OR 2006-1132 General Obligation Bonds
CERTIFICATE FOR ORDINANCE
THE STATE OF TEXAS
COUNTIES OF DALLAS AND DENTON
CITY OF COPPELL
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We, the undersigned officers of said City, hereby certify as follows:
1. The City Council of said City convened in REGULAR MEETING ON THE 22ND DAY
OF AUGUST, 2006, at the City Hall, and the roll was called of the duly constituted officers and members of
said City Council, to-wit:
Douglas N. Stover, Mayor
Jayne Peters, Mayor Pro Tem
Tim Brancheau
Brianna Hinojosa-Flores
Marsha Tunnell
Billy Faught
Marvin Franklin
Bill York
Libby Ball, City Secretary
and all of said persons were present, except the following absentees:
thus constituting a quorum. Whereupon, among other business, the following was transacted at said Meeting:
a written
ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF COPPELL, TEXAS GENERAL
OBLIGATION BONDS, SERIES 2006, IN THE PRINCIPAL AMOUNT OF $4,215,000,
MAKING PROVISIONS FOR THE SECURITY THEREOF; AND ORDAINING OTHER
MATTERS RELATING TO THE SUBJECT
was duly introduced for the consideration of said City Council and read in full. It was then duly moved and
seconded that said Ordinance be adopted; and, after due discussion, said motion carrying with it the adoption
of said Ordinance, prevailed and carried by the following vote:
AYES: All members of said City Council shown present above voted "Aye".
NOES: None.
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2. That a true, full and correct copy of the aforesaid Ordinance adopted at the Meeting described
in the above and foregoing paragraph is attached to and follows this Certificate; that said Ordinance has been
duly recorded in said City Council's minutes of said Meeting; that the above and foregoing paragraph is a true,
full and correct excerpt from said City Council's minutes of said Meeting pertaining to the adoption of said
Ordinance; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and
acting officers and members of said City Council as indicated therein; that each of the officers and members
of said City Council was duly and sufficiently notified officially and personally, in advance, of the time, place
and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and considered for adoption
at said Meeting, and each of said officers and members consented, in advance, to the holding of said Meeting
for such purpose, and that said Meeting was open to the public and public notice of the time, place and purpose
of said meeting was given, all as required by Chapter 551, Texas Government Code.
3. That the Mayor of said City has approved and hereby approves the aforesaid Ordinance; that
the Mayor and the City Secretary of said City have duly signed said Ordinance; and that the Mayor and the
City Secretary of said City hereby declare that their signing of this Certificate shall constitute the signing of
the attached and following copy of said Ordinance for all purposes.
SIGNED AND SEALED THE 22ND DAY OF AUGUST 200
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(CITY SEAL)
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ORDI,)~,)et NO. ~oO~-//~2..
ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF COPPELL, TEXAS
GENERAL OBLIGATION BONDS, SERIES 2006, IN THE PRINCIPAL AMOUNT
OF $4,215,000, MAKING PROVISIONS FOR THE SECURITY THEREOF, AND
ORDAINING OTHER MATTERS RELATING TO THE SUBJECT
THE STATE OF TEXAS
COUNTIES OF DALLAS AND DENTON
CITY OF COPPELL
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WHEREAS, the City has voted on November 2, 1999 the following general obligations and have
issued the amounts shown:
Purpose
Park Improvements
Date
Authorized
Amount
Authorized
Previously
Issued
Amount
Being Issued
Unissued
Balance
Drainage Improvements
11/02/99
11/02/99
$ 8,685,000
1,700,000
$ 7,485,000
700,000
$ 1,200,000
-0-
-0-
1,000,000
6,180,000
Street Improvements 11/02/99 30,345,000 21,100,000 3,065,000*
*principal amount of issued Bonds $3,015,000 for street improvements
plus $50,000 of net premium equals $3,065,000 amount being issued.
WHEREAS, it is deemed necessary and advisable to authorize, issue, and deliver an installment of
series of bonds in the amount of$I,200,000 for the purpose of Park Improvements and $3,015,000 for Street
Improvements; and
WHEREAS, the bonds hereinafter authorized and designated are to be issued and delivered pursuant
to Chapter 1331, Texas Govemment Code; and
WHEREAS, the meeting was open to the public and public notice of the time, place and purpose of
said meeting was given pursuant to Chapter 551, Texas Govemment Code.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
COPPELL, TEXAS:
Section 1. AMOUNT AND PURPOSE OF THE BONDS. The bond or bonds of the CITY OF
COPPELL, TEXAS (the "Issuer") are hereby authorized to be issued and delivered in the aggregate principal
amount of $4,215,000 for providing $1,200,000 for the purpose of acquiring, constructing, equipping and
improving pem1anent public improvements for the City's parks, including but not limited to the development
of MacArthur Park; Wagon Wheel Park, Andrew Brown Park East, new Senior Citizen Center, tennis courts,
extension of North Zone Trail System, and renovation of Grapevine Springs, and $3,015,00 for the purpose
of constructing, improving, and equipping permanent public improvements, to-wit: the City's streets, including
but not limited to West Sandy Lake Road (Denton Tap Road to S.H. 121); East Sandy Lake Road (Kimbel
Court to east city limits); Bethel Road I (Freeport Parkway to west city limits); Bethel Road II (Freeport
Parkway to Denton Tap Road); Coppell Road (West Sandy Lake Road to Bethel Road); Creekview Road
(Ruby Rd./State Rd. West along south edge of Wagon Wheel Park); and Freeport Parkway (Bethel Road to
I.H. 635).
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Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Ordinance
shall be designated: "CITY OF COPPELL, TEXAS GENERAL OBLIGATION BOND, SERIES 2006", and
initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest
coupons, payable in annual installments of principal (the "Initial Bond"), but the Initial Bond may be assigned
and transferred and/or converted into and exchanged for a like aggregate principal amount of fully registered
bonds, without interest coupons, having serial and annual maturities, and in the denomination or denominations
of$5,000 or any integral multiple of$5,000, all in the manner hereinafter provided. The term "Bonds" as used
in this Ordinance shall mean and include collectively the Initial Bond and all substitute bonds exchanged
therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term
"Bond" shall mean any of the Bonds.
Section 3. INITIAL DATE. DENOMINATION. NUMBER MATURITIES. INITIAL
REGISTERED OWNER AND CHARACTERISTICS OF THE INITIAL BOND. (a) The Initial Bond is
hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest
coupons, dated August 15, 2006, in the denomination and aggregate principal amount of$4 ,215,000 numbered
R-l, payable in annual installments of principal to the initial registered owner thereof, to-wit: SOUTHWEST
SECURITIES, or to the registered assignee or assignees of said Bond or any portion or portions thereof (in
each case, the "registered owner"), with the annual installments of principal of the Initial Bond to be payable
on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL BOND
set forth in this Ordinance.
(b) The Initial Bond (i) may be prepaid or redeemed prior to the respective scheduled due dates of
installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and exchanged
for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and
interest on the Initial Bond shall be payable, all as provided, and in the manner required or indicated, in the
FORM OF INITIAL BOND set forth in this Ordinance.
Section 4. INTEREST. The unpaid principal balance of the Initial Bond shall bear interest from
the date of the Initial Bond and will be calculated on the basis of a 360-day year of twelve 30-day months to
the respective scheduled due dates, or to the respective dates of prepayment or redemption, of the installments
of principal of the Initial Bond, and said interest shall be payable, all in the manner provided and at the rates
and on the dates stated in the FORM OF INITIAL BOND set forth in this Ordinance.
Section 5. FORM OF INITIAL BOND. The form of the Initial Bond, including the form of
Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the
Initial Bond, shall be substantially as follows:
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FORM OF INITIAL BOND
NO. R-l
$4,215,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTIES OF DALLAS AND DENTON
CITY OF COPPELL, TEXAS
GENERAL OBLIGA nON BOND, SERIES 2006
The CITY OF COPPELL, in DALLAS AND DENTON COUNTIES (the "Issuer"), being a political
subdivision of the State of Texas, hereby promises to pay to
SOUTHWEST SECURITIES
or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the
"registered owner") the aggregate principal amount of
FOUR MILLION TWO HUNDRED FIFTEEN THOUSAND DOLLARS
in annual installments of principal due and payable on February 1 in each of the years, and in the respective
principal amounts, as set forth in the following schedule:
YEAR AMOUNT YEAR
2007 $145,000 2017
2008 140,000 2018
2009 150,000 2019
2010 155,000 2020
2011 160,000 2021
2012 165,000 2022
2013 175,000 2023
2014 180,000 2024
2015 190,000 2025
2016 200,000 2026
AMOUNT
$ 205,000
215,000
225,000
235,000
245,000
260,000
$1,170,000
and to pay interest, from the date of this Initial Certificate of Obligation, on the balance of each such
installment of principal, respectively, from time to time remaining unpaid, at the rates as follows:
maturity 2007,4.250%
maturity 2008, 4.250%
maturity 2009,4.250%
maturity 2010,4.250%
maturity 2011,4.250%
maturity 2012,4.125%
maturity 2013,4.125%
maturity 2014,4.250%
maturity 2015,4.250%
maturity 2016,4.250%
maturity 2017, 4.250%
maturity 2018,4.250%
maturity 2019, 4.500%
maturity 2020, 4.500%
maturity 2021,4.500%
maturity 2022,4.375%
maturity 2026,5.000%
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THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in
lawful money of the United States of America, without exchange or collection charges. The installments of
principal and the interest on this Bond are payable to the registered owner hereof through the services of U.S.
BANK NATIONAL ASSOCIATION, HOUSTON, TEXAS, which is the "Paying Agent/Registrar" for this
Bond. Payment of all principal of and interest on this Bond shall be made by the Paying AgentlRegistrar to
the registered owner hereof on each principal and/or interest payment date by check or draft, dated as of such
date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the
ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying
Agent/Registrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying
Agent/Registrar by United States mail, first-class postage prepaid, on each such principal and/or interest
payment date, to the registered owner hereof, at the address of the registered owner, as it appeared on the 15th
day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the
Paying AgentlRegistrar, as hereinafter described, or by such other method acceptable to the Paying
AgentlRegistrar requested by, and at the risk and expense of, the registered owner. The Issuer covenants with
the registered owner of this Bond that on or before each principal and/or interest payment date for this Bond
it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond
Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal
of and interest on this Bond, when due.
IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday,
Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying AgentlRegistrar
is located are authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made on the original
date payment was due.
THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas,
in the principal amount of $4,215,000, for providing $1,200,000 for the purpose of acquiring, constructing,
equipping and improving permanent public improvements for the City's parks, including but not limited to the
development of MacArthur Park; Wagon Wheel Park, Andrew Brown Park East, new Senior Citizen Center,
tennis courts, extension of North Zone Trail System, and renovation of Grapevine Springs, and $3,015,000
for the purpose of constructing, improving, and equipping permanent public improvements, to-wit: the City's
streets, including but not limited to West Sandy Lake Road (Denton Tap Road to S.H. 121); East Sandy Lake
Road (Kimbel Court to east city limits); Bethel Road I (Freeport Parkway to west city limits); Bethel Road II
(Freeport Parkway to Denton Tap Road); Coppell Road (West Sandy Lake Road to Bethel Road); Creekview
Road (Ruby Rd./State Rd. West along south edge of Wagon Wheel Park); and Freeport Parkway (Bethel Road
to I.H. 635).
ON FEBRUARY 1,2016, or on any date thereafter, the unpaid installments of principal of this Bond
may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived
from any available source, as a whole, or in part, and, if in part, the Issuer shall select and designate the
maturity, or maturities, and the amount that is to be redeemed, and ifless than a whole maturity is to be called,
the Issuer shall direct the Paying Agent/Registrar to call by lot (provided that a portion of this Bond may be
redeemed only in an integral multiple of$5,OOO), at the redemption price of the principal amount, plus accrued
interest to the date fixed for prepayment or redemption.
