ORDER N0. 2725
N,ERR COUN"f Y, TEXRS GUBLIC GRUF'ERTY FINRNCE
CONTRACTUAL OBLIGATION, SERIES 2001
On this the 24th day of September 2001, upon motion made by
Commissioner Griffin, seconded by Commissioner Williams, the
Court unanimously appr-oved by a vote of 4-0-0, to appr-ove
Order R~athori~ing the Issuance of Ker•r• County, Texas F'~ablic
F'raper-ty Finance Contr-actual Obligation, Series 2001,
Authorising the Execution of a Laying Agent /Registr•ar-
Rgreement, A F'~ar-chase Contr-act and Dther Related Documents,
and Rppr^oving an Official Statement, subject to passage of the
budget and appr-oval of the contr-act with the vendor^ for- the
radio communications pr•o.ject, and, as amended, for the
5990,000.00 versus the 51 million.
COMMISSIONERS' COURT AGENDA REQUEST
PLEASE FURNISH ONE ORIGINAL AND NINE COPIES OF THIS REQUEST AND DOCUMENTS TO BE
REVIEWED BY THE COURT.
MADE BY: Fred Henn 7~ OFFICE: County Judge
MEETING DATE: September 24, 2001 TIME PREFERRED:
SUBJECT: (PLEASE BE SPECIFIC)
Consider and discuss Order Authorizing the Issuance of Kerr County, Texas Public Property
Finance Contractual Obligations, Series 2001, Authorizing the Execution of a Paying
Agent/Registrar Agreement, A Purchase Contract and Other Related Documents, and
Approving an Official Statement.
EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON)
NAME OF PERSON ADDRESSING THE COURT:
ESTIMATED LENGTH OF PRESENTATION:
IF PERSONNEL MATTER -NAME OF EMPLOYEE:
Time for submitting this request for Court to assure that the matter is posted in accordance with Title 5, Chapter
551 and 552, Government Code, is as follows:
Meeting scheduled for Mondays:
THIS REQUEST RECEIVED BY:
THIS REQUEST RECEIVED ON:

All Agenda Requests will be screened by the County Judge's Office to determine if adequate information has been
prepazed for the Court's formal consideration and action at time of Court Meetings. Your cooperation will be
appreciated and contribute towazds you request being addressed at the eazliest opportunity. See Agenda Request Rules
Adopted by Commissioners' Court.
County Judge
5:00 P.M. previous Tuesday.
All three documents in their entirety are on file in the County Clerk's Office.
The Order authorizing.... is 29 pages long.
Purchase Contract is 17 pages long.
Paying Agent..... is 14 pages long.

Kerr County Judge/Commissioners
From: Tom Spurgeon <tpurgeon@mphlegal.com>
To: <kerrcjdg(~ktc.com>; <kerrcocc(Qktc.com>; <rhenderson@dainrauscher.com>;
<dwegmiller~firstsw.com>
Sent: Thursday, September 13, 2001 2:16 PM
Attach: CO Order-1.pdf; Paying Agent Ag-1.pdf; Purchase Contract-1.pdf
Subject: Kerr County, Texas Contractual Obligations, Series 2001 -Bond Documents
Gentlemen and Thea:
In connection with the issuance of the captioned obligations, attached in
PDF format are three files containing the initial drafts of (i) the Order
authorizing the issuance of the Contractual Obligations, (ii) the Paying
Agent/Registraz Agreement, and (iii) the Purchase Contract.
Judge Henneke: Please use the caption of the Order for the Court's agenda
on the 24th.
Please call if you have any questions or would prefer to receive the
documents in WordPerfect format.
Cordially yours,
Thomas K. Spurgeon
McCall, Parkhurst & Horton L.L.P.
700 N. St. Mary's, Suite 1225
1225 One Riverwalk Place
San Antonio, Texas 78205
Telephone: (210) 225-2800
Telecopy: (210) 225-2984
e-mail:
*The information contained in this electronic communication is confidential
and may contain information that is legally privileged and exempt from
disclosure under applicable law. The information is intended solely for the
use of the individual or entity named above. If you have received this
communication in error, please notify the sender immediately by replying to
this message, and then delete it from your system. Thank you.
**If file(s) attached to this message have the extension "PDF", the files
have been saved in Adobe's Portable Document Format (PDF) .The PDF format
is designed for "universal document exchange" - it allows documents to
maintain their appeazance and pagination on any computer or printer. PDF
file(s) can be viewed and printed using Adobe's free Acrobat Reader,
available at http://www.adobe.com/prodindex/acrobat/readstep.html
«CO Order-l.pdfl> «Paying Agent Ag-l.pdfl> «Purchase Contract-l.pdfl>
9/13/01
PAYING A('FNT/RF.[~iCTRAR AGREEMENT
THIS AGREEMENT entered into as of September 15, 2001 (this "Agreement"), by and
between %rr County, Texas (tbe "Issuer"), and The Bank of New York, a New York banking
corporation duly organized and existing under the laws of the United States (the "Bank'.
RECITALS
WHEREAS, the Issuer has duly authorized and provided for the issuance of itsPublicProperty
Finance Contractual Obligations, Series 2001 (the "Securities' in the aggregate principal amount of
$1,000,000, such Securtes to be issued in fully registered form only as to the payment of principal and
interest thereon; and
WHEREAS, the Securities are scheduled to be delivered to the initial purchasers thereof on or
about October 16, 2001; and
WHEREAS, the Lssuer has selected the Bank to serve as Paying Agent/Begistrar in connection
withthe payment of the principal of, premium, ifany, and interest on said Securities andwith respell to the
registration, transfer and exchange thereof by the registered owners thereof; and
WHEREAS, the Bank has agreed to serve in such capacities for and onbehalf of the Issuer and
has full power and authority to perform and serve as Paying Agent/Regishar for the Securities;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE ONE
APPOINTMENT OF BANK AS
PAYING AGENT AND REGISTRAR
Section 1.01. Annointment.
The Issuer hereby appoints the Bank to serve as Paying Ageut with respect to the Securities. As
Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the
principal, premium (if any), and interest on the Securities as the same become due and payable to the
registered owners thereof, all in accordance with this Agreement and the "Order" (hereinafter defined).
The Issuer hereby appoints the Bank as Regishar with respect to the Securities. As Registrar for
the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to
the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein
and in the "Order "
The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar
for the Securities.
Section 1.02. Comnensatioa
As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to
pay the Bank the fees and amounts set forth in Schedule A attached hereto for the fast year of this
Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect
for services as Paying Agent/Registtar for municipalities, which shall be supplied to the Issuer on or before
90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the
fallowing Fiscal Year.
In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Bank in accordance with any ofthe provisions hereof
(including the reasonable compensation and the expenses and disbursements of its agents and counsel).
ARTICLE TWO
DEFINITIONS
Section 2.01. Definitions .
For all purposes of this Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
"Acceleration Date" on any Security means the date on and after which the principal or any or all
installments of interest, or both, are due and payable on any Security which has become accelerated
pursuant to the terms of the Security.
"Bards Office" means the corporate tmst office of the Bank as indicated on the signature page
hereof. The Bank will notify the Lssuer in writing of any change in location of the Bank Office.
"Fiscal Year" means the fiscal year of the Issuer, ending September 30.
"Holder" and "Secruiry Holder" each means the Person in whose name a Security is registered in
the Security Register.
"Issuer Request" arrd'Tssuer Order" each means a written request or order signed in the name of
the Issuer by the County Judge or County Treasurer of the Lssuer, or any one or more of said officials,
delivered to the Bank.
"Legal Holiday" means a day on which the Bank is required or authorized to be closed.
"Order" means the order, ordinance or resolution of the governing body of the Lssuer pursuant to
whichthe Securities are issued, certified by the County Clerk of the Issuer or any other officer ofthe Issuer
and delivered to the Bank.
"Person" means any individual, corporation, partnership, Joint venture, association, joint stock
company, tnist, unincorporated organization or government or any agency or political subdivision of a
government.
"Predecessor Securities" of any particular Security means every previous Serially evidencing all
or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of
This definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been
registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Order).
"Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for
such redemption pursuant to the terms of the Order.
"Responsible Officer when used with respect to the Bank means the Chairman orVice-Chaim~an
of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee of the Board of
Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any
other officer of the Bank customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and famr7iazity widr the particular subject.
"Security Register" means a register maintained by the Bank on behalf of the Issuer providing for
the registration and transfer of the Securities.
"Stated Maturity" means the date specified in the Order the principal ofa Security is scheduled to
be due and payable.
Section 2.02. Otlrer DeSnitions.
The temrs "Bank," "Issuer" and "Securities (Security)" have tbe meanings assigned to them in the
recital paragraphs of this Agreement.
The temr'Paying Agent/Regishar" refers to the Bank in the perfomrance oftbe duties and functions
of this Agreement.
ARTICLE THREE
PAYING AGENT
Section 3.01. Duties of P~'ng Agent.
As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for
such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its
Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to
the Bank at the Bank Office or the offices of the Bank located in Houston, Texas.
As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for
such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when
due, by computing the amount of interest to be paid each Holder and preparing and sending checks by
United States Mail, fast class postage prepaid, on each payment date, to the Holders of the Securities (or
their Predecessor Securities) on the respective Record Date, to the address appearing on the Security
Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the
Holder's risk and expense.
Section 3.02. Payment Dates.
The Lssrrer hereby instmcts the Bank to pay the principal of and interest on the Securities on the
dates specified in the Order.
ARTICLE FOUR
REGISTRAR
Section 4.01. ecuri Register -Transfers and Exchanges.
The Bank agrees to keep and maintain for and on behalfofthe Issuer at the Bank Office and at its
office located in Houston, Texas books and records (herein sometimes refenrd to as the "Security
Register") for recordirrg the names and addresses of the Holders of the Securities, the transfer, exchange
and replacement of the Securities and the payment of the principal of and interest on the Securities W the
Holders and containing such other infomration as may be reasonably required by the Issuer and subject to
such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and
replacement of Securities shall be noted in the Security Register.
Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by
a written irrstmment of transfer, the signature on which has been guaranteed by an officer of a federal or
state bank or a member ofe National Association of Securities Dealers, in fomt satisfactory to the Bank,
duly executed by the Holder thereof or his agent duly authorized in writing.
The Bank may request any suppofing documentation it feels necessary to effect a re-registration,
transfer or exchange of the Securities.
To the extent possible and under reasonable citctunstances, the Bank agrees that, in relation to an
exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and
new Securities delivered to the Holder or the assignee of the Holder in not more than throe (3) business
days after the receipt ofthe Securities to be cancelled in an exchange ortransfer and the written instrument
of transfer or request for exchange duly executed by the Holder, of his duly authorized agent, in form and
manner satisfactory to the Paying AgenURegisttar.
Section 4.02. Certificates.
The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or
exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping
pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in
safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other
political subdivisions or corporations for which it serves as registrar, or that is maintained for its own
securities.
Section 4.03. Form of Security~gister.
The Bank, as Regishar, will maintain the Security Register relating to the regishation, payment,
transfer and exchange of the Securities in accordance with the Bank's general practices and procedures
in effect from time to time. The Bank shall not be obligated to maintain such Security Register m any fomr
other than those which the Bank has cutretrtly available and cuttently utilizes at the time.
The Security Register may be maintained in written form or in arty other form capable of being
converted irrto written form within a reasonable time.
Section 4.04. List of Securi(y Holders.
The Bank will provide the Issuerat any time requestedby the Issuer, upon paymentofthe required
fee, a copy of the infornration contained in the Security Register. The Issuer may also inspect the
infomration contained in the Security Register at any time the Bank is customarily open for business,
provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the
informafion irrto written form.
The Bank will not release or disclose the contents ofthe Security Register to any person other than
to, or at the written request of, an authorized officer or employce of the Issuer, except upon receipt of a
court order or as otherwise required by law. Upon receipt of a court order and prior to the release or
disclosure of the contents of the Security Register, the Bank will notify the Lssuer so that the Issuer may
contest the court order or such release or disclosure of the contents of the Security Register.
Section 4.05. Return of Cancelled Certificates.
The Bank will, at such reasonable intervals as it determines, surrender to the Issuer, Securifies in
lieu of which or in exchange for which other Securities have been issued, or which have been paid
Section 4.06. Mutilated. Destroyed Lost or Stolen Securities.
The Issuer hereby instnrcts the Bank, subject to the applicable provisions of the Order, to deliver
and issue Securities in exchange for or in lieu of mutilated, destroyed, lost or stolen Securities as long as
the same does not result in an overissuance.
In case any Security shall be mutilated, destroyed, lost or stolen, the Bank, in its discretion, may
execute and deliver a replacement Security of like form and tenor, and in the same denomination and
bearing a mrmber not contemporaneously outstanding, in exchange and substitution for such mutilated
Security, or in lieu of and in substitution for such destroyed, lost or stolen Security, only after (i) the filing
by the Holder thereof with the Bank of evidence satisfactory m the Bank of the destnrction, loss or theft
of such Security, and of the authenticity of the ownership thereof and (i) the funrishing to the Bank of
irrdemrtifiption in an amount satisfactory to hold the Issuer and the Bank hamdess. All expenses and
charges associated with such indemnity and with the preparation, execution and delivery of a replacement
Security shall be home by the Holder of the Security mutilated, destroyed, lost or stolen.
Section 4.07. Transaction Information to Issuer.
The Bank will, within a reasonable tune after receipt ofwritten request from the Issuer, famish the
Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon
the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in
exchange for or in lieu of mutilated, destroyed, lost or stolen Securities pursuant to Section 4.06.
ARTICLE FIVE
THE BANK
Section 5.01. Duties of Bank.
The Bank undertakes to perform the duties set forth herein and in the Order and agrees ib use
reasonable care in the perfomrartce thereof.
Section 5.02. Reliance on Documents. Etc.
(a) The Bank may conclusively rely, as to the both of the statements and correctness of the
opinions expressed therein, on certificates or opinions famished to the Bank.
(b) The Bank shall notbe liable for any eaorofjudgment made ur good faithby aResponsible
Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts.
6
(c) No provisions of this Agreement shall require the Bank to expend or risk its own fiords or
otherwise inns any financial liability for performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity satisfactory to it against such risks or liability is not assured to it.
(d) The Bank may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, note, security or other paper or document believed by it to be genuine and to have bcen signed or
presented by the proper party or parties. Without limiting the generality of the foregoing statement, the
Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities
containing an endorsement or instmction of transfer or power of transfer which appears on its face to be
signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation
into the facts or matters stated in a resolution, certificate, statement, inslmment, opinion, report, notice,
request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer.
(e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of
counsel shall be full and complete authorization and protection with respect to any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon.
(f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either
directly or by or through agents or attorneys of the Bank.
Section 5.03. Recitals of Issuer.
The recitals contained herein with respect to the Lssuer and in the Securities shall be taken as the
statements of the Lssuer, and the Bank assumes no responsibility for their correctness.
The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any
other Person for any amormt due on any Security from its own fiords.
