) Notwithstanding satisfaction of other conditions to the issuance of
Additional Bonds contained in this Ordinance, no such issuance shall occur (1) should any
Event of Default (or any event which, once all notice or grace periods have passed, would
constitute an Event of Default) have occurred and be continuing unless such default shall be
cured upon such issuance and (2) unless the Reserve Fund is fully funded at its requirement
(including the new issue) upon the issuance of such Additional Bonds, in either case unless
otherwise permitted by FSA.
(r) In determining whether any amendment, consent or other action to be
taken, or any failure to act, under this Ordinance would adversely affect the security of the
Bonds or the rights of the Holders, the Paying AgenURegistrar shall consider the effect of any
such amendment, consent, action or inaction as if there was no Insurance Policy.
(s) No contract shall be entered into nor any action taken by which the rights
of FSA or security for or sources of payment of the Bonds may be impaired or prejudiced in any
material respect except upon obtaining the prior written consent of FSA.
SECTION 46: Public Meetinq. 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.
45247732.1
38
SECTION 47: Effective Date. This Ordinance shall take effect and be in full force from
and after its adoption on the date shown below in accordance with V.T.C.A., Government Code,
Section 1201.028.
PASSED AND ADOPTED, this November 19,2002.
ATTEST:
(City Seal)
45247732.1
CITY OF COLLEYVILLE, TEXAS
APPROVED AS TO FORM:
:iE~=
39
PAYING AGENT/REGISTRAR AGREEMENT
THIS AGREEMENT entered into as of November 19, 2002 (this "Agreement"), by and
between the City of Colleyville, Texas (the "Issuer"), and The Bank of New York Trust Company
of Florida, N.A., Dallas, Texas, a banking association duly organized and existing under the
laws of the United States of America, or its successor or assigns(the "Bank").
RECITALS
WHEREAS, the Issuer has duly authorized and provided for the execution and delivery
of its "City of Colleyville. Texas, Waterworks and Sewer System Revenue Refunding Bonds,
Series 2002" (the "Securities"), dated November 15, 2002, such Securities scheduled to be
delivered to the initial purchasers thereof on or about December 31, 2002; 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 agreed 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 "Bond Resolution" (hereinafter defined). The Issuer
hereby appoints the Bank as Registrar with respect to the Securities and, as Registrar for the
Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records
as to the ownership of said Securities and with respect to the transfer and exchange thereof as
provided herein and in the "Bond Resolution."
The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and
Registrar for the Securities.
Section 1.02. Compensation. As compensation for the Bank's services as Paying
AgenURegistrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in
Annex A attached hereto for the first year of this Agreement and thereafter the fees and
amounts set forth in the Bank's current fee schedule then in effect for services as Paying
AgenURegistrar for municipalities, which shall be supplied to the Issuer on or before 90 days
prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the
following Fiscal Year.
45249207.1
EXHIBIT A
In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Bank in accordance with any
of the provisions hereof (including the reasonable compensation and the expenses and
disbursements of its agents and counsel).
ARTICLE TWO
DEFINITIONS
Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
"Acceleration Date" on any Security means the date on and after which the
principal or any or all installments of interest, or both, are due and payable on any
Security which has become accelerated pursuant to the terms of the Security.
"Bank Office" means the principal office of the Bank as indicated in Section 3.01
hereof. The Bank will notify the Issuer in writing of any change in location of the Bank
Office.
"Bond Resolution" means the resolution, order, or ordinance of the governing
body of the Issuer pursuant to which the Securities are issued, certified by the Secretary
or any other officer of the Issuer and delivered to the Bank.
"Fiscal Year" means the fiscal year of the Issuer, ending September 30th.
"Holder" and "Security Holder" each means the Person in whose name a Security
is registered in the Security Register.
"Issuer Request" and "Issuer Order" means a written request or order signed in
the name of the Issuer by the Mayor, City Manager, Deputy City Manager, Director of
Finance or City Secretary, anyone or more of said officials, and delivered to the Bank.
"Legal Holiday" means a day on which the Bank is required or authorized to be
closed.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or government or
any agency or political subdivision of a government.
"Predecessor Securities" of any particular Security means every previous
Security evidencing all or a portion of the same obligation as that evidenced by such
particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed,
or stolen Security for which a replacement Security has been registered and delivered in
lieu thereof pursuant to Section 4.06 hereof and the Resolution).
"Redemption Date" when used with respect to any Security to be redeemed
means the date fixed for such redemption pursuant to the terms of the Bond Resolution.
"Responsible Officer" when used with respect to the Bank means the Chairman
or Vice-Chairman of the Board of Directors, the Chairman or Vice-Chairman of the
Executive Committee of the Board of Directors, the President, any Vice President, the
45249207.1 2 EXHIBIT A
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier,
any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of
the Bank customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Security Register" means a register maintained by the Bank on behalf of the
Issuer providing for the registration and transfers of Securities.
"Stated Maturity" means the date specified in the Bond Resolution the principal of
a Security is scheduled to be due and payable.
Section 2.02. Other Definitions. The terms "Bank," "Issuer," and "Securities (Security)"
have the meanings assigned to them in the recital paragraphs of this Agreement.
The term "Paying AgenURegistrar" refers to the Bank in the performance of the duties
and functions of this Agreement.
ARTICLE THREE
PAYING AGENT
Section 3.01. Duties of Payinq Aqent. As Paying Agent, the Bank, provided adequate
collected funds have been provided to it for such purpose by or on behalf of the Issuer, shall pay
on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or
Acceleration Date, to the Holder upon surrender of the Security to the Bank at the following
offices:
By Hand:
By Mail:
Debt Processing Group
The Bank of New York
15 Broad Street, Main Floor
New York, New York 10005
Debt Processing Group
The Bank of New York
P. O. Box 11254
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. All payments of principal and/or interest on the Securities ,to the registered
owners shall be accomplished (1) by the issuance of checks, payable to the registered owners,
drawn on the paying agent account provided in Section 5.05 hereof, sent by United States mail,
first class, postage prepaid, to the address appearing on the Security Register or (2) by such
other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk
and expense.
Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal
of and interest on the Securities at the dates specified in the Bond Resolution.
45249207 _]
3
EXHIBIT A
ARTICLE FOUR
REGISTRAR
Section 4.01. Security Reqister - Transfers and Exchanqes. The Bank agrees to keep
and maintain for and on behalf of the Issuer at the Bank Office books and records (herein
sometimes referred to as the "Security Register") for recording the names and addresses of the
Holders of the Securities, the transfer, exchange and replacement of the Securities and the
payment of the principal of and interest on the Securities to the Holders and containing such
other information as may be reasonably required by the Issuer and subject to such reasonable
regulations as the Issuer and Bank may prescribe. All transfers, exchanges and replacement of
Securities shall be noted in the Security Register. The Bank represents and warrants its office
in Dallas, Texas will at all times have immediate access to the Security Register by electronic or
other means and will be capable at all times of producing a hard copy of the Security Register at
its Dallas office for use by the Issuer.