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THE BONDS OF THIS SERIES scheduled to mature on FEBRUARY 1, 2026 are subject to
mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior
to their scheduled maturities, with money from the Mandatory Redemption Account of the Interest and Sinking
Fund, with the particular Bonds or portion thereof to be redeemed to be selected by the Paying Agent/Registrar,
by lot or other customary method (provided that a portion of a Bond may be redeemed only in an integral
multiple of$5,000) at a redemption price equal to the par or principal amount thereof and accrued interest to
the date of redemption, on the dates, and in the principal amounts, respectively, as shown in the following
schedules:
FEBRUARY L 2026 MATURITY
Mandatory Redemption Dates
February 1, 2023
February 1, 2024
February 1,2025
February 1,2026
Principal Amounts
$ 270,000
$ 285,000
$ 300,000
$ 315,000 (payment at maturity)
The principal amount of the Bonds required to be redeemed on each such redemption date pursuant to the
foregoing operation of the Mandatory Redemption Account shall be reduced, at the option of the Issuer, by the
principal amount of any Bonds, which at least 45 days prior to the mandatory sinking fund redemption date,
(1) shall have been acquired by the Issuer and delivered to the Paying Agent/Registrar for cancellation, or (2)
shall have been purchased and canceled by the Paying AgentlRegistrar at the request of the Issuer at a price
not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase, or (3) have
been redeemed pursuant to the optional redemption provisions set forth above and not theretofore credited
against a mandatory sinking fund redemption. During any period in which ownership of the Bonds is
determined by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same
maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and
bearing such interest rate shall be selected in accordance with the arrangements between the Issuer and the
securities depository.
AT LEAST 30 days prior to the date fixed for any such prepayment or redemption, a written notice
of such prepayment or redemption shall be mailed by United States mail, first class postage pre-paid, by the
Paying Agent/Registrar to the registered owner hereof. By the date fixed for any such prepayment or
redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the
required prepayment or redemption price for this Bond or the portion hereof which is to be so prepaid or
redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption. If such written notice
of prepayment or redemption is given, and if due provision for such payment is made, all as provided above,
this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated
as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its
prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered
owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or
redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying
Agent/Registrar shall record in the Registration Books all such prepayments or redemptions of principal of this
Bond or any portion hereof.
THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and
unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner
hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying AgentlRegistrar
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acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance.
Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying
Agent/Registrar for cancellation, together with proper instruments of assignment, in form and with guarantee
of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner
of this Bond, or any portion or portions hereof in any integral multiple of$5,000, to the assignee or assignees
in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and
registered. Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be
used to evidence the assignment of this Bond or any such portion or portions hereof by the initial registered
owner hereof. A new bond or bonds payable to such assignee or assignees (which then will be the new
registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of
this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the
Paying Agent/Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but
solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this
Bond or any portion hereof. The registered owner of this Bond shall be deemed and treated by the Issuer and
the Paying Agent/Registrar as the absolute owner hereoffor all purposes, including payment and discharge of
liability upon this Bond to the extent of such payment, and the Issuer and the Paying AgentlRegistrar shall not
be affected by any notice to the contrary.
AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or
unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal
amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated
in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Bond
which is not being assigned and transferred by the initial registered owner, in any denomination or
denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each
substitute bond issued in exchange for any portion of this Bond shall have a single stated principal maturity
date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the
form and procedures set forth in the Bond Ordinance. If this Bond or any portion hereof is assigned and
transferred or converted each bond issued in exchange for any portion hereof shall have a single stated principal
maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for
which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such
installment of principal or portion thereof. Such bonds, respectively, shall be subject to redemption prior to
maturity on the same dates and for the same prices as the corresponding installment of principal of this Bond
or portion hereof for which they are being exchanged. No such bond shall be payable in installments, but shall
have only one stated principal maturity date. AS PROVIDED IN THE BOND ORDINANCE, THIS BOND
IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY,
and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion
hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond Ordinance. The
Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring,
converting, and exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion,
and exchange shall pay any taxes or governmental charges required to be paid with respect thereto. The Paying
AgentlRegistrar shall not be required to make any such assignment, conversion, or exchange (i) during the
period commencing with the close of business on any Record Date and ending with the opening of business on
the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called
for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption date.
IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or
otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint
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a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be
mailed to the registered owner of this Bond.
IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized,
issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and
be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed,
and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the full
faith and credit thereof; and that ad valorem taxes sufficient to provide for the payment of the interest on and
principal of this Bond, as such interest and principal come due, have been levied and ordered to be levied
against all taxable property in the Issuer, and have been pledged for such payment, within the limit prescribed
by law.
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of
the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and
records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond
Ordinance constitute a contract between the registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual signature
of the Mayor of the Issuer and countersigned with the manual signature of the City Secretary of the Issuer, has
caused the official seal of the Issuer to be duly impressed on this Bond, and has caused this Bond to be dated
August 15,2006.
City Secretary
Mayor
(CITY SEAL)
FORM OF REGISTRATION CERTIFICATE
OF THE COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE:
REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attomey
General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts
of the State of Texas.
Witness my signature and seal this
Comptroller of Public Accounts of the State of Texas
(COMPTROLLER'S SEAL)
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Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. (a) Registration and
Transfer. The Issuer shall keep or cause to be kept at the principal corporate trust office of U.S.BANK
NATIONAL ASSOCIATION, HOUSTON, TEXAS (the "Paying Agent/Registrar") books or records of the
registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying
Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and
registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and
the Paying Agent/Registrar shall make such transfers and registrations as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each
Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty
of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall
be mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall
have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar,
but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise
required by law, shall not permit their inspection by any other entity. Registration of each Bond may be
transferred in the Registration Books only upon presentation and surrender of such Bond to the Paying
Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of
assignment, in form and with guarantee of signatures satisfactory to the Paying AgentlRegistrar, (i) evidencing
the assignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assignee or
assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any such portion thereof
registered in the name of such assignee or assignees. Upon the assignment and transfer of any Bond or any
portion thereof, a new substitute Bond or Bonds shall be issued in conversion and exchange therefor in the
manner herein provided. The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof,
may be assigned and transferred by the initial registered owner thereof once only, and to one or more assignees
designated in writing by the initial registered owner thereof. All Bonds issued and delivered in conversion of
and exchange for the Initial Bond shall be in any denomination or denominations of any integral multiple of
$5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated
principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in
this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as
hereinafter provided. If the Initial Bond or any portion thereof is assigned and transferred or converted the
Initial Bond must be surrendered to the Paying Agent/Registrar for cancellation, and each Bond issued in
exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be
payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date
of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each
such Bond shall bear interest at the single rate applicable to and bome by such installment of principal or
portion thereof for which it is being exchanged. If only a portion of the Initial Bond is assigned and transferred,
there shall be delivered to and registered in the name of the initial registered owner substitute Bonds in
exchange for the unassigned balance of the Initial Bond in the same manner as if the initial registered owner
were the assignee thereof. If any Bond or portion thereof other than the Initial Bond is assigned and transferred
or converted each Bond issued in exchange shall have the same principal maturity date and bear interest at the
same rate as the Bond for which it is exchanged. A form of assignment shall be printed or endorsed on each
Bond, excepting the Initial Bond, which shall be executed by the registered owner or its duly authorized
attorney or representative to evidence an assignment thereof. Upon surrender of any Bonds or any portion or
portions thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall
make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or Bonds,
having the characteristics herein described, payable to such assignee or assignees (which then will be the
registered owner or owners of such new Bond or Bonds), or to the previous registered owner in case only a
portion of a Bond is being assigned and transferred, all in conversion of and exchange for said assigned Bond
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or Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as
provided in Section 6( d), below, for the conversion and exchange of Bonds by any registered owner of a Bond.
The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such
transfer and delivery of a substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes
or other governmental charges required to be paid with respect thereto. The Paying AgentlRegistrar shall not
be required to make transfers of registration of any Bond or any portion thereof (i) during the period
commencing with the close of business on any Record Date and ending with the opening of business on the next
following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for
redemption prior to maturity, within 30 days prior to its redemption date.
(b) Ownership of Bonds. The entity in whose name any Bond shall be registered in the Registration
Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance,
whether or not such Bond shall be overdue, and the Issuer and the Paying AgentlRegistrar shall not be affected
by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest
on any such Bond shall be made only to such registered owner. All such payments shall be valid and effectual
to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.
(c) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying Agent/Registrar
to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to
convert and exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall
keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the
Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this
Ordinance. However, in the event of a nonpayment 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
Issuer. 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 Bondholder appearing
on the Registration Books at the close of business on the last business day next preceding the date of mailing
of such notice.
(d) Conversion and Exchange or Replacement: Authentication. Each Bond issued and delivered
pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount
thereof, may, upon surrender of such Bond at the principal corporate trust office ofthe Paying Agent/Registrar,
together with a written request therefor duly executed by the registered owner or the assignee or assignees
thereof, or its or their duly authorized attomeys or representatives, with guarantee of signatures satisfactory
to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as
appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form
prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, in the denomination of$5,000,
or any integral multiple of$5,000 (subject to the requirement hereinafter stated that each substitute Bond shall
have a single stated maturity date), as requested in writing by such registered owner or such assignee or
assignees, in an aggregate principal amount equal to the unpaid or unredeemed principal balance or principal
amount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, or
assignees, as the case may be. If the Initial Bond is assigned and transferred or converted each substitute Bond
issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and
shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding
to the due date of the installment of principal or portion thereof for which the substitute Bond is being
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exchanged; and each such Bond shall bear interest at the single rate applicable to and bome by such installment
of principal or portion thereof for which it is being exchanged. If a portion of any Bond (other than the Initial
Bond) shall be redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having
the same maturity date, bearing interest at the same rate, in the denomination or denominations of any integral
multiple of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the
unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If
any Bond or portion thereof (other than the Initial Bond) is assigned and transferred or converted, each Bond
issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as
the Bond for which it is being exchanged. Each substitute Bond shall bear a letter and/or number to distinguish
it from each other Bond. The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided
herein, and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond
or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds
for all purposes of this Ordinance, and may again be converted and exchanged or replaced. It is specifically
provided that any Bond authenticated in conversion of and exchange for or replacement of another Bond on
or prior to the first scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial
Bond, but each substitute Bond so authenticated after such first scheduled Record Date shall bear interest from
the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless
such Bond is authenticated after any Record Date but on or before the next following interest payment date,
in which case it shall bear interest from such next following interest payment date; provided, however, that if
at the time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due
but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in
full. THE INITIAL BOND issued and delivered pursuant to this Ordinance is not required to be, and shall not
be, authenticated by the Paying Agent/ Registrar, but on each substitute Bond issued in conversion of and
exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed a
certificate, in the form substantially as follows:
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance
described on the face of this Bond; and that this Bond has been issued in conversion of and exchange for or
replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by
the Attomey General of the State of Texas and registered by the Comptroller of Public Accounts of the State
of Texas.
Paying Agent/Registrar
Dated
By
Authorized Representative"
An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date
and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless
such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for
conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or
adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing
conversion and exchange or replacement of any Bond or portion thereof, and the Paying AgentlRegistrar shall
provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and
said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of
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customary weight and strength. Pursuant to Chapter 1207, Texas Government Code, the duty of conversion
and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and,
upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and.
exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the
same effect as the Initial Bond which originally was issued pursuant to this Ordinance, approved by the
Attomey General, and registered by the Comptroller of Public Accounts. The Issuer shall pay the Paying
Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any
Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any
taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise
of such privilege of conversion and exchange. The Paying AgentlRegistrar shall not be required to make any
such conversion and exchange or replacement of Bonds or any portion thereof (i) during the period commencing
with the close of business on any Record Date and ending with the opening of business on the next following
principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption
prior to maturity, within 45 days prior to its redemption date.
( e) In General. All Bonds issued in conversion and exchange or replacement of any other Bond or
portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and
interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their
scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for other
Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest
on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM OF
SUBSTITUTE BOND set forth in this Ordinance.
(f) Payment of Fees and Charges. The Issuer hereby covenants with the registered owners of the
Bonds that it will (i) pay the standard or customary fees and charges of the Paying AgentlRegistrar for its
services with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay the
fees and charges of the Paying Agent/Registrar for services with respect to the transfer of registration of Bonds,
and with respect to the conversion and exchange of Bonds solely to the extent above provided in this Ordinance.
(g) Substitute Paving Agent/Registrar. The Issuer covenants with the registered owners of the Bonds
that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank,
trust company, financial institution, or other agency to act as and perform the services of Paying
AgentlRegistrar for the Bonds under this Ordinance, and that the Paying AgentlRegistrar will be one entity.