Section 5.04. Mav Hold Securities.
The Bank, in its individual or any other capacity, may become the owner orpledgce of Securities
and may otherwise deal with the Lssuer with the same rights it would have if it were not the Paying
Agent/Registrar, or any Darer agent.
Section 5.05. Money~Ield by Bank.
The Bank shall deposit any moneys received from the Issuer into a trust account to be held in a
paying agent capacity for are payment of the Securities, with such moneys in the account that exrxed the
deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be fully collater-
alized with securities or obligations that are eligrble under the laws of the Staff of Texas to secure and be
pledged as collateral for IIrrst accounts until the principal and interest on such securities have been
presented for payment and paid to the owner thereof. Payments made from such trust account shall be
made by check drawn on such trust account unless the owner of such Securities shall, at its own expense
and risk, request such other medium of payment.
Subject to the Unclaimed Property Law ofthe State ofTexas, any money deposited with the Bank
for the payment of the principal, premium (if any), or interest on any Security and rem"+o+ ~ unclaimed for
three years after the final maturity of the Security has become due and payable will be paid by the Bank
to the Lssuer if the Issuer so elects, and the Holder of such Security shall hereafter look only to the Issuer
for payment thereof, and all liability ofthe Bank with respect to such monies shall thereupon cease. If the
Issuer does not elect, the Bank is directed to report and dispose of the fiuxls incompliance with Title Six
of the Texas Property Code, as amended.
Section 5.06. Indemnification
To the extent permitted by law, the Issuer agrces to inderrutify the Bank for, and hold it hamtless
against, any loss, liabrlity or expense incrured without negligemce or bad faith on its part, arising out of or
um connection with its acceptance or administration of its duties hereunder, inchrding the cost and expense
against any claim or liability in coanection with the exercise or performance of any of its powers or duties
under this Agreement
Section 5.07. Intelpleader.
'tire Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand
or controversy over its person as well as funds on deposit, in either a Federal or State District Court
located in the State and County where either the Bank Office or the adminishative offices of the Issuer are
located, and agree that service of process by certified or registered mail, return reczipt requested, to the
address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the
Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent
jurisdiction to detemtine the rights of a~+ Person claiming any interest herein.
Section 5.08. De s{-9 itorv Trust Comp~ry Services.
It is hereby represented and warranted that, in the event the Securities are otherwise qualified and
accepted for "Depository Trust Company" services or equivalent depository tout services by other
organizations, the Bank has the capability and, to the extent within its control, will comply with the
"Operational Arrangements," effective from time to time, which establishes requirements far securities to
be eligible for such type depository trust services, including, but not limited to, requirements for the
timeliness of payments and finds availability, transfer turnaround time, and notification ofredemptions and
calls.
ARTICLE SIX
MISCELLANEOUS PROVISIONS
SeMion 6.01. Amendment.
This Agreement may be amended only by an agreement in writing signed by both of the parties
hereto.
Section 6.02. Assignment.
This Agreement may not be assigned by either party withoutthe prior written consent ofthe other.
Section 6.03. Notices.
Anyrequest, demand, authorization, direction, notice, consent, waiver orother document provided
or pemritted hereby to be given or famished to the Issuer or the Bank shall be mailed or delivered to the
Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement.
Section 6.04. EffeM of Headings.
The Article and Section headings herein are for convenience only and shall not affect the
construction hereof.
Section 6.05. Successors and Assigns,
All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether
so expressed or not.
Section 6.06. Seversbility.
In case any provision herein shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be a$'ected or impaired thereby.
Section 6.07. Benefits of Agreement.
Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder.
Section 6.08. Entire Bement.
'This Agreement and the Order constitute the entire agreement between the parties hereto relative
to the Bank acting as Paying Agent/Regishar and if any conflict exists between this Agreement and the
Order, the Order shall govern.
Section 6.09. Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed
an original and all of which shall corrstitote one and the same Ageenrent.
Section 6.10. Termination
This Agreement will terminate (i) on the date offinal payment oftbe principal ofand ingest on the
Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days'
written notice; provided, however, an early temmination of this Agreement by either party shall not be
effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such ap-
pointmeart accepted and (b) notice has been given to the Holders of the Securities of the appointment of
a successor Paying Agent/Regishar. Furthermore, the Bank and Issuer mutually agree that the effective
date of an early termination of this Agreement shall not occur at any time which would disrmrpt, delay or
otherwise adversely affect the payment of the Securities.
Uponan early temmination ofthis Agreement, the Bank agrees to promptly transfer and deliver the
Security Register (or a copy thereof), together with other pertinent books and records relating to the
Securities, to dme successor Paying Agent/Regislrar designated and appointed by the Issuer.
The provisions of Section 1.02 and of Article Five shall survive and renmaitm in full force and effect
following the termination of this Agreement.
10
Section 6.11. Governing Law
This Agreement shall be oonstnred in accordance with and governed by the laws of the State of
Texas.
[The remainder of this page intentionally left blank)
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written
Attest:
13y -
Title
THE BANK OF NEW YORK
BY _
Title
Address: Towermare Plaza
10161 Centurion Parkway
Jacksonville, Florida 32256
Attest:
KERR COUNTY, TEXAS
County Judge
Address: 700 Main Street
Kerrville, Texas 78028
[SIGNATURE PAGE TO PAYIIVC~AGENT REGISTRAR AGREEMENC]
[SIGNATURE PAGE TO PAYINC~AGENT REGISTRAR AGREEMENT]
SCHEDULE A
Paying Agent/Registrar Fee Schedule
[To be supplied by the Bank]
A-1
pRnvr DA ~ MEER 13.20(11
PURCHASE CONTRACT
RELATING TO
51,000,000
KERB COUNTY, TExAs
PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES 2001
September 24, 2001
Kea County, Texas
700 Main Street
Kerrville, Texas 78028
Dear Honorable County Judge and Members of the Commissioners Court:
The undersigned, FIRST SOUTHWEST COMPANY (the "[Jnderwriter'~, offers to enter into the
following agreement (the "Contract") with%ERR COUNTY, TEXAS (the "Issuer', which, upon the Issuer's
written acceptance of this offer, will be binding on the Lssuer and on the Underwriter. This offer is made
subject to the Issuer's written acceptance hereofon orbefore 10:00 p.m, Central Time, on September 24,
2001, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to
the Lssuer at a~ time prior to the acceptance hereof by the Issuer. Terms not otherwise defined in this
Contract shallhave the satrre meanings set forth in the Order (as defined herein) or in the Ot&cial Statement
(as defined herein).
1. Purchase snd Sale of the Contractual Obligations. Subject to the leans and conditions
and in reliance upon the representations, waaanties and agreements set forth herein, the Underwriter
hereby agrees to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to the
Underwriter, all, but not less than all, ofthe Lssuer's Public Property Finance ContraclualObligations,
Series 2001 (the "Conhactual Obligations'. Inasmuch as this purchase and sale represents a negotiated
transaction, the Issuer understands, and hereby confirms, that the Underwriter is not acting as a fiduciary
of the Issuer, but rather is acting solely in its individual capacity as Underwriter for its own account.
The principal amount of the Conhadual Obligations to be issued, the amounts of such bonds to be
issued as serial securities and terxrt securities (if anY), the dated date therefor, the maturities, optional and
mandatory(ifapplicable)redemptionprovisions,and urterestrates per annum shall be as set forth in lxhrbit
A hereof. The Contractual Obligations shall be as described in, and shall be issued and secured under and
pursuant to the provisions of, the Order adopted by the Issuer on September 24, 2001 (the "Order").
The purchase price for the Contractual Obligations shall be $ (inpresenting the P~1~
amount of the Contractual Obligations, plus net original issue premium of S .and less an
Undervriter's discount on the Contractual Obligations of S) plus accnred interest from their date
to the dam of the payment for and delivery of the Contrnctual Obligafions.
2. Public Offering. The Underwriter agrees to make a bona fide public offering of all of the
Contractual Obligations at a price not to exceed the public offering price set forth on the inside cover of
the Official Statement and may subsequently lower such offering price without any requirement of prior
notice. The Underwriter may offer and sell Contractual Obligations to certain dealers (inchrding dealers
depositing Conhactual Obligations into investment trusts) and others at prices lower than the public offering
price stated on the cover of the Official Statement, provided, however, that at least ten percent (10%) of
the principal amount of the Contractual Obligations of each maturity shall be sold to the "public" (exclusive
of dealers, brokers and investment bankers, etc.) at the offering price set forth on the cover page of the
Official Statement. On orbefore Closing, the Underwriter shall execute an Issue Price Certif cafe prepared
by Bond Counsel verifying the initial offering prices to the public at which a substantial amount of each
shared maturity of the Contractual Obligations was sold to the public.
The Official Statement.
(a) The Pinlhninazy Official Statement of the Issuer, dated September 17, 2001, including
the cover page and Appendices thereto, relating to the Conhactual Obligations (the "Preliminary
Official Shaternent'~, as amended to confomr to the terms of this Contract and with changes and
amendments to the date hereof as have been mutually agreed to by the Issuer and the Underwriter,
is inferred to herein as the "Official Statement"
(b) The Preliminary Official Statement has been prepared for use by the Underwriter in
connection with the public offering, sale and distribution of the Contractual Obligations. The Issuer
hereby represents and warrartts that the Preliminary Official Statement delivered to the Underwriter
prior m the date of this Contract was deemed final by the Issuer as of the date of its initial mailing
within the meaning, and for the purposes, of Rule 15c2-12 under the Contractual Obligations
Excl>ange Act of 1934 ("Rule 15c2-12"). Until the Official Statement has been prepared and is
available fa distribution, the Issuer shall provide to the Underwriter sufficient, reasonable quantities
of the Preliminary Official Statement as the Underwriter deems necessary to satisfy the obligations
ofthe Underwriter under Rule 15c2-12 with respect to distribution to each potential customer, upon
request, of a copy of the Preliminary Official Statement
(c) As soon as practicable after the date heinof, and in any event within seven business days
after the acceptance of this Contract by the Issuer and, in the event the date of Closing is less than
seven business days following the date hereof, upon request of the Underwriter, the Issuer shall
deliver or cause to be delivered to the Underwriter, without charge, insufficient time to accompany
any confmnation requesting payment from any customers of the Underwriter, a reasonable mrmber
of copies of the final Official Statement relating to the Contractnal Obligations, which an officer duly
authorized by the Issuer will determine to be a final Official Statement for purposes of Rule 15c2-12.
(d) The Iss~rer ratifies the use oftbe preliminary Official Statement and authorizes the Official
Statement to be used in connection with the offering of the Contractual Obligations, aryl ratifies and
approves the prior distibution of the current drafts of each thereof by the Underwriter prior to the
availability of the final version thereof.
(e) Ii, atter the date ofthis Contract up to andmchrding the date the Underwriter is no longer
required pursuant to Rule 15c2-12 to provide an Official Statement to potential customers who
request an Official Smtement (the earlier of (i) 90 days from the "end of the underwriting period" (as
defined in Rule 15c2-12) and (ii) the time whentbe Official Statement is available to any person from
a nationally recognized municipal securities repository, but in no case less than 25 days after the "end
of the underwriting period" for the Contractual Obligations), the Issuer becomes awaze of any fact
or event that might or would cause the Official Statement, as then supplemented or amended, to
contain any untrue statement of a material fact or to omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the cireurrmstances when the Official
Statement is delivered to a purehaser, not misleading, or if it is necessary to amend or supplement
the Offi<tial Statementto comply with law, the Issuerwill notify the Underwriter (and for the purposes
ofihis clause provide theUnderwriterwith such infom~ation as it may from time to time request), and
in the rrasonable opinion of the Underwriter, such fact or event requires preparation and
publication ofa supplement or amendment to the Official Statement, the Issuerwill forthwithprepare
and famish, at the ]ssuer's own expense (in a fomt and manner approved by the Underwriter), a
reasonable number of copies of amendments or supplements to the t7fficial Statement so that the
statements in the Official Statement as so amended and supplemented will not, in light of the
circumstances when the Official Statement is delivered to a purchaser, be misleading or so that the
Official Statement will comply with law. If such notmfication shall be srrbsegrrent to the Ckrsing, the
Issuer shall famish such legal opinions, certificates, instvments and other documents as the
Underwriter may deem necessary to evidence the tmtir and accuracy of such supplement or
amendment to the Official Statement.
(t) The Underwriter hereby agrees to timely ffie the Official Statement with a nationally
recognized infornmationrepository and to notify the Issuer of the date of such filing. Unless otherwise
notified in writing by theUnderwriter,the Issuercan assume that ibe "end ofdteundervriting period"
for purposes of Rule 15c2-12 shall be the date of the Closing.
(g) To the best knowledge and belief of the Issuer, the Official Statement contains
information, inchrdingfinancialinformationoroperaturgdata,cancerningeveryentrty,enterprise, fund,
account or person relating to the Issuer that is material to an evaluation of the offering of the
Contractual Obligations. The Issuer has not failed to comply with any undertaking specified in
paragraph (bx5)(i) of Rule I Sc2-12 within the last five yeazs.
4. Security Deposit. Delivered to the Lssuer as a good faith deposit is a corporate check of the
Underwriter payable to the order of the issuer in the amount of $10,000. Tn the event the Issuer accepts
this offer, the check shall be held urrcashed by the Issuer until the time of Closing, at which time the Issuer
shall return the check uncashed to the Underwriter. In the event that the Issuer does not accept this
Contract, the check will be immediately retuned to the Underwriter. Should the Issuer fail to deliver the
ContractualObligations atClosing, or shouldtheIssuerbe unableto satisfytheconditions oftheobligations
3
of the Underwriter to purchase, accept delivery of and pay for the Conhailual Obligations, as set forth in
this Contrail (unless waived by the Underwriter), or should such obligations of the Underwriter be
terminated for any reason pemmitted by this Contrail, the Issuer shall immediately return the check to the
Underwriter. In the event that the Underwriter fails (other than for a reason pemmitted hereunder) to
purchase, accept delivery ofand pay for the Contractual Obligations at the Closing as herein provided, the
Issuer shall cash the check andretain the amount thereofas and for fully liquidated damages for such failure
ofthe Underwriter, and, except as set forth in Sections 9 and 11 hereof, neither party shall have any firrHter
rights against the other hereunder. The Underwriter and the Issuer understand that in such event the
Issuer's acnral damages may be greater or may be less than such amount. Accordingly, the Underwriter
hereby waives any right to claim that the Issuer's actual damages are less than such amount, and the Issuer's
acceptance of this offer shall constitute a waiver of any right the Issuer may have to additional damages
from the Underwriter. The Underwriter hereby agrees not to stop or cause payment on said check to be
stopped unless the Issuer has breached any of the temms of this Contract.
