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R-01-05-24-12A4 - 5/24/2001R- o5- ay RESOLUTION APPROVING A RESOLUTION OF 1HE ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION WITH RESPECT TO THE ISSUANCE OF SENIOR LIEN SALES TAX REVENUE BONDS, SERIES 2001; APPROVING A SALES TAX REMITTANCE AGREEMENT, A PROJECT AGREEMENT AND OTHER MA MRS RELATED TO THE ISSUANCE OF THE BONDS STATE OF TEXAS COUNTIES OF WILLIAMSON AND TRAVIS CITY OF ROUND ROCK WHEREAS, the Round Rock Transportation System Development Corporation (the "Issuer') was created under the auspices of the City of Round Rock, Texas ("the City") pursuant to Section 4B of the Development Corporation Act of 1979, as amended (Article 5190.6, V.A.T.C.S.); and WHEREAS, at an election held on August 9, 1997, a majority of the citizens of the City voting at said election authorized the City to levy a sales and use tax on the receipts at retail oftaxable items within the City at a rate of one -half of one percent; and WHEREAS, the Issuer has determined to issue bonds to provide funds to finance the construction and improvements of streets, roads, drainage and other related transportation system improvements that are necessary to promote or develop new or expanded business enterprises, encourage employment and the public welfare through the development of transportation facilities, as described in the City's Transportation Capital Improvement Plan (the "Project "); and WHEREAS, the City Council of the City desires to provide for the timely transfer to the Corporation of the proceeds of the aforesaid sales and use tax, in accordance with the provisions of the Act, to be used by the Corporation to repay the bonds sold to finance the Project; and WHEREAS, on May 24, 2001, the Board of Directors of the Corporation adopted a resolution, attached hereto as Exhibit "A ", which authorizes the issuance of $26,000,000 in principal amount of Senior Lien Sales Tax Revenue Bonds, Series 2001 (the `Bonds "), to pay all or a portion of the costs of the Project; and WHEREAS, in accordance with the provisions of Section 4B of the Act, the City shall timely transfer to the Corporation the proceeds of the aforesaid sales and use tax, in accordance with the terms and conditions of that certain Sales Tax Remittance Agreement, dated as of May 15, 2001, between the City and the Issuer, in substantially the form attached hereto as Exhibit "B" and such funds shall be maintained by the Depository of the City and accounted for separately by the City on behalf of the Corporation; and RRTSDC CityApprovu glssuanccRes WHEREAS, the City and the Issuer shall cooperate with respect to the acquisition and construction of the Project in accordance with the terms and conditions of that certain Project Agreement, dated May 15, 2001, between the City and the Issuer, in substantially the form attached hereto asExhibit "C "; and WHEREAS, it is deemed necessary and advisable that this Resolution be adopted by the City Council of the City (hereinafter referred to as the "City Council THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ROUND ROCK, TEXAS THAT: SECTION 1. Anproval of the Bonds and the Bond Resolution. The resolution of the Corporation entitled Round RockTransportat ion System Development Corporation SeniorLien Sales Tax Revenue Bonds, Series 2001; Approving a Paying Agent /Registrar Agreement, a Sales Tax Remittance Agreement, a Project Agreement and a Bond Purchase Agreement; Approving an Official Statement; and Approving Other Matters Related Thereto," in substantially the form and substance as attached to this Resolution as Exhibit "A" and made a part hereof for all purposes, is hereby approved, and Bonds in the principal amount of$26,000,000 may be issued by the Corporation pursuant thereto for the purpose of paying a portion ofthe cost of constructing and acquiring the Project, as defined and described therein, which Project is in compliance with the Development Corporation Act of 1979, as amended; and said Project is hereby approved. SECTION 2. Approval of Sales Tax Remittance Agreement. The Sales Tax Remittance Agreement attached hereto in substantially final form as Exhibit "B" is hereby approved, and the Mayor and City Secretary of the City are authorized to approve any changes and execute the Sales Tax Remittance Agreement on behalf of the City. SECTION 3. Approval of Project Agreement. The Project Agreement attached hereto in substantially final form as Exhibit "C" is hereby approved, and the Mayor and City Secretary of the City are authorized to approve any changes and execute the Project Agreement on behalf of the City. SECTION 4. Execution of Documents; No Liability of the City. The City Council ofthe City hereby authorizes the Mayor, the City Manager, the Assistant City Manager and the City Secretary to execute on behalf ofthe City all documents deemed necessary in connection with the issuance of the Bonds and the agreements approved by this Resolution. The City shall have no liability for the payment of the Bonds nor shall any of its assets be pledged to the payment of the Bonds. SECTION 5. Incorporation of Recitals. The findings and preambles set forth in this Resolution are hereby incorporated into this Resolution and made a part hereof for all purposes. SECTION 6. Effective Date. This Resolution shall become effective immediately upon passage. RRTSDC: CetyApprovmglssunnceRes 2 RRTSDC: CityApprovmglssuanceRes 3 ATTEST: PASSED AND APPROVED this , 4.1 day of Mat , 2001. 4_1.11.A [SEAL] Secretary, Joanne Land of Round Rock, Texas RRTSDC CUyApprovmglssuanceRes 4 r, City of Round Rock, Texas EXHIBIT A RESOLUTION OF THE ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION AUTHORIZING THE ISSUANCE OF $26,000,000 SENIOR LIEN SALES TAX REVENUE BONDS, SERIES 2001; APPROVING A PAYING AGENT/REGISTRAR AGREEMENT, A SALES TAX REMITTANCE AGREEMENT, A PROJECT AGREEMENT AND A BOND PURCHASE AGREEMENT; APPROVING AN OFFICIAL STATEMENTS; AND APPROVING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION WHEREAS, the City of Round Rock, Texas (the "City"), is a duly incorporated Home Rule City, having more than 60,000 inhabitants, operating and existing under the Constitution and laws of the State of Texas and the duly adopted home rule charter of the City, as amended; and WHEREAS, the Development Corporation Act of 1979, Article 5190.6, Vernon's Annotated Texas Civil Statutes (the "Act "), provides that certain eligible cities may create a development corporation to be funded by a sales and use tax for the benefit of such corporation, if the tax is authorized by a majority of the qualified voters; and WHEREAS, the City is an eligible city as defined by Section 4B(a)(1)(D) of the Act; and WHEREAS, the City Council called an election for the purpose of receiving authority to levy a sales and use tax for the benefit of a development corporation created under authority of Section 4B of the Act; and WHEREAS, at the election held on August 9, 1997 (the 'Election "), a majority of the citizens of the City voting at the election authorized the City to levy a sales and use tax on the receipts at retail of taxable items within the City at a rate of one -half of one percent for the benefit of a development corporation operating on behalf of the City to be used for streets, roads, drainage and other related transportation system improvements including the payment of maintenance and operating expenses associated with such authorized projects; and RRTSDC CityApprovmgIssuanceRes A - WHEREAS, pursuant to the provisions of the Act, the City created the Round Rock Transportation System Development Corporation (the "Issuer "), a nonstock, nonprofit industrial development corporation created to act on behalf of the City to satisfy the public purposes set forth in the Act as authorized at the Election; and WHEREAS, the Issuer has determined to issue the bonds authorized herein (the 'Bonds') to provide funds to finance the construction and improvements of streets, roads, drainage and other related transportation system improvements that are necessary to promote or develop new or expanded business enterprises, encourage employment and the public welfare through the development of transportation facilities, as described in the City's Transportation Capital Improvement Plan, to fund and pay other costs relating to the issuance of the Bonds and other costs necessary or incident to the undertaking of such project; and WHEREAS, there was published in a newspaper of general circulation in the City (as described in Sections 2051.044 and 2051.048, Texas Govemment Code) on January 11, 1999, November 5, 1999, February 3, 2000, March 3, 2000, August 7, 2000, October 9, 2000 and April 9, 2001, notices that public hearings would be held by the Issuer on January 14, 1999, November 9, 1999, February 8, 2000, March 9, 2000, August 10, 2000, October 12, 2000 and April 12, 2001 at which the projects to be financed with the proceeds of the Bonds were discussed and giving notice that the Issuer proposed to undertake such projects; and WHEREAS, the public hearings were held by the Issuer and no petition has been submitted to the City Council calling for a referendum with respect to such projects; and - WHEREAS, the Act authorizes the Issuer to issue the Bonds for the aforesaid purposes and the Board of Directors of the Issuer finds it necessary and advisable to authorize the issuance of the hereinafter described Bonds for the purposes hereinabove and hereinafter described. THEREFORE, BE IT RESOLVED BY '1 BOARD OF DIRECTORS OF THE ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION THAT: Section 1. AMOUNT AND PURPOSE OF THE BONDS AND DEFINITIONS. (a) The Bonds of the Issuer are hereby authorized to be issued and delivered in the aggregate principal amount of $26,000,000 to provide funds to finance the construction and improvements of streets, roads, drainage and other related transportation system improvements. For all purposes of this Resolution, except as otherwise expressly provided or unless the context otherwise requires, the terms defined in Exhibit "A" to this Resolution have the meanings assigned to them in Exhibit "A ". Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Resolution shall be designated: "ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION SENIOR LIEN SALES TAX REVENUE BOND, SERIES 2001", and initially there RRTSDC CityApprov,nglssuanceRes A - shall be issued, sold, and delivered hereunder fully registered bonds, without interest coupons, dated May 15, 2001, in the respective denominations and principal amounts hereinafter stated, numbered R -1 upward (except the initial Bonds delivered to the Attorney General of the State of Texas which shall be numbered T -1 upward), payable to the Registered Owners thereof (with the initial bond being payable to the Purchaser designated in Section 25 hereof), or to the registered assignee or assignees of said bonds or any portion or portion thereof (in each case, the "Registered Owner "), and said bonds shall mature and be payable serially on August 15 in each of the years and in the principal amounts, respectively, as set forth in the following schedule: annum: Year of Principal Year of Principal Maturity Amount Maturi Amount 2002 $ 455,000 2012 $1,285,000 2003 785,000 2013 1,360,000 2004 830,000 2014 1,435,000 2005 875,000 2015 1,515,000 2006 925,000 2016 1,600,000 2007 975,000 2017 1,690,000 2008 1,030,000 2018 1,790,000 2009 1,090,000 2019 1,890,000 2010 1,150,000 2020 1,995,000 2011 1,215,000 2021 2,110,000 Section 3. INTEREST. The Bonds scheduled to mature during the years, respectively, set forth below shall bear interest from the dates specified in the FORM OF BOND set forth in Exhibit "B" ofthis Resolution to their respective dates of maturity or redemption prior to maturity at the following rates per Year of Year of Maturity Interest Rate Maturity Interest Rate 2002 2012 2003 2013 2004 2014 2005 2015 2006 2016 2007 2017 2008 2018 2009 2019 RRTSDC. CityApprovmglssuanceRes A - 2010 2020 2011 2021 Said interest shall be payable in the manner provided and on the dates stated in the FORM OF BOND set forth in Exhibit 'B" of this Resolution. Section 4. CHARACTERISTICS OF THE BONDS. (a) The Issuer shall keep or cause to be kept at the designated office for payment of the Paying Agent/Registrar the Registration Books, and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such regis- trations, transfers and exchanges as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the Registered Owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each Registered Owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. To the extent possible and under reasonable circumstances, all transfers of Bonds shall be made within three business days after request and presentation thereof. The Issuer shall have the right to inspect the Registration Books during regular business hours ofthe Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. The Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided in the FORM OF BOND set forth in Exhibit "B" of this Resolution. Registration of assignments, transfers and exchanges of Bonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in Exhibit "B" of this Resolution. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. Except as provided in (e) below, an authorized representative ofthe Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the Paying Agent/Registrar's Authentication Certificate, and no such Bond shall be deemed to be issued or Outstanding unless such Certificate is so ex- ecuted. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for transfer and exchange. No additional orders, or resolutions need be passed or adopted by the Board of Directors of the Issuer or any other body or person so as to accomplish the foregoing transfer and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery ofthe substitute Bonds in the manner prescribed herein. Pursuant to Chapter 1201, Texas Govemment Code, and particularly SubchapterD and Section 1201.067 thereof, the duty oftransfer and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Certificate, the transferred and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and RRTSDC Ca yApprovinglssuancoRCs A - 4 delivered pursuant to this Resolution, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all as provided in this Resolution. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds. (c) The Bonds (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the Registered Owners thereof (ii) may be redeemed prior to their scheduled maturities (notice of which shall be given to the Paying Agent/Registrar by the Issuer at least 45 days prior to any such redemption date), (iii) may be transferred and assigned, (iv) maybe exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Bonds shall be payable, and (viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF BOND set forth in Exhibit 'B" of this Resolution. The Bonds initially issued and delivered pursuant to this Resolution are not required to be, and shall not be, authenticated by the Paying Agent/ Registrar, but on each substitute Bond issued in exchange for any Bond or Bonds issued under this Resolution the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF BOND. (d) The Issuer covenants with the Registered Owners of the Bonds that at all times while the Bonds are Outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other entity to act as and perform the services of Paying Agent/Registrar for the Bonds under this Resolution, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar uponwritten notice to the Paying Agent/Registrar in accordance with the Paying Agent/Registrar Agreement, to be effective at such time which will not disrupt or delay payment on the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent /Registrar under this Resolution. Upon any change in the Paying Agent/Registrar, the previous Paying Agent'Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each Registered Owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution, and a certified copy of this Resolution shall be delivered to each Paying Agent/Registrar. RRTSDC CiryApprnvinglssuanceRes A -5 (e) Except as provided below, no Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Resolution unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this Resolution, duly authenticated by manual execution ofthe Paying Agent/Registrar. It shall not be required that the same authorized representative ofthe Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Bonds. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Bonds delivered on the closing date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Resolution, manually executed by the Comptroller of Public Accounts ofthe State of Texas or by his duly authorized agent, which certificate shall be evidence that the Initial Bonds have been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the Issuer, and has been registered by the Comptroller. . (f) The Bonds issued in exchange for the Initial Bonds initially issued to the purchaser specified in Section 26 herein shall be initially issued in the form of a single fully registered Bond for each of the maturities thereof. Upon initial issuance, the ownership of each such Bond shall be registered in the name of Cede & Co., as nominee of DTC, and except as provided in subsection (j) hereof, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation to any 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 Bonds. Without limiting the immediately preceding sentence, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy ofthe records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a registered owner ofthe Bonds, as shown on the Registration Books, of any notice with respect to the Bonds, or (iii) the payment to any DTC Participant or any other person, other than a registered owner of Bonds, as shown in the Registration Books of any amount with respect to principal of or interest on the Bonds. Notwithstanding any other provision of this Resolution to the contrary, the Issuer and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Registration Books as the absolute owner of such Bond for the purpose of payment of principal and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Bonds only to or upon the order of the Registered Owners, as shown in the Registration Books as provided in this Resolution, 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 Bonds to the extent of the sum or sums so paid. No person other than a Registered Owner, as shown in the Registration Books, shall receive a Bond certificate evidencing the obligation of the Issuer to make payments of principal and interest pursuant to this Resolution. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this RRTSDC. C,tyApprovmgrssuanceRes A -6 Resolution 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 Resolution shall refer to such new nominee ofDTC. (g) In the event that the Issuer determines that DTC is incapable of discharging its responsibilities described herein and in the representation letter of the Issuer to DTC or that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, 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 Bonds to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Registration Books in the name of Cede & Co, as nominee ofDTC, but may be registered in the name ofthe successor securities depository, or its nominee, or in whatever name or names registered owners transferring or exchanging Bonds shall designate, in accordance with the provisions of this Resolution. (h) Notwithstanding any other provision of this Resolution to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee for DTC, all payments with respect to principal of and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the representation letter of the Issuer to DTC. (i) The officers of the Issuer are herein authorized for and on behalf of the Issuer and as officers of the Issuer to enter into one or more Blanket Issuer Letter of Representations with DTC establishing the book -entry only system with respect to the Bonds. (j) On the closing date, one Initial Bond per maturity aggregating the entire principal amount of the Bonds, payable to the Purchaser named in Section 26 of this Resolution or its designee, executed by manual or facsimile signature of the President and Secretary of the Board of Directors of the Issuer, approved by the Attomey General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas, will be delivered to the Purchaser or its designee. Upon payment for the Initial Bonds, the Paying Agent/Registrar shall cancel the Initial Bond and deliver to the initial registered owner or its designee one registered definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all of the Bonds for such maturity. Section 5. FORM OF BOND. The form of the Bond, including the form of Paying Agent/Registrar'sAuthentication Certificate, the form ofAssignmentandtheform ofRegistration Certificate ofthe Comptroller of Public Accounts ofthe State ofTexas to be attached only to the Bonds initially issued and delivered pursuant to this Resolution, shall be, respectively, substantially as set forth in Exhibit "13" attached hereto. RRTSDC: CllyApprovmglssunnceRes A -7 Section 6. PLEDGE. The Bonds and any interest payable thereon, and any Additional Parity Obligations which may be issued in accordance herewith and any interest payable thereon, are and shall be secured by and payable from a first lien on and pledge of the Pledged Revenues, which lien on and pledge is prior in right and claim to the lien and pledge on the Pledged Revenues securing the payment of the outstanding Junior Lien Obligations and any Subordinate Lien Obligations hereafter issued; and the Pledged Revenues are further pledged to the establishment and maintenance of the Debt Service Fund and the 2001 Reserve Fund as hereinafter provided. The Bonds are and will be secured by and payable only from the Pledged Revenues and amounts on deposit in the Debt Service Fund and the 2001 Reserve Fund, and