The Issuer reserves the right to, and may, at its option, change the Paying AgentlRegistrar upon not less than
120 days written notice to the Paying Agent/ Registrar, to be effective not later than 60 days prior to the next
principal or interest payment date after such notice. In the event that the entity at any time acting as Paying
AgentlRegistrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to
act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust
company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. Upon
any change in the Paying Agent/Registrar, the previous Paying AgentlRegistrar promptly shall transfer and
deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to
the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the
Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying
Agent/Registrar to each registered owner of the Bonds, by United States mail, first-class postage prepaid,
which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and
performing as such, each Paying AgentlRegistrar shall be deemed to have agreed to the provisions of this
Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar.
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(h) Book-Entrv Onlv Svstem. The Bonds issued in exchange for the Bonds initially issued to the
purchaser specified herein shall be initially issued in the form of a separate single fully registered Bond for each
of the maturities thereof. Upon initial issuance, the ownership of each such Bond shall be registered in the
name of Cede & Co., as nominee of Depository Trust Company of New York ("DTC"), and except as provided
in subsection (i) hereof, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee
of DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee ofDTC, the Issuer and the
Paying Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any person on
behalf of whom such a DTC Participant holds an interest on the Bonds. Without limiting the immediately
preceding sentence, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with
respect to (i) the accuracy of the records ofDTC, Cede & Co. or any DTC Participant with respect to any
ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a
Bondholder, as shown on the Registration Books, of any notice with respect to the Bonds, including any notice
of redemption, or (iii) the payment to any DTC Participant or any other person, other than a Bondholder, as
shown in the Registration Books of any amount with respect to principal of, premium, if any, or interest on,
as the case may be, the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, the
Issuer and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each
Bond is registered in the Registration Books as the absolute owner of such Bond for the purpose of payment
of principal, premium, if any, and interest, as the case may be, with respect to such Bond, for the purpose of
giving notices of redemption and other matters with respect to such Bond, for the purpose of registering
transfers with respect to such Bond, and for all other purposes whatsoever. The Paying AgentlRegistrar shall
pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective
owners, as shown in the Registration Books as provided in this Ordinance, or their respective attomeys duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the
Issuer's obligations with respect to payment of principal of, premium, if any, and interest on, or as the case may
be, the Bonds to the extent of the sum or sums so paid. No person other than an owner, as shown in the
Registration Books, shall receive a Bond certificate evidencing the obligation of the Issuer to make payments
of principal, premium, if any, and interest, as the case may be, pursuant to this Ordinance. Upon delivery by
DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks
being mailed to the registered owner at the close of business on the Record Date, the word "Cede & Co." in this
Ordinance shall refer to such new nominee of DTC.
(i) Successor Securities Depositorv; Transfers Outside Book-Entrv Onlv Svstem. In the event that
the Issuer or the Paying Agent/Registrar determines that DTC is incapable of discharging its responsibilities
described herein and in the representation letter of the Issuer to DTC and that it is in the best interest of the
beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Issuer or the Paying
AgentlRegistrar shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a)
of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment
of such successor securities depository and transfer one or more separate Bonds to such successor securities
depository or (ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one
or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the
Bonds shall no longer be restricted to being registered in the Registration Books in the name of Cede & Co.,
as nominee ofDTC, but may be registered in the name of the successor securities depository, or its nominee,
or in whatever name or names Bondholders transferring or exchanging Bonds shall designate, in accordance
with the provisions of this Ordinance.
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(j) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary,
so long as any Bond is registered in the name of Cede & Co., as nominee ofDTC, all payments with respect
to principal of, premium, ifany, and interest on, or as the case may be, such Bond and all notices with respect
to such Bond shall be made and given, respectively, in the manner provided in the representation letter of the
Issuer to DTC.
Section 7. FORM OF SUBSTITUTE BONDS. The form of all Bonds issued in conversion and
exchange or replacement of any other Bond or portion thereof, including the form of Paying AgentlRegistrar's
Certificate to be printed on each of such Bonds, and the Form of Assignn1ent to be printed on each of the
Bonds, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions
as are permitted or required by this Ordinance.
FORM OF SUBSTITUTE BOND
NO.
PRINCIPAL AMOUNT
$
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTIES OF DALLAS AND DENTON
CITY OF COPPELL, TEXAS
GENERAL OBLIGATION BOND, SERIES 2006
INTEREST RATE
MATURITY DATE
DA TE OF ORIGINAL ISSUE
CUSIP NO.
ON THE MATURITY DATE specified above, the CITY OF COPPELL, in DALLAS AND
DENTON COUNTIES, TEXAS (the "Issuer"), being a political subdivision of the State of Texas, hereby
promises to pay to
or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount
of
and to pay interest thereon from August 15, 2006 to the maturity date specified above, or the date of
redemption prior to maturity, at the interest rate per annum specified above; with interest being payable on
February 1,2007, and semiannually thereafter on each August 1 and February I, except that if the date of
authentication of this Bond is later than January 15, 2007, such principal amount shall bear interest from the
interest payment date next preceding the date of authentication, unless such date of authentication is after any
Record Date (hereinafter defined) but on or before the next following interest payment date, in which case such
principal amount shall bear interest from such next following interest payment date.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United
States of America, without exchange or collection charges. The principal of this Bond shall be paid to the
registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its
redemption prior to maturity, at the principal corporate trust office of U.S.BANK NATIONAL
ASSOCIATION, HOUSTON, TEXAS, which is the "Paying Agent/Registrar" for this Bond. The payment
of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each
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interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying
Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the
issuance of the Bonds (the "Bond Ordinance") to be on deposit with the Paying AgentlRegistrar for such
purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar by United
States Mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at
the address of the registered owner, as it appeared on the 15th day of the month next preceding each such date
(the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described,
or by such other method acceptable to the Paying Agent/Registrar requested by, and the risk and expense of,
the registered owner. Any accrued interest due upon the redemption of this Bond prior to maturity as provided
herein shall be paid to the registered owner upon presentation and surrender of this Bond for redemption and
payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the
registered owner of this Bond that on or before each principal payment date, interest payment date, and accrued
interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and
Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately
available funds, of all principal of and interest on the Bonds, when due.
IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday,
Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar
is located are authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made on the original
date payment was due.
THIS BOND is one of an issue of Bonds initially dated August 15,2006, authorized in accordance
with the Constitution and laws of the State of Texas in the principal amount of $4,215,000 for providing
$1,200,000 for the purpose of acquiring, constructing, equipping and improving permanent public
improvements for the City's parks, including but not limited to the development of MacArthur Park; Wagon
Wheel Park, Andrew Brown Park East, new Senior Citizen Center, tennis courts, extension of North Zone Trail
System, and renovation of Grapevine Springs, and $3,065,00 for the purpose of constructing, improving, and
equipping permanent public improvements, to-wit: the City's streets, including but not limited to West Sandy
Lake Road (Denton Tap Road to S.H. 121); East Sandy Lake Road (Kimbel Court to east city limits); Bethel
Road I (Freeport Parkway to west city limits); Bethel Road II (Freeport Parkway to Denton Tap Road);
Coppell Road (West Sandy Lake Road to Bethel Road); Creekview Road (Ruby Rd./State Rd. West along
south edge of Wagon Wheel Park); and Freeport Parkway (Bethel Road to I.H. 635).
ON FEBRUARY 1,2016, or any date thereafter, the Bonds ofthis Series may be redeemed prior to
their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source,
as a whole, or in part, and, if in part, the Issuer shall select and designate the maturity or maturities and the
amount that is to be redeemed, and if less than a whole maturity is to be called, the Issuer shall direct the
Paying Agent/Registrar to call by lot (provided that a portion of a Bond may be redeemed only in an integral
multiple of $5,000), at the redemption price of the principal amount thereof, plus accrued interest to the date
fixed for redemption.
THE BONDS OF THIS SERIES scheduled to mature on FEBRUARY 1, 2026 are subject to
mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior
to their scheduled maturities, with money from the Mandatory Redemption Account of the Interest and Sinking
Fund, with the particular Bonds or portion thereofto be redeemed to be selected by the Paying AgentlRegistrar,
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by lot or other customary method (provided that a portion of a Bond may be redeemed only in an integral
multiple of $5,000) at a redemption price equal to the par or principal amount thereof and accrued interest to
the date of redemption, on the dates, and in the principal amounts, respectively, as shown in the following
schedules:
FEBRUARY 1, 2026 MATURITY
Mandatory Redemption Dates
February 1,2023
February 1,2024
February 1,2025
February 1,2026
Principal Amounts
$ 270,000
$ 285,000
$ 300,000
$ 315,000 (payment at maturity)
The principal amount of the Bonds required to be redeemed on each such redemption date pursuant to the
foregoing operation of the Mandatory Redemption Account shall be reduced, at the option of the Issuer, by the
principal amount of any Bonds, which at least 45 days prior to the mandatory sinking fund redemption date,
(I) shall have been acquired by the Issuer and delivered to the Paying Agent/Registrar for cancellation, or (2)
shall have been purchased and canceled by the Paying Agent/Registrar at the request of the Issuer at a price
not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase, or (3) have
been redeemed pursuant to the optional redemption provisions set forth above and not theretofore credited
against a mandatory sinking fund redemption. During any period in which ownership of the Bonds is
determined by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same
maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and
bearing such interest rate shall be selected in accordance with the arrangements between the Issuer and the
securities depository.
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to
maturity a written notice of such redemption shall be sent by the Paying AgentlRegistrar by United States mail,
first class postage prepaid, not less than 30 days prior to the date fixed for any such redemption, to the
registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such
redemption date; provided, however, that the failure to receive such notice, or any defect therein or in the
sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption
of any Bond, and it is hereby specifically provided that the mailing of such notice as required above shall be
the only notice actually required in connection with or as a prerequisite to the redemption of any Bonds or
portions thereof. By the date fixed for any such redemption due provision shall be made with the Paying
AgentlRegistrar for the payment of the required redemption price for the Bonds or portions thereof which are
to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such written notice of
redemption is mailed and if due provision for such payment is made, all as provided above, the Bonds or
portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their
scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be
regarded as being outstanding except for the right of the registered owner to receive the redemption price plus
accrued interest from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of
any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the
same rate, in any denomination or denominations in any integral multiple of$5,000, at the written request of
the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued
to the registered owner upon the surrender thereoffor cancellation, at the expense of the Issuer, all as provided
in the Bond Ordinance.
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THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE
OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the
Paying AgentlRegistrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth
in the Bond Ordinance. Among other requirements for such assignment and transfer, this Bond must be
presented and surrendered to the Paying AgentlRegistrar, together with proper instruments of assignn1ent, in
form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of
this Bond or any portion or portions hereof in any integral multiple of$5,000 to the assignee or assignees in
whose name or names this Bond or any such portion or portions hereof is or are to be transferred and
registered. The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner
or its duly authorized attorney or representative, to evidence the assignment hereof. A new Bond or Bonds
payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond
or Bonds), or to the previous registered owner in the case of the assignn1ent and transfer of only a portion of
this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all
in the form and manner as provided in the next paragraph hereof for the conversion and exchange of other
Bonds. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making
such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required
to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of
registration ofthis Bond or any portion hereof (i) during the period commencing with the close of business on
any Record Date and ending with the opening of business on the next following principal or interest payment
date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45
days prior to its redemption date. The registered owner of this Bond shall be deemed and treated by the Issuer
and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge
ofliability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall
not be affected by any notice to the contrary.
ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest
coupons, in the denomination of any integral multiple of$5,000. As provided in the Bond Ordinance, this
Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or
assignees hereof, be converted into and exchanged for a like aggregate principal amount of fully registered
bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case
may be, having the same maturity date, and bearing interest at the same rate, in any denomination or
denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner,
assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for
cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. The Issuer shall
pay the Paying AgentlRegistrar's standard or customary fees and charges for transferring, converting, and
exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange
shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent
to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required
to make any such conversion and exchange (i) during the period commencing with the close of business on any
Record Date and ending with the opening of business on the next following principal or interest payment date,
or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior
to its redemption date.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or
otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint
a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be
mailed to the registered owners of the Bonds.
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IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized,
issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and
be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed,
and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the full
faith and credit thereof; and that ad valorem taxes sufficient to provide for the payment of the interest on and
principal of this Bond, as such interest and principal come due, have been levied and ordered to be levied
against all taxable property in the Issuer, and have been pledged for such payment, within the limit prescribed
by law.