5. Representations,Warrantiesand CovenantsoftheIssuer. The Issuerherebyrepresents
and warrants to and covenants with the Underwriter that:
(a) The Lssrrer is a political subdivision of the State of Texas (the "State") duly created,
organized and existing underthe laws oftbe State, and has full legal right, power and authority under
the laws of the State, and at the date of the Closing will have full legal right, power and authority
under the laws of the State and the Order (i) to enter into, execute and deliver this Contract and the
Order, and all documents required hereunder and thereunder to be executed and delivered by the
Issuer; (ri) to sell, issue and deliver the Contractual Obligations to the Underwriter as provided heroin
and (rii) to carry out and consummate the transactions described in this Contract, the Order and the
Official Statement, and the Issuer has complied, and will at the Closing be in compliance in all
respects, with the teens of the laws of the State and the Order as they pertain to such transactions;
(b) By all necessary official action of the Issuer prior to or concurrent with the acceptance
hereof, the Issuer has duly authorized all necessary action to be taken by it for (i) the adoption ofthe
Order and the issuance and sale of the Contractual Obligations; (ii) the approval, execufion and
delivery of, and the performance by the Issuer on its part, contained in the Contractual Obligations,
the Order and this Contract and (iii) the consrunmation by it ofall otherttansactions described in the
olfrcial statement, the order, this Contract and any and all such other agreements and documents
as maybe requiredto be executed, delivered and/orreceivedby the Issuer in otderto carry out, give
effect to, and consummate the transactions descn'bed herein andm the Official Statement;
(c) The Order and this Contract constitute legal, valid and binding agreements oftbe Issuer,
enforceable in accordance with their respective temts, subject to baniauptcy, insolvency,
reorgarization, moratorium and other similar laws andprinciples of equity relating to or affecting the
enforcement of creditors' rights; the Contractual Obligations, when issued, delivered and paid for,
in accordaztce with the Order and this Contrail, will constitute legal, valid and binding obligations of
the Issuer entitled to the benefits of the Order and be enforceable in accordance with their teens,
subjeil to banlavptcy, insolvency, reorganization, moratorium and other similar laws and principles
of equity relating to or affecting the enforcement of creditors' rights; and upon the issuance,
authentication and delivery of the Contractual Obligations as aforesaid, the Order will provide, the
legally valid and binding pledge of and lien it purports to create as set forth in the Order;
(d) The Issuer is not in breach ofor default under any applicable constitutional provision, law
or adminishative regulation of the State or the United States; or any applicable judgment or decree;
or any loan agreement, indenture, bond, note, resolution, agreement orother instrument to which the
Issuer is a party or to which the Issuer is otherwise subject; and no event has occurred and is
continuing that constitutes, or with the passage of time or the giving of notice, or both, would
constitute, a default or event of default by the Issuer under any such inshrrment; and the execrrtion
and delivery of the Contractual Obligations, this Contract and the adoption of the Order and
compliance with the provisions on the Issuer's part contained therein, will not conflict with or
constitute a breach of or default under any constitutional provision, administrative regulation,
judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument
to which the Issuer is a party or to which the Issuer is otherwise subject or under the temrs of any
suchlaw, regulation or instnrrrrent, except as provided by the Contractual Obligations and the Order,
(e) AIlauthorizations,appmvaLs,licenses,Permits,consentsandordasofa~+governmental
authority, legislative body, board, agency or commission having jurisdiction of the matter that are
required for the due authorization of, that would constitute a condition precedent to, or the absence
ofwhich would materially adversely affect the due perfomrance by the Issuer of its obligations under
this Contract, the Order and the Contractual Obligations have been duly obtained, except for the
approval of the Contractual Obligations by the Texas Attorney General, which approval shall be
obtained prior to the Closing or any state securities law approvals;
(>7 The Contractual ObligationsandtheOrderconformtothedescriptionsthereofcontained
ur the Official Statement under the captions "THE CONTRACTUAL OBLIGATIONS" and the
proceeds of the sale of the Contractual Obligations will be applied generally as descnbed in the
Official Statement to acquire personal property to provide a new radio system for the Issuer.
(g) There is no legislation, action, suit, proceedirtg, inquiry or investigation, at Iaw or in
equity, before or by a~ court, government agency, Public board, or body that is pending or, to the
best latowledge of the Issuer, after due inquiry threatened against the Issuer, affecting the corporate
existence of the Issuer or the titles of its officers to their respective offices; affecting or seeking to
prohibit, restrain or enjoin the sale, issrrance or delivery of the Contractual Obligations or tbe
collectionof advalorem taxes pledged to the payment ofprincipal of and interest on the Contractual
Obligations pursuant to the Order; in any way contesting or affecting the validity or enforceability of
the Contactual Obligations, the Order or this Contract; contesting the exclusion from gross income
ofinterest on the Contractral Obligations for federal income tax purposes; contesting in any way the
completeness or accrsacy of the ]'teliminary Official Statement or the Official Statement or any
supplement or amendment thereto; or contesting the powers of the Issuer or any authority for the
issuance of the Contractual Obligations, the adoption of the Order or the execution and delivery of
this Contact, nor, to the best lmowledge of the Issuer, is there any basis therefor, wherein an
unfavorable decision, Wiling or Ending would materially adversely affect the validity orenfotceability
of the Contactual Obligations, the Order or this Contract;
(h) As of the date thereof, the Prelimirrary Official Statement did not contain any untnre
statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not
misleading;
n At the time of the Issuer's acceptance hereof and (unless an event occurs of the nature
described in paragraph (e) of Section 3 of this Contract) at all times subsequent thereto during the
period up to and including twenty-five (25) days subsequent to the "end of the underwriting period,"
the Official Statement does not and will not contain any tmttue statement of a material fact or omit
to shte any material fact required to be stated therein or necessary to make the statements therein,
in light of the caernrrstances under which they were made, not misleading;
(j) If the Official Statement is supplemented or amended pursuant to paragraph (e) of
Section 3 of this Contract, at the time of each supplement or amendment thereto and (unless
subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent
thereto during the period up to and including twenty-five (25) days subsequent tu the "end of the
underwriting period," the Official Statement as so supplemented or amended wr71 not contain any
untrue statement of a material fact or omit to state any material fad required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which made, not
misleading;
(k) The Issuer will apply, or cause to be applied, the proceeds from the sale of the
ContradualObligations as providedmand subject to all ofe terms and provisions ofe Order and
will not take or omit to take any action, which action or omission will adversely affect the exclusion
born gross income for federal income tax purposes of the interest on the Contractual Obligations;
m The Issuer will famish such information and execute such instruments and take such
action in cooperation with the Underwriter, but at no expense to the Lssuer, as the Underwriter may
reasonably request (A) to (1) qualify the Contractual Obligations for offer and sale under the Blue
Sky or other securities laws andregulations ofsuch shales and other jurisdictions in the United States
as the Underwriter may designate and (2) detemurre the eligibility of the Contractual Obligations for
investmerrt underthe laws of such states and other jurisdictions and (B) tu continue such qualifications
in elTect so long as required for the distribution of the Contractual Obligations (provided, however,
that the Issuer will not be required tu qualify as a foreign corporation orto file any general or special
consents tu service of process under the laws of any jurisdiction) and will advise the Underwriter
immediately of receipt by the Issuer of any written notification with respect to the suspension of the
qualification ofhe Contractual Obligations for sale in any jutisdiction or the initiation or threat of any
proceeding for that purpose;
(m) The financial statements o1; and other firarrcial information regarding, the Issuer in the
Official Statement fairly present the financial position and results of the Issuer as of the dates and for
the periods therein set forth. Prior tu the Closing, there will be no adverse change of a material
nature in such financial position, results of operations or condition, financial or otherwise, of the
Lssuer. Except as described in the Official Statement, the Issueris not aparty tu any litigation orother
proceeding pending or, to its knowledge, threatened that, if decided adversely to the Issuer, would
have a materially adverse effect on the financial condition of the Issuer;
(n) Prior to dre Closing the Issuer will not offer or issue any bonds, notes or other
Contractual Obligations for borrowed money or incur any material liabilities, direct or contingent,
payable from or secured by any ofthe revenues or assets that will secure the Contactual Obligations,
except as maybe incurred in the ordinary course of business;
(o) Any certificate, signed by any official of the Lssuer authorized to do so in connection wiUr
the transactions contemplated by this Contract, shall be deemed a representation and warranty by
the Issuer to the Underwriter as to the statements made therein.
By delivering an executed copy ofthe Official Statement to the Underwriter the Issuer shall be deem
to have reaffirmed, with respect to the Official Statement, the representations, warranties and covenants
set forth above with respect to the Preliminary Official Statement.
6. Closing.
(a) At 10:00 a.m San Antonio, Texas time, on October 16, 2001, or at such othertime and
date as shall have been mutually agreed upon by the Issuer and the Underwriter (the "Closing"), the
Issuer will, subject to the terms and conditions hereof; deliver the Contractual Obligations to the
Underwriter duly executed and authenticated, together with the other documents hereinafter
mentioned, and theUnderwriterwrll, subjedto the terms andconditions hereof accept suchdelivery
and pay the purchase price of the Contractual Obligations as set forth in Section 1 of this Contract
by a wire transfer to the account of the Issuer as indicated by the Issuer. Payment for and delivery
of the initial Contractual Obligations shall be made at the designated office of the Paying
Agent/Registrar named in the Official Statement or such other place as shall have been mutually
agreed upon by the Tssuer and the Underwriter.
(b) DeliveryoftheContractualObligaflonsshallbemadetoTheDepositoryTn~s[Company,
New York, New York (the "Depository"). The Contractual Obligations shall be delivered in
definitive fully registered form, bearing CUSIP numbers without coupons, with o~ bond for each
rnaturityof the Contractual Obligations, registered in the name of Cede 8c Co, all as providedm the
Order.
(c) Inaddition, the Issuer and the Underwriter agree that there shall be a preliminary closing
held at such place as the Issuer and the Underwriter shall mutually agree, commencing at least 24
hours prior to the Closing; provided, however, in lieu of this preliminary ck>s;ng Bond Counsel may
provide the counsel to the Underwriter with a complete T*~n~*+pt of Proceedings on the business
day preceding the Closing. Drafts of all documents to be delivered at the Closing shall be prepared
and distributed to all panes and their counsel for review at least three business days prior to the
Closing.
7. Closing Conditions. The Underwriter has entered ink this Contract in reliance upon the
representations, warranties and agreements of the Lssuer contained herein, and in reliance upon the
representations, warranties and agreements to be contained in the documents and inshvments to be
delivered at the Closing and upon the performance by the Issues of its obligations hereunder, both as of the
date hereof and as of the date of the Closing. Accordingly, the Underwriter's obligations under this
Contract to purchase, to accept delivery of and to pay for the Contractual Obligations shall be conditioned
upon the performance by the Issuer ofits obligations to be performed hen;underand under such documents
and instnunents at or prior to the Closing, and shall also be subject to the following additional conditions,
inchrding the delivery by the Issuer of such documents as are enumerated herein, in form and substance
reasonably satisfactory to the Underwriter and counsel to the Underwriter.
(a) The representations and warranties of the Issuer containedherein shall be tme,complete
and correct on the date hereofand on and as of the date ofthe Closing, as ifmade on the date ofthe
Closirtg;
(b) The Issuer shall have performed and complied with all agreements and conditions
required by this Contract to be performed or complied with by it prior to or at the Closing;
(c) At the tone of the Closing, (i) dre Order and the Contrachral Obligations shall be in full
force and effect in the form heretofore approved by the Underwriter and shall not have been
amended, modified or supplemented, and the Official Statement shall not have been supplemented
or amended, except in any such case as may have been agreed to by the Underwriter; (ii) the net
proceeds of the sale of the Contrschral Obligations shall be deposited and applied as described in
the Official Statement and in the Order and (iu) all actions of the Issuer required to be taken by the
Issuer shall be performed in order for Bond Counsel and to deliver its opinions referred to hereafter;
(d) At the time of the Closing, all official action of the Issuer relating to this Contract, the
Contractual Obligations and the Order shall be in full force and effect and shall not have been
amerxled, modified or supplemented, and the Underwriter shall have received, inappropriate foan,
evidence thereof;
(e) At or prior to the Closing, the Order shall have been dulyexeruted and deliveredby the
Issuer and the Issuer shall have duly executed and delivered and the Paying AgenURegi~ar for the
Contractual Obligations shall have duly authenticated the Contractual Obligations;
(f) At the tune of the Closing, the Lssuer shall deliver the Contractual Obligations to, or on
behalf of, the Underwriter,
(g) Atthe time ofthe Closing, then: shall not have occurred any change orany development
involving a prospective change in the condition, financial or otherwise, or in the revenues or
operations of the Issuer, from that set forth in the Official Statement that in the judgment of the
Underwriter, is material and adverse and that makes impracticable, in the judgment of the
Underwriter, marketing ofthe Conhactral Obligations on the terms and in the rnamrer contemplated
in the Official Statement;
(h) The Issuer shall not have failed to pay principal or interest when due on any of its
outstanding obligations for borrowed money;
() Alt steps to be taken and all instnunents and other documents to be executed, and all
other legal matters in connection with the transactions descrbed in this Contract shall be reasonably
satisfactory in legal form and effect to the Underwriter and to counsel for the Underwriter,
(j) At or prior to the Closing, the Underwriter shall have received one Dopy of each of the
following docrunerlls:
(1) the Official Statement, and each supplement or amendment thereto, if any,
executed on behalf of the Issuer by the County Judge and County Cleric of the Issuer, as may
have been agreed to by the Underwriter,
(2) the Order, having been duly adopted by the Issuer and as being in full force and
effect, with such supplements or amendments as may have been agreed to by the Underwriter,
the Ordershall contain the agreement ofthe Issuer, in form satisfactory to the Underwriter, that
is described under the caption "CONTINUING DISCLOSURE OF INFORMATION" in
the Preliminary Official Statement;
(3) the approving opinion of Bond Counsel with respect to the Contractual
Obligations, in substantially the form attached to the Official Statement;
(4) a supplemental opinion of addressed to the Issuer and the Underwriter,
substantially to the effect that:
(i) the Order has been duly adopted and is in full force and effect;
(u) the Contractual Obligations are exempted securities that do not require
registration under the Contractual Obligations Act of 1933, as amended (the "1933
Ad's, arrd the Trust Indenture Act of 1939, as amended (the "Tnust Indenture Act"), and
it is notnecessary, inconnectionwith the offeringandsaleofthe Contractual Obligations,
to register any securities under the 1933 Act or to qualify the Order under the Trust
Indenture Act'; and
(m) the statements and information contained in the Official Statement tinder
the captions'THE CONTRACTUAL OBLIGATIONS",'TAX MATTERS," "LEGAL
INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS",
"LEGAL OPINIONS" and "CONTINUING DISCLOSURE OF INFORMATION"
(except for the subsection "Compliance with Prior Undertakings" as to which no opinion
need be expressed), and are accurate and fair descriptions of the laws and legal issues
addressed therein and, with respect to the Contractual Obligations, such information
conforms to the Order.