Every Security surrendered for transfer or exchange shall be duly endorsed or be
accompanied by a written instrument of transfer, the signature on which has been guaranteed
by an officer of a federal or state bank or a member of the National Association of Securities
Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly
authorized in writing.
The Bank may request any supporting documentation it feels necessary to effect a
re-registration, transfer or exchange of the Securities.
To the extent possible and under reasonable circumstances, the Bank agrees that, in
relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof
will be completed and new Securities delivered to the Holder or the assignee of the Holder in
not more than three (3) business days after the receipt of the Securities to be cancelled in an
exchange or transfer and the written instrument of transfer or request for exchange duly
executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the
Paying AgenURegistrar.
Section 4.02. Certificates. The Issuer shall provide an adequate inventory of printed
Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of
printed Securities will be kept in safekeeping pending their use and reasonable care will be
exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less
than the care maintained by the Bank for debt securities of other governments or corporations
for which it serves as registrar, or that is maintained for its own securities.
Section 4.03. Form of Securitv Reqister. The Bank, as Registrar, will maintain the
Security Register relating to the registration, payment, transfer and exchange of the Securities
in accordance with the Bank's general practices and procedures in effect from time to time. The
Bank shall not be obligated to maintain such Security Register in any form other than those
which the Bank has currently available and currently utilizes at the time.
The Security Register may be maintained in written form or in any other form capable of
being converted into written form within a reasonable time.
Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time
requested by the Issuer, upon payment of the required fee, a copy of the information contained
in the Security Register. The Issuer may also inspect the information contained in the Security
45249207.1 4 EXHIBIT A
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 Certificates. The Bank will, at such reasonable
intervals as it determines, surrender to the Issuer, Securities in lieu of which or in exchange for
which other Securities have been issued, or which have been paid.
Section 4.06. Mutilated. Destroyed, Lost or Stolen Securities. The Issuer hereby
instructs the Bank, subject to the provisions of Section 28 of the Bond Resolution, to deliver and
issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as
long as the same does not result in an overissuance.
In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank may
execute and deliver a replacement Security of like form and tenor, and in the same
denomination and bearing a number not contemporaneously outstanding, in exchange and
substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or
stolen Security, only upon the approval of the Issuer and after (i) the filing by the Holder thereof
with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such
Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of
indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All
expenses and charges associated with such indemnity and with the preparation, execution and
delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or
destroyed, lost or stolen.
Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable
time after receipt of written request from the Issuer, furnish the Issuer information as to the
Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or
exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in
exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to
Section 4.06.
ARTICLE FIVE
THE BANK
Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth
herein and agrees to use reasonable care in the performance thereof.
Section 5.02. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to
the truth of the statements and correctness of the opinions expressed therein, on certificates or
opinions furnished to the Bank.
(b) The Bank shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the
pertinent facts.
45249207.] 5 EXHIBIT A
(c) No provisions of this Agreement shall require the Bank to expend or risk its own
funds or otherwise incur any financial liability for performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity satisfactory to it against such risks or
liability is not assured to it.
(d) The Bank may rely and shall be protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note, security, or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties. Without limiting the
generality of the foregoing statement, the Bank need not examine the ownership of any
Securities, but is protected in acting upon receipt of Securities containing an endorsement or
instruction of transfer or power of transfer which appears on its face to be signed by the Holder
or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts
or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note, security, or other paper or document supplied by
Issuer.
(e) The Bank may consult with counsel, and the written advice of such counselor
any opinion of counsel shall be full and complete authorization and protection with respect to
any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon.
(f) The Bank may exercise any of the powers hereunder and perform any duties
hereunder either directly or by or through agents or attorneys of the Bank.
Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the
Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank
assumes no responsibility for their correctness.
The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security,
or any other Person for any amount due on any Security from its own funds.
Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the
same rights it would have if it were not the Paying AgenURegistrar, or any other agent.
Section 5.05. Moneys Held by Bank - Pavinq Aqent AccounUCollateralization.
Money deposited by the Issuer with the Bank of the principal (or Redemption Price, if
applicable) of or interest on any Securities shall be segregated from other funds of the Bank and
the Issuer and shall be held in trust for the benefit of the Holders of such Securities.
All money deposited with the Bank hereunder shall be secured in the manner and to the
fullest extent required by law for the security of funds of the Issuer.
Amounts held by the Bank which represent principal of and interest on the Securities
remaining unclaimed by the owner after the expiration of three years from the date such
amounts have become due and payable shall be reported and disposed of by the Bank in
accordance with the provisions of Texas law including, to the extent applicable, 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 hereunder.
45249207.1 6 EXHIBIT A
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 performance 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 offices of the Issuer is located, and agree that service of process by certified or
registered mail, return receipt requested, to the address referred to in Section 6.03 of this
Agreement shall constitute adequate service. The Issuer and the Bank further agree that the
Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction in the State
of Texas to determine the rights of any Person claiming any interest herein.
Section 5.08. DT Services. It is hereby represented and warranted that, in the event
the Securities are otherwise qualified and accepted for "Depository Trust Company" services or
equivalent depository trust services by other organizations, the Bank has the capability and, to
the extent within its control, will comply with the "Operational Arrangements," which establishes
requirements for securities to be eligible for such type depository trust services, including, but
not limited to, requirements for the timeliness of payments and funds availability, transfer
turnaround time, and notification of redemptions and calls.
ARTICLE SIX
REFUNDED OBLIGATIONS
Section 6.01. Payment Account A trust clearing account (hereinafter called the
"Payment Account") shall be maintained at the Bank 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 for the credit of the Payment Account the
sum of $2,748,900.00.
The Bank agrees to establish such Payment Account and further agrees to receive said
moneys, apply the same as set forth herein, and to hold the cash deposited and credited to the
Payment Account for application and disbursement for the payment and redemption of the
Refunded Obligations on January 1, 2003.
Section 6.02. Money in the Payment Account. (a) The Bank agrees that all cash held
in the Payment Account shall constitute dedicated interest and sinking funds for 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 deposited to the credit of the Payment
Account shall be applied solely in accordance with the provisions of this Agreement and the
Issuer shall have no right or title with respect thereto, except as otherwise provided herein.
Such funds shall not be subject to checks or drafts drawn by the Issuer.
45249207.1
7
EXHIBIT A
(b) If, for any reason, the funds on hand in the Payment Account shall be insufficient
to pay the redemption price of the Refunded Obligations on January 1, 2003, the Issuer shall
timely deposit to the credit of the Payment Account, from lawfully available funds, additional
funds in the amounts required to make such payment. 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 deposit.