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of
the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and
records of the goveming body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond
Ordinance constitute a contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF; the Issuer has caused this Bond to be signed with the manual or facsimile
signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City
Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in
facsimile, on this Bond.
City Secretary
Mayor
(CITY SEAL)
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Bond is not accompanied by an executed
Registration Certificate of the Comptroller of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described
in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in exchange for, a
bond, bonds, or a portion of a bond or bonds of a Series which originally was approved by the Attomey General of
the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas.
Dated
U.S.Bank, National Association, Houston, Texas
By
Authorized Representative
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FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative
or attomey thereof, hereby assigns this Bond to
(Assignee's Social Security or Tax Payer
Identification Number)
(Print or type Assignee's Name and Address Including Zip
Code)
and hereby irrevocably constitutes and appoints
Attomey, to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power
of substitution in the premises.
Dated
NOTICE: This signature must be guaranteed by a
member of the New York Stock Exchange or a
commercial bank or trust company.
NOTICE: This signature must correspond with the
name of the Registered Owner appearing on the face of
this Bond in every particular without alteration or
enlargement or any change whatsoever.
Section 8. TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund")
is hereby created solely for the benefit of the Bonds, together with a Mandatory Redemption Account which
shall mean that account established within the Interest and Sinking Fund as provided herein, and the Interest
and Sinking Fund shall be established and maintained by the Issuer at an official depository bank of the Issuer.
The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer,
and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and
collected for and on account of the Bonds shall be deposited, as collected, to the credit of the Interest and
Sinking Fund. During each year while any of the Bonds or interest thereon are outstanding and unpaid, the
governing body of the Issuer shall compute and ascertain a rate and amount of ad valorem tax which will be
sufficient to raise and produce the money required to pay the interest on the Bonds as such interest comes due,
and to provide and maintain a sinking fund adequate to pay the principal of its Bonds as such principal matures
(but never less than 2% of the original principal amount of the Bonds as a sinking fund each year), including
such amounts to satisfy the mandatory redemption schedule for the Bonds maturing February 1,2026, which
shall be deposited into the Mandatory Redemption Account, with such mandatory redemption of principal and
interest constituting payment at maturity, on the dates and for the amount as follows:
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....
FEBRUARY 1,2026 MATURITY
Mandatory Redemption Dates
February 1, 2023
February 1, 2024
February 1,2025
February 1, 2026
Principal Amounts
$ 270,000
$ 285,000
$ 300,000
$ 315,000 (payment at maturity)
Said tax shall be based on the latest approved tax rolls of the Issuer, with full allowance being made for tax
delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is
hereby ordered to be levied, against all taxable property in the Issuer for each year while any of the Bonds or
interest thereon are outstanding and unpaid; and said tax shall be assessed and collected each such year and
deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide
for the payment of the interest on and principal of the Bonds, as such interest comes due and such principal
matures, are hereby pledged. for such payment, within the limit prescribed by law.
Chapter 1208, Government Code, applies to the issuance of the Bonds and the pledge of the taxes
granted by the Issuer under this Section, and is therefore valid, effective, and perfected. Should Texas law be
amended at any time while the Bonds are outstanding and unpaid, the result of such amendment being that the
pledge of the taxes granted by the Issuer under this Section is to be subject to the filing requirements of Chapter
9, Business & Commerce Code, in order to preserve to the registered owners of the Bonds a security interest
in said pledge, the Issuer 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 of a security interest in said pledge to occur.
Section 9. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be deemed
to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except
to the extent provided in subsection (d) of this Section, when payment of the principal of such Bond, plus
interest thereon to the due date (whether such due date be by reason of maturity or otherwise) either (i) shall
have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for
on or before such due date by irrevocably depositing with or making available to the Paying AgentlRegistrar
in accordance with an escrow agreement or other instrument (the "Future Escrow Agreement") for such
payment (1) lawful money of the United States of America sufficient to make such payment or (2) Defeasance
Securities that mature as to principal and interest in such amounts and at such times as will insure the
availability, without reinvestment, of sufficient money to provide for such payment, and when proper
arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services
until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be
a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by,
payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this
Ordinance, and such principal and interest shall be payable solely from such money or Defeasance Securities.
(b) Any moneys so deposited with the Paying AgentlRegistrar may at the written direction of the
Issuer also be invested in Defeasance Securities, maturing in the amounts and times as hereinbefore set forth,
and all income from such Defeasance Securities received by the Paying Agent/Registrar that is not required
for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited,
shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. Any Future Escrow
Agreement pursuant to which the money and/or Defeasance Securities are held for the payment of Defeased
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Bonds may contain provisions permitting the investment or reinvestment of such moneys in Defeasance
Securities or the substitution of other Defeasance Securities upon the satisfaction of the requirements specified
in subsection 9(a)(i) or (ii). All income from such Defeasance Securities received by the Paying
Agent/Registrar which is not required for the payment of the Defeased Bonds, with respect to which such
money has been so deposited, shall be remitted to the Issuer or deposited as directed in writing by the Issuer.
(c) The term "Defeasance Securities" means (i) direct, noncallable obligations of the United States of
America, including obligations that are unconditionally guaranteed by the United States of America., (ii)
noncallable obligations ofan agency or instrumentality of the United States of America, including obligations
that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the
purchase thereof 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 ofa state that have been refunded and that, on the date the goveming body of the
Issuer adopts or approves the proceedings authorizing the financial arrangements are rated as to investment
quality by a nationally recognized investment rating firm not less than AAA or its equivalent.
(d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall
perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been
defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by
this Ordinance.
(e) In the event that the Issuer elects to defease less than all of the principal amount of Bonds of a
maturity, the Paying AgentlRegistrar shall select, or cause to be selected, such amount of Bonds by such
random method as it deems fair and appropriate.
Section 10. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a)
Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the
Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal
amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement
for such Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made by the registered owner thereofto the Paying AgentlRegistrar. In
every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall
fumish to the Issuer and to the Paying AgentlRegistrar such security or indemnity as may be required by them
to save each of them harmless from any loss or damage with respect thereto. Also, in every case ofloss, theft,
or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar
evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case
of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for
cancellation the Bond so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any
such Bond shall have matured, and no default has occurred which is then continuing in the payment of the
principal of, redemption premium, ifany, or interest on the Bond, the Issuer may authorize the payment of the
same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a
replacement Bond, provided security or indemnity is furnished as above provided in this Section.
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(d) Charge for Issuing Reolacement Bonds. Prior to the issuance of any replacement bond, the Paying
Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in
connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of
the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether
or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be
entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly
issued under this Ordinance.
(e) Authority for Issuing Reolacement Bonds. In accordance with Chapter 1207, Texas Government
Code, this Section 10 of this Ordinance shall constitute authority for the issuance of any such replacement bond
without necessity of further action by the governing body of the Issuer or any other body or person, and the
duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and
the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the
effect, as provided in Section 6( d) of this Ordinance for Bonds issued in conversion and exchange for other
Bonds.
Section 11. CUSTODY, APPROVAL AND REGISTRATION OF BONDS: BOND
COUNSEL'S OPINION: CUSIP NUMBERS: AND CONTINGENT INSURANCE PROVISION, IF
OBTAINED. The Mayor of the Issuer is hereby authorized to have control of the Initial Bond issued
hereunder and all necessary records and proceedings pertaining to the Initial Bond pending its delivery and its
investigation, examination, and approval by the Attomey General of the State of Texas, and its registration by
the Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial Bond said
Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually
sign the Comptroller's Registration Certificate on the Initial Bond, and the seal of said Comptroller shall be
impressed, or placed in facsimile, on the Initial Bond. The approving legal opinion of the Issuer's bond counsel
and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Bond or any Bonds issued
and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect,
and shall be solely for the convenience and information of the registered owners of the Bonds. In addition, if
bond insurance is obtained, the Bonds may bear an appropriate legend as provided by the Insurer.
Section 12. COVENANTS REGARDING TAX EXEMPTION. (a) Covenants. The Issuer
covenants to take any action necessary to assure, or refrain from any action that would adversely affect, the
treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not
includable in the "gross income" of the Bonds holder for purposes offederal income taxation. In furtherance
thereof, the Issuer covenants as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds
(less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined
in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed
therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private
business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or
indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds,
in contravention of section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private business use" described
in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the projects fmanced
therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent
21
is used for a "private business use" that is "related" and not "disproportionate," within the meaning of
section 141 (b )(3) of the Code, to the governmental use;
(3) to take any action to assure that no amount that is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if
any) is directly or indirectly used to finance loans to persons, other than state or local governmental
units, in contravention of section 141 (c) of the Code;
(4) to refrain from taking any action that would otherwise result in the Bonds being
treated as "private activity bonds" within the meaning of section 141(b) of the Code;
(5) to refrain from taking any action that would result in the Bonds being "federally
guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly,
to acquire or to replace funds that were used, directly or indirectly, to acquire investment property (as
defined in section 148(b )(2) of the Code) that produces a materially higher yield over the term of the
Bonds, other than investment property acquired with -
(A) proceeds of the Bonds invested for a reasonable temporary period on years
or less or, in the case ofa refunding bond, for a period of30 days or less until such proceeds
are needed for the purpose for which the Bonds are issued,
(B) amounts invested in a bona fide debt service fund, within the meaning of
section 1.148-1 (b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or replacement fund
to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds;
(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as
proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the
requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section
149(d) of the Code (relating to advance refundings); and
(8) to pay to the United States of America at least once during each five-year period
(beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the
"Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States
of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount
then required to be paid as a result of Excess Eamings under section 148(f) of the Code.
(b) Rebate Fund. In order to facilitate compliance with the above covenant (a)(8), a "Rebate Fund"
is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not
be subject to the claim of any other person, including without limitation the Bondholders. The Rebate Fund
is established for the additional purpose of compliance with section 148 of the Code.
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(c) Use of Proceeds . For purposes of the foregoing covenants (a)(1) and (a )(2), the Issuer understands
that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case
of refunding Bonds, transferred proceeds (if any) and proceeds of the refunded Bonds expended prior to the
date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are
intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S.
Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated
that modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to
comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally
recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on
the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated
that impose additional requirements applicable to the Bonds, the Issuer agrees to comply with the additional
requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the
exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance
of such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents, certificates
or reports required by the Code and to make such elections, on behalf of the Issuer, that may be permitted by
the Code as are consistent with the purpose for the issuance of the Bonds.
Section 13. ALLOCATION OF. AND LIMITATION ON. EXPENDITURES FOR THE
PROJECT. The Issuer covenants to account for the expenditure of sale proceeds and investment eamings to
be used for the purposes described in Section 1 of this Ordinance (the "Project") on its books and records by
allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made,
or (2) the Project is completed. The foregoing notwithstanding, the Issuer shall not expend sale proceeds or
investment eamings thereon more than 60 days after the earlier of (I) the fifth anniversary of the delivery of
the Bonds, or (2) the date the Bonds are retired, unless the Issuer obtains an opinion of nationally-recognized
bond counsel that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes
hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure
to comply will not adversely affect the excludability for federal income tax purposes from gross income of the
interest.
Section 14. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting
the Projects financed by the Bonds will not be sold or otherwise disposed in a transaction resulting in the receipt
by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally-recognized bond
counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For
purposes of the foregoing, the portion of the property comprising personal property and disposed in the
ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For
purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such
failure to comply will not adversely affect the excludability for federal income tax purposes from gross income
of the interest.
Section 15. CONTINUING DISCLOSURE. (a) Annual Reports. (i) The Issuer shall provide
annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after
2006, financial information and operating data with respect to the Issuer of the general type included in the final
Official Statement authorized by Section 17 of this Ordinance, being the information described in Exhibit A.
Any financial statements so to be provided shall be prepared in accordance with the accounting principles
described in Exhibit A thereto, or such other accounting principles as the Issuer may be required to employ
from time to time pursuant to state law or regulation, and audited, if the Issuer commissions an audit of such
statements and the audit is completed within the period during which they must be provided. If the audit of
23
....
such financial statements is not complete within such period, then the Issuer shall provide audited financial
statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such
statements become available.
(ii) If the Issuer 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 Issuer 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 SEe.
(b) Material Event Notices. The Issuer shall notify any SID and either each NRMSIR or the
MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material
within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds; and
II. Rating changes.
The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by
the Issuer to provide fmancial information or operating data in accordance with subsection (a) of this Section
by the time required by such subsection.