(5) An opinion of counsel for the Underwriter, dated the date of the Closing,
addressed to the Underwriter, to the effect that:
(i) the Contractual Obligations are exempt securities that do not require
registration under the 1933 Act and the Tmst Indenture Act and it is not necessary, in
connection with the offering and sale of the Contractual Obligations, to register any
securities under the 1933 Act and the Order need not be qualified under the Trust
Indenture Act; and
(h) based upon the counsel's participation in the preparation of the Official
Statement as counsel for the Underwriter and the counsel's participation at conferences
at which the Official Statement was discussed, but without having undertaken to
detemrine urdependently the accxuacy, completeness or fairness of the statements
contained in the Official Statement, the counsel has no reason to believe that the Official
Statement wntains any untrue statement ofa material fact oromits to state a material fact
necessary to make the statements therein, in light ofthe circrnr under which they
were made, not misleading (except for any financial, forecast, technical and statistical
statements and data included in the Official Statement, in each case as to which no view
need be expressed);
(6) A certificate, dated the date of Closing, of tbe Lssuer, signed by the County Judge
and County Clerk of the LSSUer, to the effect that (i) the representations and warranties of the
Issuer contained herein are tore and correct in all material respects on and as of the date of
Closing as if made on the date of Closing; (ii) no litigation or proceeding against the Issuer is
pending or, to the Issuers knowledge, threatened in any court or administrarive body nor, m
the best of the knowledge of the persons executing such certification, is there a basis for
litigation that would (a) contest the right of the members or officials of the Issuer to hold and
exercise their respective positions; (b) contest the due organization and valid existence of the
Issuer; (c) contest the validity, due authorization and execution of the Contractual Obligations,
the Order or this Contractor (d) attempt to limit, enjoin or otherwise restrict or prevent the
Lssuer from fimctioning, collecting ad valorem taxes and making payments on the Contactual
Obligations, pursuant to the Order, and the collection of the ad valorem taxes pledged or to
be pledged to pay the principal of and interest on the Conhactual Obligations, or the pledge
thereof; (iii) the Order and this Contract have been duly adoptedbytbe Issuer, are in full force
and effect and have not been modified, amended or repealed; (iv) to the best of their
knowledge, no event affecting the Issuer has occurred since the date of the Official Statement
that should be disclosed in the Official Statement for the purpose for which it is to be used ar
that it is necessary to disclose therein in order to make the statements and infomration therein,
in light of the cireumslances under which made, not misleading in any respect as of the time of
Closing, and the information contained in the Official Statement is correct in all material
respects and, as of the date of the Official Statement did not, and as of the date ofdre Ckuing
does not, contain any untrue statement ofarrraterial fact oromitto state amatetial fad required
to be stated therein or necessary to make the statements made therein, in the light of the
circumstances under which theywere made, notmisleading; and (v) thatthere has notbeen any
to
material and adverse change in the affairs or financial condition of the Issuer since September
30, 2000, the latest date as to which audited financial infomurtion is available;
(7) A certificate of the Issuer in fomr and substance satisfadory to and counsel to the
Underwriter (a) setting forflr the facts, estimates and circrurtstaztces inexistence on the date of
the Closing that establish that the proceeds of the Contractual Obligations are not expelled to
be used in a manner that would cause the Contractual Obligations to be "arbitrage bonds"
widrur the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the
"Code"), and any applicable regulations (whether final, temporary or proposed), issued
pursuant to the Code, and (b) certifying that to the best of the knowledge and belief of the
Issuer there are no other facts, estimates or ciroumstances that would materially change the
conclusions, representations and expectations contained in such certificate;
(8) Any other certificates and opinions required by the Order for the issuance
thereunder of the Contractual Obligations;
(9) An opinion or certificate, dated on or prior to the dale ofClosing, of the Attorney
General of Texas, approving the Contractual Obligations as required by law, and the
registration certificate of the Comptroller of public Accounts of the State of Texas; and
(10) Suchadditiortal irgal opinions, certificates, instnurrertts and other documents as the
Underwriter or counsel to the Underwriter may reasonably request to evidence the tnrtkr and
acetrracy, as of the date hereof and as ofthe date ofthe Closing, oftbe Lssuer's representations
and warranties contained herein and of the statements and information contained in the Official
Statement and tbe due perfomrance or satisfaction by the Lssuer on or prior to the date of the
Closing of all the respective agreements then to be performed and conditions then to be
satisfied by the Issuer.
All of the opinions, letters, certificates, instnunents and other documents mentioned above or
elsewhere in this Contract shall be deemed to be in compliance with the provisions hereof if; but only it;
they are in form and substance satisfactory to the Underwriter.
Ifthe Issuer shall be unable to satisfy the conditions to the obligations ofthe Underwriter to purcbase,
to accept delivery of and to pay for the Contractual Obligations contained in this Contract, or if the
obligations ofthe Underwriter to purchase, to accept deliveryofand to pay forthe Contractual Obligations
shall be terminated for any mason permitted by this Contract, this Contract shall terminate and neither the
Underwriter nor the Issuer shall be under any further obligation hereunder, except that the respective
obligations of the Lssuer and the Underwriter set forth in Sections 5 and 9(b) hereof shall continue in full
force and effect
8. Termination. The Underwriter shall have the right to cancel their obligation to purchase the
Contractual Obligations if, between the date of this Contract and the Closing, the market price or
marketability of the Contractual Obligations shall be materially adversely affected, in the sole judgment of
the Underwriter (as evidenced by a written notice to the Issuer+~**++nar,~ the obligation ofthe Underwriter
to accept delivery of and pay for the Contractual Obligations), by the occurrence of any ofthe following.
11
(a) legislation shall be enacted by or introduced in the Congress or recommended to the
Congress forpassage by the President oftite United States orthe Treasury Department of the United
States or the Internal Revenue Service or any member of the Congress, or favorably reportedfor ., :.~, _ -. _
passage to either House of the Congress by any committee of such House to which such legislation
has been referred for consideration; a decision by a court ofthe United States or ofthe C rP nr he ___
United States Tax Court shall be rendered; or an order, ruling, regulation (final, temporary or
proposed), press release, statement or other form of notice by or on behalf of the Treasury
Ikpaztment of the United States, the Internal Revenue Service or other governmental agency shall
be made or proposed, the effect of any or all of which would be to impose, directly or indirectly,
federal income taxation upon revenues or other income ofthe general character to be derived by the
Issuer pursuant to the Order, or upon interest received on obligations of the general character of the
Contractual Obligations as described in the Official Statement, or other action or events shall have
transpired which may have the purpose or effect, directly or indirectly, ofchanging the federal income
tax consequences of any of the transactions contemplated herein, or any other action or events shall
have occurred that, in the judgment of the Underwriter, materially adversely affect the market for the
Contracual Obligations or the market price generally of Contractual Obligations of the general
character of the Conlracdral Obligations;
(b) legislation introduced in or enacted by, or resolution passed by, the Congress; an order,
decree or injunction issued by any court of competent jurisdiction; or an order, Wiling, reguhtton
(final, temporary or proposed), press release or other fornr ofnotice issued or made by or on behalf
ofihe Contractual Obligations and Exchange Commission, or any other goverrrarental agency having
jurisdiction of the subject matter, to the effect that obligations of the genera! character of the
Contractual Obligations, including any or all underlying arrangements, are not exempt from
regishalion under or other requirements of the 1933 Act, or that the Order is not exempt from
qualification under or other requirernents of the Tnrst Indenture Act, or that the issuance, offering or
sale of obligations of the general character of the Contractual Obligations, inchrding any or all
underlying arrangements, as contemplated hereby or by the Official Statement or otherwise, is or
would be in violation of the federal securites law as amended and then in effect;
(c) a~ state blue sky or securities commission or other govemmentat agetrcy or body in
which 25% or more of the Contractual Obligations have been sold shall have withheld regishation,
exemption or clearance of the offerhrg of the Contractual Obligations as descnbed herein, or issued
a stop order or similar Wiling relating thereto;
(d) a general suspension of trading in secruities on the New York Stock Exchange or the
American Stock Exchange; the establishment of minimum prices on either such exchange; the
establishment of material restrictions (not in force as of the date hereof) upon trading securities
generally by any governmental authority or arty national securities exchange; or a general banking
moratorium dechued by federal, State of New York or State officials authorized to do so;
(e) imposition of any material resbictons not now in force, or a material increase of those
now in force, by the New York Stock Exchange or another national securities exchange or any
govemmentalauthority, as to the Contractral Obligations or as to obligations oftbe general character
12
of the Contractual Obligations, with respect to the extension of coedit by, or the charge to the net
capital requirements of, the Underwriter,
(~ arry amendment to the federal or State Constitution or action by any federal or State
court, legislative body, regulatory body or other authority materially adversely affecting the tax status
of the Issuer, its properly, or income securities (or interest thereon), or the validity or enforeeability
of the pledge of tax revenues as provided in the Order to pay principal of and interest on the
Contractual Obligations;
(g) any event occurring, or infomration becoming known that, in the judgment of the
Underwriter, makes untme in any material respect any statement or infomlation contained in the
Official Statement, or has the effect that the Official Statement contains any unhue statement of
material fad or omits to state a material fad required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
(h) there shall have occurred since the date of this Contract any materially adverse change
in the affairs or financial catdition of the Issuer;
(i) the United States shall have become engaged in hostilities (whether or not foreseeable)
that have resulted in a declaration of waz or a national emergency or there shall have occurred any
other outbreak or escalation of hostilities or a national or international calamity or crisis, financial or
otherwise, the effect of such outbreak, calamity or crisis on the financial markets ofthe United States
being such as, in the reasonable opinion ofihe Underwriter, would materially or adversely affect the
ability of the Underwriter to marks the Contractual Obligations;
(k) arty fact or event shall exist or have existed that, in the Underwriter' judgment, requires
or has required an amendment of or supplement to the Official Statement;
m there shall have occurred any downgrading, or any notice shall have been given of
(A) any intended or potential downgrading or (B) any review or possible change drat does not
indicate the direction of a possible change, in the rating accorded any of the Issuers securities
Curc)uding the rating to be accorded the Contractual Obligations) by any nationally recognizai
statistical rating organization, as such term is defined for purposes of Rule 43b(gx2) under the 1933
Ad; and
(m) the purchase ofand payment for the Contractual Obligations by the Underwriter, or the
resale ofthe Contractual Obligations by the Underwriter, onthe terms and conditions herein provided
shall be prohibited by any applicable law, governmental authority, board, agency or commission
which prohibition shall occur subsequent to the date hereof and shall not be due to dre malfeasance,
misfeasance or nonfeasance of the Underwriter.
13
9. Ezpenses.
(a) The Underwriter shall be under no obligation to pay, and the Issuer shall pay, any
expenses incident to the perfomrance ofthe Issuer's obligations hereunder, inchrding, but not limited
to (i) the cost of preparation and printing ofthe Contractual Obligations, the Order, the Preliminary
Official Statement and Final Official Statement; (ii) the foes and disbursements of and counsel to the
Issuer, if any; (iii) the fees and disbursements of Southwest Contractual Obligations, Inc, as Financial
Advisor to the Issuer; (iv) the fees and disbursements of any engineers, accountants and other
experts, consultants or advisers retained by the Issuer, and (v) the fees, if any, for bond ratings.
(b) The Underwriter shall pay (i) the cost of preparation and printing of this Contras; (ii) all
advertising expenses in connection with the public offering of the Contractual Obligations; and (iii) all
other expenses incurred by it in connection with the public offering ofthe Contractual Obligations,
inchrding the fees and disbursements of counsel retained by the Underwriter.
10. Notices. Any notice or other communication to be given to the Issuerunder this Contract may
be given by delivering tbe same in writurg at the address on the cover page to this Contras and any notice
or other communication to be given to the Underwriter under this Contract may be given by delivering the
same in writing to First Southwest Company, 98 San Jacinto Blvd., Suite 370, Austin, Texas 78701 X039,
Attention: Dan Wegmiller.
11. Parties in Interest. This Contract as heretofore specified shall constitute the entire agreement
between us and is made solely for the benefit ofthe Issuer and the Underwriter (inchrdmg successors or
assigns ofthe Underwriter) and no other person shall acquire or have any right hereunder or by virtue
hereof. This Contras may not be assigned by the Issuer. All ofthe Issuer's representations, warranties
and agreements contained in this Contract shall remain operative and in full face and effect, regardless of
(i) any investigations made by or on behalf of the Underwriter, (ii) delivery of and payment fa the
Contractual Obligations pursuant to this Contract; and (iii) any temilnalion of this Contract.
12. Effectiveness. This ContrasshallbecomeeffesiveupontheacceptancehereofbytheLs.suer
and shall be valid and enforceable at the time of such acceptance.
13. Choice of Law. This Contract shall be governed by and construed in aa:ordance with the law
of the State.
14. Severability. If any provision ofthis Contract shall be held or deemed to be a shall, in fas,
be invalid, inoperative or unenforceable as applied in any particrilar case in any jurisdision a jurisdisions,
or in all jurisdisions because it confliss with any provisions of any Constitution, statute, Wile of public
policy, a any other reason, such circumstances shall not have the effect of rendering the provision in
question invalid, inoperative a unenforceable in any other case or circumstance, or ofrendering any other
provision a provisions of this Contras invalid, inoperative a unenforceable to any extent whatever.
15. Business Day. For purposes of tins Contras, 'business day" means any day on which the
New York Stack Exchange is open for trading.
to
16. Section Headings. Section headings have been inserted in this Contact as a matter of
convenience of reference only, and it is agrced that such section headings are not a part of this Contract
and will not be used in the interpretation of any provisions of this Contract.
17. No Personal Liability. None of the members of the Commissioners Court, nor any officer,
agent, or employee of the Issuer, shall be charged personally by ate Underwriter with any liability, or be
held liable to the Undervriter under any term or provision of this Contract or because of execution or
attempted execution, or because any breach or attempted or alleged breach, of this Contract.
18. Counterparts. This Contract may be executed in several counterparts each ofwhich shall be
regarded as an original (with the same effect as if the signatures thereto and hereto were upon the same
document) and all of which shall cctnstitttte one and the same document.
19. Status of the Underwriter; Senior Manager. It is understood and agreed that for all
purposes of this Contract and the transactions contemplated hereby the Underwriter has, in its role as
underwriter, acted solely as an independent contractor and has not acted as a financial or investment
advisor, fiduciary oragentto or fortbe Issuer, whetherdirecdyor indirectly through any person. The Issuer
recognizes that the Underwriter expects to profit from the acquisition and potential distribution of the
Contractual Obligations.
[The remainder of this page intentionally le,/i blank]
is
Ifyou agree with the foregoing, please sign the enclosed counterpart of this Contract and return it to
the Underwriter. This Contract shall become a binding agreement between you and the Underwriter when
at least the counterpart of this letter shall have been signed by or on behalf of each of the parties hereto.
Respectfully submitted,
FIIiST SOUTHWEST COMPANY
Title:
ACCEPTANCE
ACCEPTED pursuant to an Order approved by the Commissioners Court of Ken County, Texas
on September 24, 2001.