(c) The Bank represents that the deposit covered by this Agreement shall constitute
firm banking arrangements to insure payment of the Refunded Obligations and such deposit is
collateralized to insure against any loss or diminution by virtue of any action of the Bank or as a
result of its lack of financial integrity 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 monies to the
extent such money is not insured by the Federal Deposit Insurance Corporation.
(d) The Bank shall have no lien whatsoever upon any of the moneys deposited to
the credit of the Payment Account for payment of services rendered hereunder or for any costs
or expenses incurred hereunder and reimbursable from the Issuer.
Section 6.03. Payment of Refunded Obliqations. The Bank, as deposit agent shall,
without further direction from anyone, including the Issuer, cause to be paid from the Payment
Account the amount required to pay and redeemed in full the Refunded Obligations on January
1, 2003.
Section 6.04. Investment of Funds. Neither the Issuer nor the Bank shall invest any
moneys deposited in the Payment Account.
ARTICLE SEVEN
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment. This Agreement may be amended only by an agreement in
writing signed by both of the parties hereto.
Section 7.02. Assiqnment. This Agreement may not be assigned by either party without
the prior written consent of the other.
Section 7.03. Notices. Any request, demand, authorization, direction, notice, consent,
waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or
the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses
shown on page 10.
Section 7.04. Effect of Headinqs. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
Section 7.05. Successors and Assiqns. All covenants and agreements herein by the
Issuer shall bind its successors and assigns, whether so expressed or not.
Section 7.06. Severability. In case any provision herein shall be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
45249207. ]
8
EXHIBIT A
Section 7.07. Benefits of Aqreement. 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 7.08. Entire Aqreement. This Agreement and the Bond Resolution constitute
the entire agreement between the parties hereto relative to the Bank acting as Paying
AgenURegistrar and if any conflict exists between this Agreement and the Bond Resolution, the
Bond Resolution shall govern.
Section 7.09. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall constitute one
and the same Agreement.
Section 7.10. Termination. This Agreement will terminate (i) on the date of final
payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be
earlier terminated by either party upon sixty (60) days written notice; provided, however, an
early termination of this Agreement by either party shall not be effective until (a) a successor
Paying AgenURegistrar has been appointed by the Issuer and such appointment accepted and
(b) notice given to the Holders of the Securities of the appointment of a successor Paying
AgenURegistrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an
early termination of this Agreement shall not occur at any time which would disrupt, delay or
otherwise adversely affect the payment of the Securities.
Upon an early termination of this Agreement, the Bank agrees to promptly transfer and
deliver the Security Register (or a copy thereof), together with other pertinent books and
records relating to the Securities, to the successor Paying Agent/Registrar designated and
appointed by the Issuer.
The provisions of Section 1.02 and of Article Five shall survive and remain in full force
and effect following the termination of this Agreement.
Section 7.11. Governinq Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Texas.
45249207.\
9
EXHIBIT A
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE BANK OF NEW YORK TRUST COMPANY
OF FLORIDA, N.A.,
Dallas, Texas
[SEAL]
Attest:
By:
Title:
Title:
Address:
Plaza of the Americas
600 North Pearl Street
South Tower, Suite 420
Dallas, Texas 75201
CITY OF COLLEYVILLE, TEXAS
[CITY SEAL]
Attest:
By:
Title: Mayor
Address:
5400 Bransford Road
Colleyville, Texas 76034
Title: City Secretary
45249207. ]
10
EXHIBIT A
EXHIBIT B
CITY OF COLLEYVILLE, TEXAS
(Tarrant County, Texas)
$2,580,000 WATERWORKS AND SEWER SYSTEM
REVENUE REFUNDING BONDS, SERIES 2002
PURCHASE CONTRACT
November 19,2002
Honorable Mayor and City Council
City of Colleyville
5400 Bransford Road
Colleyville, Texas 77034
Ladies and Gentlemen:
The undersigned, Estrada Hinojosa & Company, Inc. (the "Representative "), acting
on its own behalf and on behalf of the other underwriters listed on Schedule I hereto
(collectively, the "Underwriters "), and not acting as fiduciary or agent for you, offers to enter
into the following Purchase Contract with the City of Colleyville, Texas (the "Issuer"),
which, upon the Issuer's written acceptance of this offer, will be binding upon the Issuer and
upon the Underwriters. This offer is made subject to the Issuer's written acceptance hereof
on or before 10 p.m., Central time, on November 19,2002, and, ifnot so accepted, will be
subject to withdrawal by the Underwriters upon notice delivered to the Issuer at any time prior
to the acceptance hereof by the Issuer. Terms not otherwise defined in this Purchase Contract
shall have the same meanings set forth in the Ordinance (as defined herein) or in the Official
Statement (as defined herein).
1. Purchase and Sale of the Bonds. Subject to the terms and conditions and in
reliance upon the representations, warranties and agreements set forth herein, the Underwriters
hereby agree to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to
the Underwriters, all, but not less than all, of the Issuer's $2,580,000 Waterworks and Sewer
System Revenue Refunding Bonds, Series 2002 (the "Bonds "). Inasmuch as this purchase
and sale represents a negotiated transaction, the Issuer understands, and hereby confirms, that
the Underwriters are not acting as a fiduciary ofthe Issuer, but rather are acting solely in their
capacity as Underwriters for their own account. The Representative has been duly authorized
by the Underwriters to execute this agreement and to act hereunder.
F:\WDDX\CLlENTS\999999\OOOI7\1 0023463. WPD / 2
The principal amount of the Bonds to be issued, the dated date therefor, the maturities,
mandatory and optional redemption provisions, if any, 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 an ordinance to be adopted by the Issuer's City
Council on November 19,2002 (the "Ordinance ").
The purchase price for the Bonds shall be $2,551,290.35 (representing the par amount
ofthe Bonds, plus a premium on the Bonds of$4,958.50, less a original issue discount on the
Bonds of$II,608.90, less an underwriting discount of$22,059.25), plus accrued interest on
the Bonds from the dated date of the Bonds to the Closing Date (as hereinafter defined).
Delivered to the Issuer herewith as a good faith deposit is a check payable to the order
of the Issuer in the amount of$25,800. In the event you accept this offer, such check shall be
held uncashed by you until the time of Closing, at which time such check shall be returned
uncashed to the Representative. In the event that the Issuer does not accept this Purchase
Contract, such check will be immediately returned to the Representative. Should the Issuer
fail to deliver the Bonds at the Closing, or should the Issuer be unable to satisfy the conditions
of the obligations of the Underwriters to purchase, accept delivery of and pay for the Bonds,
as set forth in this Purchase Contract (unless waived by the Underwriters), or should such
obligations of the Underwriters be terminated for any reason permitted by this Purchase
Contract, such check shall immediately be returned to the Representative. In the event that
the Underwriters fail (other than for a reason permitted hereunder) to purchase, accept
delivery of and pay for the Bonds at the Closing as herein provided, such check shall be
cashed and the amount thereof retained by the Issuer as and for fully liquidated damages for
such failure of the Underwriters, and, except as set forth in Sections 8 and 10 hereof, no party
shall have any further rights against the other hereunder. The Underwriters and the Issuer
understand that in such event the Issuer's actual damages may be greater or may be less than
such amount. Accordingly, the Underwriters hereby 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 aaditional damages from the
Underwriters.