(c) Limitations_ Disclaimers_ and Amendments. (i) The Issuer shall be obligated to observe and
perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an
"obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in any event
will give notice of any deposit made in accordance with this Ordinance or applicable law that causes Bonds
no longer to be outstanding.
(ii) 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 Issuer 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 Issuer'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 Issuer 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.
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(iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER 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 ISSUER,
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.
(iv) No default by the Issuer in observing or performing its obligations under this Section shall
comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer
under federal and state securities laws.
(v) The provisions of this Section may be amended by the Issuer from time to time to adapt to changed
circumstances that arise from a change in legal requirements, a change in law, or a change in the identity,
nature, status, or type of operations of the Issuer, but only if(l) 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 since such
offering 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 Issuer (such as bond counsel) determined that such amendment will not materially impair the interest of the
holders and beneficial owners of the Bonds. If the Issuer so amends the provisions of this Section, it shall
include with any amended financial information or operating data next provided in accordance with subsection
(a) of this Section an explanation, in narrative form, of the reason for the amendment and of the impact of any
change in the type of financial information or operating data so provided. The Issuer may also amend or repeal
the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision
of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only
if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully
purchasing or selling Bonds in the primary offering of the Bonds.
(d) 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.
"SEe" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department, officer, or
agency thereof as, and determined by the SEC or its staff to be, a state information depository within
the meaning of the Rule from time to time.
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Section 16. SALE OF BONDS AND USE OF NET PREMIUM. (a) The Initial Bond is hereby
sold and shall be delivered to SOUTHWEST SECURITIES (the "Underwriter") for cash for the price of
$4,269,219.75, being the par value of$4,215,000 thereof, less an original issue discount of$3,590.60, plus
a reoffering premium of$87,855.85, less Underwriter's discount of$30,045.50, plus accrued interest (accrued
interest to be deposited into the Interest and Sinking Fund) to the date of delivery pursuant to the terms and
provisions of a Purchase Agreement with the Underwriter. It is hereby officially found, determined, and
declared that the Initial Bond has been sold pursuant to the terms and provisions of a Purchase Agreement in
substantially the form attached hereto as Exhibit B, which the Mayor of the Issuer is hereby authorized and
directed to execute and deliver and which the City Secretary of the issuer is hereby authorized and directed to
attest. It is hereby officially found, determined, and declared that the terms of this sale are the most
advantageous reasonably obtainable. The Initial Bond shall be registered in the name of SOUTHWEST
SECURITIES.
(b) The Bonds are being sold at a premium equal to $87,855.85, less an original issue discount equal
to $3,590.60, less $30,045.50 to be used to pay the Underwriter's Discount, resulting in a net premium of
$54,219.75. Thus, the $1,200,000 total principal an10unt of the Bonds, which are being issued for Park
Improvements and $3,015,000 of principal amount of the Bonds to be issued for Street Improvements, plus
the net premium of $54,219.75 results in a total principal plus net premium of $4,269,219.75 to be issued
pursuant to the voted authorization. Therefore, the voted authorization of Bonds which are being issued for
the purpose of Park Improvements is $1,200,000 and voted authorization of Bonds which are being issued for
the purpose of Street Improvements is $3,065,000, being $3,015,000 in principal amount of the Bonds plus
$50,000 in net premium leaving $4,219.75 in excess premium to be deposited into the Interest and Sinking
Fund and used to pay principal and interest. Therefore, the unissued balance of Street Improvement bonds is
$6,180,000.
Section 17 . APPROVAL OF OFFICIAL STATEMENT. The Issuer hereby approves the form
and content of the Official Statement relating to the Bonds and any addenda, supplement or amendment thereto,
and approves the distribution of such Official Statement in the reoffering of the Bonds by the Underwriter in
final form, with such changes therein or additions thereto as the officer executing the same may deem advisable,
such determination to be conclusively evidenced by his execution thereof. The Preliminary Official Statement,
dated August 15,2006, is hereby approved and deemed final as of its date, as required by SEC Rule 15-2-12,
and the distribution and use of the Preliminary Official Statement prior to the date hereof is hereby ratified and
confirmed.
Section 18. INSURANCE. The Issuer approves the insurance of the Bonds by XL Capital
Asssurance Inc., and the payment of such premium and covenants to comply with all terms of the insurance
commitment attached hereto as Exhibit C, which terms are hereby adopted.
Section 19. INTEREST EARNINGS ON BOND PROCEEDS. The eamings derived from the
investment of proceeds from the sale of the Bonds shall be used along with other Bond proceeds as described
in Section 1 hereof; provided that after completion of such project, if any of such interest earnings remain on
hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however,
that interest earnings on the Bond proceeds which are required to be rebated to the United States of America
pursuant to Section 14 hereof in order to prevent the Bonds from being arbitrage bonds shall be so rebated and
not considered as interest eamings for the purpose of this Section.
Section 20. PUBLIC NOTICE. It is hereby officially found and determined that public notice of
the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas Government
Code, and no petition was received from the qualified electors of the Issuer protesting the issuance of such
Bonds.
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EXHIBIT A
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 15 of this Ordinance.
I. Annual Financial Statements and Operating Data
The financial information and operating data with respect to the Issuer 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 and Tables referred to) below:
Table Nos. 1 through 6 and 8 through 15 and in Appendix B
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in the
notes to the financial statements referred to in paragraph I above.
T
EXHIBIT B
PURCHASE AGREEMENT
THE PURCHASE AGREEMENT IS OMITTED AT THIS POINT AS IT APPEARS
ELSEWHERE IN THE TRANSCRIPT.
T
EXHIBIT C
INSURANCE COMMITMENT
T
EXHIBIT C
)XtbCAPITAL ASSURANCE
COMMITMENT TO ISSUE A
FINANCIAL GUARANTY INSURANCE POLICY
XL Capital Assurance Inc.
1221 Avenue of the Americas
New York, hlY 10020-1001
Phone 212478-3400
Fax 212 4"18-3587
www.xlca.com
Ms. Jennifer Armstrong
City of Coppell
Chad Beach
255 Parkway Boulevard
Coppell, TX 75019
Re: $8,050,000 (est.) City ofCoppell (Dallas and Denton Counties), Texas, Consisting of:
$4,265,000 (est.) General Obligation Bonds, Series 2006 and $3,785,000 (est.) Combination
Tax and Revenue Certificates of Obligation, Series 2006 (the "Obligations")
Dear Ms Annstrong:
This commitment to issue a financial guaranty insurance policy (the "Commitment") dated
August 15,2006, constitutes an agreement between City ofCoppell, (Dallas and Denton Counties),
Texas (the "Obligor") and XL Capital Assurance Inc. (the "Insurer"), a stock insurance company
incorporated under the laws of the State of New York.
The Insurer agrees, upon satisfaction of the conditions herein, to issue on the closing date, a
financial guaranty insurance policy (the "Policy") for the Obligations, insuring the payment of
principal of and interest on the Obligations when due. The issuance of the Policy shall be subject to
the following terms and conditions:
1. As compensation for issuing the Policy and guaranteeing certain payments with respect to the
Obligations, the Insurer will be paid by the Obligor a nonrefundable, one-time up front premium
of 17.3 basis points of total debt service (the "Premium").
2. The Obligations shall have received the unqualified opinion of bond counsel with respect to the
tax-exempt status of interest on the Obligations.
3. There shall have been no material adverse change in the Obligations, the Transaction
Documents or other underlying transaction documents or in the offering memorandum or other
similar document, including the financial statements included therein.
4. There shall have been no material adverse change in any information submitted to the Insurer
in connection with its review and evaluation of the Obligations.
5. No event shall have occurred which would allow any underwriter or any other purchaser of the
Obligations not to be required to purchase the Obligations at closing.
6. A Statement of Insurance in form and substance satisfactory to the Insurer shall be printed on
the Obligations.
7. Prior to the delivery of and payment for the Obligations, none of the information or documents
submitted to the Insurer in connection with its review and evaluation of the Obligations shall be
A mel7'lber 01 the XL Capital group
T
determined to contain any untrue or misleading statement of a material fact or fail to state a
material fact required to be stated therein or necessary in order to make the statements
contained therein not misleading.
8. No material adverse change affecting any security for the Obligations shall have occurred prior
to the delivery of and payment for the Obligations.
9. The underlying documentation relating to the issuance of the Policy, the Obligations and the
repayment of amounts drawn under the Policy, including the underlying financial documents,
any certificates, any legal opinions and any other documents, shall be complete and in form and
substance acceptable to the Insurer.
10. No preliminary official statement may use XLCA's name or form disclosure without the prior
consent of XLCA.
11. The Official Statement relating to the Obligations shall, to the extent it contains disclosure
regarding the Insurer, incorporate the narrative attached to this Commitment, with any changes
the Insurer determines should be made.
12. Compliance with the Insurer's Standard XLCA Provisions (see attached).
13. This Commitment may be signed in counterpart by the parties hereto.
14. This Commitment may be modified by the parties only in writing, signed by both parties.
15. This Commitment shall terminate on November 15, 2006.
Dated this 15th day of August of 2006.
By
enriN.Gourd
II Managing Direyor
/
,;
City ofCoppell (Dallas and Denton Counties), Texas
By:
Name:
Title:
Date
....
FORM OF STANDARD DISCLOSURE
Dated as of August 5, 2006
{Any changes to this form are subject to
XLeA legal review]
DESCRIPTION OF THE INSURER
The following information has been supplied by the Insurer for inclusion in this Official
Statement. No representation is made by IssuerlUnderwriter as to the accuracy or completeness
of the information.
The Insurer accepts no responsibility for the accuracy or completeness of this Official
Statement or any other info1TI1ation or disclosure contained herein, or omitted herefrom, other
than with respect to the accuracy of the information regarding the Insurer and its affiliates set
forth under this heading. In addition, the Insurer makes no representation regarding the Bonds or
the advisability of investing in the Bonds.
General
XL Capital Assurance Inc. (the "Insurer" or "XLCA") is a mono line [mancial guaranty
insurance company incorporated under the laws of the State of New York. The Insurer is
currently licensed to do insurance business in, and is subject to the insurance regulation and
supervision by, all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and
Singapore.
The Insurer is an indirect wholly owned subsidiary of Security Capital Assurance Ltd
("SCA"), a company organized under the laws of Bermuda. Through its subsidiaries, SCA
provides credit enhancement and protection products to the public finance and structured finance
markets throughout the United States and intemationally. XL Capital Ltd beneficially owns
approximately 65% of SCA's outstanding shares. The common shares of SCA are publicly
traded in the United States and listed on the New York Stock Exchange (NYSE: SCA). SCA is
not obligated to pay the debts of or claims against the Insurer.
Financial Strength and Financial Enhancement Ratings of XLCA
The Insurer's insurance financial strength is rated "Aaa" by Moody's and "AAA" by
Standard & Poor's and Fitch, Inc. ("Fitch"). In addition, the Insurer has obtained a financial
enhancement rating of"AAA" [rom Standard & Poor's. These ratings reflect Moody's, Standard
& Poor's and Fitch's current assessment of the Insurer's creditworthiness and claims-paying
ability as well as the reinsurance arrangement with XLF A described under "Reinsurance" below.
The above ratings are not recommendations to buy, sell or hold securities, including the
Bonds and are subject to revision or withdrawal at any time by Moody's, Standard & Poor's or
....
Fitch. Any downward revision or withdrawal of these ratings may have an adverse effect on the
market price of the Bonds. The Insurer does not guaranty the market price of the Bonds nor does
it guaranty that the ratings on the Bonds will not be revised or withdrawn.
Reinsurance
The Insurer has entered into a facultative quota share reinsurance agreement with XLF A,
an insurance company organized under the laws of Bermuda, and an affiliate of the Insurer.
Pursuant to this reinsurance agreement, the Insurer expects to cede up to 75% of its business to
XLF A. The Insurer may also cede reinsurance to third parties on a transaction-specific basis,
which cessions may be any or a combination of quota share, fIrst loss or excess of loss. Such
reinsurance is used by the Insurer as a risk management device and to comply with statutory and
rating agency requirements and does not alter or limit the Insurer's obligations under any
financial guaranty insurance policy. With respect to any transaction insured by XLCA, the
percentage of risk ceded to XLF A may be less than 75% depending on certain factors including,
without limitation, whether XLCA has obtained third party reinsurance covering the risk. As a
result, there can be no assurance as to the percentage reinsured by XLF A of any given financial
guaranty insurance policy issued by XLCA, including the Policy.