not from amounts on deposit in any other Funds or accounts of the Issuer, and are not secured by or payable from a mortgage or deed of trust on any real, personal or mixed properties constituting the Project. Section 7. SPECIAL FUNDS. The below listed special Funds are hereby created and shall be established and maintained on the books of the Issuer, so long as any of the Bonds are outstanding and unpaid: (a) Round Rock Transportation System Development Corporation Revenue Fund, hereinafter called the 'Revenue Fund." (b) Round Rock Transportation System Development Corporation Debt Service Fund, hereinafter called the "Debt Service Fund." (c) Round Rock Transportation System Development Corporation Reserve Fund, hereinafter called the "Reserve Fund." (d) Round Rock Transportation System Development Corporation Operating Fund, hereinafter called the "Operating Fund." (e) Round Rock Transportation System Development Corporation Project Fund, hereinafter called the "Project Fund." Though all of such funds may be subaccounts of the City's Funds held by the Depository, and, as such, not held in separate bank accounts, such treatment shall not constitute a commingling of the monies in such Funds or of such Funds and the Issuer shall keep full and complete records indicating the monies and investments credited to each of such Funds. Section 8. REVENUE FUND. All Pledged Revenues shall be credited to the Revenue Fund immediately upon receipt as provided in the Transfer Agreement. Section 9. FLOW OF FUNDS. All Pledged Revenues deposited and credited to the Revenue Fund shall be pledged and appropriated to the extent required for the following uses and in the order of priority shown: RRTSDC C,tyApprovingIssuanccRes A - FIRST: To the payment of the amounts required to be deposited in the Debt Service Fund for the payment of Debt Service on the Parity Obligations as the same becomes due and payable; SECOND: On a pro rata basis, to each debt service reserve fund, created by this Resolution or any Additional Parity Obligations Resolution, which contains less than the amount to be accumulated and/or maintained therein, as provided in this Resolution or such Additional Parity Obligations Resolutions; THIRD: To the payment ofthe amounts required to be deposited in the debt service fund for the payment of Debt Service on the Junior Lien Obligations as the same becomes due and payable; FOURTH: On a pro rata basis, to each debt service reserve fund created by a Junior Lien Obligation Resolution which contains less than the amount to be accumulated and/or maintained therein as provided in the Junior Lien Obligation Resolution; FIFTH: To the payment of amounts required to be deposited in any other fund or account required by any Additional Parity Obligations Resolution; SIXTH: To any fund or account held at any place or places, or to any payee, required by any other resolution of the Board which authorized the issuance of Subordinate Lien Obligations; and SEVENTH: To the payment of the amounts required for any lawful purpose. Any Pledged Revenues remaining in the Revenue Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, shall be transferred to the Operating Fund and may be appropriated and used for any other lawful purpose now or hereafter permitted by law. Section 10. DEBT SERVICE FUND. The Debt Service Fund is for the sole purpose of paying the principal of and interest on the Parity Obligations Outstanding at any time, as the same come due (including principal coming due as a result of any mandatory redemption of the Parity Obligations). The Issuer covenants that there shall be deposited into the Debt Service Fund prior to each principal and interest payment date from the Pledged Revenues an amount equal to one hundred per cent (100 %) ofthe interest on and the principal ofthe Parity Obligations then falling due and payable, and such deposits to pay principal and accrued interest on the Parity Obligations shall be made in substantially equal monthly installments on or before the 10th day of each month, beginning on or before the 10th day ofthe month next following the delivery of the Parity Obligations to the Purchasers thereof; provided, however, that in any Fiscal Year the Issuer may elect to fund the Debt Service Fund on an accelerated basis and at any time when amounts on deposit in the Debt Service Fund are sufficient to make payment of all principal and RRTSDC: CayApprov,ngIssuanceRes A -9 interest coming due on the Outstanding Parity Obligations within the next twelve months, such deposits of Pledged Revenues to the Debt Service Fund maybe discontinued, until there is once again an amount less than the principal and interest coming due on the Outstanding Parity Obligations within the next twelve months, at which time such deposits shall be resumed. The required deposits to the Debt Service Fund for the payment of principal of and interest on the Parity Obligations shall continue to be made as hereinabove provided until (i) the total amount on deposit in the Debt Service Fund and the Reserve Fund (excluding any Reserve Fund Obligation) is equal to the amount required to fully pay and discharge all Parity Obligations (principal and interest) then Outstanding or (ii) the Parity Obligations are no longer Outstanding. Accrued interest and capitalized interest, if any, received from the purchaser of any Parity Obligation shall be taken into consideration and reduce the amount ofthe semi- annual deposits and credits hereinabove required into the Debt Service Fund. Section 11. RESERVE FUND. (a) The Issuer may create and establish a debt service reserve fund pursuant to the provisions of any Parity Obligations Resolution for the purpose of securing that particular issue or series of Parity Obligations or any specific group of issues or series of Parity Obligations and the amounts once deposited or credited to said debt service reserve funds shall no longer constitute Pledged Revenues and shall be held solely for the benefit of the owners of the particular Parity Obligations for which such debt service reserve fund was established. Each such debt service reserve fund shall be designated in such manner as is necessary to identify the Parity Obligations it secures and to distinguish such debt service reserve fund from the debt service reserve funds created for the benefit of other Parity Obligations. (b) For purposes of (i) paying the principal of, premium, if any, and interest on the Bonds, when and if amounts on deposit in the Debt Service Fund and available to pay such amounts as the same shall become due are insufficient (ii) to pay principal of and interest on any Bonds held by the Bond Insurer, or evidenced by an instrument of assignment entitling the Bond Insurer to payment of principal of and interest on the Bonds, as a result of payments or draws made on a Surety Bond or insurance policy held for the account of the 2001 Reserve Fund (as defined below) and such payments will result in (x) the principal of and/or interest on such Bonds to be paid and (y) the restoration and replenishment of the Surety Bond or insurance policy coverage representing all or a portion of the 2001 Required Reserve for the Bonds, and (iii), in addition, may be used to the extent not required to maintain the 2001 Required Reserve for the Bonds, to pay, or provide for the payment of, the final principal amount of the Bonds so that they are no longer deemed to be "Outstanding" as such term is defined herein, the Issuer hereby creates and establishes a special account known as the "Round Rock Transportation System Development Corporation Senior Lien Sales Tax Revenue Bonds, Series 2001 Reserve Fund" (hereinafter referred to as the "2001 Reserve Fund "), which account shall continue to be kept separate and apart from all other funds or accounts of the Issuer. The Issuer hereby covenants that the 2001 Reserve Fund, at any time while such Fund is funded with cash, shall be established and kept at such Depository of the Issuer as the Issuer shall designate. The RRTSDC. CityAppravinglssuanceRes A - Issuer shall maintain an amount equal to the 2001 Required Reserve at all times in or held for the benefit of the 2001 Reserve Fund. The Issuer may at any time substitute a qualifying Surety Bond for cash or other Surety Bond on deposit in, or held for the benefit of, the 2001 Reserve Fund. The 2001 Required Reserve shall be established and maintained with Pledged Revenues in accordance with Section 9 hereof or by depositing to the credit ofthe 2001 Reserve Fund, one or more Surety Bonds or insurance policies issued by a company or institution having a rating in the highest rating category by two nationally recognized rating agencies or services, or any combination thereof. The amount required to be maintained in the 2001 Reserve Fund shall be funded with surety bond coverage provided by a Surety Bond issued by the Bond Insurer immediately upon the delivery ofthe Bonds as provided below, in an amount equal to the 2001 Required Reserve. During such time as the 2001 Reserve Fund contains the total 2001 Required Reserve, the Issuer may, at its option, withdraw any amount in the 2001 Reserve Fund in excess of the 2001 Required Reserve and deposit such surplus in the Revenue Fund. Cash, Surety Bonds or other instruments on deposit in, or held for the benefit of, the 2001 Reserve Fund shall be drawn upon by the Paying Agent/Registrar and exhausted prior to making demand for payment under the insurance policy provided for the Bonds under Section 30 hereof. When and so long as the cash and investments in the 2001 Reserve Fund and/or coverage afforded by a Surety Bond or insurance policy held for the account of the 2001 Reserve Fund total not less than the 2001 Required Reserve for the Bonds, no deposits need be made to the credit ofthe 2001 Reserve Fund; but, if and when the 2001 Reserve Fund at any time contains less than the 2001 Required Reserve for the Bonds, the Issuer covenants and agrees to cause monthly deposits to be made to the 2001 Reserve Fund on or before the 10th day of each month (beginning the month next following the month the deficiency in the 2001 Required Reserve occurred by reason of a draw on the 2001 Reserve Fund or as a result of a reduction in the market value of investments held for the account ofthe 2001 Reserve Fund) from Pledged Revenues ofthe System in an amount equal to either (i) 1/60th ofthe 2001 Required Reserve for the Bonds until the total 2001 Required Reserve then required to be maintained in the 2001 Reserve Fund has been fully restored or (ii) the amounts to pay principal of and interest on the Bonds held by the Bond Insurer, or evidenced by an instrument of assignment entitling the Bond Insurer to payment of principal of and interest on the Bonds, as a result of payments or draws made on a Surety Bond or insurance policy held for the account of the 2001 Reserve Fund and such payments will result in (x) the principal of and/or interest on such Bonds to be paid and (y) the restoration and replenishment ofthe Surety Bond or insurance policy coverage representing all or a portion ofthe 2001 Required Reserve. The Issuer further covenants and agrees that, subject only to the payment of the Bonds and payments to be made to the Debt Service Fund for the benefit of Parity Obligations and to the payments to be made on a pro rata basis to all debt service funds (including the 2001 Reserve Fund) as provided by Section 9 hereof the Pledged Revenues shall be applied and appropriated and used to establish and maintain the 2001 Required Reserve and to cure any deficiency in such amounts as required by the terms of this Resolution and any Additional Parity Obligations Resolution. RRTSDC. CityApprovinglssuanceRes A - (c) When the 2001 Reserve Fund is funded with cashor securities, in whole or in part (excluding the Surety Bond), the value of the 2001 Required Reserve for the Bonds shall be determined on the basis of cash on deposit therein, the book value of securities in which money in the 2001 Reserve Fund are invested or the face value of any Surety Bond held for the benefit of the 2001 Reserve Fund, as the case may be. Section 12. OPERATING FUND. Amounts on deposit in the Operating Fund may be (i) used to complete and maintain the Project, (ii) applied to pay or redeem any Parity Obligations at the option of the Issuer, or (iii) applied for any other lawful purpose ofthe Issuer. Section 13. TRANSFER. (a) Pursuant to the provisions of the Transfer Agreement, which is hereby approved in substantially the form attached hereto, the City has agreed to do any and all things necessary to accomplish the transfer of the Sales Tax collected for the benefit of the Issuer to the Revenue Fund on a monthly basis. The Transfer Agreement shall govem matters with respect to the collection of the Sales Taxes from the Comptroller, credits and refunds due and owing to the Comptroller, and other matters with respect to the collection and transfer of the Sales Tax. The President and Secretary of the Board are hereby authorized to execute the Transfer Agreement on behalf ofthe Corporation. (b) The President and the Secretary of the Board are hereby ordered to do any and all things necessary to accomplish the transfer of money to the Funds established hereby in ample time to pay the principal of and interest on the Bonds. Section 14. INVESTMENTS. Money in any Fund established by this Resolution may, at the option of the Board, be invested in eligible investment securities as described in the Investment Act; provided that all such investments shall be made in such manner that the money required to be expended from any Fund will be available at the proper time or times. Investment eamings realized on investments attributable to the Debt Service Fund shall be retained therein and shall constitute a credit against the amount of money that is required to be on deposit therein for each payment of principal or interest. Investment earnings realized on investments attributable to the 2001 Reserve Fund shall be retained therein at all times when there is less than the 2001 Required Reserve on deposit therein; at all other times such earnings shall be deposited to the Debt Service Fund. Investment earnings realized on investments attributable to the Operating Fund shall be retained therein. Money in the 2001 Reserve Fund shall not be invested in securities maturing later than 18 months from the date of acquisition of such securities by the Issuer. Such investments shall be valued in terms of current market value as ofthe last day of each Fiscal Year. Such investments shall be sold promptly when necessary to prevent any default in connection with the Parity Obligations. Section 15. FUNDS SECURED. Money in all Funds created by this Resolution, to the extent not invested, shall be secured in the manner prescribed by law for securing funds of the City. RRTSDC• CityApprovinglssuanceRes A - Section 16. PAYMENT. While any of the Parity Obligations are outstanding, the Issuer shall transfer to the respective paying agent/registrar therefor, from funds on deposit in and credited to the Debt Service Fund, and, ifnecessary, in the Reserve Fund, amounts sufficient to fully pay and discharge promptly the interest on and principal of the Parity Obligations as shall become due on each interest or principal payment date, or date of redemption of the Parity Obligations; such transfer of funds must be made in such manner as will cause immediately available funds to be deposited with each respective paying agent/registrar for the Parity Obligations not later than the business day next preceding the date such payment is due on the Parity Obligations. The Paying Agent/Registrar shall destroy all paid Parity Obligations and famish the Issuer with an appropriate certificate of cancellation or destruction. Section 17. DEFICIENCIES - EXCESS PLEDGED REVENUES. (a) If on any occasion there shall not be sufficient Pledged Revenues (after making all payments pertaining to all Panty Obligations) to make the required deposits and credits to the Debt Service Fund and the Reserve Fund, then such deficiency shall be cured as soon as possible from the next available unallocated Pledged Revenues, or from any other sources available for such purpose, and such deposits and credits shall be in addition to the amounts otherwise required to be deposited and credited to these Funds. (b) Subject to making the deposits and credits required by this Resolution, or any Additional Parity Obligations Resolution, or the payments and credits required by the provisions ofthe resolutions authorizing the issuance of Junior Lien Obligations or Subordinate Lien Obligations hereafter issued by the Issuer, the excess Pledged Revenues may be used for any lawful purpose. Section 18. ADDITIONAL PARITY OBLIGATIONS. The Issuer shall have the right and power at any time and from time to time and in one or more series or issues, to authorize, issue and deliver Additional Parity Obligations, in accordance with law, in any amounts, for any lawful purpose including the refunding of any Parity Obligations, Junior Lien Obligations, Subordinate Lien Obligations or other obligations of the Issuer. Such Additional Parity Obligations, if and when authorized, issued and delivered in accordance with this Resolution, shall be secured by and made payable equally and ratably on a parity with all other Outstanding Parity Obligations, from the lien on and pledge of the Pledged Revenues herein granted. (a) The President of the Issuer (or other officer of the Issuer then having the primary responsibility for the financial affairs of the Issuer) shall have executed a certificate stating that, to the best of his or her knowledge and belief, the Issuer is not then in default as to any covenant, obligation or agreement contained in this Resolution or any additional Parity Obligation Resolution. (b) The Issuer has secured from a certified public accountant a certificate or opinion to the effect that, according to the books and records of the Issuer, the Pledged Revenues received by the Issuer for either (i) the last completed Fiscal Year next preceding the adoption of the Parity Obligation Resolution or (ii) any twelve (12) consecutive months out of the previous eighteen (18) months next preceding the adoption of the Parity Obligation Resolution equal to not less than 1.25 times the maximum annual Debt RRTSDC: CayApprovmgIssuanceRes A -13 Service for all Parity Obligations then Outstanding after giving effect to the issuance of the Additional Parity Obligations then being issued and 1.0 times the average annual debt service requirements (computed in the same manner as for Parity Obligations) of the Junior Lien Obligations and Subordinate Lien Obligations to be outstanding after the issuance of the then proposed Additional Parity Obligations. (c) The Issuer may create and establish a reserve fund pursuant to the provisions of any resolution authorizing the issuance of Additional Parity Obligations for the purpose of securing that particular issue or series of Parity Obligations or any specific group of issues or series of Parity Obligations and the amounts once deposited or credited to said reserve funds shall no longer constitute Pledged Revenues and shall be held solely for the benefit of the Holders of the particular Parity Obligations for which such reserve fund was established. Each such reserve fund shall be designated in such manner as is necessary to identify the Parity Obligations it secures and to distinguish such reserve fund from the Reserve Fund and the reserve funds created for the benefit of other Parity Obligations. Section 19. JUNIOR LIEN AND SUBORDINATE DEBT. Except as may be limited by resolution, the Issuer shall have the right to issue or create Junior Lien Obligations or Subordinate Lien Obligations payable from or secured by a lien on all or any part of the Pledged Revenues for any lawful purpose without complying with the provisions of Section 18 hereof, provided the pledge and the lien securing such debt is subordinate to the pledge and lien established, made and created in Section 6 of this Resolution with respect to the Pledged Revenues to the payment and security of the Parity Obligations. Section 20. GENERAL COVENANTS. The Issuer further covenants and agrees that in accordance with and to the extent required or permitted by law: (a) It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Resolution and in every Bond; it will promptly pay or cause to be paid the principal of and interest on every Bond on the dates and in the places and manner prescribed in this Resolution and the Bonds; and it will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Funds created hereby; and any registered owner of the Bonds may require the Issuer, its officials and employees to carry out, respect or enforce the covenants and obligations of this Resolution, by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings, in any court of competent jurisdiction, against the Issuer, its officials and employees, or by the appointment of a receiver in equity. (b) It is a duly created and existing industrial development corporation, and is duly authorized under the laws of the State of Texas, including the Act, to create and issue the Bonds; that all action on its part for the creation and issuance of the Bonds has been duly and effectively taken, and that the Bonds in the hands of the registered owners thereof are and will be valid and enforceable special obligations of the Issuer in accordance with their terms. RRTSDC• CllyApprovmglssuanceRes A - (c) (i) The Issuer hereby confirms the earlier levy by the City of the Sales Tax at the rate voted at the Election, and the Issuer hereby warrants and represents that the City has duly and lawfully ordered the imposition and collection of the Sales Tax upon all sales, uses and transactions as are permitted by and described in the Act throughout the boundaries of the City as such boundaries existed on the date of said election and as they may be expanded from time to time. (ii) For so long as any Bonds are Outstanding, the Issuer covenants, agrees and warrants to take and pursue all action permissible under applicable law to cause the Sales Tax, at said rate or at a higher rate if permitted by applicable law, to be levied and collected continuously, in the manner and to the maximum extent permitted by applicable law, and to cause no reduction, abatement or exemption in the Sales Tax or rate of tax below the rate stated, confirmed and ordered in subsection (a) of this Section to be ordered or permitted so long as any Bonds shall remain Outstanding. (iii) If the City shall be authorized hereafter by applicable law to apply, impose and levy the Sales Tax on any taxable items or transactions that are not subject to the Sales Tax on the date of the adoption hereof the Issuer, to the extent it legally may do so, hereby covenants and agrees to use its best efforts to cause the City to take such action as may be required by applicable law to subject such taxable items or transactions to the Sales Tax. (iv) The Issuer agrees to take and pursue all action permissible under applicable law to cause the Sales Tax to be collected and remitted and deposited as herein required and as required by the Act, at the earliest and most frequent times permitted by applicable law. (v) The Issuer agrees and covenants at all times to use its best efforts to cause the City to comply with the Transfer Agreement. (d) It will keep proper books of record and account in which full, true and correct entries will be made of all dealings, activities and transactions relating to the Project, the Pledged Revenues and the Funds created pursuant to this Resolution, and all books, documents and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any bondholders. (e) It will maintain its corporate existence during the time that any Bonds are Outstanding hereunder. Section 21. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Bond') within the meaning of this Resolution, except to the extent provided in subsections (c) and (e) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date or dates (whether such due date or dates be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption) or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to RRTSDC CityApprovmgIssuanccRes A -15 r�ra�s.p�� P• i 5co Tax the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment, (2) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amounts and at such times as will ensure the availability, without reinvestment, of sufficient money to provide for such payment and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable or (3) any combination of (1) and (2). At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the Pledged Revenues herein levied and pledged as provided in this Resolution, and such principal and interest shall be payable solely from such money or Defeasance Securities. (b) The deposit under clause (ii) of subsection (a) shall be deemed a payment of a Bond as aforesaid when proper notice of redemption of such Bonds shall have been given, in accordance with this Resolution. Any money so deposited with the Paying Agent/Registrar as provided in this Section may at the discretion ofthe Board of Directors also be invested in Defeasance Securities, maturing in the amounts and at the times as hereinbefore set forth, and all income from all Defeasance Securities in possession of the Paying Agent/Registrar pursuant to this Section which is not required for the payment of such Bond and premium, if any, and interest thereon with respect to which such money has been so deposited, shall be tumed over to the Board of Directors. (c) Notwithstanding any provision of any other Section of this Resolution which may be contrary to the provisions of this Section, all money or Defeasance Securities set aside and held in trust pursuant to the provisions of this Section for the payment of principal ofthe Bonds and premium, if any, and interest thereon, shall be applied to and used solely for the payment of the particular Bonds and premium, if any, and interest thereon, with respect to which such money or Defeasance Securities have been so set aside in trust. Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Resolution. (d) Notwithstanding anything elsewhere in this Resolution, if money or Defeasance Securities have been deposited or set aside with the Paying Agent/Registrar pursuant to this Section for the payment of Bonds and such Bonds shall not have in fact been actually paid in full, no amendment ofthe provisions of this Section shall be made without the consent of the registered owner of each Bond affected thereby. (e) Notwithstanding the provisions of subsection (a) immediately above, to the extent that, upon the defeasance of any Defeased Bond to be paid at its maturity, the Issuer retains the right under Texas law to later call that Defeased Bond for redemption in accordance with the provisions of the Resolution authorizing its issuance, the Issuer may call such Defeased Bond for redemption upon complying with the provisions ofTexas law and upon the satisfaction ofthe provisions of subsection (a) immediately above with respect to such Defeased Bond as though it was being defeased at the time of the exercise of the option RRTSDC CityApprovinglssuanceRes A -16 to redeem the Defeased Bond and the effect of the redemption is taken into account in determining the sufficiency of the provisions made for the payment of the Defeased Bond. Section 22. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) In the event any Outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall famish to 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 Toss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) Notwithstanding the foregoing provisions ofthis Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment ofthe principal of redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is famished as above provided in this Section. (d) Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions ofthis Section by virtue ofthe fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Resolution equally and proportionately with any and all other Bonds duly issued under this Resolution. (e) In accordance with Chapter 1201, Texas Government Code and particularly Subchapter D, this Section shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 4(d) ofthis Resolution, for Bonds issued in conversion and exchange for other Bonds. RRTSDC CityAppravingIssuanceRes A - Section 23. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION; CUSIP NUMBERS AND BOND INSURANCE, IF OBTAINED. The President of the Board of the Issuer is hereby authorized to have control of each Bond issued hereunder and all necessary records and proceedings pertaining to each Bond pending their delivery and their investigation, examination, and approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts ofthe State of Texas. Upon registration of each Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on each Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on each Bond. The approving legal opinion ofthe Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option ofthe Issuer, be printed on each Bond or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information ofthe registered owners ofthe Bonds. In addition, the form of bond counsel's opinion relating thereto, and an appropriate statement of insurance supplied by a municipal bond insurance company providing insurance, if any, covering all or any part of the Bonds may be printed or attached to the Bonds. Section 24. COVENANTS REGARDING TAX EXEMPTION. (a) The Issuer covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 ofthe Internal Revenue Code of 1986, as amended (the "Code "), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof the Issuer covenants as follows: (i) to take any action to assure that no more than 10 percent ofthe proceeds ofthe Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) ofthe 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 Resolution or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(6)(2) of the Code; (ii) to take any action to assure that in the event that the "private business use described in subsection (1) hereof exceeds 5 percent ofthe proceeds ofthe Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use; (iii) 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 Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local govemmental units, in contravention of section 141(c) ofthe Code; RRTSDC CityApprovuglssuanccRcs A - (iv) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (v) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (vi) to refrain from using any portion ofthe proceeds ofthe Bonds, 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 materially higher yield over the term of the Bonds, other than investment property acquired with — (A) proceeds ofthe Bonds 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, within the meaning of section 1.148 -1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; (vu) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 ofthe Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (viii) to pay to the United States of America at least once during each five -year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the 'Excess Earnings," within the meaning of section 148(1) ofthe Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent ofthe amount then required to be paid as a result of Excess Earnings under section 148(1) ofthe Code. (b) In order to facilitate compliance with the above covenant (8), a "Rebate Fund" is hereby established by the Issuer for the sole benefit ofthe United States of America, and such fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (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 proceeds ofthe refunded bonds expended prior to the date of issuance ofthe Bonds. It is the understanding ofthe Issuer that the covenants contained herein are intended to assure compliance with the Code and any RRTSDC: CItyApprovmgIssuanceRes A -19 regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Superintendent to execute any documents, certificates or reports required by the Code and to make such elections, on behalf ofthe Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. (d) The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the Project 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 proceeds 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 foregoing notwithstanding, the Issuer recognizes that in order for proceeds to be expended under the Internal Revenue Code, the sale proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are retired. The Issuer agrees to obtain the advice of nationally - recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax - exempt status of the Bonds. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e) 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 Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally - recognized bond counsel that such sale or other disposition will not adversely affect the tax - exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 25. SALE OF BONDS. The Bonds are hereby sold and shall be delivered to (the "Purchaser"), at a price of $ (representing the par amount of the Bonds, Tess an original issue discount of $ , less an underwriter's discount of $ ) plus accrued interest on the Bonds, pursuant to the terms and provisions of a Bond Purchase Agreement in substantially the form RRTSDC CityApprovinglssuanceRes A -20 attached hereto, which the President of the Board of Directors of the Issuer is hereby authorized and directed to execute and deliver, and which the Secretary of the Board ofDirectors of the Issuer is hereby authorized and directed to attest. Section 26. APPROVAL OF OFFICIAL STATEMENT. The Board of the Issuer hereby approves the form and content ofthe Official Statement relating to the Bonds and any addenda, supplement or amendment thereto, and approves the distribution of such Official Statement in the reoffering of the Bonds by the Purchaser in final form, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. The distribution and use ofthe Preliminary Official Statement dated April 26, 2001, prior to the date hereof is ratified and confirmed. The Board of the Issuer hereby finds and determines that the Preliminary 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 their respective dates. Sec tion 27. USE OF BOND PROCEEDS; PROJECT AGREEMENT; PROJECT FUND. The proceeds from the sale of the Bonds, except for accrued interest, which shall be deposited to the Debt Service Fund and any deposit for the Reserve Requirement, which shall be deposited in the Reserve Fund, shall be deposited into the Project Fund of the Issuer and used to pay Costs of the Project. Notwithstanding the provisions of Section 9 hereof, interest earnings on amounts on deposit in the Project Fund shall be used to pay Costs of the Project or, at the option of the Issuer, transferred to the Debt Service Fund and used to pay amounts coming due with respect to the Bonds. The Project Agreement, in substantially the form and substance as attached hereto and made a part hereof for all purposes, is hereby approved and the President and the Secretary of the Board of Directors are hereby authorized to execute, attest, seal and deliver the Project Agreement. Section 28. EXECUTION OF DOCUMENTS. The President, Vice President and Secretary of the Board of the Issuer are hereby authorized to execute, deliver, attest and affix the seal of the Issuer to all documents and instruments necessary and appropriate in connection with the issuance, sale and delivery of the Bonds, including, without limitation, the Transfer Agreement, the Paying Agent/Registrar Agreement and the DTC Blanket Issuer Letter of Representations in substantially the forms attached hereto and made a part hereof for all purposes. Section29. CONTINUING DISCLOSURE UNDERTAKING. (a) The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of any Fiscal Year, financial information and operating data of the general type included in the final Official Statement authorized by this Resolution 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 Exhibit "C "hereto, or such other accounting principles as the Issuer may be required to employ from time 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 the period during which they must be provided. Ifthe audit of such financial statements is not complete within such period, then the Issuer shall provide (1) unaudited financial statements for the RRTSDC: CLLyApprovmglssuenceRes A - applicable Fiscal Year within six months after the end of such Fiscal Year, and (2) audited financial statements for the applicable Fiscal Year to each NRMSIR and any SID, when and if the audit report on such statements become available. If the Issuer changes its Fiscal Year, it will notify each NRMSIR and any SID of the change (and of the date of the new Fiscal Year end) prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this paragraph (a). The financial information and operating data to be provided pursuant to this paragraph (a) may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. (b) The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: i. Principal and interest payment delinquencies; Non - payment related defaults; iii. Unscheduled draws on debt service reserves reflecting financial difficulties; iv. Unscheduled draws on credit enhancements reflecting financial difficulties; v. Substitution of credit or liquidity providers, or their failure to perform; vi. Adverse tax opinions or events affecting the tax exempt status of the Bonds; vii. Modifications to rights of holders of the Bonds; viii. Bond calls; ix. Defeasances; x. Release, substitution or sale of property securing repayment of the Bonds; and xi. Rating changes. RRTSDC. CityApprovinglssuanceRcs A -22 The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordance with paragraph (a) of this Section by the time required by such paragraph. (c) The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in any event will give notice of any deposit made in accordance with Section 21 of this Resolution that causes Bonds no longer to be outstanding. The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The Issuer does not make any representation or warranty conceming such information or its usefulness to a decision to invest in or sell the Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Resolution for purposes of any other provision of this Resolution. Nothing in this Section is intended or shall act to disclaim, waive or othenvise limit the duties of the Issuer under federal and state securities laws. - The provisions ofthis Section may be amended by the Issuer from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law or a change in the identity, nature, status or type of operations of the Issuer, but only if (1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule 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 ofthis Resolution that authorizes such an amendment) of the Bonds consent to such amendment or (b) a person that is unaffiliated RRTSDC CItyApprovingIssuanceRes A - with the Issuer (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interest of the Holders and beneficial owners of the Bonds. 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 ofthe Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering ofthe Bonds. If the Issuer so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with paragraph (a) of this Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. [TO BE REVISED DEPENDING UPON INSURANCE - Section 30. PROVISIONS RELATING TO BOND INSURANCE. The Bonds have been sold with the principal ofand interest thereon being insured by pursuant to a Municipal Bond Insurance Policy. In accordance with the terms and conditions applicable to insurance provided by , the Issuer covenants and agrees that, in the event the principal and interest due on the Bonds shall be paid by pursuant to the policy referred to this Section 30, the assignment and pledge of all funds and all covenants, agreements and other obligations of the Issuer to the Holders shall continue to exist and shall be subrogated to the rights of such Holders; and furthermore, the Issuer covenants and agrees that: (a) shall be deemed to be the Holder ofthe Bonds insured by at all times for the purpose ofthe execution and delivery of any amendment, change or modification of this Resolution or the initiation by Holders of any action to be taken under this Resolution at the Holder's request, which under this Resolution (or under such underlying documents requires the written approval or consent of or can be initiated by the Holders of a majority (50% percent) in aggregate principal amount ofthe Bonds at the time Outstanding. (b) In the event that the principal and redemption price, if applicable, and interest due on the Bonds shall be paid by pursuant to the policy referred to in this Section 40, all covenants, agreements and other obligations ofthe Issuer to the Holders shall continue to exist and shall be subrogated to the rights of such Holders. (c) While the Municipal Bond Guaranty Insurance Policy is in effect, the Issuer shall furnish to (i) as soon as practicable after the filing thereof a copy of any financial statement of the Issuer and a copy of any audit and annual report of the Issuer; (i) a copy of any notice to be given to the registered owners of the Bonds, including, without limitation, notice of any redemption or defeasance of Bonds, and any certificate rendered pursuant to this Resolution relating to the security for the Bonds; and RRTSDC C tyApprevinglssuanceRes A - (iii) such additional information as it may reasonably request. The Issuer will permit to discuss the affairs, finances and accounts ofthe Issuer, or any information may reasonably request regarding the security for the Bonds with appropriate officers of the Issuer. The Issuer will permit to have access to and make copies of all books and records relating to the Bonds at any reasonable time. (d) Any provision of this Resolution expressly recognizing or granting rights in or to may not be amended in any manner which affects the rights of hereunder without the prior written consent of . Furthermore, anything in this Resolution to the contrary notwithstanding, upon the occurrence and continuance of an event of default, shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders of the Bonds for the benefit of such Holders. (e) As long as insurance for the Bonds shall be in full force and effect, the Issuer agrees to comply with the following provisions: (1) if five (5) days prior to an interest payment date for the Bonds the Issuer determines that there will be insufficient funds in the Bond Fund to pay the principal of or interest on the Bonds on such interest payment date, the Issuer shall so notify . Such notice shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable and whether such Bonds will be deficient as to principal or interest, or both. (2) the Issuer shall, after giving notice to as provided in (1) above, make available to and the United States Trust Company ofNew York, as insurance trustee for , the registration books of the Issuer maintained by the Paying Agent/Registrar, and all records relating to the funds and accounts maintained under this Resolution. (3) the Issuer shall cause the Paying Agent/Registrar to provide and the United States Trust Company of New York with a list of registered owners of Bonds entitled to receive principal or interest payments from under the terms of the Municipal Bond Insurance Policy, and shall cause the Paying Agent/Registrar to make arrangements with United States Trust Company of New York (i) to mail checks or drafts to the registered owners of Bonds entitled to receive full or partial interest payments from and (ii) to pay principal upon Bonds surrendered to United States Trust Company ofNew York by the registered owners of Bonds entitled to receive full or partial principal payments from RRTSDC. CityApprovmglssuanceRes A - (4) the Issuer shall cause the Paying Agent/Registrar to notify, at the time it provides notice to pursuant to (1) above, the registered owners of Bonds entitled to receive the payment of principal or interest thereon from (i) as to the fact of such entitlement, (ii) that will remit to them all or a part ofthe interest payments next coming due, (iii) that should they be entitled to receive full payment of principal from they must tender their Bonds (along with a form of transfer of title thereto) for payment to United States Trust Company of New York, as insurance trustee for and not the Paying Agent/ Registrar, and (iv) that should they be entitled to receive partial payment of principal from they must tender their Bonds for payment thereon first to the Paying Agent/Registrar, who shall note on such Bonds the portion of the principal paid by the Paying Agent/Registrar, and then, along with a form of transfer of title thereto, to , which will then pay the unpaid portion of principal. (5) shall, to the extent it makes a payment of principal of or interest on Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Municipal Bond Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past -due interest, the Issuer shall cause the Paying Agent/Registrar to note 's rights as subrogee on the registration books of the Issuer maintained by the Paying Agent/Registrar upon receipt from of proof of the payment of interest thereon to the registered owners of the Bonds, and (ii) in the case of subrogation as to claims for past due principal, the Issuer shall cause the Paying Agent/Registrar to note 's rights as subrogee on the registration books of the Issuer maintained by the Paying Agent/ Registrar upon surrender of the Bonds by the registered owners thereof together with proof of the payment of principal thereof. Section 31. REMEDIES IN THE EVENT OF DEFAULT. In addition to all ofthe rights and remedies provided by the laws of the State of Texas, it is specifically covenanted and agreed particularly that in the event the Issuer (i) defaults in the payments to be made to the Debt Service Fund, as required by this Resolution, (ii) defaults in the observance or performance of any other of the covenants, conditions, or obligations set forth in this Resolution, the Holder or Holders of any Parity Obligations shall be entitled to a writ of mandamus issued by a court of proper jurisdiction, compelling and requiring the Issuer, its officers, the Board of Directors, and/or all of them, to observe and perform any covenants, conditions, or obligations prescribed in this Resolution. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. The specific remedies herein provided shall be cumulative of all other existing remedies and the specifications of such remedies shall not be deemed to be exclusive. RRTSDC: CilyApprovmglssuanceRes A - Section 32. NO RECOURSE AGAINST OFFICIALS. No recourse shall be had for the payment of principal of or interest on any Parity Obligations or for any claim based thereon or on this Resolution against any official of the Issuer or the City or any person executing any Parity Obligations. Section 33. FUR 'IHER ACTIONS. The officers and employees of the Issuer and the City are hereby authorized, empowered and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of the Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Resolution, the Bonds, the initial sale and delivery of the Bonds, the Paying Agent/RegistrarAgreement, any insurance commitment letter or insurance policy and the Official Statement. In addition, prior to the initial delivery of the Bonds, the Mayor, the President of the Board, the City Attorney and Bond Counsel are hereby authorized and directed to approve any technical changes or corrections to this Resolution or to any of the instruments authorized and approved by this Resolution necessary in order to (i) correct any ambiguity or mistake or properly or more completely document the transactions contemplated and approved by this Resolution and as described in the Official Statement, (ii) obtain a rating from any of the national bond rating agencies or satisfy requirements of the Bond Insurer, (iii) obtain a surety policy covering the Required Reserve or (iv) obtain the approval of the Bonds by the Texas Attorney General's office. In case any officer of the Issuer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 34. AMENDMENT OF RESOLUTION. (a) The Bond Insurer and the holders of the Parity Obligations aggregating a majority in principal amount of the aggregate principal amount of then Outstanding Parity Obligations shall have the right from time to time to approve any amendment to this Resolution which may be deemed necessary or desirable by the Issuer, provided, however, that without the consent of the Bond Insurer and the holders of all of the effected Parity Obligations at the time outstanding, nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Resolution or in the Parity Obligations so as to: ( (ii) Ci7 Make any change in the maturity of the Outstanding Parity Obligations; Reduce the rate of interest borne by any of the outstanding Parity Obligations; Reduce the amount of the principal payable on the outstanding Parity Obligations; (iv) Modify the terms of payment of principal of or interest on the outstanding Parity Obligations or impose any conditions with respect to such payment; (v) Affect the rights of the holders of less than all of the Parity Obligations then outstanding; RRTSDC CltyApprovmglssuanceRes A - (v) Change the minimum percentage of the principal amount of Parity Obligations necessary for consent to such amendment. (b) If at any time the Issuer shall desire to amend this Resolution under this Section, the Issuer shall cause notice of the proposed amendment to be delivered to the Bond Insurer and published in a financial newspaper or journal of general circulation in the city of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file for inspection by all registered owners of Parity Obligations at the designated trust office of the registrar for the Parity Obligations. Such publication is not required, however, if notice in writing is given to each registered owner of the Parity Obligations. (c) Whenever at any time not less than thirty days, and within one year, from the date of the first publication of said notice or other service of written notice the Issuer shall receive an instrument or instruments executed by the holders of at least a majority in aggregate principal amount of all Parity Obligations then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form ofthe copy thereof on file with the Paying Agent/Registrar, the Issuer Board of Directors may pass the amendatory resolution in substantially the same form. (d) Upon the passage of any amendatory resolution pursuant to the provisions of this Section, this Resolution shall be deemed to be amended in accordance with such amendatory resolution, and the respective rights, duties and obligations under this Resolution of the Issuer and all the holders of then outstanding Parity Obligations shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such amendments. (e) Any consent given by the Registered Ownerofa Parity Obligation pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders ofthe same Parity Obligation during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the holder who gave such consent, or by a successor in title, by filing notice thereof with the Paying Agent and the Issuer, but such revocation shall not be effective if the Registered Owners of at least a majority in aggregate principal amount of the then outstanding Parity Obligations as in this Section defined have, prior to the attempted revocation, consented to and approve the amendment. (f) For the purpose of this Section, the fact ofthe holding of Parity Obligations issued in registered form without coupons and the amounts and numbers of such Parity Obligations and the date of their holding same shall be proved by the Registration Books of the Paying Agent/Registrar. For purposes of this Section, the holder of a Parity Obligation in such registered form shall be the owner thereof as shown on RRTSDC CityApprovingrssuanceRes A -28 such Registration Books. The Issuer may conclusively assume that such ownership continues until written notice to the contrary is served upon the Issuer. (g) The foregoing provisions of this Section notwithstanding, the Issuer by action of the Issuer Council may amend this Resolution for any one or more of the following purposes: (1) To add to the covenants and agreements of the Issuer in this Resolution contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to bondholders or to surrender, restrict or limit any right or power herein reserved to or conferred upon the Issuer; (2) To make such provisions for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained in this Resolution, or in regard to clarifying matters or questions arising under this Resolution, as are necessary or desirable and not contrary to or inconsistent with this Resolution and which shall not adversely affect the interests of the holders of the Parity Obligations; (3) To make any changes or amendments requested by any Rating Agency, as a condition to the issuance or maintenance of a rating, which changes or amendments do not, in the judgment of the Issuer, materially adversely affect the interests of the owners of the outstanding Parity Obligations; (4) To make such changes, modifications or amendments as may be necessary or desirable, which shall not adversely affect the interests of the owners of the outstanding Parity Obligations, in order, to the extent permitted by law, to facilitate the economic and practical utilization of credit agreements with respect to the Parity Obligations including, without limitation, supplementing the definition of "Annual Debt Service Requirements" to address the amortization of payments due and owing under a credit agreement; (5) To modify any of the provisions of this Resolution in any other respect whatever, provided that (i) such modification shall be, and be expressed to be, effective only after all Parity Obligations outstanding at the date of the adoption of such modification shall cease to be outstanding, and (ii) such modification shall be specifically referred to in the text of all Additional Parity Obligations issued after the date of the adoption of such modification. Notice of any such amendment may be published or given by the Issuer in the manner described in subsection (b) of this Section; provided, however, that the publication of such notice shall not constitute a condition precedent to the adoption of such amendatory resolution and the failure to publish such notice shall not adversely affect the implementation of such amendment as adopted pursuant to such amendatory resolution. RRTSDC' CnyApprovinglssuanceRcs A - Section 35. INTERPRETATIONS. All terms defined herein and all pronouns used in this Resolution shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the articles and sections of this Resolution and the Table of Contents of this Resolution have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Resolution and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Bonds and the validity of the lien on and pledge of the Pledged Revenues to secure the payment of the Bonds. Section 36. INCONSISTENT PROVISIONS. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict and the provisions of this Resolution shall be and remain controlling as to the matters contained herein. Section 37. INTERESTED PARTIES. Nothing in this Resolution expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Issuer and the Registered Owners of the Bonds, any right, remedy or claim under or by reason of this Resolution or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Resolution contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer and the registered owners of the Bonds. Section 38. INCORPORATION OF RECITALS. The Issuer hereby finds that the statements set forth in the recitals ofthis Resolution are true and correct, and the City hereby incorporates such recitals as a part of this Resolution. Section 39. SEVERABILITY. If any provision of this Resolution or the application thereof to any circumstance shall be held to be invalid, the remainder of this Resolution and the application thereof to other circumstances shall nevertheless be valid, and this governing body hereby declares that this Resolution would have been enacted without such invalid provision. Section 40. REPEALER. All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. Section 41. EI FECTIVE DATE. This Resolution shall become effective upon adoption and approval by the City. Section 42. PREAMBLE. The findings and preambles set forth in this Resolution are hereby incorporated into this Resolution and made a part hereof for all purposes. RRTSDC CityApprovingIssuanccRcs A - EXHIBIT A DEFINITIONS 'Act" shall mean the Development Corporation Act of 1979, Article 5190.6, V.A.T.C.S., as amended. 'Additional Parity Obligations" shall mean bonds, notes warrants, certificates of obligation or other debt obligations which the Issuer reserves the right to issue or enter into, as the case may be, in the future in accordance with the terms and conditions provided in Section 18 of the Resolution and which, together with the Bonds, are equally and ratably secured by a first lien on and pledge of the Pledged Revenues on a parity with the Bonds under the terms of this Resolution and an Additional Parity Obligation Resolution. 'Additional Parity Obligation Resolution "shall mean any resolution ofthe Board authorizing and providing the terms and provisions of the Additional Parity Obligations. "Amortization Installment" means, with respect to any Term Bonds of any series of Parity Obligations, the amount of money which is required to be deposited into a mandatory redemption account for retirement of such Term Bonds (whether at maturity or by mandatory redemption and including redemption premium, if any) provided that the total Amortization Installments for such Term Bonds shall be sufficient to provide for retirement of the aggregate principal amount of such Term Bonds. 'Annual Debt Service Requirements" means, as ofthe date of calculation, the principal of and interest on all Parity Obligations coming due at Maturity or Stated Maturity (or that could come due on demand of the owner thereof other than by acceleration or other demand conditioned upon default by the Issuer on such Debt, or be payable in respect of any required purchase of such Debt by the Issuer) in such Fiscal Year, and, for such purposes, any one or more of the following rules shall apply at the election of the Issuer: (a) If the principal (including the accretion of interest resulting from original issue discount or compounding of interest) of any series or issue of Funded Debt due (or payable in respect of any required purchase of such Funded Debt by the Issuer) in any Fiscal Year either is equal to at least 25% ofthe total principal (including the accretion of interest resulting from original issue discount or compounding of interest) of such Funded Debt or exceeds by more than 50% the greatest amount of principal of such series or issue of Funded Debt due in any preceding or succeeding Fiscal Year (such principal due in such Fiscal Year for such series or issue of Funded Debt being referred to herein and throughout this Resolution as "Balloon Debt "), the amount of principal of such Balloon Debt taken into account during any Fiscal Year shall be equal to the debt service calculated using the original principal amount of such Balloon Debt amortized over the Term RRTSDC CItyApprovmgIssuanceRes A -1 of Issue on a level debt service basis at an assumed interest rate equal to the rate bome by such Balloon Debt on the date of calculation; (b) In the case of Balloon Debt, if a Designated Financial Officer shall deliver to the Issuer a certificate providing for the retirement of (and the instrument creating such Balloon Debt shall permit the retirement of), or for the accumulation of a sinking fund for (and the instrument creating such Balloon Debt shall permit the accumulation ofa sinking fund for), such Balloon Debt according to a fixed schedule stated in such certificate ending on or before the Fiscal Year in which such principal (and premium, if any) is due, then the principal of (and, in the case of retirement, or to the extent provided for by the sinking fund accumulation, the premium, if any, and interest and other debt service charges on) such Balloon Debt shall be computed as if the same were due in accordance with such schedule, provided that this clause (2) shall apply only to Balloon Debt for which the installments previously scheduled have been paid or deposited to the sinking fund established with respect to such Debt on or before the times required by such schedule; and provided further that this clause (2) shall not apply where the Issuer has elected to apply the rule set forth in clause (1) above; (c) Principal of and interest on the Bonds and Additional Parity Obligations, or portions thereof, shall not be included inthe computation ofthe Annual Debt Service Requirements for any Fiscal Year for which such principal or interest are payable from funds on deposit or set aside in trust for the payment thereof at the time of such calculations (including without limitation capitalized interest and accrued interest so deposited or set aside in trust) with a financial institution acting as fiduciary with respect to the payment of such Debt; and (d) As to any Parity Obligations that bear interest at a variable interest rate which cannot be ascertained at the time of calculation of the Annual Debt Service Requirement then, at the option of the Issuer, either (A) an interest rate equal to the average rate borne by such Parity Obligations (or by comparable debt in the event that such Parity Obligations has not been outstanding during the preceding 24 months) for any 24 month period ending within 30 days prior to the date of calculation, or (B) an interest rate equal to the 30 -year Revenue Bond Index (as most recently published in The Bond Buyer), shall be presumed to apply for all future dates, unless such index is no longer published in The Bond Buyer, in which case an index of revenue bonds with maturities of at least 20 years which is published in a financial newspaper or journal with national circulation may be used for this purpose (if two Series of Parity Obligations which bear interest at variable interest rate, or one or more maturities within a Series, of equal par amounts, are issued simultaneously with inverse floating interest rates providing a composite fixed interest rate for such Parity Obligations taken as a whole, such composite fixed rate shall be used in determining the Annual Debt Service Requirement with respect to such Parity Obligations); With respect to any calculation of historic data, only those payments actually made in the subject period shall be taken into account in making such calculation and, with respect to prospective calculations, only RRTSDC CityApprovingIssuanccRcs A - those payments reasonably expected to be made in the subject period shall be taken into account in making the calculation. 'Average Annual Debt Service Requirements" means that average amount which, at the time of computation, will be required to pay the Annual Debt Service Requirements when due (either at Stated Maturity or mandatory redemption) and derived by dividing the total of such Annual Debt Service Requirements by the number of Fiscal Years then remaining before Stated Maturity of such Parity Obligations. For the purposes of this definition, a fractional period of a Fiscal Year shall be treated as an entire Fiscal Year. Capitalized interest payments provided from bond proceeds, accrued interest on any Debt, and interest earnings thereon shall be excluded in making such computation. 'Board' shall mean the Board of Directors of the Issuer. 'Bond' or "Bonds" shall mean the Round Rock Transportation System Development Corporation Sales Tax Revenue Bonds, Series 2001, in the aggregate principal amount of $26,000,000, authorized to be issued by this Resolution. 'Bond Insurer" means or any other entity that issues or guarantees the payment of principal and interest on any Bonds or the provider of a Reserve Fund Obligation. "Book- Entry -Only System" means the book - entry system ofbondregistration provided in Section 4, or any successor system of book -entry registration. "Cede & Co." means the designated nominee and its successors and assigns of The Depository Trust Company, New York. "City" shall mean the City of Round Rock, Texas. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas, and any successor official or officer thereto. "Cos" shall mean with respect to the Project, the cost of acquisition, construction and improvement of the Project as provided in the Act, including, without limitation, the cost of the acquisition of all land, rights -of -way, property rights, easements, and interests, the cost of all machinery and equipment, financing charges, interest during construction, necessary reserve funds, premiums for reserve fund surety policies and municipal bond insurance policies, costs of ratings for the Bonds, cost of estimates and of engineering, accountant, financial advisor and legal services, plans, specifications, surveys, estimates of cost and of revenue, other expenses necessary or incident to determining the feasibility and practicability of acquiring, constructing, reconstructing, improving, and expanding any such Project, administrative expense, and such RRTSDC• CItyApprovmgIssuanceRes A - other expense as may be necessary or incident to the acquisition, construction, reconstruction, improvement and expansion thereof, the placing of the same in operation, and the financing of the Project. "Debt" and "Debt of the Issuer payable from Pledged Revenues" mean: (a) all indebtedness payable from Pledged Revenues incurred or assumed by the Issuer for borrowed money and all other financing obligations payable from Pledged Revenues that, in accordance with generally accepted accounting principles, are shown on the liability side of a balance sheet; and (b) all other indebtedness payable from Pledged Revenues (other than indebtedness otherwise treated as Debt hereunder) for borrowed money or for the acquisition, construction or improvement of property or capitalized lease obligations that is guaranteed, directly or indirectly, in any manner by the Issuer, or that is in effect guaranteed, directly or indirectly, by the Issuer through an agreement, contingent or otherwise, to purchase any such indebtedness or to advance or supply funds for the payment or purchase of any such indebtedness or to purchase property or services primarily for the purpose of enabling the debtor or seller to make payment of such indebtedness, or to assure the owner of the indebtedness against loss, or to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether or not such property is delivered or such services are rendered), or otherwise. For the purpose of determining Debt, there shall be excluded any particular Debt it upon or prior to the Maturitythereot; there shall have been deposited with the proper depository (a) in trust the necessary funds (or investments that will provide sufficient funds, if permitted by the instrument creating such Debt) for the payment, redemption, or satisfaction of such Debt or (b) evidence of such Debt deposited for cancellation; and thereafter it shall not be considered Debt. No item shall be considered Debt unless such item constitutes indebtedness under generally accepted accounting principles applied on a basis consistent with the financial statements of the Issuer in prior Fiscal Years. "Defeasance Securities" means (i) Federal Securities, (ii) noncallable obligations of an agency or instrumentality ofthe United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the Board ofDirectors adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide for the funding of an escrow to effect the defeasance of the Bonds are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent, and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision ofa state that have been refunded and that, on the date the Board of Directors adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide for the funding of an escrow to effect the defeasance of the Bonds, are rated as to investment quality by a nationally recognized investment rating firm no less than "AAA" or its equivalent. "Depository" means one or more official depository banks of the Issuer. RRTSDC CityApprovmglssuanceRes A - assigns. "DTC" means The Depository Trust Company, New York, New York and its successors and "DTC Participant" means securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants. "Election" means the sales and use tax election held by the City on August 9, 1997 pursuant to the provisions of the Act. "Federal Securities" as used herein means direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America (including Interest Strips of the Resolution Funding Corporation). "Fiscal Year" means the twelve -month accounting period used by the Issuer in connection with the operation of the System, currently ending on September 30 of each year, which may be any twelve consecutive month period established by the Issuer, but in no event may the Fiscal Year be changed more than one time in any three calendar year period. "Funded Debt" means all Parity Obligations created or assumed by the Issuer that mature by their terms (in the absence of the exercise of any earlier right of demand), or that are renewable at the option of the Issuer to a date, more than one year after the original creation or assumption of such Debt by the Issuer. "Holder" or "Holders" means the registered owner, whose name appears in the Security Register, for any Parity Obligation. 'Investment Act" shall mean the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended. "Issuer" shall mean Round Rock Transportation System Development Corporation. t "Junior Lien Obligations" shall mean the State Infrastructure Bank Loan Agreement between the Issuer and the Texas Department of Transportation relating to a loan in the amount of$16,000,000 for the acquisition of right -of -way and the relocation of utilities for the expansion of SH 45 and any other obligations issued on a parity therewith which the Issuer reserves the right to issue in Section 19 of this Resolution. "MSRB" means the Municipal Securities Rulemaking Board. RRTSDC. CityApprovinglssuanceRes A - 'Maturity" means, when used with respect to any Debt, the date on which the principal of such Debt or any installment thereof becomes due and payable as therein provided, whether at the Stated Maturity thereof or by declaration of acceleration, call for redemption, or otherwise. "Maximum Annual Debt Service Requirements" means the greatest requirements ofAnnualDebt Service Requirements (taking into account all mandatory principal redemption requirements) scheduled to occur in any future Fiscal Year or in the then current Fiscal Year for the particular obligations for which such calculation is made. Capitalized interest payments provided from Debt proceeds, accrued interest on any Debt, and interest earnings thereon shall be excluded in making such computation. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Outstanding" - When used in this Resolution with respect to Parity Obligations means, as of the date of determination, all Bonds and Parity Obligations theretofore sold, issued and delivered by the Issuer, except: (a) those Parity Obligations canceled or delivered to the transfer agent or registrar for cancellation in connection with the exchange or transfer of such obligations; (b) those Parity Obligations paid or deemed to be paid in accordance with the provisions of Section 21 hereof or similar provisions of any Additional Parity Obligations Resolution. (c) those Parity Obligations that have been mutilated, destroyed, lost, or stolen and replacement obligations have been registered and delivered in lieu thereof. "Parity Obligations" shall mean, collectively, the Bonds and any Additional Parity Obligations. "Paying Agent /Registrar" shall mean the financial institution so designated in accordance with the provisions of Section 4 of this Resolution and any successor thereto. "Pledged Revenues" shall mean all ofthe Issuer's receipts ofthe Sales Tax, less any amounts due or owing to the Comptroller as charges for collection or retention by the Comptroller for refunds and to redeem dishonored checks and drafts, to the extent such charges and retentions are authorized or required by law. 'Project "shal mean collectively, the construction, equipment and acquisition ofcertain street, road, drainage and other related transportation system improvements as provided in the City's Transportation Capital Improvement Plan and costs necessary or incident to the undertaking ofthe Project. RRTSDC CityApprovinglssuanceRes A - "Project Agreement" means the agreement dated May 15, 2001 between the Issuer and the City relating to the Project. "Record Dale" means Record Date as defined in the Form of Bond in Exhibit 'B" to this Resolution. "2001 Required Reserve" shall mean the amount to be maintained on deposit in, or held as securities, a Surety Bond or other similar instrument permitted by State law for the benefit of the 2001 Reserve Fund (as defined in Section 11 hereof) which shall equal or exceed, or have a face value of Average Annual Debt Service on the Bonds. "Registration Books" means the books or records for the registration ofthe transfer and exchange of the Bonds. "Required Reserve Amount" means the amount required to be maintained in the Reserve Fund pursuant to the provisions of Section 11 of this Resolution. "Required Reserve Fund Deposits" means the deposits and credits, if any, required to be made to the Reserve Fund pursuant to the provisions of Section 11 of this Resolution. "Reserve Fund" means the special fund created, established and maintained by the provisions of Sections 7 and 11 of this Resolution. "Reserve Fund Obligation" means, to the extent permitted by law, as evidenced by an opinion of nationally recognized bond counsel, a surety bond or insurance policy deposited in the Reserve Fund to satisfy the Required Reserve Amount whereby the issuer is obligated to provide funds up to and including the maximum amount and under the conditions specified in such agreement or instalment. "Reserve Fund Obligation Payment" means any subrogation payment the Issuer is obligated to make from Pledged Revenues deposited in the Reserve Fund with respect to a Reserve Fund Obligation. "Sales Tax" shall mean the one -half of one percent sales and use tax levied by the City within the boundaries of the City as they now or hereafter exist, together with any increases in the aforesaid rate if provided and authorized by the laws of the State of Texas, including specifically the Act, and collected for the benefit of the Issuer, all in accordance with the Act, including particularly Section 4B thereof. RRTSDC CatyApprovmgIssunnceRcs A - "Rule" means SEC Rule 15c2 -12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state infomlation depository within the meaning of the Rule from time to time. "Stated Maturity " means the annual principal payments ofthe Parity Obligations payable on the respective dates set forth in the Resolutions which authorized the issuance of such Parity Obligations. "Subordinate Lien Obligations" means (i) any bonds, notes, warrants, certificates of obligation, contractual obligations or other Debt issued by the Issuer that are payable, in whole or in part, from and equally and ratably secured by a lien on and pledge of the Pledged Revenues, such pledge being subordinate and inferior to the lien on and pledge of the Pledged Revenues that are or will be pledged to the payment of any Parity Obligations and Junior Lien Obligations issued by the Issuer, and (ii) obligations hereafter issued to refund any of the foregoing if issued in a manner that provides that the refunding bonds are payable from and equally and ratably secured, in whole or in part, by a lien on and pledge of the Pledged Revenues on a parity with the Subordinate Lien Obligations. "Supplemental Resolution" means any resolution supplementing or amending this Resolution for any authorized purpose permitted in this Resolution. . 'Surety Bond' shall mean a policy of municipal bond insurance, a surety bond or other obligation permitted by law which is issued by an insurance company or other issuer of such instruments for the purpose offending all or part ofthe Required Reserve; provided that the issuing company or institution shall have a rating in the highest rating category by two nationally recognized rating agencies or services. "Term Bonds" means those Parity Obligations so designated in the resolutions authorizing such bonds which shall be subject to retirement by operation of a mandatory redemption account. "Term of Issue" means with respect to any Balloon Debt, a period of time equal to the greater of (i) the period of time commencing on the date of issuance of such Balloon Debt and ending on the final maturity date of such Balloon Debt or (ii) twenty years. "TransferAgreement "shall mean the Sales Tax Remittance Agreement dated as ofMay 15, 2001, between the City and the Issuer. RRTSDC CayApprovinglssuanceRes A -8 NO. Interest Rate REGISTERED OWNER: EXHIBIT B FORM OF BOND PRINCIPAL AMOIJNT UNITED STATES OF AMERICA STATE OF TEXAS ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION SENIOR LIEN SALES TAX REVENUE BOND SERIES 2001 Dated Date Maturity Date CUSIP No. PRINCIPAL AMOUNT: DOLLARS ON THE MATURITY DATE specified above, Round Rock Transportation System Development Corporation (the "Issuer "), being a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas, including particularly the Development Corporation Act of 1979, Article 5190.6, V.A.T.C.S., as amended (the "Act "), and acting on behalf of the City of Round Rock, Texas (the "City"), hereby promises to pay to the Registered Owner set forth above or to the assignee or assignees thereof (either being hereinafter called the "Registered Owner ") on the Maturity Date specified above, the Principal Amount specified above. The Issuer promises to pay interest on the unpaid principal amount hereof (calculated on the basis ofa 360 -day year of twelve 30-day months) from May 15, 2001 at the Interest Rate per annum specified above. Interest is payable on February 15, 2002 and semiannually on each and August 15 and February 15 thereafter to the Maturity Date specified above, or the date of redemption prior to maturity; except, if this Bond is required to be authenticated and the date of its authentication 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 bear interest from such next fol- lowing interest payment date; provided, however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being exchanged is due but has not been paid, then this Bond shall bear interest from the date to which such interest has been paid in full. Notwithstanding the foregoing, during any period in which ownership of the Bonds is determined only by a book entry at a RRTSDC• CityApprovinglssuanceltes 13 securities depository for the Bonds, any payment to the securities depository, or its nominee or registered assigns, shall be made in accordance with existing arrangements between the Issuer and the securities depository. 1DE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal ofthis Bond shall be paid to the Registered Owner hereof upon presentation and surrender ofthis Bond at maturity or upon the date fixed for its redemption prior to maturity, at the designated office for payment of The Chase Manhattan Bank, Dallas, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the Registered Owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds ofthe Issuer required by the Resolution authorizing the issuance of this Bond (the "Bond Resolution ") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first -class postage prepaid, on each such interest payment date, to the Registered Owner hereof, at 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/Registrar, as hereinafter described. In the event of a non- 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/Registrar if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date" 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 States mail, first class, postage prepaid, to the address of each Registered Owner appearing on the Registration Books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the Registered Owner upon presentation and surrender ofthis Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar (unless the redemption date is a regularly scheduled interest payment date, in which case accrued interest on such redeemed Bonds shall be payable in the regular manner described above). The Issuer covenants with the Registered Owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Debt Service Fund" created by the Bond Resolution, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. DURING ANY PERIOD in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, if fewer than all ofthe Bonds ofthe same maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between the Issuer and the securities depository. RRTSDC: CLLyApprovmglssuanceRes 6 -2 IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS BOND is one of an issue of Bonds initially dated the Dated Date specified on the face of this Bond, authorized in accordance with the Constitution and laws of the State of Texas, including particularly the Act, in the original principal amount of $26,000,000 to provide funds to finance the construction and improvements of streets, roads, drainage and other related transportation system improvements. TIIE BONDS OF THIS SERIES maturing on August 15, 20 are subject to mandatory redemption prior to maturity in part at random, by lot or other customary method selected by the Paying Agent/Registrar, at par plus accrued interest to the redemption date, in amounts sufficient to redeem said Bonds on August 15, in the years and principal amounts shown on the following schedule. Such Bonds shall be redeemed with funds from the "Debt Service Fund" created by the Bond Resolution and shall be redeemed by the Paying Agent/Registrar in part prior to maturity with funds from the Debt Service Fund, for the principal amount thereof and accrued interest to the date of redemption, and without premium, on each of the aforesaid dates, in the principal amounts, respectively, as set forth in the following schedule: • Final maturity of Bond. Bonds Maturing August 15. 20 Year 20 20 20 * RRTSDC CnyApprovinglssuanccRcs B - Principal Amount The principal amount of the Bonds required to be redeemed pursuant to the operation of such mandatory sinking fund shall be reduced by the principal amount of any Bonds which, at least 45 days prior to the mandatory sinking fund redemption date shall have been (1) purchased by the Issuer and delivered to the Paying Agent/Registrar for redemption or (2) redeemed pursuant to the optional redemption provision described below and delivered to the Paying Agent/Registrar for cancellation. ON AUGUST 15, 2011, or on any date thereafter, the Bonds of this Series maturing on and after August 15, 2012 may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at a redemption price equal to the principal amount to be redeemed plus accrued interest to the date fixed for redemption. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity, the Issuer shall cause written notice of such redemption to be sent by United States mail, first class, postage prepaid, to each Registered Owner of a Bond to be redeemed, in whole or in part, at the address of the Registered Owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing of such notice. Any notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Registered Owner. By the date fixed for any such redemption, due provision shall be made with the Paying Agent/Registrar for the payment ofthe required redemption price for the Bonds or portions thereof which are to be so redeemed. If such written notice of redemption is mailed and if due provision for such payment is made, all as provided above, the Bonds or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being Outstanding except for the right of the Registered Owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the Registered Owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the Registered Owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Resolution. ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Resolution, this Bond, or any unredeemed portion hereof, may, at the request of the Registered Owner or the assignee or assignees hereof, be assigned, transferred and exchanged for a like aggregate principal amount of fully registered Bonds, without interest coupons, payable to the appropriate Registered Owner, assignee or assignees, as the case may be, having the same denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate Registered Owner, assignee or assignees, as the case maybe, upon surrender ofthis Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Resolution. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment ofthis Bond to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond shall be executed by the Registered Owner or its duly authorized attorney or representative to evidence the assignment hereof. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. RRTSDC: CnyApprov.ngIssuanceRes B-4 The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. The Registered Owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. WHENEVER the beneficial ownership of this Bond is determined by a book entry at a securities depository for the Bonds, the foregoing requirements of holding, delivering or transferring this Bond shall be modified to require the appropriate person or entity to meet the requirements ofthe securities depository as to registering or transferring the book entry to produce the same effect. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Resolution that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the Registered Owners of the Bonds. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery ofthis Bond have been performed, existed, and been done in accordance with law; that this Bond is a special obligation of the Issuer; that neither the State of Texas, the City, nor any political corporation, subdivision, or agency of the State of Texas, nor any member of the Board of Directors of the Issuer, either individually or collectively, shall be obligated to pay the principal of or the interest on this Bond and neither the faith and credit nor the taxing power (except as described below) of the State of Texas, the City, or any other political corporation, subdivision, or agency thereof is pledged to the payment of the principal of or the interest on this Bond; that the principal of and interest on this Bond, together with any Additional Parity Obligations hereafter issued, are secured by and payable from a first lien on and pledge of certain funds created under the Resolution and the revenues defined in the Resolution as the "Pledged Revenues ", which include the proceeds of a one -half of one percent sales and use tax levied for the benefit of the Issuer by the City (the "Sales Tax') pursuant to Section 4B of the Act which lien on and pledge is prior in right and claim to the lien and pledge on the Pledged Revenues securing the payment of the outstanding Junior Lien Obligations and any Subordinate Lien Obligations; and that the Registered Owner hereof shall not have the right to demand payment of the principal of or interest on this Bond from any tax proceeds other than the Sales Tax proceeds levied for the benefit of the Issuer by the City pursuant to Section 4B of the Act, or from any other source. THE ISSUER HAS RESERVED the right in the Bond Resolution, subject to certain conditions set forth therein, to issue obligations or incur indebtedness from time to time in the future on a parity with the Bonds with respect to the pledge of and lien on the Pledged Revenues which secures the Bonds. The RRTSDC. CntyApprovinglssuanceRes B - Issuer may also issue obligations or incur indebtedness which is secured on a junior and subordinate lien with respect to the Pledged Revenues. The Bond Resolution further provides that the Issuer may create a debt service reserve fund and fund it or provide for it to be funded in connection with the issuance of any obligations or the incurrence of any indebtedness which possesses a lien on and pledge of the Pledged Revenues on a parity with the Bonds, and that such reserve shall secure only the obligations or indebtedness for which it was funded or is to be funded. The Issuer has created a debt service reserve fund for the benefit of the Bonds. THE ISSUER ALSO HAS RESERVED THE RIGHT to amend the Bond Resolution as provided therein, and under some (but not all) circumstances amendments thereto must be approved by the Registered Owners of a majority in aggregate principal amount of the Outstanding Bonds. BY BECOMING the Registered Owner of this Bond, the Registered Owner thereby acknowledges all of the terms and provisions of the Resolution, agrees to be bound by such terms and provisions, acknowledges that the Resolution is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Resolution constitute a contract between each Registered Owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature of the President of the Board of Directors of the Issuer and countersigned with the manual or facsimile signature of the Secretary of the Board of Directors of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. (facsimile signature) (facsimile signature) Secretary, Board of Directors President, Board of Directors (SEAL) FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERT FTCATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions ofthe Resolution described in the text of this Bond; and that this Bond has been issued in conversion or replacement of or in exchange for, a Bond, Bonds, or a portion of a Bond or Bonds of a series which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. RRTSDC: CityApprovmglssuanceRes B - Dated: FORM OF ASSIGNMENT ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto Please insert Social Security or Taxpayer Identification Number of Transferee (Please print or typewrite name and address, including zip code, of Transferee.) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney, to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a securities transfer association recognized signature guarantee program. The Chase Manhattan Bank Dallas, Texas Paying Agent/Registrar By: Authorized Representative NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, without alteration or enlargement or any change whatsoever. FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. RRTSDC. CityApprovingIssuanceRes B -7 I hereby certify that this Bond has been examined, certified as to validity and approved by the AttomeyGeneral ofthe State of Texas, and that this Bond has been registered by the Comptroller ofPublic Accounts of the State of Texas. Witness my signature and seal this (COMPTROLLERS SEAL) RRTSDC CIryApprovinglssuanceRes B - Comptroller of Public Accounts of the State of Texas EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 29(a) of this Resolution: Annual Financial Statements and Operating Data RRTSDC: CityApprovinglssuanceRes C -1 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 under the headings of the Official Statement referred to) below: (A) The annual audited financial statements of the Issuer if an audit is conducted separate and independent of the audit of the City of Round Rock, but if the audit of the City of Round Rock includes an audit of the Issuer, then those portions of the City's audit relating to the Issuer, or the unaudited financial statements of the Issuer in the event audited financial statement are not completed within six months after the end of any fiscal year. (B) All quantitative financial information and operating data with respect to the Issuer of the general type included in the Official Statement under Tables 1 through 4. 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 A above. EXHIBIT B SALES TAX REMITTANCE AGREEMENT THIS SALES TAX REMITTANCE AGREEMENT, dated as of May 15, 2001, executed by and between the City of Round Rock, Texas (the "City") and the Round Rock Transportation System Development Corporation (the "Corporation ") WITNESSETH: WHEREAS, the Corporation was created by the City pursuant to authority granted by Article 5190.6, Texas Revised Civil Statutes, as amended (the "Act "), specifically with the Corporation to possess the powers granted by Section 4B of the Act; and WHEREAS, on August 9, 1997, the citizens of the City voting at an election on said date approved the levy ofa one -half of one percent sales and use tax upon the receipts at retail oftaxable items, pursuant to Section 4B of the Act (the "Sales Tax "); and WHEREAS, under the Act and the provisions of the Texas Tax Code, disbursements of sales and use taxes are made to cities, such as the City, by the Comptroller of Public Accounts of Texas (the "Comptroller "); and WHEREAS, under authority of the Act, it is the intent of the Corporation to issue bonds for the purpose of financing and/or refinancing eligible projects under the Act, particularly Section 4B thereof and to secure said bonds with the Sales Tax collected by the City under authority of Section 4B of the Act; and WHEREAS, the parties hereto find it necessary and advisable to enter into this Agreement to evidence the duties and responsibilities of the respective parties with respect to the collection, remittance and transfer of such sales and use tax revenues. NOW THEREFORE, in consideration ofthe covenants and agreements herein made, and subject to the conditions herein set forth, the City and the Corporation contract and agree as follows: ARTICLE I SALES TAX FUND RRTSDC. C tyApprovmglssuanceRes B-I Section 1.1. Creation of Fund. The City agrees to establish and maintain on the books of the City and hold at an official depository bank of the City (the "Depository") a fund to be entitled 'Round Rock Transportation System Development Corporation Sales and Use Tax Fund" (the "Sales Tax Fund "). Though such Sales Tax Fund may be a subaccount of the City's General Fund held by the City's depository and as such, not held in a separate bank account, such treatment shall not constitute a commingling of the monies in such funds or of such funds and the City shall keep full and complete records indicating the monies and investments credited to the Sales Tax Fund. Section 1.2. Deposits to Fund. The revenues received by the City from the Comptroller from the charge and levy of the Sales Tax shall be deposited as received, or transmitted by the Comptroller directly, to the credit of the Sales Tax Fund, for the benefit of the Corporation, and shall be made available to the Corporation from time to time as hereinafter provided in this Agreement. Section 1.3. Security for Fund. The City hereby agrees that moneys on deposit in the Sales Tax Fund shall at all times be collateralized in the manner and with the collateral required by the City for its own funds. Section 1.4. Change in Depository. The City reserves the right from time to time to change its official depository bank, and hereby agrees to give the Corporation thirty (30) days prior written notice of any such change in its official depository bank. ARTICLE II TRANSFER OF FUNDS Section 2.1. Collection of Sales Tax. (a) Until the Comptroller is able to determine and report the amount of the Sales Tax levied for the benefit of the Corporation and any rebate, charge -back or adjustment thereof on a point of collection basis, the City will allocate a portion ofthe undivided sales and use tax receipts to the Corporation on the basis of the total sales and use taxes collected, multiplied by the pro rata portion of the Sales Tax. In addition, the City will allocate the costs of any rebate or charge -back applicable to the undivided sales and use tax receipts between the City and the Corporation on a pro rata basis. (b) The President of the Board of Directors of the Corporation and the City Manager of the City shall take such actions as are required to cause the Sales Tax to be delivered and transferred by the Comptroller to the City for use by the Corporation by the fastest and most economically feasible means available. Section 2.2. Revenue Fund. By resolution adopted by the Corporation on May 24, 2001 (the 'Bond Resolution "), the Corporation established a fund designated in the Bond Resolution as the "Revenue Fund," such fund to be held by the depository bank of the Corporation. RRTSDC: CityApprovingissuanceRes B -2 Section 2.3. Transfers to Revenue Fund. On or before the 25th day of each month, the City shall direct the Depository to transfer funds on deposit in the Sales Tax Fund to the credit of the Revenue Fund, on behalf of the Corporation. The City shall cause the Depository to make such transfers within twenty-four (24) hours of receipt of such direction to the extent that there are moneys on deposit in the Sales Tax Fund to effect such transfer. Section 2.4. Use of Moneys by Corporation. The Corporation agrees to use the moneys on deposit in the Revenue Fund in a manner consistent with the terms and conditions of the Bond Resolution. Section 2.5. Covenant of the City. Recognizing that the Sales Tax shall provide the security for the Corporation's bonds, so long as such bonds are outstanding, the City covenants and agrees that it will take and pursue all possible action permitted by the Act and other applicable State law to cause the Sales Taxto be levied and collected continuously at the rate of one half of one percent or, to the extent permitted by law and necessary or desirable, at a higher rate, and the City will not cause a reduction, abatement or exemption in the Sales Tax or in the rate at which it is authorized to be collected. ARTICLE III MISCELLANEOUS Section 3.1. Depository Responsibilities. The President of the Board of Directors of the Corporation and the City Manager of the City shall develop procedures to ensure that the official depository bank of the City, as it may exist from time to time, shall be obligated to perform the duties detailed in this Agreement, and to that end the City agrees to incorporate into its agreement with its official depository bank a covenant by the official depository bank that it will perform all duties and obligations as a depository as set forth in this Agreement and in the Bond Resolution. Section 3.2. Fees of Depositorv. In connection with the establishment and maintenance of the Sales Tax Fund, the Corporation agrees to pay the reasonable costs and expenses of the Depository associated with the administration of the Sales Tax Fund and such costs and expenses, if any, shall never constitute a cost, liability, or obligation of the City. Section 3.3. Severability. If any clause, provision, or section of this Agreement should be held illegal or invalid by any court of competent jurisdiction, the invalidity of such clause, provision, or section shall not affect any of the remaining clauses, provisions, or sections hereof and this Agreement shall be construed and enforced as if such illegal or invalid clause, provision, or section had not been contained herein. In case any agreement or obligation contained in this Agreement should be held to be in violation of law, then such agreement or obligation shall be deemed to be the agreement or obligation of the City and the Corporation, as the case may be, to the full extent permitted by law. RRTSDC. CityApprovmgIssuanceRes B -3 L IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed in multiple counterparts, each of which shall be considered an original for all purposes, as of the day and year first set out above. ATTEST: City Secretary (SEAL) ATTEST: Secretary, Board of Directors (SEAL) RRTSDC. CityApprovmglssuanccRcs CITY OF ROUND ROCK, TEXAS By Mayor ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION By President, Board of Directors B-4 EXHIBIT C PROJECT AGREEMENT THIS PROJECT AGREEMENT (this "Project Agreement") executed by and among the City of Round Rock, Texas (the "City") and the Round Rock Transportation System Development Corporation (the "Corporation "). WITNESSETH: WHEREAS, the Corporation was created by the City pursuant to authority granted by the Development Corporation Act of 1979, Article 5190.6, Texas Revised Civil Statutes, as amended (the "Act"), specifically with the Corporation to possess the powers granted by Section 4B of the Act; and WHEREAS, on August 9, 1997, the citizens of the City voting at an election on said date approved the levy ofa one -half of one percent sales and use tax upon the receipts at retail of taxable items, pursuant to Section 4B of the Act (the "Sales Tax "); and WHEREAS, under authority of the Act, it is the intent of the Corporation to issue bonds for the purpose of financing eligible projects under the Act, particularly Section 4B thereof, and to secure such bonds with the Sales Tax collected by the City under authority of Section 4B of the Act; and WHEREAS, on the date ofthe execution of this Project Agreement, the Corporation has adopted a bond resolution (the "Resolution ") and the City has approved the adoption of the Resolution by the Corporation, which Resolution has authorized the issuance of $26,000,000 in principal amount of the Corporation's Senior Lien Sales Tax Revenue Bonds, Series 2001 (the "Bonds ") for the purpose of financing various improvements primarily for the benefit of the City (referred to in the Resolution as the "Project", which improvements are more specifically described in Exhibit "A" attached to this Project Agreement), and the Corporation and the City have entered into a sales tax remittance agreement (the "Sales Tax Remittance Agreement") for the purpose of providing a mechanism for distributing the Sales Tax between the Corporation and the City; and WHEREAS, for the purpose of promoting and encouraging employment and the public welfare, the Board of Directors ofthe Corporation desires to provide funds to be used to finance the Project; and WHEREAS, the City Council of the City desires to provide for the timely transfer of the proceeds of the Sales Tax to the Corporation in accordance with the provisions of the Act to be used by the Corporation to repay the Bonds sold to finance the Project; and WHEREAS, the parties hereto find it necessary and advisable to enter into this Agreement to evidence the duties and responsibilities of the respective parties with respect to the financing, construction and acquisition of the Project. RRTSDC C■tyApprovmglssuanceRes NOWTHEREFORE, in consideration ofthe covenants and agreements herein made, and subject to the conditions herein set forth, the City and the Corporation contract and agree as follows: SECTION 1. DEFINITIONS AND INCORPORATION OF PREAMBLES . The terms and expressions used in this Project Agreement, unless the context shows clearly otherwise, shall have the meanings set forth herein, including terms defined in the Preambles hereto, which preambles are incorporated in and made a part hereof for all purposes, or, if not defined herein, such terms shall have the meanings given in the Resolution. • SECTION 2. OBLIGATION OF CORPORATION TO FINANCE PROJECT. The Corporation agrees to pay, and will pay, certain costs of acquiring and constructing the Project on behalf of the City through the issuance of its Bonds to provide the money for such payment, all in the manner hereinafter described and as provided in the Resolution; and the Corporation, by such payment, will therefore provide for the acquisition and construction of the Project for the benefit of the City. SECTION 3. USE OF BOND PROCEEDS. The proceeds from the sale of the Bonds will be used for the payment of costs and expenses in connection with the issuance of the Bonds and the acquisition and construction ofthe Project, including, without limitation, all financing, legal, printing, administrative, and other expenses and costs incurred in issuing the Bonds and acquiring the Project, and to fund a debt service reserve and the other Funds required by the Resolution. Bonds will be issued by the Corporation in the amount of $26,000,000 which amount is now estimated to be sufficient, together with other available funds, to cover all the aforesaid costs and expenses and other amounts required. SECTION 4. ACQUISITION AND CONSTRUCTION CONTRACTS. The City, acting on behalf of and as agent for the Corporation under this Project Agreement, will enter into such contracts as are necessary to provide for acquiring and constructing the entire Project, and said contracts shall be executed as required by the respective laws applicable to the City. The Corporation shall cause the proceeds of the sale of the Bonds to be available to pay under such contracts. The Corporation shall deposit the proceeds of the Bonds into the Project Fund in accordance with the Resolution, excluding proceeds, if any, required to be deposited into the Reserve Fund and the Debt Service Fund established by the Resolution). The Project Fund shall be used for paying the Corporation's costs and expenses incidental to the issuance of the Bonds and to pay certain costs of acquiring, by purchase and construction, the Project. All contracts and draws on the Project Fund shall be approved by the Corporation and by the City with respect to the City's portion of the Project, and any form of written approval signed by the President of the Board of Directors of the Corporation or by the City Manager or the Chief Financial Officer of the City will evidence the approval of the Corporation and the City, respectively, for the purposes of this Section 4. Draws on the Project Fund shall be made in accordance with the Resolution. SECHON 5. OWNERSHIP OFPROJECT. (a) The Corporation will provide, make available, and render, to and for the benefit of the City and its inhabitants the Project financed by the Corporation pursuant to this Project Agreement. It is agreed that the City always shall have the exclusive use of the Project. In consideration of the Corporation's acquiring, making available, and rendering to and for the benefit of the City and its inhabitants, the facilities and services of the Project, the City makes and agrees to comply with its covenants which are set forth in the Sales Tax Remittance Agreement. The City shall RRTSDC. CityApprovingissuanceRes C-2 not be relieved of its covenants and obligations under the Sales Tax Remittance Agreement, notwithstanding the failure of the Corporation to acquire or construct all or any part of the Project. It is hereby provided that in further consideration of the covenants made by the City under this Section and under the Sales Tax Remittance Agreement, the City shall become the owner of the Project upon completion ofthe construction of each distinct portion of the Project, as more particularly described in Section 5(b) of this Project Agreement. (b) After completion of the acquisition and construction of each identifiable portion of the Project, and when an identifiable portion of the Project is ready to be placed in service, the City shall inspect the same and if it is found by the City to have been acquired and constructed as required by this Project Agreement, the City, acting by and through the Mayor of the City, shall notify the Corporation in writing that it has accepted the Project. Upon such acceptance, all of the Corporation's right, title, and interest of every nature whatsoever in and to such portion ofthe Project automatically shall vest irrevocably in the City without the necessity of the execution of any conveyance by the Corporation, and such transaction shall result in the automatic sale and delivery of such portion of the Project by the Corporation to the City, and the vesting of title to such portion of the Project in the City in consideration for the agreement of the City to perform its obligations required under this Project Agreement. If requested in writing by the City, acting by and through the Mayor or City Manager ofthe City, the Corporation will execute and deliver to the City an appropriate instrument acknowledging that such sale, delivery, and vesting oftitle has occurred, but such instrument shall not be necessary to effect the automatic sale, delivery, and vesting oftitle, which shall occur as described above. Until the acceptance ofa portion of the Project by the City, all right, title, and interest in and to a portion of the Project shall be in the Corporation. After such acceptance and the resulting sale, delivery, and vesting of title in the City, the Corporation shall have no right, title, or interest in, or respon- sibility with respect to, a portion of the Project and the Corporation shall have no right to extend, improve or otherwise expend funds in the Construction Fund of the Resolution for such portion of the Project. SECTION 6. ACQUISITION. The City and the Corporation agree to proceed promptly with the acquisition, by purchase and construction, of the Project. The City and Corporation hereby covenant that they will make a diligent effort to complete such acquisition and construction as soon as practicable. The City and the Corporation do not anticipate any delays in completing the acquisition of the Project, but the City and the Corporation shall not be liable to each other for any damages caused by any delays in comple- tion of the Project. SECTION 7. USE OF CITY'S AND DISTRICT'S PUBLIC PROPERTY. By these presents, the City authorizes use of any and all real property, streets, alleys, public ways and places, and general utility or sewer easements of the