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 price set forth on the inside
cover page of the Official Statement and may subsequently change such offering price without
any requirement of prior notice. The Underwriters may offer and sell the Bonds to certain
dealers (including dealers depositing Bonds into investment trusts) and others at prices lower
than the public offering price stated on the inside cover page of the Official Statement.
3. The Official Statement. (a) Attached hereto as Exhibit A is a copy of the
Preliminary Official Statement dated November 12, 2002 (the "Preliminary Official
Statement "), including the cover page and Appendices thereto, of the Issuer relating to the
Bonds. Such copy of the Preliminary Official Statement, as amended to conform to the terms
F:IWDOXICLlENTSI999999\OOO 1711 0023463.WPD /2
2
EXHIBIT B
of this Purchase Contract and with changes and amendments to the date hereof as have been
mutually agreed to by the Issuer and the Underwriters, is referred to hereinafter as the
"Official Statement. "
(b) The Preliminary Official Statement has been prepared by the Issuer for use in
connection with the public offering, sale and distribution of the Bonds by the
Underwriters. The Issuer hereby represents and warrants that the Preliminary Official
Statement was 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
completion, all as permitted to be excluded by Section (b)(1) of Rule 15c2-12 under
the Securities Exchange Act of 1934 (the "Rule ").
(c) The Issuer hereby authorizes the Official Statement and the information therein
contained to be used by the Underwriters in connection with the public offering and
the sale of the Bonds. The Issuer consents to the use by the Underwriters prior to the
date hereof of the Preliminary Official Statement in connection with the public
offering of the Bonds. The Issuer shall provide, or cause to be provided, to the
Underwriters as soon as practicable after the date of the Issuer's acceptance of this
Purchase Contract (but, in any event, not later than within seven business days after
the Issuer's acceptance of this Purchase Contract 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 Underwriters in such
quantity as the Representative shall request in order for the Underwriters to comply
with Section (b)(4) of the Rule and the rules of the Municipal Securities Rulemaking
Board.
(d) If, after the date of this Purchase Contract 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) 90 days from
the "end of the underwriting period" (as defined in the Rule) and (ii) the time when the
Official Statement is available to any person from a nationally recognized municipal
securities repository, but in no case less than 25 days after the "end of the underwriting
period" for the Bonds), the Issuer becomes aware of any fact or event 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 Representative (and for the purposes of this clause provide the
Representative with such information as it may from time to time request), and if, in
the 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 Representative), 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
F;\WDOXlCLTENTS\999999\Ooo 17\1 0023463. WPD 12
3
EXHIBIT B
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. If such notification shall be subsequent to the Closing, the Issuer
shall furnish such legal opinions, certificates, instruments and other documents as the
Representative may deem necessary to evidence the truth and accuracy of such
supplement or amendment to the Official Statement.
(e) The Representative hereby agrees to file the Official Statement with a
nationally recognized municipal securities information repository. Unless otherwise
notified in writing by the Representative, 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 operating as
such under the laws ofthe State of Texas and has full legal right, power and authority,
and at the date of the Closing will have full legal right, power and authority under the
Ordinance (i) to enter into, execute and deliver this Purchase Contract, the Ordinance,
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 (iii) to carry out and consummate the transactions contemplated by this
Purchase Contract and the Official Statement), and the Issuer has complied, and will
at the Closing be in compliance in all respects, with the terms of this Purchase
Contract 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 and this Purchase Contract and (iii) the
consummation by it of all other transactions contemplated by the Official Statement
and this Purchase Contract and any and all such other agreements and documents as
may be required to be executed, delivered and/or received by the Issuer in order to
carry out, give effect to, and consummate the transactions contemplated herein and in
the Official Statement;
(c) The Bonds, when issued, delivered and paid for, in accordance with the
Ordinance and this Purchase Contract, will constitute legal, valid and binding special
obligations of the Issuer entitled to the benefits of the Ordinance and enforceable in
accordance with their terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws and principles of equity relating to or affecting the
enforcement of creditors' rights; upon the issuance, authentication and delivery of the
Bonds as aforesaid, the Ordinance will provide, for the benefit of the holders, from
time to time, ofthe Bonds, the legally valid and binding pledge of and lien of the Net
F:IWDOXICLIENTSI999999\OOO 1711 0023463,WPD /2
4
EXHIBIT B
Revenues of the Issuer's Waterworks and Sewer System it purports to create as set
forth in the Ordinance;
(d) The Issuer is not in breach of or default in any material respect under any
applicable constitutional provision, law or administrative regulation of the State or the
United States or any applicable judgment or decree or any loan agreement, indenture,
bond, note, resolution, agreement or other instrument to which the Issuer is a party or
to which the Issuer is or any of its property or assets are otherwise subject, and no
event has occurred and is continuing which constitutes or with the passage of time or
the giving of notice, or both, would constitute a default or event of default by the
Issuer under any of the foregoing; and the execution and delivery of the Bonds, this
Purchase Contract and the adoption of the Ordinance and compliance with the
provisions on the Issuer's part contained therein, will not conflict with or constitute
a breach of or default under any constitutional provision, administrative regulation,
judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or
other instrument to which the Issuer is a party or to which the Issuer is or to which any
of its property or assets are otherwise subject nor will any such execution, delivery,
adoption or compliance result in the creation or imposition of any lien, charge or other
security interest or encumbrance of any nature whatsoever upon any of the property
or assets of the Issuer to be pledged to secure the Bonds or under the terms of any such
law, regulation or instrument, except as provided by the Bonds and the Ordinance;
(e) All authorizations, approvals, licenses, permits, consents and orders of any
governmental authority, legislative body, board, agency or commission having
jurisdiction of the matter which are required for the due authorization of, which would
constitute a condition precedent to, or the absence of which would materially
adversely affect the due performance by the Issuer of its obligations under the Issuer
Documents and the Bonds have been duly obtained or will be obtained prior to
Closing;
(f) The Bonds and the Ordinance conform to the descriptions thereof contained
in the Official Statement under the captions "PLAN OF FINANCING" and "THE
BONDS"; and the Undertaking (as hereinafter defined) conforms to the description
thereof contained in the Official Statement under the caption "CONTINUING
DISCLOSURE OF INFORMA nON";
(g) There is no legislation, action, suit, proceeding, inquiry or investigation, at law
or in equity, before or by any court, government agency, public board or body,
pending or, to the best knowledge of the Issuer after due inquiry, threatened against
the Issuer, affecting the existence of the Issuer or the titles of its officers to their
respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale,
issuance or delivery of the Bonds or the collection of taxes pledged to the payment of
principal of and interest on the Bonds pursuant to the Ordinance or in any way
contesting or affecting the validity or enforceability of the Bonds, or contesting the
exclusion from gross income of interest on the Bonds for federal income tax purposes,
F:\WDOX\CLIENTS\999999\OOO 17\1 0023463. WPD I 2
5
EXHIB'T B
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 this Purchase Contract, nor,
to the best knowledge of the Issuer, is there any basis therefor, wherein an unfavorable
decision, ruling or finding would materially adversely affect the validity or
enforceability of the Bonds or this Purchase Contract;
(h) As of the date thereof, the Preliminary Official Statement did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(i) At the time of the Issuer's acceptance hereof and (unless the Official