Based on the audited financials ofXLF A, as of December 31, 2005, XLF A had total
assets, liabilities, redeemable preferred shares and shareholders' equity of $1 ,394,081 ,000,
$704,007,000, $39,000,000 and $651,074,000, respectively, determined in accordance with
generally accepted accounting principles in the United States ("US GAAP"). XLFA's insurance
financial strength is rated "Aaa" by Moody's and "AAA" by S&P and Fitch Inc. In addition,
XLFA has obtained a financial enhancement rating of"AAA" from S&P.
The ratings of XLF A or any other member of the SCA group of companies are not
recommendations to buy, sell or hold securities, including the Bonds and are subject to revision
or withdrawal at any time by Moody's, Standard & Poor's or Fitch.
Notwithstanding the capital support provided to the Insurer described in this section, the
Bondholders will have direct recourse against the Insurer only, and XLF A will not be directly
liable to the Bondholders.
Capitalization of the Insurer
Based on the audited financials of XLCA, as of December 31, 2005, XLCA had total
assets, liabilities, and shareholder's equity of $953,706,000, $726,758,000, and $226,948,000,
respectively, determined in accordance with U.S. GAAP.
Based on the audited statutory financial statements for XLCA as of December 31, 2005
filed \\'ith the State of New York Insurance Department, XLCA has total admitted assets of
$328,231,000, total liabilities of $139,392,000, total capital and surplus of $188,839,000 and
total contingency reserves of $13,031,000 determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities ("SAP").
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Incorporation by Reference of Financials
For further information concerning XLCA and XLFA, see the financial statements of
XLCA and XLF A, and the notes thereto, incorporated by reference in this Official Statement.
The financial statements of XLCA and XLF A are included as exhibits to the periodic reports
filed with the Securities and Exchange Commission (the "Commission") by SCA, with respect to
all periods ending after August 4, 2006, and by XL Capital Ltd, with respect to all periods ending
prior to August 4, 2006, and may be reviewed at the EDGAR website maintained by the
Commission. All financial statements of XLCA and XLF A included in, or as exhibits to,
documents filed by SCA or XL Capital Ltd pursuant to Section l3(a), l3(c), 14 or 15(d) of the
Securities Exchange Act of 1934 on or prior to the date of this Official Statement, or after the
date of this Official Statement but prior to termination of the offering of the Bonds, shall be
deemed incorporated by reference in this Official Statement. Except for the financial statements
ofXLCA and XLFA, no other information contained in the reports filed with the Commission by
SCA or XL Capital Ltd is incorporated by reference. Copies of the statutory quarterly and annual
statements filed with the State of New York Insurance Department by XLCA are available upon
request to the State of New York Insurance Department.
Regulation of the Insurer
The Insurer is regulated by the Superintendent ofInsurance of the State of New York. In
addition, the Insurer is subject to regulation by the insurance laws and regulations of the other
jurisdictions in which it is licensed. As a financial guaranty insurance company licensed in the
State of New York, the Insurer is subject to Article 69 of the New York Insurance Law, which,
among other things, limits the business of each insurer to financial guaranty insurance and
related lines, prescribes minimum standards of solvency, including minimum capital
requirements, establishes contingency, loss and unearned premium reserve requirements,
requires the maintenance of minimum surplus to policyholders and limits the aggregate amount
of insurance which may be written and the maximum size of any single risk exposure which may
be assumed. The Insurer is also required to file detailed annual financial statements with the
New York Insurance Department and similar supervisory agencies in each of the other
jurisdictions in which it is licensed.
The extent of state insurance regulation and supervision varies by jurisdiction, but New
York and most other jurisdictions have laws and regulations prescribing permitted investments
and governing the payment of dividends, transactions with affiliates, mergers, consolidations,
acquisitions or sales of assets and incurrence of liabilities for borrowings.
THE FINANCIAL GUARANTY INSURANCE POLICIES ISSUED BY THE
INSURER, INCLUDING THE INSURANCE POLICY, ARE NOT COVERED BY THE
PROPERTY/CASUAL TY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76
OF THE NEW YORK INSURANCE LAW.
The principal executive offices of the Insurer are located at 1221 Avenue of the
Americas, New York, New York 10020 and its telephone number at this address is (212) 478-
3400.
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STANDARD XLCA PROVISIONS
A. Notice to XLCA. The financing documents must provide that any notices
required to be given by any party should also be given to XLCA,
Attn: Surveillance.
B. Amendments. XLCA's consent must be required for all amendments to the
financing documents and XLCA must be given prior notice of any such
amendment. All financing documents must contain a provision which requires
copies of any amendments to such documents which are consented to by XLCA
to be sent to S&P.
C. Supplemental Legal Document. If the financing document provides for a
supplemental financing document to be issued for reasons other than (1) a
refunding to obtain savings or (2) the issuance of additional bonds pursuant to an
additional bonds test, there must be a requirement that XLCA' s consent also be
obtained prior to the issuance of any additional bonds and/or execution of such
supplemental financing document.
D. Events of Default. All financing documents normally contain provisions which
define the events of default and which prescribe the remedies that may be
exercised upon the occurrence of an event of default. At a minimum, events of
default must be defined as follows:
1. the issuer/obligor fails to pay principal when due;
2. the issuer/obligor fails to pay interest when due;
3. the issuer/obligor fails to observe any other covenant or condition of the
document and such failure continues for 30 days; and
4. the issuer/obligor declares bankruptcy.
E. Remedies. XLCA, acting alone, must have the right to direct all remedies upon
the occurrence of an event of a default. XLCA must be recognized as the owner
of each bond which it insures for the purposes of exercising all rights and
privileges available to owners. For bonds which it insures, XLCA must have the
right to institute any suit, action, or proceeding at law or in equity under the same
terms as an owner in accordance with applicable provisions of the governing
documents. Other than scheduled sinking fund redemptions, any acceleration of
principal payments must be subject to XLCA's prior written consent.
F. Defeasance. The following will be permitted investments for purposes of
defeasance:
1. Cash.
2. U.S. Treasury Certificates, Notes and Bonds (including State and Local
Government Series - (SLGs)).
3. Direct obligations of the U.S. Treasury which have been stripped by the
U.S. Treasury itself.
4. Resolution Funding Corp. ("REFCORP'). Only the interest component
of REFCORP strips which have been stripped by request to the Federal
Reserve Bank of New York in book entry form are acceptable.
5. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by
S&P. If, however, the issue is only rated by S&P (i.e., there is no
Moody's rating) then the pre-refunded bonds must have been pre-refunded
with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-
refunded municipals to satisfy this condition.
6. Obligations issued by the following agencies which are backed by the full
faith and credit of the U.S.:
a. US. Export-Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial
ownership
b. Farmers Home Administration (FmHA)
c. Federal Financing Bank
d. General Services Administration
Participation Certificates
e. Us. Maritime Administration
Guaranteed Title XI financing
f. Us. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed
debentures
U.S. Public Housing Notes and Bonds - U.S. government
guaranteed public housing notes and bonds
G. Agents:
1. In transactions where there is an agent/enhancer (other than XLeA), the
trustee, tender agent (if any), and paying agent (if any) must be
commercial banks with trust powers.
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2. The remarketing agent (if any) must have trust powers if they are
responsible for holding moneys or receiving bonds. As an alternative, the
documents may provide that if the remarketing agent is removed, resigns
or is unable to perform its duties, the trustee must assume the
responsibilities of remarketing agent until a substitute acceptable to XLCA
is appointed.
H. XLCA as Third Party Beneficiary. XLCA must be explicitly recognized as being
a third-party beneficiary under the financing documents with the power to enforce
any right, remedy or claim conferred, given or granted under such financing
documents.
I. Subrogation. If principal and/or interest due on the Obligations shall be paid by
XLCA, the Obligations shall remain outstanding under the indenture, resolution
or any similar document for all purposes, and shall not be deemed defeased or
otherwise satisfied, or paid by the issuer, and the assignment and pledge of the
trust estate and all covenants, agreements and other obligations of the issuer to the
owners shall continue to exist and shall run to the benefit of XLCA, and XLCA
shall be subrogated to the rights of such owners.
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PERMISSIBLE INVESTMENTS
A. Direct obligations of the United States of America (including obligations issued
or held in book-entry form on the books of the Department of the Treasury, and
CATS and TIGRS) or obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America.
B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following federal agencies and provided such obligations are backed
by the full faith and credit of the Untied States of America (stripped securities are
only permitted if they have been stripped by the agency itself):
1. U.S. Export-Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
2. Farmers Home Administration (FmHA)
Certificates of Beneficial Ownership
3. Federal Financing Bank
4. Federal Housing Administration Debentures (FHA)
5. General Services Administration
Participation eertificates
6. Government National Mortgage Association (GNMA or Ginnie Mae)
GNMA - guaranteed mortgage-backed bonds
GNMA - guaranteed pass-through obligations
(these obligations are not acceptable for certain cash-flow sensitive
issues)
7. U.S. Maritime Administration
Guaranteed Title XI financing
8. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed
public housing notes and bonds
C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following federal agencies which are not backed by the full faith
and credit of the United States of America (stripped securities are only permitted
if they have been stripped by the agency itself):
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I. Federal Home Loan Bank System
Senior debt obligations
2. Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac)
Participation Certificate
Senior debt obligations
3. Federal National Mortgage Association (FNMA or Fannie Mae)
Mortgage-backed securities and senior debt obligations
4. Student Loan Marketing Association (SLMA or Sallie Mae)
Senior debt obligations
5. Resolution Funding Corp. (REFCORP) obligations
6. Farm eredit System
Consolidated systemwide bonds and notes
D. Money market funds registered under the Federal Investment Company Act of
1940, whose shares are registered under the Federal Securities Act of 1933, and
having a rating by S&P of AAAm-G; AAA-m; or AA-m and if rated by Moody's
rated Aaa, Aal or Aa2.
E. Certificates of deposit secured at all times by collateral described in (A) and/or
(B) above. Such certificates must be issued by commercial banks, savings and
loan associations or mutual savings banks. The collateral must be held by a third
party and the bondholders must have a perfected first security interest in the
collateral.
F. Certificates of deposit, savings accounts, deposit accounts or money market
deposits which are fully insured by FDIC, including BIF and SAIF.
G. Investment Agreements, including GIC's, Forward Purchase Agreements and
Reserve Fund Put Agreements acceptable to XLCA.
H. Commercial paper rated, at the time of purchase, "Prime -1" by Moody's and
"A-I" or better by S&P.
1. Bonds or notes issued by any state or municipality which are rated by Moody's
and S&P in one of the two highest rating categories assigned by such rating
agencies.
J. Federal funds or bankers acceptances\vith a maximum term of one year of any
bank which has an unsecured, uninsured and unguaranteed obligation rating of
"Prime - 1" or "A3" or better by Moody's and "A-I" or "A" or better by S&P.
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K. Repurchase Agreements ("Repos") for 30 days or less must follow the following
criteria. Repos which exceed 30 days must be acceptable to XLCA (criteria
available upon request).
Repos provide for the transfer of securities from a dealer bank or securities firm
(seller/borrower) to a municipal entity (buyerllender), and the transfer of cash
from a municipal entity to the dealer bank or securities firm with an agreement
that the dealer bank or securities firm will repay the cash plus a yield to the
municipal entity in exchange for the securities at a specified date.
1. Repos must be between the municipal entity and a dealer bank or
securities firm.
a. Primary dealers on the Federal Reserve reporting dealer list which
are rated A or better by S&P and A2 or better by Moody's, or
b. Banks rated "A" or better by S&P and A2 or better by Moody's.
2. The written repurchase agreement must include the following:
a. Securities which are acceptable for transfer are:
(1) Direct obligations of the United States of America referred
to in Section A above, or
(2) Obligations of federal agencies referred to III Section B
above
(3) Obligations ofFNMA and FHLMC
b. The term of the Repos may be up to 30 days.
c. The collateral must be delivered to the municipal entity, trustee (if
trustee is not supplying the collateral) or third party acting as agent
for the trustee is (if the trustee is supplying the collateral)
before/simultaneous with payment (perfection by possession of
certificated securities).
d. Valuation of Collateral.
(1) the securities must be valued weekly, marked-to-market at
current market price plus accrued interest.