!~
Title: County Judge, Ken• 'only, Texas
16
EXHIBIT A
SCHEDULE OF MATURTTIIsS, INTEREST RATES AND REDEMPTION PROVISIONS
MATURITY PRINCIPAL INTEREST MATORPIY PRINCIPAL INTEREST
(O2/15) AMOUNT RATE('/o) (02/15) AMOl1NC RATE('/o)
2002	2006
2003	2007
2004	2008
2005	***
The Contractual Obligations are not subject to optional redemption prior to scheduled maturity.
In addifion, the Contractual Obligations maturing on February 15 in the years 20_ and 20 (the "Term
Contractual Obligations") are subject to mandatory redemption prior to maturity. The Tetm Contractual
Obligations shall be redeemed by the Paying Agent/Registrar in part prior to maturity for the principal
amount thereof and accrued interest to the date of redemption, and without premium, on the dates and in
the principal amounts as set forth in the following schedule:
Contractual Obligations Maturing Contractual Obligations Maturing
February 15, 20_ February 15, 20_
at "/o per annum at % per annum
Redemption Principal Amonmt Redemption Date Principal
Date Amount
'Final madnity.
A-1
DRAFT' DATE SEPTEMBER 13. 2001
ORDER AUTHORIZING THE ISSUANCE OF KERR COUNTY, TEXAS
PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES
2001, AUTHORIZING THE EXECUTION OF A PAYING AGENT/REGISTRAR
AGREEMENT, A PURCHASE CONTRACT AND OTHER RELATED
DOCUMENTS, AND APPROVING AN OFFICIAL STATEMENT
THE STATE OF TEXAS
COUNTY OF KERR
WHEREAS, the Public Property Finance Act, Sections 271.001 - 271.009, Texas Local
Government Code (the "Act"), authorizes political subdivisions of the State of Texas, including Kea
County, Texas (the "Issuer") to execute, perfornr, and make payments under contracts with any person for
die use, purchase or other acquisition of any personal property, as defined in the Act, or the financing
thereof, and for materials and labor incident to the installation of such personal property; and
WHEREAS, dre Ad pemrits the governing body of the Issuer to execute contracts in any fomr
deemed appropriate by said governing body in connection withthe use, purchase or acquisition personal
property or the financing thereof; and
WHEREAS, the governing body of the Issuer desires to acquire or purchase, or reimburse itself
for costs previously incurred to purchase, personal property as described in Exhtbit A attached hereto, or
such other appliances, equipment, facilities, fiunishings or interests drerein, whether movable or fixed
(including all materials and labor incident to the installation thereofj, considered by the governing body of
the Issuer to be necessary, useful or appropriate for one or more purposes oftbe Issuer (collectively, the
"ProPertY~~; ~
WHEREAS, the governing body of the Issuer deems it appropriate to adopt this Order and issue
the "Contractual Obligations" herein authorized as pemritted by the Acr; and
WHEREAS, the meeting at which this Order was considered and passed was a regularly
scheduled meeting ofthe Commissioners Court at which at least four members ofthe Commissioners Court
were present, and such meeting
WHEREAS, it is hereby officially found and determined that the meeting at which this Orderwas
passed was (i) pursuant to the requirements of Section 81.006(6), Texas Local Government Code, as
amended, a "regularly scheduled meeting" of the Comm;~eionets Court at which at least four members of
the Commissioners Court were present, (ii) held on a day on which the Commissioners Court "routinely
and periodically meets" within the meaning of Section 81.005(8), Texas Local Government Code, as
amended, and (iii) open to the public, and public notice ofthe time, place and purpose ofsaid meeting was
given, all as required by Chapter 551, Texas Government Code, as amended;
THEREFORE, BE IT ORDERED BY THE COMMISSIONERS COURT OF %ERR
COUNTY, TEXAS:
SECr[ON 1. RECITALS, AMOUNT AND PURPOSE OF CONTRACTUAL OBLIGA-
TIONS. The recitals set forth in thepreamble hereofare ineorporatea herein and shall have the same force
and effect as if set forth in this Section The Issuer's Public Property Finance Contractual Obligations
(hereinafter sometimes called the "Contractual Obligations") are hereby authorized to be issued in the
aggregate principal amount of $1,000,000, FOR THE PURPOSE OF FINANCING ALL OR A
PORTION OF THE ISSUER'S PURCHASE AND ACQUISITION OF PERSONAL
PROPERTY (INCLUDING MATERIALS AND LABOR INCIDENT TO THE
INSTALLATION OF SUCH PERSONAL PROPERTY) IN ACCORDANCE WITH THE
PROVISIONSOFTHEPUBLICPROPERTYFINANCEACT,SECTIONS271.001-271.009,
TEXAS LOCAL GOVERNMENT CODE.
SECI'[ON 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND
MATURITIES OF BONDS. Each contractual obligation issued pursuant to this Order shall be
designated: "%ERR COUNTY, TEXAS PUBLIC PROPERTY FINANCE CONTRACTUAL
OBLIGATION, SERIES 2001 ", and initially there shall be issued, sold, and delivered hereunder one
frilly registered Contractual Obligation, without interest coupons, dated September 15, 2001, in the
principal amount stated in Section 1 above, numbered T-1 (the "Initial Conhachral Obligation") with
Contractual Obligations issued in replacement thereof being in denominations of $5,000 or any integral
multiple thereof and numbered consecutively from R-1 upward, payable to the initial registered owner
thereof (with the Initial Contractual Obligation being payable to the initial purchaser designated in Section
15 hereof), or to the registered assignee or assignees of said Contractual Obligations or any portion or
portions thereof (in each case, the "Registered Owner', and said Contractual Obligations shall mature and
be payable serially on Febmary 15 in each of the years and in the principal amounts, respectively, as set
forth in the following schedule:
The terra "Contractual Obligations" as used in this Order shall mean and include collectively the contractual
obligations initially issued and delivered pursuant tu this Order and all substitute contractual obligations
exchanged therefor, as well as all other substitute contractual obligations and replacement contractual
obligations issued pursuant hereto, and the temr "Conttactual Obligation" shall mean any of the Contractual
Obligations.
2
SECrtox3. INTEREST. The Contractual Obligations shall bear interest from the dates specified
in the FORM OF CONTRACTUAL OBLIGATION set forth in this Order to their respective dates of
maturity at the rates as set forth in the following schedule:
Interest shall be payable in the manner provided and on the dates stated in the FORM OF
CONTRACTUAL OBLIGATION set forth in this Order.
SECrtON 4. CHARACTERISTICS OF THE CONTRACTUAL OBLIGATIONS. (a)
Re;ichatinn Trancf r r~tttlyP.TCIOn nd X han e• Authentication The Issuer shall keep or cause [O be
kept at the designated corporate trust office (initially located in Houston, Texas) ofThe Bank ofNew York
(the "Paying Agent/Registrar") books or records for the registration of the transfer and exchange of the
Contractual Obligations (the "Registration Books"), and the Issuer hereby appoints the Paying
Agern/Registrar as its registrar and transfer agent to keep such books or records and make such
registrations of transfers and exchanges under such reasonable regulations as the Issuer and the Paying
AgetrdRegistrarroayprescribe; and the Paying AgenURegistrar shall make such registrations, transfers and
exchanges as herein provided within three days of presentation in due and proper fomr. Attached hereto
as Exhibit B is a copy of the Paying Agent/Registrar Agreement between the Issuer and the Paying
AgenURegistrar which is hereby approved in substantially final form, and the County Judge and County
Clerk of the Issuer are hereby authorized to execute the Paying AgendRegisttar Agreement and approve
a~ changes in the 5nal form theeoŁ
The Paying Agent/Regishar shall obtain and record in the Registration Books the address of the
registered owner of each Conttactual Obligation to which payments with respect to the Contractual
Obligations shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify
the Paying Agent/Regishar 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/Regishar shall keep the Registration Books confidential and, unless otherwise required by
law, shall not permit their inspectionby any other entity. The Issuer shall pay the Paying Agerrt/Registrar's
standard or customary fees and charges for malting such registration, transfer, exchange and delivery of
a substitute Contractual Obligation or Contractual Obligations. Regstration of assignments, transfers and
exchanges of ConttacNal Obligations shall be made in the manner provided and with the effect stated in
the FORM OF CONTRACTUAL OBLIGATION set forth in this Order. Each substitute Contractual
Obligation shall bear a letter and/or number to dicring»eh it from each other Contractual Obligation.
Except as provided in Section 4(c) of this Order, an authorized representative of the Paying
AgendRegishar shall, before the delivery ofany such Contractual Obligation, date and manually sign said
Contractual Obligation, and no such Contractual Obligation shall be deemed to be issued or outstanding
unless such Contractual Obligation is so executed. The Paying AgenURegist<ar promptly shall cancel all
paid Contractual Obligations or Contractual Obligations surrendered for transfer and exchange. No
additional ordinances, orders, or resolutions need be passed or adopted by the Issuer or any other body
or person so as to accomplish the foregoing transfer and exchange of any Contractual Obligation or portion
thereof, and the Paying AgendRegishar shall provide for the printing, execution, and delivery of the
substitute Contractual Obligations in the manner prescribed herein, and said Contractual Obligations shall
be of type compositionprinted onpaper with lithographed or steel engraved borders of customary weight
and shength. Pursuant to Chapter 1201, Texas Government Code, and particularly Subehapter D thereof,
the duty of transfer and exchange of Contractual Obligations as aforesaid is hereby imposed upon the
Paying AgenURegisnay and, upon the execution of said ContracAual Obligations, the iransfered and
exchanged Contractual Obligations shall be valid, incontestable, and enforceable in the same manner and
with the same effect as the Contactual Obligations which initially were issued and delivered pursuant to
this Order, approved by the Attorney General, and registered by the Comptroller of Public Accounts.
(b) Payment of Conhacb~a ObLgations acrd Lrrterest. The Issuer hereby fiuther appoints the
paying Agent/Registrarto act as the paying agent for paying the payment oftbe principal ofand interest on
the Contractual Obligations, all as provided in this Order. The Paying Agent/Registrar shall keep proper
records of all payments made by the Lssuer and the Paying Agent/Registrar with respect to the Contractual
Obligations, and of all transfers and exchanges of Contractual Obligations, and all replacements of
Contractual Obligations, as provided in this Order. 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/Regishar, if and when fiords for the
payment of such interest have been received fiom the Lssuer. Notice of the Special Record Date and of
the scheduled payment date oftbe past due interest (which shall be 15 days at2er the Special RecordDate)
shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first-
chrsspostage prepaid, to the address of each registered owner appearing on the Registation Books at the
close of business on the Lot business day next preceding the date of mailing of such notice.
(c) In General The Contractual Obligations (i) shall be issued in fully registered fomr, without
interest coupons, with the principal of and interest on such Contractual Obligations to be payable only to
the registered owners thereof, (H) may be transferred and assigned, (iii) may be converted and exchanged
for other Contractual Obligations, (iv) shall have the characteristics, (v) shall be signed, sealed, executed
and authenticated, (vi)theprincipalofandinterest ontbeContractual Obligations shallbe payable, and (vii)
shall be administered and the Paying Agent/Regis~ar and the Lssuer shall have certain duties and
responsibilities with respect to the Contactual Obligations, all as provided, and in the manner abe to the
effect as required or indicated, in the FORM OF CONTRACTUAL OBLIGATION set forth in this
Order. The Initial Contactual Obligation is not required to be, and shall not be, authenticated by the
Paying Agent/ Registrar, but on each substitute Contractual Obligation issued in exchange for the Initial
Contractual Obligation issued under this Order the Paying Agent/Registtar shall execute the PAYING
AGENT/REGISTRAR'S AUfEIENTICATION CERTIFICATE, in the form set forth in the FORM OF
BOND. In lieu of the executed Paying Agent/Regishar'sActhentication Certificate described above, the
LritialContractual Obligation delivered onthe closing date (as fiuther descnbed in subparagraph (i) below)
shall have attached thereto the Comptroller's Registration Certificate substantially in the form set forth in
the FORM OF BOND below, manually executed by the Comptroller of Public Accounts of the State of
Texas or by his duly anthorized agent, which certificate shall be evidence that the Initial Contractual
Obligation has been duly approved by the Attorney Generalofthe State of Texas and that it is a valid and
binding obligation of the Issuer, and has been registered by the Comptroller.
(d) Substitute Pacing Agent~shar. The Issuer covenants with the registered owners of the
Contractual Obligations that at all times while the Contractual Obligations 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 Agent/Registrar for the Contractual Obligations under this Older,
and that the Paying Agent/Registtar will be one entity. The Issuer reserves the right to, and may, at its
option, change the Paying Agent/Registtar upon not less than 120 days written notice to the Paying
Agent/Registtar, to be effective Trot later than 60 days prior to the next principal or interest payment date
after such notice. Tn the event that the entity at any timeacting asPaying Agent/Regishar (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, bust company, financial
institution, or other agency to act as Paying Agent/Registrar under this Order. Upon any change in the
Paying AgenURegishatar, the previous Paying Agent/Regishar promptly shall transfer and deliver the
Registration Books (or a copy thereof), along with all other pertinent books and records relating to the
ContractualObligations, iA the new Paying Agent/Regishar designated and appointedby the Lssuer. Upon
any change in the Paying Agent/Registtar, the Issuer promptly will cause a written notice thereofto be sent
by the new Paying Agent/Regishar to each registered owner of the Contractual Obligations, by United
States mail, firstclass 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 Agent/Regishar shall be
deemed to have agreed to the provisions ofthis Order, and a certified copy ofthis Order shall be delivered
to each Paying AgendRegisttar.
(e) Book-Entrv~~y Sys The Contractual Obligations issued in exchange for the
ConttactualObligations irritiallyissued to tlrepurchaser specifiedmSection 15 herein shallbe initially issued
in the form of a separate single fully registered Contractual Obligation for each of the maturities thereof.
Upon initial issuance, the ownership of each such Contractual Obligation shall be registered in the name of
Cede & Co, as nominee of The Depository Trust Company of New York ("DTC"), and except as
provided in subsection (f) hereof, all of the outstanding Contractual Obligations shall be registered in the
name of Cede & Co, as nominee of DTC.