Statement is amended or supplemented pursuant to paragraph (d) of Section 3 of this
Purchase Contract) at all times subsequent thereto during the period up to and
including the date of Closing, 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;
U) If the Official Statement is supplemented or amended pursuant to paragraph
(d) of Section 3 of this Purchase Contract, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant
to such paragraph) at all times subsequent thereto during the period up to and
including the date of Closing, the Official Statement as so supplemented or amended
will not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which made, not misleading;
(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 agrees not to 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 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 jurisdictions in the
United States as the Representative may designate and (z) determine the eligibility of
the Bonds for investment under the laws of such states and other jurisdictions and (B)
to continue such qualifications in effect so long as required for the distribution of the
Bonds (provided, however, that the Issuer will not be required to qualify as a foreign
corporation or to file any general or special consents to service of process under the
F:\WDOX\CUENTS\999999\OOO17\! 0023463. WPD I 2
6
EXHIBIT B
laws of any jurisdiction) and will advise the Representative immediately of receipt by
the Issuer of any written notification with respect to the suspension of the qualification
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 position and results of the
Issuer as of the dates and for the periods therein set forth. Prior to the Closing, to the
best of the Issuer's knowledge, there will be no adverse change of a material nature in
such financial position, results of operations or condition, financial or otherwise, of
the Issuer. The Issuer is not a party to any litigation or other proceeding pending or,
to its knowledge, threatened which, if decided adversely to the Issuer, would have a
materially adverse effect on the financial condition of the Issuer;
(n) Prior to the Closing the Issuer will not offer or issue any bonds, notes or other
obligations for borrowed money or incur any material liabilities, direct or contingent,
payable from or secured by any of the revenues which will secure the Bonds without
the prior approval of the Representative;
(0) The Issuer is in compliance with all previous continuing disclosure
agreements made in accordance with the Rule; and
(p) Any certificate, signed by any official of the Issuer authorized to do so in
connection with the transactions contemplated by this Purchase Contract, shall be
deemed a representation and warranty by the Issuer to the Underwriters as to the
statements made therein.
5. Closing.
(a) At or before 10:00 a.m., Central time, on December 31,2002, or at such other
time and date as shall have been mutually agreed upon by the Issuer and the
Representative (the "Closing"), the Issuer will, subject to the terms and conditions
hereof, deliver the Initial Bond to the Underwriters duly executed and authenticated,
together with the other documents hereinafter mentioned, and the Underwriters will,
subject to the terms and conditions hereof, accept such delivery and pay the purchase
price of the Bonds as set forth in Section 1 of this Purchase Contract by 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 named
in the Official Statement, or such other place as shall have been mutually agreed upon
by the Issuer and the Representative.
(b) Delivery of the Bonds shall be made to The Depository Trust Company, New
York, New York ("DTC"). The Bonds shall be delivered in definitive fully registered
form, bearing CUSIP numbers without coupons, with one Bond for each maturity of
the Bonds, registered in the name of Cede & Co., all as provided in the Ordinance, and
F:\WDOXlCLlENTS\999999\OOO 17\1 0023463.WPD / 2
7
EXHIBIT B
shall be made available to the Representative at least one business day before the
Closing for purposes of inspection.
6. Closing Conditions. The Underwriters have entered into this Purchase
Contract in reliance upon the representations, warranties and agreements of the Issuer
contained herein, and in reliance upon the representations, warranties and agreements to be
contained in the documents and instruments to be delivered at the Closing and upon the
performance by the Issuer of its obligations hereunder, both as of the date hereof and as ofthe
date of the Closing. Accordingly, the Underwriters' obligations under this Purchase Contract
to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the
performance by the Issuer of its obligations to be performed hereunder and under such
documents and instruments at or prior to the Closing, and shall also be subject to the following
additional conditions, including the delivery by the Issuer of such documents as are
enumerated herein, in form and substance reasonably satisfactory to the Representative:
(a) The representations and warranties of the Issuer contained herein shall be true,
complete and correct on the date hereof and on and as of the date of the Closing, as if
made on the date of the Closing;
(b) The Issuer shall have performed and complied with all agreements and
conditions required by this Purchase Contract to be performed or complied with by it
prior to or at the Closing;
(c) At the time of the Closing, (i) the 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 (ii) all actions of the
Issuer required to be taken by the Issuer shall be performed in order for Bond Counsel
and counsel to the Underwriters to deliver their respective opinions referred to
hereafter;
(d) At the time ofthe Closing, all official action of the Issuer relating to the Bonds
and the Ordinance shall be in full force and effect and shall not have been amended,
modified or supplemented;
(e) At or prior to the Closing, the Ordinance shall have been duly adopted and
filed of record and the Issuer shall have duly executed and delivered, and the Paying
Agent/Registrar shall have duly authenticated, the Bonds;
(f) At or prior to the Closing, the municipal bond insurance policy shall have been
duly executed, issued and delivered by Financial Security Assurance;
(g) At the time of the Closing, there shall not have occurred any change or any
development involving a prospective change in the condition, financial or otherwise,
F:IWDOXICLlENTSI9999991000 1711 0023463.wPD /2
8
EXHIBIT B
or in the revenues or operations of the Issuer, from that set forth in the Official
Statement that in the judgment of the Representative, reasonably exercised, is material
and adverse and that makes it, in the judgment of the Representative, impracticable to
market the Bonds on the terms and in the manner contemplated in the Official
Statement;
(h) The Issuer shall not have failed to pay principal or interest when due on any
of its outstanding obligations for borrowed money;
(i) All steps to be taken and all instruments and other documents to be executed,
and all other legal matters in connection with the transactions contemplated by this
Purchase Contract shall be reasonably satisfactory in legal form and effect to the
Representative and to counsel for the Underwriters;
U) At or prior to the Closing, the Underwriters shall have received copies of each
of the following documents:
(1) The Official Statement, and each supplement or amendment thereto, if
any, executed by original or facsimile signature on behalf of the Issuer by the
Mayor or such other official as may have been agreed to by the Representative,
and the reports and audits referred to or appearing in the Official Statement;
(2) The Ordinance (which shall include the undertaking of the Issuer (the
"Undertaking") which satisfies the requirements of Section (b )(5)(i) of the
Rule), with such supplements or amendments as may have been agreed to by
the Representative;
(3) The approving opinions of Bond Counsel with respect to the Bonds, in
substantially the form attached to the Official Statement;
(4) Supplemental opinion of Bond Counsel addressed to the Issuer and the
Underwriters, substantially to the effect that:
(i) the Bonds are exempted securities under the Securities Act of
1933, as amended (the "1933 Act"), and the Trust Indenture Act of
1939, as amended (the 'Trust Indenture Act "), and it is not necessary,
in connection with the offering and sale of such Bonds, to register the
Bonds under the 1933 Act or to qualifY the Ordinance under the Trust
Indenture Act; and
(ii) the statements and information contained in the Official
Statement under the captions and subcaptions "PLAN OF
FINANCING" (except for the subcaption "Use of Proceeds"), "THE
BONDS" (except for the information under the subcaption "Book-
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9
'IBfT B
Entry-Only System"), "SELECTED PROVISIONS OF THE BOND
ORDINANCE," "TAX MATTERS" and "CONTINUING
DISCLOSURE OF INFORMATION" (except for the subcaption
"Compliance with Prior Undertakings"), and the subcaptions
"Registration and Qualification of Bonds for Sale," "Legal Investments
and Eligibility to Secure Public Funds in Texas" and "Legal Opinions"
under the caption "OTHER INFORMATION" fairly and accurately
summarize the matters purported to be summarized therein.