(2) The value of collateral must be equal to 104% of the
amowlt of cash transferred by the municipal entity to the
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dealer bank or security firm under the repo plus accrued
interest. If the value of securities held as collateral slips
below 104% of the value of the cash transferred by the
municipal entity, then additional cash and/or acceptable
securities must be transferred. If, however, the securities
used as collateral are FNMA or FHLMC, then the value of
collateral must equal 105%.
3. A legal opinion which must be delivered to the municipal entity that states
that the Repo meets guidelines under state law for legal investment of
public funds.
Additional Notes
(i) There is no list of permitted investments for non-indentured funds. Your own
credit judgment and the relevant circumstances (e.g., amount of investment and
timing of investment) should dictate what is permissible.
(ii) Any state administered pool investment fund in which the issuer is statutorily
permitted or required to invest will be deemed a permitted investment.
(iii) DSRF investments should be valued at fair market value and marked to market at
least once per year. DSRF investments may not have maturities extending
beyond 5 years, except for Investment Agreements or Repurchase Agreements
approved by the XLCA.
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)X4bCAPITAl ASSURANCE
1221 Avenue ofthe Americas
New York, New York 10020
Telephone: (212) 478-3400
MUNICIPAL BOND
INSURANCE POLICY
ISSUER:
Policy No: [
BONDS:
Effective Date: [
XL Capital Assurance Inc. (XLCA), a New York stock insurance company, in consideration of the payment of the
premium and subject to the terms of this Policy (which includes each endorsement attached hereto), hereby agrees
unconditionally and irrevocably to pay to the trustee (the "Trustee") or the paying agent (the "Paying Agent") (as set forth in
the documentation providing for the issuance of and securing the Bonds) for the benefit ofthe Owners of the Bonds or, at the
election of XLCA, to each Owner, that portion of the principal and interest on the Bonds that shall become Due for Payment
but shall be unpaid by reason of Nonpayment.
XLCA will pay such amounts to or for the benefit of the Owners on at 0
interest becomes Due for Payment or one (1) Business Day following the u 'ness on hich XLCA shall have received
Notice of Nonpayment (provided that Notice will be deemed received a e Bu 'ness D ifit is received prior to 10:00
a.m. New York time on such Business Day; otherwise it will be de med ceo ext siness Day), but only upon
receipt by XLCA, in a form reasonably satisfactory to it, of Y1 en f t wn s t to receive payment of the
principal or interest then Due for Payment and (b) evidence in udin a ap opri e 'ns ments of assignment, that all of
the Owner's rights with respect to payment of such pri ip 0 i er t a' r Payment shall thereupon vest in
XLCA, Upon such disbursement, XLCA shall beco tn 0 eo, any' ppurtenant coupon to the Bond or the
right to receipt of payment of principal and interest nile y subrogated to the rights of the Owner,
including the Owner's right to receive paymen n t B ex any payment by XLCA hereunder. Payment
by XLCA to the Trustee or Paying Agent for e bet 0 he a , to the extent thereof, discharge the obligation of
XLCA under this Policy.
ha any payment of principal or interest on a Bond which has
mer by r on behalf of the Issuer of the Bonds has been recovered from
co 0 petent jurisdiction that such payment constitutes an avoidable
o y a licable bankruptcy law, such Owner will be entitled to payment from
ffic' nt fu s are not otherwise available.
ve e meanings specified for all purposes of this Policy, except to the extent such terms
n n 0 this Policy. "Business Day" means any day other than (a) a Saturday or Sunday
tions in the State of New York or the Insurer's Fiscal Agent are authorized or required
by law or executive order to emai losed. "Due for Payment", when referring to the principal of Bonds, is when the stated
maturity date or a mandatory re emption date for the application of a required sinking fund installment has been reached and
does not refer to any earlier date on which payment is due by reason of call for redemption (other than by application of
required sinking fund installments), acceleration or other advancement of maturity, unless XLCA shall elect, in its sole
discretion, to pay such principal due upon such acceleration; and, when referring to interest on the Bonds, is when the stated
date for payment of interest has been reached. ''Nonpayment'' means the failure of the Issuer to have provided sufficient
funds to the Trustee or Paying Agent for payment in full of all principal and interest on the Bonds which are Due for
Payment. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by
registered or certified mail, from an Owner, the Trustee or the Paying Agent to XLCA which notice shall specify (a) the
person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount
became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is
entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or
entity whose direct or indirect obligation constitutes the underlying security for the Bonds.
XLCAP-005-TX
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XLCA may. by giving written notice to the Trustee and the Paying
Fiscal Agent") for purposes of this Policy. From and after the date of receiBt
notice, which shall specify the name and notice address of the Insurer's F' al
delivered to XLCA pursuant to this Policy shall be simultaneously del' ered
shall not be deemed received until received by both and (b) all pa e r
may be made directly by XLCA or by the lnsurer's Fiscal Agent beR
of XLCA only and the lnsurer's Fiscal Agent shall in no even I 0
or any failure ofXLCA to deposit or cause to be deposite s
t .s Policy is non-cancelable by XLCA, and
cy oes not insure against loss of any prepayment
e e t of any Bond, other than at the sole option of
rth the full undertaking of XLCA and shall not be
uding any modification or amendment thereto.
executed on its behalfby its duly authorized officers.
SP
SPECIMEN
Name:
Title:
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>X4b CAPITAL ASSURANCE
]221 Avenue ofthe Americas
New York, New York 10020
Telephone: (212) 478-3400
In connection with any fidelity bond, XL C
cancel or refuse to renew a policy or cant ct
the policyholder in question is an el e
A. CancelIation/N on-renewal
I. TEXAS AMENDATORY ENDORSEMENT
B.
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}XtbCAPITAL ASSURANCE
1221 Avenue of the Americas
New York, New York 10020
Telephone: (212) 478-3400
II. IMPORTANT NOTICE
To obtain information or make a complaint, you may con
General Counsel
(212) 478-3400
You may also call the toll-free number at
make a complaint:
epartment of Insurance to obtain information on companies,
ts at:
1-800-252-3439
You may write the Texas Department of Insurance
P.O. Box l49104
Austin, TX 78714-9104
Fax: (512) 475-177l
A. PREMIUM OR CLAIM DISPUTES
Should you have a dispute concerning your premium or about a claim, you should first
contact XL Capital Assurance Inc. If the dispute is not resolved, you may contact the
Texas Department of Insurance.
B. ATTACH TillS NOTICE TO YOUR POLICY
This notice is for information only and does not become a part or condition of the
attached document.
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STATEMENT OF INSURANCE
XL Capital Assurance Inc. ("XLCA"), New York, New York, has delivered its municipal bond
insurance policy (the "Policy") with respect to the scheduled payments due of principal of and
interest on this Bond to , (city) (state) , or its
successor, as paying agent (the "Paying Agent") for the (Name of the Bonds)
Said Policy is on file and
available for inspection at the principal office of the Paying Agent and a copy thereof may
be obtained from XLCA or the Paying Agent.
PAYMENTS UNDER THE POLICY
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 Issuer] under the Resolution, after
making all transfers and deposits required under the Resolution, moneys sufficient to pay the
principal of, and interest on, Insured Bonds due on such Payment Date, [the Issuer] shall give notice
to XLCA and to its designated agent (if any) (the "Insurer's Fiscal Agent"), by telephone or
telecopy, of the amount of such deficiency by lO:OO a.m., New York City time, on such Business
Day. If, on the Business Day prior to the related Payment Date, there is not on deposit with the
Trustee moneys sufficient to pay the principal of, and interest on, the Insured Bonds due on such
Payment Date, the Trustee shall make a claim under the Insurance Policy and give notice to XLCA
and XLCA' s Fiscal Agent (if any) by telephone of the amount of any deficiency in the amount
available to pay principal and interest, and the allocation of such deficiency between the amount
required to pay interest on the Insured Bonds and the amount required to pay principal of the
Insured Bonds, confirmed in writing to the related Insurer and XLCA's Fiscal Agent by 10:00 a.m.,
New York City time, on such Business Day, by delivering the Notice of Nonpayment and
Certificate.
For the pmposes of the preceding paragraph, "Notice" means telephonic or telecopied
notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail,
from the Trustee to XLCA, which notice shall specify (a) the name of the entity making the claim,
(b) the policy number, (c) the claimed amount and (d) the date such claimed amount will become
Due for Payment. "Nonpayment" means the failure of [the Issuer] to have provided sufficient funds
to the Trustee for payment in full of all principal of, and interest on, the XLCA Insured Bonds that
are Due for Payment. "Due for Payment", when referring to the principal ofInsured bonds, means
when the stated maturity date or mandatory redemption date for the application of a required
sinking fund installment has been reached and does not refer to any earlier date on which payment
is due by reason of call for redemption (other than by application of required sinking fund
installments, acceleration or other advancement of maturity, unless XLCA shall elect, in its sole
discretion, to pay such principal due upon such acceleration; and when referring to interest on
Insured Bonds, means when the stated date for payment of interest has been reached. "Certificate"
means a certificate in form and substance satisfactory to XLCA as to the Trustee's right to receive
payment under the Insurance Policy.
The Trustee shall designate any portion of payment of principal on Insmed Bonds paid by
XLCA at matmity on its books as a reduction in the principal amount of Insured Bonds registered to
the then cun-ent Bondholder, whether DYC or its nominee or otherwise, and shall issue a
replacement Insured Bond to XLCA, registered in the name of XLCA, as the case may be, in a
principal amount equal to the amount of principal so paid (without regard to authorized
denominations); provided that the Trustee's failme to so designate any payment or issue any
replacement Insured Bond shall have no effect on the amount of principal or interest payable by [the
Issuer] on any Insured Bond or the subrogation rights ofXLCA.
The Trustee shall keep a complete and accurate record of all funds deposited by XLCA into
the Policy Payments Account (as hereinafter defined) and the allocation of such funds to payment of
interest on and principal paid with respect to any Insured Bond. XLCA shall have the right to
inspect such records at reasonable times upon reasonable notice to the Trustee.
Upon payment of a claim under the Insurance Policy, the Trustee shall establish a separate
special purpose trust account for the benefit of holders ofInsured Bonds referred to herein as the
"Policy Payments Account" and over which the Trustee shall have exclusive control and sole right
of withdrawal. The Trustee shall receive any amount paid under Insurance Policy in trust on behalf
of holders ofInsured Bonds 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 Trustee to holders of Insured Bonds in the same manner as
principal and interest payments are to be made with respect to the Insured Bonds under the sections
hereof regarding payment of Insured 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 Trustee and may not
be applied to satisfy any costs, expenses or liabilities of the Trustee.
Any funds remaining in the Policy Payments Account following an Insured Bond payment
date shall promptly be remitted to XLCA.
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}X4b CAPITAL ASSURANCE~
XL Capital Assurance Inc.
1221 Avenue of the Americas
New York, NY 10020-1001
Tel: (212) 478-3400
Fax: (212) 478-3587
Incoming Wire Transfer Instructions (as of 06/20/05)
Receiving Bank:
Bank of America
777 Main Street
Hartford, CT 06115-2001
ABA - 0260-0959-3
Beneficiary:
XL Capital Assurance Inc.
1221 Avenue of the Americas
New York, NY 10020-1001
Account Number 94278-35841
PLEASE REFERENCE POLICY NUMBERS
T
FORM OF STANDARD DISCLOSURE
Dated as of August 5, 2006
[Any changes to this form are subject to
XLCA legal review]
DESCRIPTION OF THE INSURER
The following information has been supplied by the Insurer for inclusion in this Official
Statement. No representation is made by IssuerlUnderwriter as to the accuracy or completeness
of the information.
The Insurer accepts no responsibility for the accuracy or completeness of this Official
Statement or any other information or disclosure contained herein, or omitted herefrom, other
than with respect to the accuracy of the information regarding the Insurer and its affiliates set
forth under this heading. In addition, the Insurer makes no representation regarding the Bonds or
the advisability of investing in the Bonds.
General
XL Capital Assurance Inc. (the "Insurer" or "XLCA") is a monoline financial guaranty
insurance company incorporated under the laws of the State of New York. The Insurer is
currently licensed to do insurance business in, and is subject to the insurance regulation and
supervision by, all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and
Singapore.