With respell to Contractual Obligations registered in the name of Cede & Co., as nominee of
DTC, the Lssuer and the Paying Agent/Registtar shall have no responsibility or obligation to arty securities
brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on
whose behalf DTC was created ("DTC Participant") to hold securities to facilitate the clearance and
settlement of securities transaction among DTC Participants or to any person on behalf of whom such a
DTC Participant holds an interest in the Contractual Obligations. Without limiting the immediately
preceding sentence, the Lssuer and the Paying AgenbRegistrar shall have no responsibility or obligation with
respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to
arty ownership interest in the Contractual Obligations, (ir) the delivery to any DTC Participant or any other
person, other than a registered owner of Contractual Obligations, as shown on the Registration Books, of
any notice with respect to the Contractual Obligations, or (iii) the payment to any DTC Participant or any
other person, odrer than a registered owner of Contractual Obligations, as shown in the Registration Books
of any amount with respect to principal of or interest on the Contractual Obligations. Notwithstanding any
other provision of this Order to the contrary, the Issuer and the Paying AgendRegistrar shall be entitled to
treat and consider the person in whose name each Contractual Obligation is registered in the Registration
Books as the absolute owner of such Contractual Obligation for the purpose of payment of principal and
interest with respect to such Contractual Obligation, for the purpose of registering transfers with respect
to such Contractual Obligation, and for all other purposes whatsoever. The Paying AgenURegistrar shall
pay all principal of and interest on the Contractual Obligations only to or upon the order of the registered
owners, as shown in the Registration Books as provided in this Order, or their respective attorneys 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 and interest on the Contractual Obligations to
the extent of the sum or sums so paid No person other than a registered owner, as shown in the
RegistrationBooks, shall receive a Contractual Obligation certificate evidencing the obligation ofthe Issuer
to make payments of principal and interest pursuant to this Order. Upon delivery by DTC to tbe Paying
Agent/Registrar ofwrittennotice tothe effect that DTC has detemvned to substitute a new nominee inplace
of Cede & Co., and subject to the provisions in this Order with respect to interest checks being mailed to
the registered owner at the close of business on the Record date, the words "Cede & Co." in this Order
shall refer to such new nomince of DTC.
(t) Cnr~PCCttrSecnritiPS at ~TransfersOutsideBook-EntrvOnly~Y~. DTC may
detemrine to discontinue providing its services as securities depository with respect to the Contractual
Obligations, and the Lssuer may detemrine to discontinue the use of the book-entry only with DTC. Tn
either of such events, the Issuer 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
Contractrral Obligations to such successor securities depository, or (n~ notify DTC and DTC Participants
of the avar7ability through DTC of Contractual Obligations and transfer one or more separate Contractual
Obligations to DTC Participants having Contractual Obligations credited to their DTC accounts. In such
event, the Contractual Obligations shallno longerberestrictedtobeing registered inthe RegistrationBooks
in the name of Cede & Co, as nominee of DTC, but may be registered in the name of the successor
securities depository, or its nominee, or in whatever name or names registered owners transferring or
exchanging Contractual Obligations shall designate, in accordance with the provisions of this Order.
(g) Payments to Cede & Co. Notwithstanding any other provision of this Order to the
contrary, so long as any Contractual Obligation is registered in the name of Cade & Co., as nominee for
DTC, all payments with respell to principal of and interest on such Contractual Obligation and all notices
with respect to such Contrachral Obligation shall be made and given, respectively, in the manner provided
in the representation letter of the Issuer to DTC.
(h) Blanket DT Ptter of R~rresentation The officers of the Board are herein authorized
for and on behalf of the Issuer and as officers of the Lssuer to execute a Blanket Letter of Representations
with DTC, in such form as is provided by DTC, to establish the bookcrrtry only system with respect to
the Contractual Obligations.
(i) Delivery~,f Initial Contractual Obligation. On the closing date, one Initial Conhactrral
Obligation representing the entire principal amount of the Contractual Obligations, payable in stated
installments to the initial registered owner named in Section 15 of this Order or its designee, executed by
manual or facsimile signature of the County Judge and County Clerk of the Issuer, approved by the
Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of
the State of Texas, will be delivered to the initial purchaser or its designee. Upon payment for the Initial
ConnactualObligation,tbe Paying Agent/Regishaz shall cancelthe Initial Contractual Obligation and deliver
to the initial registered owner or its designee one registered definitive Contractual Obligation for each year
of maturity of the Contractual Obligations, in the aggregate principal amount of all of the Contractual
Obligations for such maturity.
SEC['[ON 5. FORM OF CONTRACTUAL OBLIGATIONS. The form of the Contractual
Obligations, including the form of Paying Agent/Regislrar's Authentication Certificate, the form of
Assignment and the form of Regishation Certificate of the Comptroller of Public Accounts of the State of
Texas (to be attached only to the Initial Contractual Obligation), shall be, respectively, substantially as
follows, with such appropriate variations, omissions, or insertions as are permitted or required by this
Order.
FORM OF CONTRACTUAL OBLIGATION
R_ PRINCIPAL
AMOUNT
UNITED STATES OF AMERICA
STATE OF TEXAS
KERR COUNTY, TEXAS
PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATION
SERIES 2001
INTEREST DATE OF MATURITY
RATE CONTRACTUAL OBLIGATIONS DATE CUSIP NO.
September 15, 2001
OWNER:
PRINCII'AL AMOUNT: DOLLARS
ON THE MATURITY DATE specified above, KERR COUNTY, TEXAS (the "LSSrrer"),
beingapoliticalsubdivision ofthe State ofTexas, herebypromisestopaytothe Registered Ownerset forth
above, orregistered assigos(hereinatiercalledthe "negisteredowner")the PtincipalAmount setforthabove
and to pay interest thereon fmm the Date of Contachtal Obligations set forth above, on February 15, 2002
and ePm;annually on each August 15 and February 15 thereafter to the Maturity Date specified above, at
the Interest Rate per annum specified above; except that if this Contractual Obligation is required in be
authenticated and the date of its audhentication is later than the first Record Date (hereinafter defined), 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 but on or before the next
following interest payment date, in which case such Principal Amount shall beaz interest from such next
following interest payment date; provided, however, that ifon the date ofauthentication hereofthe interest
on the Contractual Obligation or Contractual Obligations, if any, for which this Contractual Obligation is
being exchanged or converted from is due bat his not been paid, then this Contractual Obligation shall bear
interest from the date to which such interest has been paid in full
IN CONSIDERATIONOF the Registered Owner's acceptance hereof, which acceptance shall
constitute the registered owner's assent hereto and to the terms and conditions of the order authorizing the
issuance of the Contractual Obligations (the "Order"), the Lssuer hereby nn,~_trratly contracts with such
registered owner that it will utilize the net available proceeds of the Contractual Obligations, after payment
ofthe costs of issuance related thereto, to acquire or purchase the "Property" in accordance with the terms
and provisions of the Order.
THEPRINCIPAL OFANDINTEREST ONthis Conhactttal Obligationare payable inlawfid
money of the United States of America, without exchange or collection charges. The principal of this
Conhactual Obligation shall be paid to the registered owner hereofupon presentation and surrender ofthis
Contractual Obligation at maturity at the designated corporate tmst office (initially located in Houston,
Texas) of The Bank ofNew York, which is the "Paying AgenURegishar" for this Contractual Obligation.
The payment of interest on this Contractual Obligation shall be made by the Paying AgendRegistrar to the
registered ownerhereof on each interestpayment date by check or draft, dated as ofsuch interest payment
date, drawnby the Paying Agent/Registrar on, and payable solely from, funds ofthe Issuer required by the
Order to be on deposit with the Paying Agent/Regishar for such purpose as hereinafter provided; and such
check or draft shall be sent by the Paying AgentBegistrar by United States mail, firstclass postage pre-
paid, on each such interest payment date, to the registered owner hereof, at its address as it appeared on
the last business day of the month next preceding each such date (the "Record Date") on the Registration
Books kept by the Paying Agent/Regishar, as hereinafter described. In addition, interest may be paid by
such other method, acceptable to the Paying Agent/Regishar, requested by, and at the risk and expense
of, the registered owner. In the event of anon-payment of interest on a scheduled payment date, and for
30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be
established by the Paying Agent/Regishar, if and when funds for the payment of such interest have been
received from the Issuer. Notice ofthe Special Record Date and of the scheduled payment date oftbe past
due interest (which shall be 15 days after the Special Record Date) shall be sent at least five business days
prior to the Special Record Date by United Smtes mail, first-class postage prepaid, to the address of each
owner of a Contractual Obligation appearing on the Registration Books at the close ofbusiness on the last
business day next preceding the date of mailing of such notice.
THE ISSUER COVENANTS withthe Registered Qwrrerofthis Contractual Obligationthat on
or before each principal payment date, and interest payment date for this Contractual Obligation it will
make available to the Paying Agent/Regis6rar, from the "Interest and Sinking Fund" created by the Order,
the amounts required to provide for the payment, in immediately available fiords, of all principal of and
interest on the Contractual Obligations, when due.
IF THE DATE FOR THE PAYMENT of this Contractual Obligation shall be a Saturday,
Sunday, a legal holiday, or a day on which banking instittions in the city where the principal corporate tnrst
office of the Paying Agent/Registrar islocated are authorized by law or executive order to close, then the
date forsuchpayment shallbe the next succeeding daywlrich is not such a Saturday, Sunday, legal holiday,
or day on whidr 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 CONTRACTUAL OBLIGATION is one of a Series of Contractual Obligations, dated
September 15, 2001, authorized in accordance with the Constitution and laws ofthe State ofTexas in the
princ~al amount of SI,000, 000 FOR THE PURPOSE OF FINANCING ALL OR A PORTION
OF THE ISSUER'S PURCHASE AND ACQUISITION OF PERSONAL PROPERTY
(INCLUDINGMATERL4LSAND LABOR INCIDENT TO THEINSTALLATIONOFSUCH
PERSONAL PROPERTY) INACCORDANCE WITH THE PROVISIONS OF THE PUBLIC
PROPERTYFINANCEACT,SEOTIONS 271.001-271.009, TEXASLOCAL GOVERNMENT
CODE.
ALL CONTRACTUAL OBLIGATIONS OF THIS SERIES are issuable solely as fiilly
registered Contractual Obligations, without itterest coupons, in the denomination of a~ integral multiple
of $5,000. As provided in the Order, this Contractual Obhgation may, at the request of the registered
owner or the assignee or assignees hereof, be assigned, transferred, converted into and exchanged for a
hke aggegate principal amount of fully registered Contactual Obligations, without interest coupons,
payable to the appropriate registered owner, assignee or assignees, as the case maybe, having the same
denominationordenominations inany integral multiple of$5,000 as requested in writing bythe appropriate
registered owner, assignee or assignees, as the case may be, upon surrender of this Contractual Obligation
to the Paying AgendRegistrar for cancellation, all in accordance with the form and procedures set forth in
the Order. Among other requirements for such assignment and transfer, this Conttacdral Obligation must
be presented and surrendered to the Paying Agent/Registrar, together with the proper instruments of
assignment, in fomrand with guararrtce of signatures satisfactory to the Paying Agent/Registrar, evidencing
assigtunent ofthis Contractual Obligationorany portionorportionshereofinanyimegral multiple of$5,000
to the assignee or assignces in whose name or names this Contractual Obligation or any such portion or
portions hereof is or are to be registered. The forrrr of Assignment printed or endorsed on this Contractual
Obligation maybe executed by the registered owner to evidence the assignment hereof, but such method
is not exchrsive, and other insturnenis ofassignnrent satisfactory to the Paying Agerrt/Regisltarmay beused
to evidence the assignment of this Contractual Obligation or any portion or portions hereof from time to
trtrre by the registered owner. in the case of the assignment, transfer, conversion or exchange of a
Contractual Obligation or Contractual Obligations or any portion or portions thereof, the reasonable
standard or customary fees and charges of the Paying AgendRegistar will be paid by the Lssuer. In any
circurnslance, any taxes or governmental charges required to be paid with respect thereto shall be paid by
the one requesting such assignment, transfer, conversion or exchange, as a condition precedent to the
exercise of such privilege. The Paying Agent/Registar shall not be required to make any such transfer,
conversion or exchange during the period commencing with the close ofbusitress on any llecord Date and
ending with the opening of business on the next following principal or interest payment date.
IN THE EVENT ANY PAYING AGENT/REGISTRAR for the Conttactual Obligations is
changed by the Issuer, resigns, or otherwise ceases to act as such, the Lssuer has covenanted in the Order
that it promptly will appoint a competent and legally qualified substitute therefor, and rouse written notice
thereof to be mailed to the registered owners of the Contractual Obligations.
IT IS HEREBY CERTIFIED, RECITED AND COVENANTED that this Contractual
Obligation has been duly and validly arrdrorized, issued 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 Contractual Obligation have been perforated, existed and been done in accordance with
law; that this Contractral Obligation is an obligation ofthe Issuer, issued on the fiill faith and credit thereof
and that annual ad valoremtaxes sufficientto provide fortbepaymentofthe intereston andprincipal ofthis
Contractual Obligation, as such interest comes due and such principal matures, have been levied and
ordered to be levied against all taxable property in the Issuer, and have beers pledged from the Issuer's
anrnral ad valorem maintenance tax for such payment, within the limit prescn'bed bylaw.
BY ACCEPTANCE OF THIS CONTRACTUAL OBLIGATION, the registered owner
assents to the temrs and provisions of the Order, a copy of which is on file in the official records of the
Issuer, and this Contractual Obligation, agrees to be bound by such terms and provisions, and agrees that
10
the tertns and provisions of this Contractual Obligation and the Order constitute a contract between each
registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Contractual Obligation to be signed with
the manual or facsimile signature of the County Judge of the Issuer and countersigned with the manual or
facsimile signature ofthe County Clerk ofthe Issuer, and has caused the official seal of the Issuer to be duly
impressed, or placed in facsimile, on this Contractual Obligation.
() 1~~
County Cletk, Kerr County Texas County Judge, Kea County, Texas
(SEAL)
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROL.L.ER OF PLIgL.I A O
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Contractual Obligation has been examined, certified as to validity, and
approved by the Altomey General of the State of Texas, and that this Contractual Obligation has been
registered by the Comptroller of Public Accounts of the State of Texas.
Witness my sigrature and seal this
(COMPTROLLER'S SEAL)
Comptroller of Public Accounts
of the State of Texas
[The remainder of this page intentionally left blank)
11
FORM OF PAYING A ENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Contractual Obligation is not accompanied by an executed
Registration Certificate of the Comptroller of Public Accounts of the Staff of Texas)
It is hereby certified that this Contractual Obligation has been issued under the provisions of the
Order described in the text of this Contractual Obligation; and that this Contractual Obligation has been
issued in conversion or replacement of, or in exchange for, a contractual obligation, contractual obligations,
or a portion of a contractual obligation or contractual obligations of a Series which originally was approved
by the Attorney General of the State ofTexasand registered by the Comptroller of Public Accounts ofthe
State of Texas.
Dated:
THE BANK OF NEW YORK
Houston, Texas
Paying Agent/Regishar
By
Authorized Representative
[The remainder of this page intentionally left blank)
12
FORM OF ASSIGNMENT
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned Registered Owner of this Contractual Obligation, or
duly authorized representative or attorney thereof, hereby assigns this Contractual Obligation to
(Assignee's Social Security or (Print or typewrite Assignee's name and address,
Taxpayer Identification Number) including zip code)
and hereby irrevocably constitutes and appoints
attorney to register the transfer of the within Contractual Obligation on die books kept for registration
thereof, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by a
member fmxr ofthe New York Stock Exchange or
a commercial bank or tnrst company.
NOTICE: The signature above must correspond
with the name of the Registered Owner as it
appears upon the front of this Contractual
Obligation in every particular, without alteration or
enlargement or any change whatsoever.