(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 exempt securities under the 1933 Act and the
Trust Indenture Act and it is not necessary, in connection 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
(ii) 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 statistical statements
and data included in the Official Statement and the information
regarding the Depository and its book-entry system and information
regarding the municipal bond insurer, 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 representations and warranties of the Issuer
contained herein are true and correct in all material respects on and as of the
date of Closing as if made on the date of Closing; (ii) no litigation or
proceeding against it is pending or, to his or her knowledge, threatened in any
court or administrative body nor is there a basis for litigation which would (a)
contest the right of the members or officials of the Issuer to hold and exercise
their respective positions, (b) contest the due organization and valid existence
of the Issuer, (c) contest the validity, due authorization and execution of the
Bonds or the adoption of the Ordinance or (d) attempt to limit, enjoin or
otherwise restrict or prevent the Issuer from operating and maintaining the
System and revenues, including payments on the Bonds, pursuant to the
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tXH'B1T B
Ordinance, and other income or the anticipated receipt of Pledged Revenues
to pay the principal of and interest on the Bonds, or the pledge thereof, (iii) the
Bonds and the Ordinance have been duly adopted 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 order to make the statements and information
therein, in light ofthe circumstances under which made, not misleading in any
respect as of the time of Closing, and the information contained in the Official
Statement relating to the Issuer and the Bonds 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 or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading;
(7) A certificate of the Issuer in form and substance satisfactory to Bond
Counsel and counsel to the Underwriters (a) setting forth the facts, estimates
and circumstances in existence on the date of the Closing, which establish that
it is not expected 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, and (b) certifying that to the best of the knowledge and
belief of the Issuer there are no other facts, estimates or circumstances that
would materially change the conclusions, representations and expectations
contained in such certificate;
(8) Evidence satisfactory to the Underwriters that the Bonds have been
rated "Aaa" by Moody's Investors Services and "AAA" by Standard & Poor's
Rating Services, A Division of The McGraw-Hill Companies, Inc., on the
basis of the issuance of the municipal bond insurance policy described in (10)
below, and that such ratings are in effect as of the date of Closing;
(9) The approving opinion of the Attorney General of the State of Texas
and the registration certificates of the Comptroller of Public Accounts of the
State of Texas in respect of the Bonds;
(10) A copy of the policy of municipal bond insurance issued by Financial
Security Assurance, together with the customary opinion of its legal counsel
as to the validity and enforceability of such policies and the fairness and
accuracy of the language contained in the Official Statement; and
(11) Such additional legal opinions, certificates, instruments and other
F:\WDOXlCLIENTS\999999\OOO 17\1 0023463.WPD /2
11
EXHIBtT B
documents as the Representative 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 representations 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 respective agreements then to be
performed and conditions then to be satisfied by the Issuer.
All of the opinions, letters, certificates, instruments and other documents mentioned
above or elsewhere in this Purchase Contract shall be deemed to be in compliance with the
provisions hereof if, but only if, they are in form and substance satisfactory to the
Underwriters.
If the Issuer shall be unable to satisfy the conditions to the obligations of the
Underwriters to purchase, to accept delivery of and to pay for the Bonds contained in this
Purchase Contract, or if the obligations of the Underwriters to purchase, to accept delivery of
and to pay for the Bonds shall be terminated for any reason permitted by this Purchase
Contract, this Purchase Contract shall terminate and neither the Underwriters nor the Issuer
shall be under any further obligation hereunder, except that the respective obligations of the
Issuer and the Underwriters set forth in Section 1 (with respect to the Check) hereof shall
continue in full force and effect.