The Insurer is an indirect wholly owned subsidiary of Security Capital Assurance Ltd
("SeA"), a company organized under the laws of Bermuda. Through its subsidiaries, SCA
provides credit enhancement and protection products to the public finance and structured finance
markets throughout the United States and internationally. XL Capital Ltd beneficially owns
approximately 65% of SCA's outstanding shares. The common shares of SCA are publicly
traded in the United States and listed on the New York Stock Exchange (NYSE: SCA). SCA is
not obligated to pay the debts of or claims against the Insurer.
Financial Strength and Financial Enhancement Ratings of XLCA
The Insurer's insurance financial strength is rated "Aaa" by Moody's and "AAA" by
Standard & Poor's and Fitch, Inc. ("Fitch"). In addition, the Insurer has obtained a financial
enhancement rating of "AAA" from Standard & Poor's. These ratings reflect Moody's, Standard
& Poor's and Fitch's current assessment of the Insurer's creditworthiness and claims-paying
ability as well as the reinsurance arrangement with XL Financial Assurance Ltd. ("XLF A")
described under "Reinsurance" below.
The above ratings are not recommendations to buy, sell or hold securities, including the
Bonds and are subject to revision or withdrawal at any time by Moody's, Standard & Poor's or
Fitch. Any downward revision or withdrawal of these ratings may have an adverse effect on the
market price of the Bonds. The Insurer does not guaranty the market price of the Bonds nor does
it guaranty that the ratings on the Bonds will not be revised or withdrawn.
Reinsurance
The Insurer has entered into a facultative quota share reinsurance agreement with XLF A,
an insurance company organized under the laws of Bermuda, and an affiliate of the Insurer.
Pursuant to this reinsurance agreement, the Insurer expects to cede up to 75% of its business to
XLF A. The Insurer may also cede reinsurance to third parties on a transaction-specific basis,
which cessions may be any or a combination of quota share, first loss or excess of loss. Such
reinsurance is used by the Insurer as a risk management device and to comply with statutory and
rating agency requirements and does not alter or limit the Insurer's obligations under any
financial guaranty insurance policy. With respect to any transaction insured by XLCA, the
percentage of risk ceded to XLFA may be less than 75% depending on certain factors including,
without limitation, whether XLeA has obtained third party reinsurance covering the risk. As a
result, there can be no assurance as to the percentage reinsured by XLF A of any given financial
guaranty insurance policy issued by XLCA, including the Policy.
Based on the audited financials ofXLFA, as of December 31,2005, XLFA had total
assets, liabilities, redeemable preferred shares and shareholders' equity of$I,394,081,000,
$704,007,000, $39,000,000 and $651,074,000, respectively, determined in accordance with
generally accepted accounting principles in the United States ("US GAAP"). XLFA's insurance
financial strength is rated "Aaa" by Moody's and "AAA" by S&P and Fitch Inc. In addition,
XLFA has obtained a financial enhancement rating of"AAA" from S&P.
The ratings of XLF A or any other member of the SCA group of companies are not
recommendations to buy, sell or hold securities, including the Bonds and are subject to revision
or withdrawal at any time by Moody's, Standard & Poor's or Fitch.
Notwithstanding the capital support provided to the Insurer described in this section, the
Bondholders will have direct recourse against the Insurer only, and XLF A will not be directly
liable to the Bondholders.
Capitalization of the Insurer
Based on the audited financials of XLCA, as of December 31, 2005, XLCA had total
assets, liabilities, and shareholder's equity of $953,706,000, $726,758,000, and $226,948,000,
respectively, determined in accordance with U.S. GAAP.
Based on the audited statutory financial statements for XLeA as of December 31, 2005
filed with the State of New York Insurance Department, XLCA has total admitted assets of
$328,231,000, total liabilities of $139,392,000, total capital and surplus of $188,839,000 and
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total contingency reserves of $13,031,000 determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities ("SAP").
Incorporation by Reference of Financials
For further information concerning XLeA and XLF A, see the financial statements of
XLeA and XLF A, and the notes thereto, incorporated by reference in this Official Statement.
The financial statements of XLCA and XLF A are included as exhibits to the periodic reports
filed with the Securities and Exchange eommission (the "Commission") by SeA, with respect to
all periods ending after August 4, 2006, and by XL Capital Ltd, with respect to all periods ending
prior to August 4, 2006, and may be reviewed at the EDGAR website maintained by the
Commission. All financial statements of XLCA and XLF A included in, or as exhibits to,
documents filed by SCA or XL Capital Ltd pursuant to Section 13(a), 13 (c), 14 or l5(d) of the
Securities Exchange Act of 1934 on or prior to the date of this Official Statement, or after the
date of this Official Statement but prior to termination of the offering of the Bonds, shall be
deemed incorporated by reference in this Official Statement. Except for the financial statements
ofXLCA and XLF A, no other information contained in the reports filed with the Commission by
SCA or XL eapital Ltd is incorporated by reference. Copies of the statutory quarterly and annual
statements filed with the State of New York Insurance Department by XLCA are available upon
request to the State of New York Insurance Department.
Regulation of the Insurer
The Insurer is regulated by the Superintendent ofInsurance of the State of New York. In
addition, the Insurer is subject to regulation by the insurance laws and regulations of the other
jurisdictions in which it is licensed. As a financial guaranty insurance company licensed in the
State of New York, the Insurer is subject to Article 69 of the New York Insurance Law, which,
among other things, limits the business of each insurer to financial guaranty insurance and
related lines, prescribes minimum standards of solvency, including minimum capital
requirements, establishes contingency, loss and unearned premium reserve requirements,
requires the maintenance of minimum surplus to policyholders and limits the aggregate amount
of insurance which may be written and the maximum size of any single risk exposure which may
be assumed. The Insurer is also required to file detailed annual financial statements with the
New York Insurance Department and similar supervisory agencies in each of the other
jurisdictions in which it is licensed.
The extent of state insurance regulation and supervision varies by jurisdiction, but New
York and most other jurisdictions have laws and regulations prescribing permitted investments
and governing the payment of dividends, transactions with affiliates, mergers, consolidations,
acquisitions or sales of assets and incurrence of liabilities for borrowings.
THE FINANCIAL GUARANTY INSURANCE POLICIES ISSUED BY THE
INSURER, INCLUDING THE INSURANCE POLICY, ARE NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76
OF THE NEW YORK INSURANCE LAW.
3
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The principal executive offices of the Insurer are located at 1221 Avenue of the
Americas, New York, New York 10020 and its telephone number at this address is (212) 478-
3400.
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MUNICIPAL BOND
INSURANCE POLICY
1221 Avenue of the Americas
New York, New York 10020
Telephone: (212) 478-3400
ISSUER:
Policy No: [
BONDS:
Effective Date: [
XL Capital Assurance Inc. (XLCA), a New York stock insurance company, in consideration of the payment of the
premium and subject to the terms of this Policy (which includes each endorsement attached hereto), hereby agrees
unconditionally and irrevocably to pay to the trustee (the "Trustee") or the paying agent (the "Paying Agent") (as set forth in
the documentation providing for the issuance of and securing the Bonds) for the benefit of the Owners of the Bonds or, at the
election of XLCA, to each Owner, that portion of the principal and interest on the Bonds that shall become Due for Payment
but shall be illlpaid by reason of Nonpayment.
XLCA will pay such anlOilllts to or for the benefit of the Owners on at 0
interest becomes Due for Payment or one (1) Business Day following the u 'ness on hich XLCA shall have received
Notice of Nonpayment (provided that Notice will be deemed received age Bu iness D if it is received prior to 10:00
a.m. New York time on such Business Day; otherwise it will be de med ceo e next siness Day), but only upon
receipt by XLCA, in a fonn reasonably satisfactory to it, of 1.11 enc f M1Il 's . t to receive payment of the
principal or interest then Due for Payment and (b) evidence in udin a ap opri e' ns ents of assignment, that all of
the Owner's rights with respect to payment of such pri ip 0 er t ue r Payment shall thereupon vest in
XLCA. Upon such disbursement, XLCA shall beco ill 0 e, any purtenant coupon to the Bond or the
right to receipt of payment of principal and interest n 11 e y subrogated to the rights of the Owner,
including the Owner's right to receive payment ex any payment by XLCA hereilllder. Payment
by XLCA to the Trustee or Paying Agent for e bet 0 the a , to the extent thereof, discharge the obligation of
XLCA illlder this Policy.
ve e meanings specified for all purposes of this Policy, except to the extent such terms
1 n 0 this Policy. "Business Day" means any day other than (a) a Saturday or Silllday
tions in the State of New York or the Insurer's Fiscal Agent are authorized or required
by law or executive order to emai losed. "Due for Payment", when referring to the principal of Bonds, is when the stated
maturity date or a mandatory re emption date for the application of a required sinking fund installment has been reached and
does not refer to any earlier date on which payment is due by reason of call for redemption (other than by application of
required sinking flll1d installments), acceleration or other advancement of maturity, lll1less XLCA shall elect, in its sole
discretion, to pay such principal due upon such acceleration; and, when referring to interest on the Bonds, is when the stated
date for payment of interest has been reached. "Nonpayment" means the failure of the Issuer to have provided sufficient
funds to the Trustee or Paying Agent for payment in full of all principal and interest on the Bonds which are Due for
Payment. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by
registered or certified mail, from an Owner, the Trustee or the Paying Agent to XLCA which notice shall specify (a) the
person or entity making the claim, (b) the Policy Number, (c) the claimed amOlll1t and (d) the date such claimed amOlll1t
became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is
entitled illlder the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or
entity whose direct or indirect obligation constitutes the lll1derlying security for the Bonds.
XLCAP-005- TX
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XLCA may, by giving written notice to the Trustee and the Paying
Fiscal Agent") for purposes of this Policy. From and after the date of receiRt
notice, which shall specify the name and notice address of the Insurer's F" al
delivered to XLCA pursuant to this Policy shall be simultaneously del' ered
shall not be deemed received until received by both and (b) all pa e s r
may be made directly by XLCA or by the Insurer's Fiscal Agent be
ofXLCA only and the Insurer's Fiscal Agent shall in no even ia 1 to
or any failure of XLCA to deposit or cause to be deposite s ficie
.s Policy is non-cancelable by XLCA, and
o s not insure against loss of any prepayment
of any Bond, other than at the sole option of
the full undertaking of XLCA and shall not be
uding any modification or amendment thereto.
executed on its behalf by its duly authorized officers.
SP
Name:
Title:
SPECIMEN
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1221 Avenue of the Americas
New York, New York 10020
Telephone: (212) 478-3400
I. TEXAS AMENDATORY ENDORSEMENT
A. Cancellation/Non-renewal
A") may not
ely on the fact that
In connection with any fidelity bond, XL C
cancel or refuse to renew a policy or cont ct
the policyholder in question is an el e
B.
Legal proceedings D
expiration of fo e
o ereunder shall not be brought after the
el1: f such loss.
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( w, ~-, iN '\ "'J' . ,;: ;-., j" .
. .~_..l: _' { - :.... l '-I\.... .-.A./ ""X,( ::..: ......~ ....
1221 Avenue of the Americas
New York, New York 10020
Telephone: (212) 478-3400
II. IMPORTANT NOTICE
To obtain information or make a complaint, you may cant
General Counsel
(212) 478-3400
You may also call the toll-free number at
make a complaint:
epartment of Insurance to obtain information on companies,
ts at:
1-800-252-3439
You may write the Texas Department of Insurance
P.o. Box 149104
Austin, TX 78714-9104
Fax: (512) 475-1771
A. PREMIUM OR CLAIM DISPUTES
Should you have a dispute concerning your premium or about a claim, you should first
contact XL Capital Assurance Inc. If the dispute is not resolved, you may contact the
Texas Department of Insurance.
B. ATTACH THIS NOTICE TO YOUR POLICY
This notice is for information only and does not become a part or condition of the
attached document.
4
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}Xtb C:l\PIl:-\L ASSL.JRAi'JC:E;'
XL Capital Assurance Inc.
1221 Avenue of the Americas
New York, NY 10020-1001
Tel: (212) 478-3400
Fax: (212) 478-3587
Incoming Wire Transfer Instructions (as of 06/20/05)
Receiving Bank:
Bank of America
777 Main Street
Hartford, CT 06115-2001
ABA - 0260-0959-3
Beneficiary:
XL eapital Assurance Inc.
1221 Avenue of the Americas
New York, NY 10020-1001
Account Number 94278-35841
PLEASE REFERENCE POLICY NUMBERS
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