IN Ai O ACTU i OBLI ATION INSERTIONS:
The Initial Contractual Obligation shall be in the form set forth above except that
(A) Immediately under the name of the Contractual Obligation, the headings "INTEREST
RATE" and "MATURPfY DATE" shall be completed with the words "As shown below"
and "CUSIP NO. " shall be deleted.
(B) The first paragraph shall be deleted and the following shall be inserted:
"ON THE RESPECTIVE MATURITY DATES specified below, %ERR COUNTY,
TEXAS (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to the
Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"), the
respective Principal Installments specified below, and to pay interest thereon (calculated on the basis of a
360~ay year composed of twelve 3(May months) from September 15, 2001 at the respective Interest
Rates per annum specified below, payable on Febmazy 15, 2002 and semiannually on each August 15 and
Febmary 15 thereafter to the respective Maturity Dates specified below, or the date of redemption prior
13
[Insert principal and interest information from Sections 2 and 3 above)
(C) The Initial Contractual Obligation shall be numbered'T-k."
SECnox6. INTERESTAND SINHING FUND/TAX LEVY. A special Kerr County, Texas
Public Property Finance Contractual Obligations, Series 2001 Interest and Sinking Fund (tbe'7nterest and
Sinking Fund's is hereby created solely for the benefit ofthe Contractual Obligations, and the Interest and
Sinking Fund shall be established and maintained on the financial records of the Issuer or at an official
depository bank ofthe Issuer for so long as the Contractual Obligations or interest thereon are outstanding
and unpaid 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 Contractual
Obligations. Until expended for the purposes set forth in Section 1 hereof, the proceeds derived from the
sale of the Contractual Obligations shall be held as firrther security for the timely payment of the principal
and interest on the Contractual Obligations. All ad valorem taxes levied and collected for the Issuer's main-
tenancetax forand onaccount ofsaidContuactualObligations shallbedeposited, ascollected, to the credit
of the Interest and Sinking Fund. During each year while any of said Contractual Obligations are
outstanding and unpaid, the governing body of the Issuer shall compute and ascertain a rate and amount
of ad valorem tax for the Issuers maintenance tax which will be sufficient to raise and produce the money
required to pay the interest on said Contractual Obligations as such interest comes due, and to provide and
traimain a sinking fund adequate to pay the principal of such Conttactuak Obligations as such principal
matures; and said tax shallbe based onthe latest approvedtaxrolls ofsaidlssuer, with fiill allowancebeing
made fortax delinquencies andthe cost oftax collection. Said rate and amount ofad valoremtax is hereby
levied out of the maintenance tax of the Lssrrer, and is hereby ordered to be levied, against all taxable
property in said Issuer for each year while any of said Contractual Obligations 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 said Contractual Obligations as such interest comes due and such principal matures, are
herebypledged fi-omthe maintenance tax ofthe Issuer for swchpayment, within the limitprescdbed by law.
SECr[ON 7. ACQUISTITON FUND. There is hereby created and established on the financial
records of the Issuer or in the depository of the Issuer, a fund to be called the "Kerr County, Texas Public
Property Finance Contractual Obligations (Series 2001) AcquisitionFund" -(hereincalledthe "Acquisition
14
to maturity. The respective Maturity Dates, Principal Installments and Interest Rates for this Contractual
Obligation are set forth in the following schedule:
Fund"). All proceeds from the sale and delivery of any Contractual Obligation (other than accnred interest
which shall be deposited into the Interest and Sinkng Fund) shall be deposited into the Acquisition Fund.
Money in the Acquisition Fund shall be subject to disbursements by the Issuer for payment of all costs
incurred in carrying out the purpose for which the Contractual Obligations are issued, including but not
limited >b (i) costs for the use, acquisition, or purchase ofthe Property being financed with proceeds of the
Contractual Obligations, and (ii) costs of issuance ofthe Contractual Obligations. All funds remaining on
deposit in the Acquisition Fund upon completion of acquisition of the Property being 5nanced with the
proceeds fiorrr the Contractual Obligations, if any, shall be transferred to the Interest and Sinking Fund
SECTION 8. INVESTMENTS. Funds on deposit in the Interest and Sinking Fund and the
AcquisitionFundshall bemaintained at and secured by the depository bank ofthe Issuer in the manner and
to the extent required by law to secure other public fiords ofthe Issuer and maybe invested from time to
time in a~ invcshrrent authorized in the Public Funds Investment Act (Chapter 2256, Texas Government
Code) and the Issuer's investment policy adopted in accordance with the provisions of the Public Funds
Investnent Act; provided, however, that investments purohased for and held in the Interest and Sinking
Fund shall have a final matuity no later than the next principal or interest payment date for which such funds
are required, and investrnents purchased for and held in the Acquisiton Fund shall have a final maturity of
not later than the date the Issuer reasonably expects the funds from such investments will be required to
pay costs of the projects for which the Contactual Obligations were issued Income and profits from such
investments shall be deposited in the respective Fund which holds such investments; however, any such
income andprofits from inveshnenl5 in theAcquisition Fundmaybe withdtawnbytbe Issuer anddeposited
in the Interest and Sinking Fund to pay all or a portion ofthe interest next coming due on the Contactual
Obligations. It is further provided, however, that any interest earnings on Contactual Obligation proceeds
which are required to be rebated to the United States of America pursuant to Section 13 hereof in order
to prevent the Contractual Obligations from being arbitrage bonds shall be so rebated and not considered
as interest earnings for the purposes of this Section.
SECrIOx9. CONTRACTUAL UNDERTAKING WITH REGISTERED OWNER. The
Lssuer hereby, and by the acceptance of each ofthe Contractual Obligations, rbnhactuauy obligates and
corrrmits itself th utilize the net proceeds available firnn the issuance and delivery of the Contractual
Obligations, after payment of costs of issuance related thereto, for the acquisition or purchase ofthe
Property in accordance with the terms and provisions of this Order.
SECr[Ox10. DEFEASANCE OF CONTRACTUAL OBLIGATIONS. (a) Any Contractual
Obligation and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a
"Ikfeased Conhactual Obligation") within the meaning of this Order, except to the extent provided in
subsection (d) of this Secton, when payment ofthe principal of such Contractual Obligation, phrs 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 beenprovided for
on or before such due date by irrevocably depositing with or making available to the Paying
AgenURegistrar in accordance with an escrow agreement or other instrument (the "Future Escrow
Agreement") for such payment (1) lawful money ofthe 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,
15
and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the
payment of its services until all Defeased Contractual Obligations shall have become due and payable. At
such time as a Contractual Obligation shall be deemed to be a Defeased Contractural Obligation hereunder,
as aforesaid, such Contractual Obligation and the interest thereon shall no longer be secured by, payable
from, or entitled to the benefits of, the ad valorem taxes or revenues herein levied andpledged as provided
in this Order, and such principal and interest shall be payable solely from such money or Defeasance
Securities.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of
the Issurerbe 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 Contractual Obligations and interest thereon, with respect to which such money has
been so deposited, shall be fumed over to the Lssuer, or deposited as directed in writing by the Lssuer. Any
Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held for the
payment of Defeased Contractual Obligations may contain provisions permitting the investment or
reinveshnent of such moneys in Defeasance Securities or the substitution of other Defeasarrce Securities
upon the satisfaction of the requirements specified in subsection (ate or (h) of this Section. All iceome
from such Defeasance Securities received by the Paying Agent/Registrar which is not required for the
payment of the Defeased Contractual Obligations, 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 of an agency or instrumentality of the United S~Yes of America,
irrchrd'mgobligationsthatareunconditionally guaranteedorinsuredbythe agencyorinstnmmentalityandthat,
ontbe date ofthe purchase thereof are rated as to investment quality by a nationally recognized investment
rating fimi ~t less than AAA or its equivalent, and (iii) noncallable obligations of a state or an agency or
a county, municipality, or other political subdivision of a state that have been refunded and that, on the date
the governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements
aze rated as to inveshnent quality by a nationally recognized investment rating fimr not less than AAA or
its equivalent
(d) Urml all Defeased Contractual Obligations shall have become due and payable, the Paying
AgendRegishaz shall perform the services of Paying Agent/Registrar for such Defeased Contractual
Obligation 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 Order.
(e) Tn the event that the Issuer elects to defense less than all of the principal amount of
Contractual Obligations of a maturity, the Paying Agent/Regishaz shall select, or cause to be selected, such
amount of Contractual Obligations by such random method as it deems fair and appropriate.
SECnON 11. DAMAGED, MUTII.ATED, LOST, STOLEN, OR DESTROYED
CONTRACTUAL OBLIGATIONS. (a) Reo1?rement Contrac gal Obligations. In the event any
outstanding Contractual Obligation is damaged, mutilated, lost, stolen, or destroyed, the Paying
16
Agent/Kegishar shall cause to be printed, executed, and delivered, anew contractualobligation ofthe same
principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed
Contractual Obligation, in replacement for such Conttactual Obligation in the manner hereinafter provided
(b) Application for Replacement Contractual Obli ~ons. Application for replacement of
damaged, mutilated, lost, stolen, or destroyed Contractual Obligations shall be made by the registered
owner thereof to the Paying Agent/Registrar. Tn every case of loss, theft, or destmction of a Contractual
Obligation, the registered ownerapplying fora replacement contractual obligation shall fumishto the Issuer
and to the Paying Agent/Registrar 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 of loss, theft, or
destnrction of a Contractual Obligation, the registered owner shall famish to the Issuer and to the Paying
AgenURegistrar evidence to their satisfaction of the loss, theft, or destruction of such Contractual
Obligation, as the case may be. in every case of damage or mutilation of a Contractual Obligation, the
registered owner shall surrender to the Paying AgendRegistrar for cancellation the Contractual Obligation
so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the fioregoing provisions of this Section, in the event
any such Contractual Obligation shall have matured, and no default has occurred which is then continuing
in the payment of the principal of or interest on such Contractual Obligation, the Issuer may authorize the
payment of the same (without surrender thereof except in the case of a damaged or mutilated Contmdual
Obligation) instead of issuing a replacement contractual obligation, provided security or indemnity is
famished as above provided in this Section.
(d) h~ye for Leanne R~rL~Prrrent Can ,a Ob' do Prior to the issuance of any
replacement contractual obligation, the Paying AgerNRegistrar shall charge the registetrd owner of such
Contractual Obligation with all legal, printing, and other expenses in connection therewith. Every
rephuxrrtent contractual obligation issued pursuant to the provisions of this Section by virtue of the fact that
a~ Contracnral Obligation is lost, stolen, or destroyed shall constitute a contractual obligation oftbe Issuer
whether or not the lost, stolen, or destroyed Contractual Obligation shall be found at any time, or be
enforceable by arryone, and shall be entitledto all the benefits ofthis Otderequally andproportionatelywith
any and all other Contractual Obligations duly issrred under this Order.
(e)Au for ~r RgRlacementC!m__tradualObligatioas.InaccordancewithChapter1201,
Subchapter D, Texas Government Code, this Section of this Order shall constitute authority for tbe issuance
ofany such replacement oonlractrral obligation without necessity offiuttrer action by the Lssuet or a~ other
body or person, and the duty of the replacement of such Contractual Obligations is hereby authorized and
imposed upar the Paying AgendRegistrar, and the Paying Agent/Registrar shall authenticate and deliver
suchrephuxment cottractual obligations in the form and manner and with the effect, as provided in Section
4(a) of this Order for Contractual Obligations issued in conversion and exchange of other Contractual
Obligations.
SECriON 12. CUSTODY, APPROVAL, AND REGISTRATION OF CONTRACTUAL
OBLIGATIONS; BOND COUNSEL'S OPINION; CUSIP NUMBERS AND CONTINGENT
INSURANCE PROVISION, IF OBTAINED. The County Judge of the Lssuer is hereby authorized
17
to have control of the Contractual Obligations initially issued and delivered hereunder and all necessary
records andproceedingspertainingto the Contractual Obligationspendingtheirdelivery andtheirinvestiga-
tion, Pxan,ir>afion, and approval by the Attorney General of the State of Texas, and their registration by the
Comptroller of Public Accounts of the State of Texas. Upon registration of the Contractual Obligations
said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall
manually sign the Comptroller's Registration Certificate attached to such Contactual Obligations, and the
seal ofsaid Comptroller shall be impressed, or placed in facshnile, on such Certificate. The approving legal
opinion of the Issuer's Bond Counsel (together with an appropriate certificate of the County Clerk of the
Issuer relating to such opinion) and the assigned CUSIP numbers may, at the option of the Lssuer, be
printed on the Contactual Obligations issued and delivered under this Order, but neither shall have any
legal effect, and shall be solely for the convenience and infomration of the registered owners of the
Contachral Obligations. In addition, if bond insuance is obtained, the Contractual Obligations may bear
an appropriate legend as provided by the insurer.
SECrtoxl3. COVENANTS REGARDINGTAXEXEMPTIONOFINTERESTONTHE
CONTRACTUAL OBLIGATIONS. (a) Covenants. The Lssuer covenants to take any action
necessary to assure, or refrain from arty action which would adversely affect, the treahrrent of the
Contractual Obligations as obligations described in section 103 of the Internal Revenue Code of 1986, as
amended (the "Code"), the ingest on which is not includable in the "gross income" of the holder for
purposes of federal income taxation Tn finthcrance thereof, the Issuer covenants as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds of the
Contractual Obligations or the projects financed therewith (less amounts deposited to a reserve
fiord, if any) are used for any "private business use," as defined in section 141(bx6) 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 Order or any underlying arrarrgement, directly or indirectly, secure or
provide for the payment of more than 10 percent of the debt service on the Contractual
Obligations, in contaverrtion of section 141(bx2) 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 Contractual Obligations or the
projects financed therewith (less amamis deposited irrto a reserve fund, if any) then the amount in
excess of 5 percent is used fora "private business use" which is "related" and not
"disproportionate;'withinthe meaning ofsection 141(bx3) ofthe Code, to the governmental use;
(3) to take any action to assure that no amount which is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Contractual Obligations (less amounts deposited
irrto a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state
or local governmental units, in contavention of section 141(c) of the Code;
(4) to refrain from taking any action which would otherwise result in the Contractual
Obligations being treated as "private activity bonds" within the meaning of section 141(b) of the
Code;
18
(5) to refrain fiomtalang any action that would result in the Contractual Obligations being
"federally guaranteed" within the meaning of section 149(b) of the Cade;
(ti) to refiain from using any portion of the proceeds of the Contractual Obligations,
directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to
acquire investment property (as defined in section 148(b)(2) of the Code) which produces a
mateaially higher yield over the term ofthe Contractual Obligations, other than investment property
acquired with -
(A) proceeds of the Contractual Obligations invested for a reasonable temporary
period of 3 years or less or, in the case of a refunding bond, for a period of 30 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, wither the meaning of
section 1.148-1(b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or replacement fimd
to the extent such amounts do not exceed 10 percent of the proceeds of the Contractual
Obligafions;
(7) to otherwise restrict tbe use ofihe proceeds ofthe Contractual Obligations or amounts
treated as proceeds oftbe Contractual Obligations, as may be necessary, so that the Contractual
Obligations 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
~): ~
(8) to pay to the United States of America at least once during each five-yeaz period
(beginning on the date of delivery of the Contractual Obligations) an amount that is at least equal
to 90percentofthe "Excess Earnings," within the meaning ofsection 148(f) ofthe Code andto pay
to the United States ofAmerica, not laterthan 60 days atler the Contractual Obligations have been
paid in fiil1,100 percent oftbe amountthen requiredto be paid as aresultofExcessFamingsunder
section 148(f) of the Code.