7. Termination. The Underwriters shall have the right to cancel their obligation to
purchase the Bonds if, between the date of this Purchase Contract and the Closing, the market
price or marketability of the Bonds shall be materially adversely affected, in the reasonable
judgment of the Representative, reasonably exercised, by the occurrence of any of the
following:
(a) legislation shall be enacted by or introduced in the Congress of the United
States or recommended to the Congress for passage by the President of the United
States, or the Treasury Department of the United States or the Internal Revenue
Service or any member of the Congress or favorably reported for passage to either
House of the Congress by any committee of such House to which such legislation 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), press release, statement or other form of notice by or
on behalf of the Treasury Department of the United States, the Internal Revenue
Service or other governmental agency shall be made or proposed, the effect of any or
all of which would be to impose, directly or indirectly, federal income taxation upon
interest received on obligations of the general character ofthe Bonds or upon interest
on the Bonds as described in the Official Statement, or other action or events shall
have transpired which may have the purpose or effect, directly or indirectly, of
changing the federal income tax consequences of any ofthe transactions contemplated
herein;
F:\WDOX\CLIENTS\999999\OOOI7\I0023463.WPD /2
12
l.~\ >ilBIT B
(b) legislation is introduced in or enacted (or resolution passed) by the Congress
or an order, decree, or injunction is issued by any court of competent jurisdiction, or
an order, ruling, regulation (final, temporary, or proposed), press release or other form
of notice is issued or made by or on behalf of the Securities and Exchange
Commission, or any other governmental agency having jurisdiction of the subject
matter, to the effect that obligations of the general character of the Bonds, including
any or all underlying arrangements, are not exempt from registration under or other
requirements of the 1933 Act, or that the Ordinance is not exempt from qualification
under or other requirements of the Trust Indenture Act, or that the issuance, offering,
or sale of obligations of the general character of the Bonds, including any or all
underlying arrangements, as contemplated hereby or by the Official Statement or
otherwise, is or would be in violation of the federal securities law as amended and then
in effect;
(c) a general suspension of trading in securities on the New York Stock Exchange
or the American Stock Exchange, the establishment of material restrictions (not in
force as of the date hereof) upon trading securities generally by any governmental
authority or any national securities exchange, a general banking moratorium declared
by federal, State of New York, or State officials authorized to do so;
(d) any amendment to the federal or state Constitution or action by any federal or
state court, legislative body, regulatory body, or other authority materially adversely
affecting the tax status of the Issuer, its property, income securities (or interest
thereon), or the validity or enforceability of the pledge of revenues to pay principal of
and interest on the Bonds;
(e) any event occurring, or information becoming known which, in the judgment
of the Representative reasonably exercised, makes untrue in any material respect any
statement or information contained in the Official Statement, or has the effect that the
Official Statement contains any untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
(f) there shall have occurred since the date of this Purchase Contract any
materially adverse change in the affairs or financial condition of the Issuer, except for
changes which the Official Statement discloses are expected to occur;
(g) the United States shall have become engaged in hostilities which have resulted
in a declaration of war or a national emergency or there shall have occurred any other
outbreak or escalation of hostilities or terrorist act or a national or international
calamity or crisis, financial or otherwise;
F:\WDOX\CLlENTS\999999\OOOI7\! 0023463. WPD / 2
13
LXHfBtT B
(h) any fact or event shall exist or have existed that, in the Representative's
judgment, reasonably exercised, requires an amendment of or supplement to the
Official Statement and such amendment or supplement in the opinion of the
Representative materially affects the marketability of the Bonds;
(i) there shall have occurred any downgrading, or any notice shall have been given
of (A) any intended or potential downgrading or (B) any review or possible change
that does not indicate a possible upgrade, in the rating accorded any of the Issuer's
obligations (including the rating to be accorded the Bonds); and
U) the purchase of and payment for the Bonds by the Underwriters, or the resale
of the Bonds by the Underwriters, on the terms and conditions herein provided shall
be prohibited by any applicable law, governmental authority, board, agency or
commission; provided, however, that such prohibition is not caused by any intentional
act, or failure to act, of the Underwriters.
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 obligations
hereunder, including, but not limited to (i) the cost of preparation and printing of the Bonds,
(ii) the fees and disbursements of Bond Counsel and counsel to the Issuer; (iii) 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 ratings and credit enhancement fees or premiums, if any; and (vi) any
other expenses agreed to by the Issuer to be reasonably considered expenses of the Issuer
which are incident to the transaction contemplated hereby.
(b) The Underwriters shall pay (i) the cost of preparation and printing of this
Purchase Contract, and any requested Blue Sky Survey; (ii) all advertising expenses
in connection with the public offering of the Bonds; and (iii) all other expenses
incurred by them in connection 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 Purchase Contract may be given by delivering the same to the Issuer, at the address
indicated above, Attention: Mayor (with copies to the City Manager), and any notice or other
communication to be given to the Underwriters under this Purchase Contract may be given by
delivering the same in writing to Estrada Hinojosa & Company, Inc., 1717 Main Street, Suite
4740, Dallas, Texas 75201, Attention: Robert Estrada.
10. Parties in Interest. This Purchase Contract as heretofore specified shall
constitute the entire agreement between us and is made solely for the benefit ofthe Issuer and
the Underwriters (including successors or assigns of the Underwriters) and no other person
shall acquire or have any right hereunder or by virtue hereof. This Purchase Contract may not
be assigned by the Issuer. All of the Issuer's representations, warranties and agreements
F:\WDOX\CLIENTS\999999\OOO!7\! 0023463.WPD / 2
14
EXHIBIT B
(;,., ;~
..~.
~..,Jt!.~' .....
contained in this Purchase Contract shall remain operative and in full force and effect,
regardless of (i) any investigations made by or on behalf of any of the Underwriters; (ii)
delivery of and payment for the Bonds pursuant to this Purchase Contract; and (iii) any
termination of this Purchase Contract.
11. Effectiveness. This Purchase Contract shall become effective upon the
acceptance hereof by the Issuer and shall be valid and enforceable at the time of such
acceptance.
12. Choice of Law. This Purchase Contract shall be governed by and construed
in accordance with the law of the State of Texas.
13. Severability. If any provision of this Purchase Contract shall be held or deemed
to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case
in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any
provisions of any Constitution, statute, rule of public policy, or any other reason, such
circumstances shall not have the effect of rendering the provision in question invalid,
inoperative or unenforceable in any other case or circumstance, or of rendering any other
provision or provisions of this Purchase Contract invalid, inoperative or unenforceable to any
extent whatever.
14. Business Day. For purposes of this Purchase Contract, "business day" means
any day on which the New York Stock Exchange is open for trading.
15. Section Headings. Section headings have been inserted in this Purchase
Contract as a matter of convenience of reference only, and it is agreed that such section
headings are not a part of this Purchase Contract and will not be used in the interpretation of
any provisions of this Purchase Contract.
16. Counterparts. This Purchase Contract may be executed in several counterparts
each of which shall be regarded as an original (with the same effect as if the signatures thereto
and hereto were upon the same document) and all of which shall constitute one and the same
document.
If you agree with the foregoing, please sign the enclosed counterpart of this Purchase
Contract and return it to the Representative. This Purchase Contract 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.
[Execution page follows]
F:\WDOXlCLlENTS\999999\OOO 17\1 0023463.WPD /2
15
EXH'BIT B
ACCEPTED AND AGREED TO THIS
day of November, 2002
CITY OF COLLEYVILLE, TEXAS
By:
Donna Arp
Mayor
Very truly yours,
ESTRADA HINOJOSA & COMPANY INe.
By
Authorized Representative
EXECUTION PAGE TO PURCHASE CONTRACT
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EXHIBIT B
Schedule I
SWS Securities
F:\WDOX\CLIENTS\999999\OOOI7\! 0023463. WPD 12
Schedule I - Page I
EXHIBIT B
Schedule II
CITY OF COLLEYVILLE, TEXAS
WATERWORKS AND SEWER SYSTEM
REVENUE REFUNDING BONDS, SERIES 2002
MATURITY SCHEDULE
The Bonds shall have the following terms:
January 1
Amount Maturitv Rate (% ) Yield (%)
$195,000 2004 2.000% 1.700%
$200,000 2005 2.000% 2.050%
$205,000 2006 2.500% 2.300%
$205,000 2007 3.000% 2.650%
$215,000 2008 3.000% 2.950%
$215,000 2009 3.100% 3.150%
$225,000 2010 3.300% 3.400%
$235,000 2011 3.500% 3.550%
$245,000 2012 3.500% 3.650%
$255,000 2013 3.700% 3.800%
$255,000 2014 3.900% 4.000%
$130,000 2015 4.000% 4.120%
(Accrued Interest from November 15,2002 to be added)
REDEMPTION PROVISIONS
The Issuer reserves the right, at its option, to redeem Bonds having stated maturities on and
after January 1, 2013, in whole or in part in principal amounts of $5,000 or any integral multiple
thereof, on January 1,2012, or any date thereafter, at the par value thereof plus accrued interest to the
date of redemption.
F:IWDOXICLlENTSI9999991000 171)1lO23463.wPD / 2
Schedule II - Page 1
EXHIBfT B
F:\WDOX\CLIENTS\999999\OOO 17\1 0023463.WPD / 2
EXHIBIT "A"
Preliminary Official Statement
dated November 12,2002
(Found elsewhere in this transcript)
Exhibit A
EXHIBIT B
EXHIBIT C
NOTICE OF REDEMPTION
CITY OF COLLEYVILLE, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE BONDS
SERIES 1975
DATED JANUARY 1,1975
NOTICE IS HEREBY GIVEN that all bonds of the above series maturing on and after
January 1, 2004 and aggregating in principal amount $1,050,000 have been called for
redemption on January 1, 2003 at the redemption price of par and accrued interest to the date
of redemption, such bonds being numbered 191 through 400, each in the denomination of
$5,000.
NOTICE IS FURTHER GIVEN that due and proper arrangements have been made with
The Bank of New York Trust Company of Florida, N.A., Plaza of the Americas, South Tower,
600 North Pearl Street, Suite 420, Dallas, Texas 75201, for providing GMAC Commercial
Mortgage, the registered owner of such bonds, with sufficient funds to pay the redemption price
for such bonds. Such bonds shall cease to bear interest from and after such redemption date.
THIS NOTICE is issued and given pursuant the terms and conditions prescribed for the
redemption of said bonds and pursuant to an ordinance adopted by the City Council of the City
of Colleyville, Texas.
WITNESS MY OFFICIAL SIGNATURE, this the 19th day of November, 2002.
City Secretary
City of Colleyville, Texas
The above and foregoing notice of redemption was duly received and filed with GMAC
Commercial Mortgage, this
GMAC COMMERCIAL MORTGAGE
By:
Title:
45247732.1
EXHIBIT D
NOTICE OF REDEMPTION
CITY OF COLLEYVILLE, TEXAS,
GENERAL OBLIGATION BONDS
SERIES 1975
DATED JANUARY 1,1975
NOTICE IS HEREBY GIVEN that all bonds of the above series maturing on and after
January 1, 2004 and aggregating in principal amount $600,000 have been called for redemption
on January 1, 2003 at the redemption price of par and accrued interest to the date of
redemption, such bonds being numbered 110 through 229, each in the denomination of $5,000.
NOTICE IS FURTHER GIVEN that due and proper arrangements have been made with
The Bank of New York Trust Company of Florida, N.A., Plaza of the Americas, South Tower,
600 North Pearl Street, Suite 420, Dallas, Texas 75201, for providing GMAC Commercial
Mortgage, the registered owner of such bonds, with sufficient funds to pay the redemption price
for such bonds. Such bonds shall cease to bear interest from and after such redemption date.
THIS NOTICE is issued and given pursuant the terms and conditions prescribed for the
redemption of said bonds and pursuant to an ordinance adopted by the City Council of the City
of Colleyville, Texas.
WITNESS MY OFFICIAL SIGNATURE, this the 19th day of November, 2002.
City Secretary
City of Colleyville, Texas
The above and foregoing notice of redemption was duly received and filed with GMAC
Commercial Mortgage, this
GMAC COMMERCIAL MORTGAGE
By:
Title:
45247732.1
EXHIBIT E
NOTICE OF REDEMPTION
CITY OF COLLEYVILLE, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE BONDS
SERIES 1975-A
DATED JULY 1, 1975
NOTICE IS HEREBY GIVEN that all bonds of the above series maturing on and after
January 1, 2004 and aggregating in principal amount $151,000 have been called for redemption
on January 1, 2003 at the redemption price of par and accrued interest to the date of
redemption, such bonds being numbered 100 through 250, each in the denomination of $1 ,000.
NOTICE IS FURTHER GIVEN that due and proper arrangements have been made with
The Bank of New York Trust Company of Florida, N.A., Plaza of the Americas, South Tower,
600 North Pearl Street, Suite 420, Dallas, Texas 75201, for providing GMAC Commercial
Mortgage, the registered owner of such bonds, with sufficient funds to pay the redemption price
for such bonds. Such bonds shall cease to bear interest from and after such redemption date.
THIS NOTICE is issued and given pursuant the terms and conditions prescribed for the
redemption of said bonds and pursuant to an ordinance adopted by the City Council of the City
of Colleyville, Texas.
WITNESS MY OFFICIAL SIGNATURE, this the 19th day of November, 2002.
City Secretary
City of Colleyville, Texas
The above and foregoing notice of redemption was duly received and filed with
, this
By:
Title:
45247732.1
EXHIBIT F
NOTICE OF REDEMPTION
CITY OF COLLEYVILLE, TEXAS,
WATERWORKS AND SEWER SYSTEM REVENUE BONDS
SERIES 1981
DATED APRIL 1, 1981
NOTICE IS HEREBY GIVEN that all bonds of the above series maturing on and after
January 1, 2004 and aggregating in principal amount $655,000 have been called for redemption
on January 1, 2003 at the redemption price of par and accrued interest to the date of
redemption, such bonds being numbered 746 through 1,400, each in the denomination of
$1,000.
NOTICE IS FURTHER GIVEN that due and proper arrangements have been made with
The Bank of New York Trust Company of Florida, N.A., Plaza of the Americas, South Tower,
600 North Pearl Street, Suite 420, Dallas, Texas 75201, for providing GMAC Commercial
Mortgage, the registered owner of such bonds, with sufficient funds to pay the redemption price
for such bonds. Such bonds shall cease to bear interest from and after such redemption date.
THIS NOTICE is issued and given pursuant the terms and conditions prescribed for the
redemption of said bonds and pursuant to an ordinance adopted by the City Council of the City
of Colleyville, Texas.
WITNESS MY OFFICIAL SIGNATURE, this the 19th day of November, 2002.
City Secretary
City of Colleyville, Texas
The above and foregoing notice of redemption was duly received and filed with
, this
By:
Title:
45247732.1
Exhibit G
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION AND OPERATING DATA
The following information is referred to in Section 44 of this Ordinance.
Annual Financial Statements and OperatinQ Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Section are as specified (and included in the Appendix or
under the headings of the Official Statement referred to) below:
1. The financial statements of the City appended to the Official
Statement as Appendix B, but for the most recently concluded fiscal year.
2. The information in the Official Statement contained in Tables 1
through 10.
AccountinQ Principles
The accounting principles referred to in such Section are the generally accepted
accounting principles as applicable to governmental units as prescribed by The Government
Accounting Standards Board.
45247732.1