(b) Rebate Fund. In order to facilitate compliance with the above covenant (8), a "Rebate Fund"
is hereby established by the Lssuer forffie sole benefit oftbe United States ofAmerica, 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.
(c) . 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
procceds of the refunded bonds expended prior to the date of issuance of the Contractual Obligations. It
is the imdetsTanding of the Issuer that the covenants contained herein are intended to assure compliance
withtbe Code and any regulations or rulings promulgated by the U.S. Deparhnent ofthe Treasury pursuant
19
thereto. In the event that regulations or mlings are hereafter promulgated which modify or expand
provisions of the Code, as applicable to the Contractual Obligations, 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 cotmsel, will not adversely affect the exemption from federal income taxation
of interest on the Contractual Obligations under section 103 of the Code. In the event that regulations or
rulings are hereafter promulgated which impose additional requirements which are applicable to the
Contractual Obligations, 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 fmm federal
income taxation of interest on the Contractual Obligations under section 103 ofthe Code. Tn furtherance
ofsuch intention, the Lssuerhereby authorizes anddirects the County Judge orCounry Treasurerto execute
any documents, certificates or reports required by the Code and to make such elecfions, on behalf of the
Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the
Contractual Obligations.
(d) Allocation of and Limitation of F=xoend>n~s for the 1'miect. The Issuer covenants to account
for the expenditure of sate proceeds and investment earnings to be used for the purposes descn'bed in
Section 1 of this Order (the "Project's on its books and records in accordance with the requirements of
the Internal Revenue Code. The Issuer recognizes that in order for the proceeds to be considered used
for the reimbursement of costs, the prooceds must be allocated to expenditures within 18 months of the
later of the date that (1) the expenditure is made, or (2) the Project is completed; but in no event later than
three years after the date on which the original expenditure is paid. The foregohrg notwithstanding, the
Issuer recognizes that in order for procceds to be expended under the Internal Revenue Code, the sale
proceeds or investment earnings must be expended no more than 60 days after the eat~ier of (1) the fifth
anniversary of the delivery of the Contractual Obligations, or (2) the date tbe Contractual Obligations are
retired. The Lssuer agrees to obtain the advice ofnationally-recognized bond counsel if such expenditure
fails to comply with the foregoing to assure that such expenditure will not adversely affectthetax-exempt
status of the Contractual Obligations. 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 firm gross income of the interest.
(f). Disposition of Protect. The Issuer covenants that the property constituting the Project will not
be sold or otherwise disposed in a transaction resulting in the receipt by the Lssuer of cash or other
compensation, unless the Issuerobtains anopinion ofnationally-recognized bond counsel that such sale or
other disposition will not adversely affect the tax-exempt status of the Conhactual Obligations. For
purposes of the foregoing, the portion of the property comprising personal property and disposed in tbe
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.
20
SECTION 14. CONTINUING DISCLOSURE UNDERTAKING. (a) Annual Reports.
[Note: TheissuanceoftheContractualObligationsqualifiesforRule15c2-12(d)(2)exemptionfrom
Rule 1 Sc2-12(6)(5) regarding the Issuer's continuing disclosure obligations because the Issuer has
not issued more than $10,000,000 in aggregate amount of outstanding bonds and no person is
committed by contract or other arrangement with respect to payment of the Contractual
Obligations.) The Issuer shall provide annually to any SID, within six months after the end of each fiscal
yeaz ending in or after 2001, financial information and operating data with respect to the Issues of the
general type inchrded in the Official Statement authorized by this Order being the information described in
Exhibit C hereto. Any financial statements so to be provided shall be (1) prepared in accordance with the
accounting principles described in Exlubit C hereto, or such other accounting principles as the Issuer may
be required to employ from tune to time pursuant to state law or regulation, and (2) audited, if the Issuer
commissions an audit of such statements and the audit is completed within tbe period doting which they
must be provided If the audit of such financial statements is not complete within such period, then the
Issuer shall provide audited financial statements for dre applicable fiscal yeaz to any SID, when and if the
audit report on such statements become available.
If the Issuer changes its fiscal yeaz, it will notify each NRMSIR and any SID of the change (and
of the date of the new fiscal yeaz end) prior to the next date by which the Issuer otherwise would be
required to provide financial infom~ation and operating data pursuant to this paragraph (a).
The financial information and operating data to be provided pursuant to this P~SaPh (a) ~Y be
set forth in fizll in one or more documents or may be included by specific reference to any document
(mchmding an official shaternentor otberoffering document, ifit is available frornthe MSRB) thattheretofore
has been provided to any SID or filed with the SEC.
(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 everrts with respell to the Contractual Obligations, if
such event is material within the meaning of the federal securities laws:
A. Principal and interest payment delinquencies;
B. Non-payment related defaults;
C. Unscheduled draws on debt service reserves reflecting financial difficulties;
D. Unscheduled draws on credit enharrcemermts reflecting financial diflicailties;
E. Subsiitufion of credit or liquidity providers, or their failure to perform;
F. Adverse tax opinions or events affecting the tax-exempt status of the Contractual
Obligations;
G. Modifications to rights of holders of the Contractual Obligations;
21
H. ContracKUal Obligation calls;
Defeasances;
J. Release, substitution, or sale of property securing repayment of the Contractual
Obligations; and
K. Rating changes.
The Issuer shall notify any SID and either eachNRMSIR orthe MSRB, in a timely manner, ofany
failure by the Issuer to provide financial information or operating data in accordance with paragraph (a) of
this Section by the time required by such paragraph.
(c) Limitations. Disclaimers. and Amendments 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 Contractual Obligations within the meaning of the Rule, except
that the Issuer in any eventwill give notice ofany depositmade in accordance with Section 10 ofthis Order
that causes Contractual Obligations no longer to be outstanding.
The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the
Contractual Obligations, 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 trndertakes to provide only
the 5rrancial information, operating daha, financial statements, and nofices 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 resrilts, 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 usefiilness to a decision to invest in or sell Contractual Obligations at arty future date.
UNDERNO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE HOLDER OR
BENEFICIAL OWNER OF ANY CONTRACTUAL OBLIGATION OR ANY OTHER PERSON,
IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE ORIN PART FROM ANY
BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON TTS PART, OF
ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF
ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH
BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE.
No default by the Lssuer in observing or perfomming its obligations under this Section shall comprise
a breach of or default under the Order for purposes ofany other provision of this Order.
Nothing in this Section is intended or shall act to disc]aim, waive, or otherwise limit the duties of
the Issuer under federal and state securities laws.
22
The provisions ofthis Section may be amendedby the Issuer fiomlirne to time to adaptto changed
circurnsharrces 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 (1) the provisions of this Section, as so
amended, would have perrnitted an underwriter to purchase or sell Contractual Obligations in the primary
offering of the Contractual Obligations incompliance 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 Order that authorizes such an amendment) of the Outstanding Contractual Obligations
consent to such amendment or (b) a person that is unaffiliated with the Issuer (such as nationally recognized
bond counsel) detemrined that such amendment will not materially impair the interest of the Holders and
beneficial owners of the Contractual Obligations. If the Issuer so amends the provisions of this Section,
rt shall include with any amended financial information or operating data next provided in accordance with
paragraph (a) of this Section an explanation, in narrative form, of the reason for the amendment and ofthe
impact of any change in the type of financial infomration 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 fiom lawfully purchasing or selling Contractual Obligations in the primary offering of the
Conttacdral Obligations.
(d) D~/initions. As used in this Section, the following temrs have the meanings ascribed to such
terms below:
MSRB" means the Municipal Securities Rulemalring Board.
"NRMSIR" means each person whom the SEC or its staff has detemrined to be a nationally
recognized municipal securities infomration repository within the meaning of the Rule fiorrr tune to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the Slate ofTexas or an authorized depattrrrent, officer, or
agency thereof as, and detemrined by the SEC or its staff to be, a state infomration depository within the
meaning of the Rule from time to tirra;.
SECTION 15. SALE AND DELIVERY OF CONTRACTUAL OBLIGATIONS. The
Contractual Obligations are hereby sold and shall be delivered to First Southwest Company (the
"Underwriter") at a price of S (paz less Underwriter's discount on the Contractual Obligations
of $ and less net original issue discount of $), plus accnred interest on the
Contractual Obligations fiorrr September 15, 2001 until date of delivery, all pursuant to the terms and
provisions of a Purchase Contract in substantially the form attached hereto as Exhibit B which the County
Judge of the Issuer is hereby authorized and directedto execute and deliver. The Issuer will initially deliver
to the Underwriter one Contractual Obligation for each maturity of the Contractual Obligations authorized
23
under this Order. It is hereby officially found, deterrrrirred, and declared that the berms of this sale are the
most advantageous reasonably obtainable. The Contractual Obligations shall initially be registered in the
Warne of First Southwest Company.
SECI'[ON 16. APPROVAL OF OFFICIAL STATEMEN'T'. The Issuer hereby approves the
form and content of the Official Statement relating to the Contractual Obligations and any addenda,
supplement, or amendment thereto, and approves the dislnbution ofthe Official Statement in the reoffering
of the Contractual Obligations by the Underwriter in final form, with such changes therein or additions
thereto as the officer executing the same may deem advisable, such de~mrination to be conclusively
evidenced by his execution thereof. The distnbution and use of the Preliminary Official Statement for the
Contractual Obligations, dated September 17, 2001, prior to the date hereof is hereby ratified and
confirmed. The Commissioners Court finds and detemunes that the Preliminazy Official Statement and the
Official Statement were and are "deemed final" (as that term is defined in 17 C.F.R. Section 240.15c-12)
as of each of their respective dates.
$ECIYON 17. FURTHER PROCEDURES. The County Judge, County Clerk, County
Treasurer and County Auditor of the Issuer and all other officers, employees and agents ofthe Issuer, and
eachofthem, shall be and they are herebyexpressly authorized, empoweredanddirected from time to time
and at anytime to do and perform all such acts and things and to execute, aclmowledge and deliver in the
name and under the corporate seal and on behalf of the Issuer the Paying Agent/Regishar Agreement, the
Purchase Contract and all other instnunents, whether or not herein mentioned, as maybe necessary or
desirable in order to carry out the berms and provisions of d»s Order, the Contractual Obligations, the sale
of the Contractual Obligations and the Official Statement. In case any officer whose signature shall appear
on any Contractual Obligation shall cease to be such officer before the delivery of such Contractual
Obligation, such signature shall nevertheless be valid and sufficient for all purposes the same as if such
officer had rtanairred in office until such delivery.
$ECIION 18. ORDER A CONTRACT; AMENDMEN'T'S. The Order shall constitute a
contract with the Registered Owners of the Contractual Obligations, binding on the Issuer and its
successors and assigns, and shall not be amended or repealed by the Issuer as long as any Contractual
Obligation remains outstanding except as pemritted in this Section. The Issuer may, without the consent
of or notice to any Registered Owners, amend, change, or modify this Order as may be required (i) by the
provisions hereof; (u) for the purpose of airing any ambiguity, inconsistency, or formal defect or omission
herein, or (iii) in connection with any other change which is not to the prejudice ofthe Registered Owners.
The Issuer may, with the written consent of the Registered Owners of a majority in aggregate P~P~
amount oftheContractual Obligationsthenoutstandingaffectedthereby,amend, change, modify, orrescind
any provisions of this Order, provided that without the consent of all of the Registered Owners affected,
m such amendment, change, modification, or rescission shall (i) extend the time or times ofpayment oftbe
principal of and interest on the Contractual Obligations, reduce the principal amount thereof or the rate of
interest thereof, (ii) give any preference to any Contractual Obligation over any other Contractual
Obligation, (iii) extend any waiver of default to subsequent defanlts, or (iv) reduce the aggef~ P~ciP~
amamt of Contractual Obligations required for consent to any such amendment, change, modification, or
rescission. Whenever the Issuer shall desire to make any amendment or addition to or rescission of this
Order requiring consent ofthe Registered Owners, the Issuer shall cause notice ofthe amendment, addition,
24
or rescission to be sent by first class mail, postage prepaid, to the Registered Owner; at the respective
addresses shown on the Registration Books. Whenever at any time within one year after the date of the
giving of such notice, the Issuer shall receive an ir>shument or instrtrments in writing executed by the
Registered Owners of a majority in aggregate principal amount of the Contractual Obligations then
outstanding affected by any such amendment, addition, orrescission requiring the consent ofthe Registered
Owners, which inslnunent or instruments shall refer to the proposed amendment, addition, or rescission
descn'bed in such notice and shall specifically consent to and approve the adoption thereof in substantially
the form of the copythereof refemd to in such notice, thereupon, but not otherwise, the Issuer may adopt
such amendment, addition, or rescission in substantially such form, except as herein provided No
Registered Owner may thereafter object to the adoption of such amendment, addition, or rescission, or to
any of fhe provisions thereof, and such amendment, addition, or rescission shall be fully effecfive for all
Purposes.
SECI70N 19. INCORPORATION OF RECITALS. The Issuer hereby finds that the
statements set forth in the recitals of this Order are true and correct, and the Issuer hereby incorporates
such recitals as a part of this Order.
SECftON 20. EFFECTIVE DATE. This Order shall become effective immediately upon its
adoption
[The remainder of this page intentionally le,~i blank.)
2S
ADOPTED BY THE COMMISSIONERS COURT OF%ERR COUNTY, TEXASAT A
REGULAR SPECIAL MEETING HELD ON THE 14TH DAY OF SEPTEMBER, 2001.
ATTEST:
A
ty Clerk, Kea County, Texas
APPROVED:
County Judge, Kea County, Texas
~, /
[SIGNATURE PAGE TO ORDERAUTHORIZ[NG ISSUANCE OF CONTRACTUAL OBLIGATIONS]
EXHIBTT A
PROPERTY EXPECTED TO BE FINANCED IN WHOLE OR IN PART WITH THE
KERR COUNTY, TEXAS
PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES 2001
DESCRIPI7ON OF PROPERTY ESTIMATED COST
TOTAL
EXHIBTf B
'n-~ PAYING AGENT/RECISTRARRGREEMENT IS OMITTED AT THIS POINT AS 1T APPEARS IN
EXE(:UI'ED FORM ELSEWHERE IN THIS'IYtANSCRIPI' OF PROCEEDINGS.
EXlIIB1T C
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 14 of this Order.
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 referred to) below:
1. The annual audited financial statements of the Issuer.
2. All quantitative financial information and operating data with respect to the Issuer of the general
type included in Appendix A of the Official Statement (other than the information relarting to overlapping
razing entities).
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.