City for acquisition and construction of the Project. SECCION 8. FORCE MAJEURE. If, by reason of Force Majeure, any party hereto shall be rendered unable wholly or in part to carry out its obligations under this Project Agreement, then such party shall give notice and full particulars of such Force Majeure in writing to the other parties within a reasonable time after occurrence of the event or cause relied upon, and the obligation of the party giving such notice, so k as it is affected by such Force Majeure, shall be suspended during the continuance of the inability then claimed, except as hereinafter provided, but for no longer period, and any such party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as employed RRTSDC• CityApprovinglssuanceRes C -3 herein, shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas or any civil or military authority, insurrections, riots, epidemics, landslides, Lightning, earthquake, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines, or canals, or other causes not reasonably within the control of the party claiming such inability. It is understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of the party having the difficulty, and that the above requirement that any Force Majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes and lockouts by acceding to the demands of the opposing party or parties when such settlement is unfavorable to it in the judgment of the party having the difficulty. It is specifically excepted and provided, however, that in no event shall any Force Majeure relieve the City of its obligation to transfer Sales Tax revenues to the Corporation as required under the Sales Tax Remittance Agreement. SECTION 9. REGULATORY BODIES. This Project Agreement and the Project shall be subject to all valid rules, regulations, and Laws applicable thereto passed or promulgated by the United States of America, the State of Texas, or any govemmental body or agency having lawful jurisdiction or any authorized representative or agency of any of them. SECF[oN 10. TERM OF PROJECT AGREEMENT. The term of this Project Agreement shall be for the period during which the Bonds or any interest thereon are outstanding and unpaid. RRTSDC. CLLyApprovmglssuanceRes [The remainder of this page intentionally left blank] C -4 IN WITNESS WHEREOF, the Corporation and the City, acting under authority of their respective goveming bodies, have caused this Project Agreement to be duly executed in several counter- parts, each of which shall constitute an original, all as of the 115th day of May, 2001, which is the date of this Project Agreement. ATTEST: Secretary, Board of Directors (CORPORATION SEAL) Al IEST: (CITY SEAL) City Secretary CITY OF ROUND ROCK, TEXAS [SIGNATURE PAGE TO PROJECT AGREEMENT] ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION ECONOMIC IMPROVEMENT CORPORATION By President, Board of Directors By Mayor EXHIBIT A DESCRIFTJON OF THE PROJECT The Bonds have been authorized to provide funds to finance the construction and improvements of streets, roads, drainage and other related transportation system improvements that are necessary to promote or develop new or expanded business enterprises, encourage employment and the public welfare through the development oftransportation facilities, as described in the City's Transportation Capital ImprovementPlan DATE: • May 18, 2001 SUBJECT: City Council Meeting — May 24, 2001 ITEM: 12.A.4. Consider a resolution approving a resolution of the Round Rock Transportation System Development Corporation with respect to the issuance of senior lien sales tax revenue bonds, series 2001; approving a sales tax remittance agreement, a project agreement and other matters related to the issuance of the bonds. This resolution will authorize the issuance of $26,000,000 in bonds for needed transportation system improvements. Resource: David Kautz, Finance Director History: • The Council is asked to approve the issuance of $26 Million in Senior Lien Sales Tax Revenue Bonds secured by the 1/2 cent sales tax revenues of the Round Rock Transportation System Development Corporation. The transaction is expected to be insured and is structured to achieve equal annual debt service through final maturity of the Bonds in 2021. The Bonds will be callable in 2011 at par and are budgeted at a net interest cost of 5.65% though actual interest cost is expected to be below this figure. Actual pricing of the Bonds will take place on May 23 in a negotiated sale to a group of four underwriters led by Morgan Keegan and Co. Board action at this meeting includes approving sale of the bonds and adopting the Bond Resolution and related documents. Previously, the Corporation has borrowed $16 million from the State Infrastructure Bank for transportation improvement projects. Funding: Cost: Costs include bond issuance costs and interest cost. Interest cost will be a market rate (expected to be at or below 5.65 %) and costs of issuance (bond rating costs, Attorney General fees, financial advisory fees, legal fees, fiscal agent fees, etc.) are expected to be less than 1% of the bond issue and are paid from proceeds of the bonds. Source of funds: The'' Y. cent sales tax for transportation improvements Outside Resources: 1 Southwest Co., Financial Advisor; McCall Parkhurst, Bond Counsel Impact/ Benefit: Public Comment: N/A Sponsor: N/A Proceeds from the sale of these bonds will be combined with available cash to fund transportation projects scheduled for completion over the next two years. Projects funded all or in part by this transaction include SH45 frontage road utility relocations, South Mays Extension, A.W. Grimes Blvd., CR 113, US 79 improvements from FM1460 to CR 195, Forest Creek/Double Creek, Greenlawn Interchange and others. 1 FIRST SOUTHWEST COMPANY Presentation to: l,UWn.(; L $25,890,000 Senior Lien Sales Tax Revenue Bonds, Series 2001 FINAL PRICING INFORMATION May 24, 2001 Round Rock Transportation System Development Corporation ..I }EST SOUTHWEST COMPANY NEW ISSUE —Book- Entry-Only OFFICIAL STATEMENT Dated May 24, 2001 Ratings: Moody's: "Asa" S &P: "AAA" Fitch: "AAA" See ( "OTHER INFORMATION - Ratings" herein) In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. 525,890,000 ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION (Williamson and Travis Counties) SENIOR LIEN SALES TAX REVENUE BONDS, SERIES 2001 Dated Date: May 15, 2001 Due: August 15, as shown on the inside cover page PAYMENT TERMS ... Interest on the 525,890,000 Round Rock Transportation System Development Corporation Senior Lien Sales Tax Revenue Bonds, Series 2001 (the "Bonds ") will accrue from May 15, 2001 (the "Dated Date ") and will be payable February 15 and August 15 of each year commencing February 15, 2002 until maturity or prior redemption, and will be calculated on the basis of a 360 -day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( "DTC ") pursuant to the Book -Entry -Only System described herein. Beneficial ownership edam Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "THE BONDS - Book -Entry-Only System" herein. The initial Paying Agent/Registrar is The Chase Manhattan Bank, Dallas, Texas (see "THE BONDS - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE ... The Bonds are being issued by Round Rock Transportation System Development Corporation (the "Corporation ") pursuant to the Development Corporation Act of 1979, Article 5190 6, Tex. Rev. Civ. Stats. as amended (the "Act "), including Section 4B of the Act. The Bonds and their terms are governed by the provisions of a resolution authorizing the- issuance of the Bonds (the "Resolution ") adopted by the Corporation (see "THE BONDS - Authority for Issuance "). The Bonds are special obligations of the Corporation, payable, together with any Additional Parity Obligations, from and secured by a lien on and pledge of certain Pledged Revenues (as defined in the Resolution) which include the proceeds of a 1/2 of l% sales and use tax levied within the City of Round Rock, Texas (the "City") for the benefit of the Corporation as approved by the voters within the City on August 9, 1997 (see "APPENDIX D - SELECTED PROVISIONS OF THE BOND RESOLUTION "). The Bonds are payable solely by a pledge of and lien on the moneys described in the Resolution and not from any other revenues, properties or income of the Corporation. Neither the State of Texas (the "State "), Williamson and Travis Counties, the City of Round Rock nor any other political corporation, subdivision, or agency of the State shall be obligated to pay the Bonds or the interest thereon, and neither the faith and credit nor the taxing power of the State, Williamson and Travis Counties, the City of Round Rock, or any other political corporation, subdivision, or agency of the State, except as authorized by Section 4B of the Act, is pledged to the payment of the principal of or interest on the Bonds (see "THE BONDS - Security and Source of Payment "). PURPOSE ... Proceeds from the sale of the Bonds will be used to finance transportation system improvements and pay the costs of issuance of the Bonds. !_ Financial Guaranty wuranne The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by Financial Guaranty Insurance Company. MATURITY SCHEDULE See Inside Cover Pane LEGALITY... The Bonds are offered for delivery when, as and if issued and received by the Underwriters and subject to the approving opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, Austin, Texas (see APPENDIX C — "Forn of Bond Counsel's Opinion "). Certain legal matters will be passed upon for the Underwriters by Andrews & Kurth L.L.P., Houston, Texas, Counsel for the Underwriters. DELIVERY... It is expected that the Bonds will be available for delivery through DTC on June 19, 2001. MORGAN KEEGAN & COMPANY, INC. DAIN RAUSCHER INCORPORATED LEGG MASON WOOD WALKER, INC. JPMORGAN Round Rock Transportation System Development Corporation Senior Lien Sales Tax Revenue Bonds Series 2001 PRICING SUMMARY Maturity Type of Bond Coupon Yield Maturity Value Price Dollar Price 8/15/2002 Serial Coupon 4.000% 3 100% 545,00000 101.010% 550,504.50 8/15/2003 Serial Coupon 4.000% 3350% 880,000.00 101.337% 891,765.60 8/15/2004 Serial Coupon 4 000% 3 600% 915,000.00 101.179% 925,787 85 8/15/2005 Serial Coupon 4.000% 3.800% 950,000.00 100.758% 957,201.00 8/15/2006 Serial Coupon 3 900% 3.950% 990,000.00 99.764% 987,663.60 8/15/2007 Serial Coupon 4 000% 4.125% 1,030,000 00 99 322% 1,023,016.60 8/15/2008 Serial Coupon 4.150% 4250% 1,070,000.00 99.383% 1,063,398 10 8/15/2009 Serial Coupon 4250% 4.370% 1,115,000.00 99.179% 1,105,845.85 8/15/2010 Serial Coupon 4.375% 4 470% 1,160,000.00 99.287% 1,151,729.20 8/15/2011 Serial Coupon 5.000% 4.570% 1,210,000.00 103.456% 1,251,817.60 8/15/2012 Serial Coupon 4.625% 4.730% 1,270,00000 99.092% 1,258,468.40 8/15/2013 Serial Coupon 4.750% 4.850% 1,330,000.00 99.083% 1,317,803.90 8/15/2014 Serial Coupon 4.850% 4.950% 1,395,000.00 99.035% 1,381,538.25 8/15/2015 Serial Coupon 5.000% 5.050% 1,460,000.00 99.491% 1,452,568.60 8/15/2016 Serial Coupon 5500% 5.100% 1,535,000.00 103.132% c 1,583,07620 8/15/2019 Term 1 Coupon 5.500% 5 220% 5,135,00000 102.177% c 5,246,788.95 8/15/2021 Term 2 Coupon 5.250% 5.350% 3,900,000,00 98.768% 3,851,952.00 Total - - - - 25,890,000.00 - - 26,000,926.20 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Public Finance BID INFORMATION Par Amount of Bonds $25,890,000.00 Reoffering Premium or (Discount) 110,926.20 Gross Production $26,000,926.20 Total Underwnter's Discount (0.704 %) $(182,265.60) Bid (99.724 %) ... 25,818,660 60 Accrued Interest from 05/15/2001 10 06/19/2001 117,925 46 Total Purchase Price $25,936,586.06 Bond Year Dollars $320,512.50 Average Life 12.380 Years Net Interest Cost (NIC) 5.0881682% True Interest Cost (TIC) 5.0509424% First Southwest Company FIIe = Round Rock.sf -01 926 strb FINAL 5/23/2001 2:13 PM Pricing /Sale Date Amount Issuer Type of Issue Ratings Insured Underlying Insurance 5/23/2001 825,890,000 Round Rock TSDC Sales Tax Revenue Ana/AAA /AAA Al /A + /A+ FG1C 5/23/2001 15,01�0___, Laredo _ . Sales Tax Revenue Aaa/AAA/A A A3A - /A- ` - FG1C Equivalent NIC 5.088% 5.169% 2001 2002 3.10 2003 3.35 3.38 2004 3.60 3.63 2005 3.80 3.83 2006 3.95 3.98 2007 4.125 4.14 2008 4.25 - ' 4.27 -- 2009 4.37 4.41 2010 4.47 4.51 2011 4.57 4.61 2012 4.73 4.75 2013 4.85 4.85 2014 4.95 4.95 2015 5.05 5.05 2016 5.10 5.14 2017 - 5.26 2018 , - 5.31 2019 5.22 * - 2020 - 2021 5.35 * 5.41 * 2022 - 2023 5.46 * 2024 - 2025 - 2026 5.49 * 1 1 1 1 1 1 ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION $25,890,000 Senior Lien Sales Tax Revenue Bonds, Series 2001 New Issue Yield Comparison - Sales Tax Revenue Bonds Pricing the Week of 5/21/01 * Term Bond maturity. First Southwest Company Public finance Department Round Rock Transportation System Development Corporation Senior Lien Sales Tax Revenue Bonds Series 2001 SOURCES & USES Dated 05/15/2001 Delivered 06/19/2001 SOURCES OF FUNDS Par Amount of Bonds $25,890,000.00 Net Reoffering Premium 110,926.20 Accrued Interest from 05/15/2001 to 06/19/2001 117,925.46 TOTAL SOURCES $26,118,851.66 USES OF FUNDS Total Underwriter's Discount (0.704 %) 182,265.60 Costs of Issuance. 218,538.00 Gross Bond Insurance Premium ( 29.0 bp) 122 16794 Surety Premium 42,126.88 Deposit to Debt Service Fund 117,925.46 Deposit to Project Construction Fund 25,435,000.00 Rounding Amount 827.78 TOTAL USES . -- $26,118,851.66 First Southwest Company Public Finance Fde = Round Rock sf -01 826 strb FINAL 523/2001 2:13 PM Round Rock Transportation System Development Corporation Senior Lien Sales Tax Revenue Bonds Series 2001 DEBT SERVICE SCHEDULE Principal Coupon Interest Total P +1 FISCAL TOTAL 6/19/2001 2/15/2002 8/15/2002 9/30/2002 2/15/2003 8 /15/2003 9/30/2003 2/15/2004 8/15/2004 9/30/2004 545,000.00 936,466.88 93 6,466.88 _ 624,311.25 1,169,311,25 613,411.25 2,105,778 13 880,00000 4000% 613.41125 613,41125 1 . 4 93,411.25 _ 595,811 25 2,106,822.50 915,000.00 4 000% 595,811,25 _ 595, 811.25 1, 510, 811, 25 4.000% 2/15/2005 2,106,622.50 8/15/2005 950,000 00 577,511.25 577,511.25 9/30/2005 4.000% 577,511.25 1,527,511,25 - 2/15/2006 2,105,022 50 8/15/2006 990,000,00 558,511,25 558,511.25 9/30/2006 _ 3.900% 558,511.25 1,548,511.25 2/15/2007 - _ - 2,107,022,50 8/15/2007 1,030,000,00 539,206 5 39,206,25 9/30/2007 4.000% 539,206 25 1,569,206.25 - 2 /15/2008 _ - ' — - — - 2,108,412 50 8/15/2008 1,070,000.00 518,606.25 518,606.25 9/30/2008 _ 4.150% 518,606,25 1,588,606,25 2/15/2009 - 2,107,212.50 8/15/2009 1,115,000 00 4.250% 496,403.75 9/30/2009 4'250% 496,403,75 1,611,403.75 2/15/2010 _ _ - 2,107,807.50 8/15/2010 1,160,000.00 472,710.00 472,710.00 9/30/2010 - 4.375% 472,710.00 1,632,710.00 2/15/2011 2,105,420.00 8/15/2011 1,210,000.00 447 ,335 00 447,335.00 9/30/2011 5.000% 447,335.00 1 , 6 57,335.00 - 2/15/2012 _ 2,104,670.00 8/15/2012 1,270,00000 417,085.00 417,085.00 9/30/2012 4.625 ° /, 417,085.00 1,687,085.00 - 2/15/2013 _ 2,104,170.00 8/15/2013 1,330,000.00 387,716.25 387,71625 9/30/2013 4 387,716.25 1,717,716.25 - - 2/15/2014 8/15/2014 1,395,000,00 356,128.75 356,128.75 9/30/2014 4.850% 356,128.75 1,751,128.75 - - 2/15/2015 _ - 2,107,257.50 8/15/2015 1,460,000.00 322,300.00 322,300.00 9 /30/2015 _ 5.000% 322,30000 1,782,300.00 - 2/15/2016 - 8/15/2016 1,535,000.00 9 /30/2016 _ 2 /15/2017 - 285,800.00 2,104.60000 2 85,800.00 5.500% _ 285,800.00 1 , 8 20,800.00 _ 2 ,106,600,00 243,587.50 243,587,50 _ First Southwest Company Public Finance File = Round Rocksf -01$ 26 strb FINAL 5 /23/2001 2:13 PM r r 1 1 1 1 1 Round Rock Transportation System Development Corporation Senior Lien Sales Tax Revenue Bonds Series 2001 DEBT SERVICE SCHEDULE Dale Principal Coupon Interest Total P +I FISCAL TOTAL 8/15/2017 9/30/2017 2/15/2018 _ 2,107,175 00 199,037.50 199,037.50 - 8/15/2018 1,710,00000 5.500% 199,037.50 1,909,037.50 9/30/2018 - 2/15/2019 - - 2,108,075.00 8/15/2019 1 ,805,000.00 5 500% 152,012.50 152,012.50 _ 9/30/2019 - 152,012 50 1,957,012.50 - 2/15/2020 - - - 2,109,025.00 102,375.00 102,375 00 8/15/2020 1,900,000 00 5.250% 102,375 00 2,002,375.00 9/30/2020 _ - 2/15/2021 _ 8/15/2021 2, 000, 000.00 9/30/2021 _ 1,620,000.00 5.500% 243,587.50 1,863,587 50 2,104,750.00 52,500.00 52,500 00 5 250% 52,500 00 2,052,500 00 - 2,105,000.00 Total 25,890,000 00 - 16,236,875 63 42,126,875 63 YIELD STATISTICS Accrued Interest from 05/15/2001 to 06/19/2001 Bond Year Dollars Average ................................... ............................... Net Interest Cost (NIC) True Interest Cost (TIC) First Southwest Company Public Finance 117,925.46 5320,512.50 12.380 Years 5 0881682% 5 0509424% Fde = Round Rocksf -01$26 shb FINAL 5232001 2:13 PM Issue Size Proceeds NIC ESTIMATED $26,000,000 $25,415,121 5.650% FINAL 525,890,000 525,435,000 5.088 % BENEFIT / (DEFICIT) 2002 $ 2,225,961 $ 2,105,778 $ 120,183 2003 2,228,293 2,106,823 121,470 2004 2,228,940 2,106,623 122,318 2005 2,227,045 2,105,023 122,023 2006 2,227,608 2,107,023 120,585 2007 2,225,345 2,108,413 116,933 2008 2,225,258 2,107,213 118,045 2009 2,227,063 2,107,808 119,255 2010 2,225,478 2,105,420 120,058 2011 2,225,503 2,104,670 120,833 2012 2,226,855 2,104,170 122,685 2013 2,229,253 2,105,433 123,820 2014 2,227,413 2,107,258 120,155 2015 2,226,335 2;104,600 121, 2016 2,225,738 2,106,600 119,138 2017 2,225,338 2,107,175 118,163 2018 2,229,853 2,108,075 121,778 2019 2,228,718 2,109,025 119,693 2020 2,226,933 2,104,750 122,183 2021 2,229,215 2,105,000 124,215 $ 44,542,139 $ 42,126,876 $ 2.41 1 1 1 i 1 1 1 1 1 ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION $25,890,000 Senior Lien Sales Tax Revenue Bonds, Series 2001 Debt Service and Proceeds Comparison FirsLSouthwest Company Total Debt Service Benefit: Average Annual Debt Service Benefit: Proceeds Benefit: S 2 ,415,263 5 120,763 $ 19,879 Public Finance Department Cun (5.61%) 20-Year Fixed Rale Muni Ten Year Average (6.02%) "Bond Buyer's" Index Historical Revenue Debt Interest Rates - Trailing 10 Year Period First Southwest Company 'Public Finance Department GOLOICLg ) Fy2 RESOLUTION OF THE ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION AUTHORIZING THE ISSUANCE OF $25,890,000 ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION SENIOR LIEN SALES TAX REVENUE BONDS, SERIES 2001; APPROVING A PAYING AGENT/REGISTRAR AGREEMENT, A SALES TAX REMITTANCE AGREEMENT, A PROJECT AGREEMENT AND A BOND PURCHASE AGREEMENT; APPROVING AN OFFICIAL STATEMENT; AND APPROVING OTHER MATTERS RELATED THERETO TABLE OF CONTENTS Page Section 1. AMOUNT AND PURPOSE OF THE BONDS AND DEFINITIONS 2 Section 2. DESIGNATION OF THE BONDS 2 Section 3. INTEREST. 3 Section 4. CHARACTERISTICS OF THE BONDS. 3 Section 6. PLEDGE. 7 Section 7. SPECIAL FUNDS. 7 Section 8. REVENUE FUND 8 Section 9. FLOW OF FUNDS. 8 Section 10. DEBT SERVICE FUND 9 Section 11. RESERVE FUND 10 Section 12. OPERATING FUND 11 Section 13. TRANSFER 11 Section 14. INVESTMENTS 11 Section 15. FUNDS SECURED 12 Section 16. PAYMENT 12 Section 17. DEFICIENCIES - EXCESS PLEDGED REVENUES 12 Section 18. ADDITIONAL PARITY OBLIGATIONS 12 Section 19. JUNIOR LIEN AND SUBORDINATE DEBT. 13 Section 20. GENERAL COVENANTS. 14 Section 21. DEFEASANCE OF BONDS 15 WHEREAS, the Issuer has determined to issue the bonds authorized herein (the "Bonds ") to provide funds to finance the construction and improvements of streets, roads, drainage and other related transportation system improvements that are necessary to promote or develop new or expanded business enterprises, encourage employment and the public welfare through the development of transportation facilities, as described in the City's Transportation Capital Improvement Plan, to fund and pay other costs relating to the issuance of the Bonds and other costs necessary or incident to the undertaking of such project; and WHEREAS, there was published in a newspaper of general circulation in the City (as described in Sections 2051.044 and 2051.048, Texas Government Code) on January 11, 1999, November 5, 1999, February 3, 2000, March 3, 2000, August 7, 2000, October 9, 2000 and April 9, 2001, notices that public hearings would be held by the Issuer on January 14, 1999, November 9, 1999, February 8, 2000, March 9, 2000, August 10, 2000, October 12, 2000 and April 12, 2001 at which the projects to be financed with the proceeds of the Bonds were discussed and giving notice that the Issuer proposed to undertake such projects; and WHEREAS, the public hearings were held by the Issuer and no petition has been submitted to the City Council calling for a referendum with respect to such projects; and WHEREAS, the Act authorizes the Issuer to issue the Bonds for the aforesaid purposes and the Board of Directors of the Issuer finds it necessary and advisable to authorize the issuance of the hereinafter described Bonds for the purposes hereinabove and hereinafter described. THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF IHE ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION THAT: Section 1. AMOUNT AND PURPOSE OF THE BONDS AND DEFINITIONS. (a) The Bonds of the Issuer are hereby authorized to be issued and delivered in the aggregate principal amount of $25,890,000 to provide funds to finance the construction and improvements of streets, roads, drainage and other related transportation system improvements. For all purposes of this Resolution, except as otherwise expressly provided or unless the context otherwise requires, the terms defined in Exhibit "A" to this Resolution have the meanings assigned to them in Exhibit "A ". Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Resolution shall be designated: "ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION SENIOR LIEN SALES TAX REVENUE BOND, SERIES 2001 ", and initially there shall be issued, sold, and delivered hereunder fully registered bonds, without interest coupons, dated May 15, 2001, in the respective denominations and principal amounts hereinafter stated, numbered R -1 upward (except the initial Bonds delivered to the Attorney General of the State of Texas which shall be numbered T -1 upward), payable to the Registered Owners thereof (with the initial bond being payable to the Purchaser designated in Section 25 hereof), or to the registered assignee or assignees of said bonds or any portion or portion thereof (in each case, the 2 "Registered Owner "), and said bonds shall mature and be payable serially on August 15 in each of the years and in the principal amounts, respectively, as set forth in the following schedule: Year of Principal Year of Principal Maturity Amount M Amount 2002 $ 545,000 2011 $1,210,000 2003 880,000 2012 1,270,000 2004 915,000 2013 1,330,000 2005 950,000 2014 1,395,000 2006 990,000 2015 1,460,000 2007 1,030,000 2016 1,535,000 2008 1,070,000 2019 5,135,000 2009 1,115,000 2021 3,900,000 2010 1,160,000 Section 3. INTEREST. The Bonds scheduled to mature during the years, respectively, set forth below shall bear interest from the dates specified in the FORM OF BOND set forth in Exhibit "B" of this Resolution to their respective dates of maturity or redemption prior to maturity at the following rates per annum: Year of Year of Maturity Interest Rate Maturity Interest Rate 2002 4.000% 2011 5.000% 2003 4.000 2012 4.625 2004 4.000 2013 4.750 2005 4.000 2014 4.850 2006 3.900 2015 5.000 2007 4.000 2016 5.500 2008 4.150 2019 5.500 2009 4.250 2021 5.250 2010 4.375 Said interest shall be payable in the manner provided and on the dates stated in the FORM OF BOND set forth in Exhibit "B" of this Resolution. Section 4. CHARACTERISTICS OF THE BONDS. (a) The Issuer shall keep or cause to be kept at the designated office for payment of the Paying Agent/Registrar the Registration Books, and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep 3 such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such registrations, transfers and exchanges as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the Registered Owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each Registered Owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. To the extent possible and under reasonable circumstances, all transfers ofBonds shall be made within three business days after request and presentation thereof. The Issuer shall have the right to inspect the Registration Books during regular business hours ofthe Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. The Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided in the FORM OF BOND set forth in Exhibit "B" of this Resolution. Registration of assignments, transfers and exchanges ofBonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in Exhibit "B" of this Resolution. Each substitute Bond shall bear a letter and /or number to distinguish it from each other Bond. Except as provided in (e) below, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the Paying Agent/Registrar's Authentication Certificate, and no such Bond shall be deemed to be issued or Outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for transfer and exchange. No additional orders, or resolutions need be passed or adopted by the Board of Directors of the Issuer or any other body or person so as to accomplish the foregoing transfer and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery ofthe substitute Bonds in the manner prescribed herein. Pursuant to Chapter 1201, Texas Government Code, and particularly Subchapter D and Section 1201.067 thereof, the duty of transfer and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Certificate, the transferred and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Resolution, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all as provided in this Resolution. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds. (c) The Bonds (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the Registered Owners thereof, (ii) may be redeemed prior to their scheduled maturities (notice of which shall be given to the Paying Agent/Registrar by the Issuer at least 45 days prior to any such redemption date), (iii) may be trans- 4 ferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Bonds shall be payable, and (viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF BOND set forth in Exhibit "B" of this Resolution. The Bonds initially issued and delivered pursuant to this Resolution are not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in exchange for any Bond or Bonds issued under this Resolution the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF BOND. (d) The Issuer covenants with the Registered Owners of the Bonds that at all times while the Bonds are Outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other entity to act as and perform the services of Paying Agent/Registrar for the Bonds under this Resolution, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon written notice to the Paying Agent/Registrar in accordance with the Paying Agent/Registrar Agreement, to be effective at such time which will not disrupt or delay payment on the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Resolution. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each Registered Owner of the Bonds, by United States mail, first -class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution, and a certified copy of this Resolution shall be delivered to each Paying Agent/Registrar. (e) Except as provided below, no Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Resolution unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this Resolution, duly authenticated by manual execution of the Paying Agent/Registrar. It shall not be required that the same authorized representative of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Bonds. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Bonds delivered on the closing date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Resolution, manually executed by the Comptroller of Public Accounts of the State of Texas or by his duly authorized agent, which certificate shall be evidence that the Initial Bonds have been duly approved by the Attomey General of the State of Texas and that it is a valid and binding obligation of the Issuer, and has been registered by the Comptroller. 5 r t (f) The Bonds issued in exchange for the Initial Bonds initially issued to the purchaser specified in Section 26 herein shall be initially issued in the form of a single fully registered Bond for each of the maturities thereof. Upon initial issuance, the ownership of each such Bond shall be registered in the name of Cede & Co., as nominee of DTC, and except as provided in subsection (j) hereof, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation to any 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 Bonds. Without limiting the immediately preceding sentence, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a registered owner of the Bonds, as shown on the Registration Books, of any notice with respect to the Bonds, or (iii) the payment to any DTC Participant or any other person, other than a registered owner of Bonds, as shown in the Registration Books of any amount with respect to principal of or interest on the Bonds. Notwithstanding any other provision of this Resolution to the contrary, the Issuer and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Registration Books as the absolute owner of such Bond for the purpose of payment of principal and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Bonds only to or upon the order of the Registered Owners, as shown in the Registration Books as provided in this Resolution, 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 Bonds to the extent of the sum or sums so paid. No person other than a Registered Owner, as shown in the Registration Books, shall receive a Bond certificate evidencing the obligation of the Issuer to make payments of principal and interest pursuant to this Resolution. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Resolution 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 Resolution shall refer to such new nominee of DTC. (g) In the event that the Issuer determines that DTC is incapable of discharging its responsibilities described herein and in the representation letter of the Issuer to DTC or that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, 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 Bonds to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being 6 registered in the Registration Books 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 Bonds shall designate, in accordance with the provisions of this Resolution. (h) Notwithstanding any other provision of this Resolution to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee for DTC, all payments with respect to principal of and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the representation letter of the Issuer to DTC. (i) The officers of the Issuer are herein authorized for and on behalf of the Issuer and as officers of the Issuer to enter into one or more Blanket Issuer Letter of Representations with DTC establishing the book -entry only system with respect to the Bonds. (j) On the closing date, one Initial Bond per maturity aggregating the entire principal amount of the Bonds, payable to the Purchaser named in Section 26 of this Resolution or its designee, executed by manual or facsimile signature of the President and Secretary of the Board of Directors 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 Purchaser or its designee. Upon payment for the Initial Bonds, the Paying Agent/Registrar shall cancel the Initial Bond and deliver to the initial registered owner or its designee one registered definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all of the Bonds for such maturity. Section 5. FORM OF BOND. The form of the Bond, including the form of Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached only to the Bonds initially issued and delivered pursuant to this Resolution, shall be, respectively, substantially as set forth in Exhibit "B" attached hereto. Section 6. PLEDGE. The Bonds and any interest payable thereon, and any Additional Parity Obligations which may be issued in accordance herewith and any interest payable thereon, are and shall be secured by and payable from a first lien on and pledge of the Pledged Revenues, which lien on and pledge is prior in right and claim to the lien and pledge on the Pledged Revenues securing the payment of the outstanding Junior Lien Obligations and any Subordinate Lien Obligations hereafter issued; and the Pledged Revenues are further pledged to the establishment and maintenance of the Debt Service Fund and the 2001 Reserve Fund as hereinafter provided. The Bonds are and will be secured by and payable only from the Pledged Revenues and amounts on deposit in the Debt Service Fund and the 2001 Reserve Fund, and not from amounts on deposit in any other Funds or accounts of the Issuer, and are not secured by or payable from a mortgage or deed of trust on any real, personal or mixed properties constituting the Project. Section 7. SPECIAL FUNDS. The below listed special Funds are hereby created and shall be established and maintained on the books of the Issuer, so long as any of the Bonds are outstanding and unpaid: 7 (a) Round Rock Transportation System Development Corporation Revenue Fund, hereinafter called the "Revenue Fund." (b) Round Rock Transportation System Development Corporation Debt Service Fund, hereinafter called the "Debt Service Fund." (c) Round Rock Transportation System Development Corporation Reserve Fund, hereinafter called the "Reserve Fund." (d) Round Rock Transportation System Development Corporation Operating Fund, hereinafter called the "Operating Fund." (e) Round Rock Transportation System Development Corporation Project Fund, hereinafter called the "Project Fund." Though all of such funds may be subaccounts of the City's Funds held by the Depository, and, as such, not held in separate bank accounts, such treatment shall not constitute a commingling of the monies in such Funds or of such Funds and the Issuer shall keep full and complete records indicating the monies and investments credited to each of such Funds. Section 8. REVENUE FUND. All Pledged Revenues shall be credited to the Revenue Fund immediately upon receipt as provided in the Transfer Agreement. Section 9. FLOW OF FUNDS. All Pledged Revenues deposited and credited to the Revenue Fund shall be pledged and appropriated to the extent required for the following uses and in the order of priority shown: FIRST: To the payment of the amounts required to be deposited in the Debt Service Fund for the payment of Debt Service on the Parity Obligations as the same becomes due and payable; SECOND: On a pro rata basis, to (i) each debt service reserve fund, created by this Resolution or any Additional Parity Obligations Resolution, which contains less than the amount to be accumulated and /or maintained therein, as provided in this Resolution or such Additional Parity Obligations Resolutions and (ii) make any Reserve Fund Obligation Payment; THIRD: To the payment of the amounts required to be deposited in the debt service fund for the payment of Debt Service on the Junior Lien Obligations as the same becomes due and payable; 8 FOURTH: On a pro rata basis, to each debt service reserve fund created by a Junior Lien Obligation Resolution which contains less than the amount to be accumulated and/or maintained therein as provided in the Junior Lien Obligation Resolution; 14114 1H: To the payment of amounts required to be deposited in any other fund or account required by any Additional Parity Obligations Resolution; SIXTH: To any fund or account held at any place or places, or to any payee, required by any other resolution of the Board which authorized the issuance of Subordinate Lien Obligations; and SEVENTH: To the payment of the amounts required for any lawful purpose. Any Pledged Revenues remaining in the Revenue Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, shall be transferred to the Operating Fund and may be appropriated and used for any other lawful purpose now or hereafter permitted by law. Section 10. DEBT SERVICE FUND. The Debt Service Fund is for the sole purpose of paying the principal of and interest on the Parity Obligations Outstanding at any time, as the same come due (including principal coming due as a result of any mandatory redemption of the Parity Obligations). The Issuer covenants that there shall be deposited into the Debt Service Fund prior to each principal and interest payment date from the Pledged Revenues an amount equal to one hundred per cent (100 %) of the interest on and the principal of the Parity Obligations then falling due and payable, and such deposits to pay principal and accrued interest on the Parity Obligations shall be made in substantially equal monthly installments on or before the 10th day of each month, beginning on or before the 10th day of the month next following the delivery of the Parity Obligations to the Purchasers thereof; provided, however, that in any Fiscal Year the Issuer may elect to fund the Debt Service Fund on an accelerated basis and at any time when amounts on deposit in the Debt Service Fund are sufficient to make payment of all principal and interest coming due on the Outstanding Parity Obligations within the next twelve months, such deposits of Pledged Revenues to the Debt Service Fund may be discontinued, until there is once again an amount less than the principal and interest coming due on the Outstanding Parity Obligations within the next twelve months, at which time such deposits shall be resumed. The required deposits to the Debt Service Fund for the payment of principal of and interest on the Parity Obligations shall continue to be made as hereinabove provided until (i) the total amount on deposit in the Debt Service Fund and the Reserve Fund (excluding any Reserve Fund Obligation) is equal to the amount required to fully pay and discharge all Parity Obligations (principal and interest) then Outstanding or (ii) the Parity Obligations are no longer Outstanding. 9 Accrued interest and capitalized interest, if any, received from the purchaser of any Parity Obligation shall be taken into consideration and reduce the amount of the semi - annual deposits and credits hereinabove required into the Debt Service Fund. Section 11. RESERVE FUND. (a) The Issuer may create and establish a debt service reserve fund pursuant to the provisions of any Parity Obligations Resolution for the purpose of securing that particular issue or series of Parity Obligations or any specific group of issues or series of Parity Obligations and the amounts once deposited or credited to said debt service reserve funds shall no longer constitute Pledged Revenues and shall be held solely for the benefit of the owners of the particular Parity Obligations for which such debt service reserve fund was established. Each such debt service reserve fund shall be designated in such manner as is necessary to identify the Parity Obligations it secures and to distinguish such debt service reserve fund from the debt service reserve funds created for the benefit of other Parity Obligations. (b) For purposes of (i) paying the principal of, premium, if any, and interest on the Bonds, when and if amounts on deposit in the Debt Service Fund and available to pay such amounts as the same shall become due are insufficient and (ii) to the extent not required to maintain the 2001 Required Reserve for the Bonds, the 2001 Required Reserve may be used to pay, or provide for the payment of, the final principal amount of the Bonds so that they are no longer deemed to be "Outstanding" as such term is defined herein, the Issuer hereby creates and establishes a special account known as the "Round Rock Transportation System Development Corporation Senior Lien Sales Tax Revenue Bonds, Series 2001 Reserve Fund" (hereinafter referred to as the "2001 Reserve Fund "), which account shall continue to be kept separate and apart from all other funds or accounts of the Issuer. The Issuer shall maintain an amount equal to the 2001 Required Reserve at all times in or held for the benefit of the 2001 Reserve Fund. The amount required to be maintained in the 2001 Reserve Fund shall be funded with a Reserve Fund Obligation issued by the Bond Insurer immediately upon the delivery of the Bonds as provided below, in an amount equal to the 2001 Required Reserve. During such time as the 2001 Reserve Fund contains the total 2001 Required Reserve, the Issuer may, at its option, withdraw any amount in the 2001 Reserve Fund in excess of the 2001 Required Reserve and deposit such surplus in the Revenue Fund. Any cash or investments purchased with such cash shall be drawn upon by the Paying Agent/Registrar prior to any drawing upon the Reserve Fund Obligation. The Reserve Fund Obligations on deposit in, or held for the benefit of, the 2001 Reserve Fund shall be drawn upon by the Paying Agent/Registrar and exhausted prior to making demand for payment under the Bond Insurance Policy provided for the Bonds under Section 30 hereof. When and so long as the cash and investments in the 2001 Reserve Fund and/or coverage afforded by the Reserve Fund Obligation held for the account of the 2001 Reserve Fund total not less than the 2001 Required Reserve for the Bonds, no deposits need be made to the credit of the 2001 Reserve Fund; but, if and when the 2001 Reserve Fund at any time contains less than the 2001 Required Reserve for the Bonds, the Issuer covenants and agrees to cause monthly deposits to be made to the 2001 Reserve Fund on or before the 10th day of each month (beginning the month next 10 following the month the deficiency in the 2001 Required Reserve occurred by reason of a draw on the 2001 Reserve Fund or as a result of a reduction in the market value of investments held for the account of the 2001 Reserve Fund) from Pledged Revenues of the System in an amount equal to either (i) 1 /12th of the 2001 Required Reserve for the Bonds until the total 2001 Required Reserve then required to be maintained in the 2001 Reserve Fund has been fully restored or (ii) 1 /12th of the amounts to pay the Reserve Fund Obligation Payments, as a result of payments or draws made on the Reserve Fund Obligations held for the account of the 2001 Reserve Fund. The Reserve Fund Obligation Payments shall be made prior to replenishment of any cash amounts in the 2001 Reserve Fund. The Issuer further covenants and agrees that, subject only to the payment of the Bonds and payments to be made to the Debt Service Fund for the benefit of Parity Obligations and to the payments to be made on a pro rata basis to all debt service reserve funds (including the 2001 Reserve Fund) and any Reserve Fund Payment Obligations as provided by Section 9 hereof, the Pledged Revenues shall be applied and appropriated and used to establish and maintain the Required Reserve Account and to cure any deficiency in such amounts as required by the terms of this Resolution and any Additional Parity Obligations Resolution. (c) When the 2001 Reserve Fund is funded with cash or securities, in whole or in part (excluding the Reserve Fund Obligation), the value of the 2001 Required Reserve for the Bonds shall be determined on the basis of cash on deposit therein, the book value of securities in which money in the 2001 Reserve Fund are invested or the face value of any Reserve Fund Obligation held for the benefit of the 2001 Reserve Fund, as the case may be. Section 12. OPERATING FUND. Amounts on deposit in the Operating Fund may be (i) used to complete and maintain the Project, (ii) applied to pay or redeem any Parity Obligations at the option of the Issuer, or (iii) applied for any other lawful purpose of the Issuer. Section 13. TRANSFER. (a) Pursuant to the provisions of the Transfer Agreement, which is hereby approved in substantially the form attached hereto, the City has agreed to do any and all things necessary to accomplish the transfer of the Sales Tax collected for the benefit of the Issuer to the Revenue Fund on a monthly basis. The Transfer Agreement shall govern matters with respect to the collection of the Sales Taxes from the Comptroller, credits and refunds due and owing to the Comptroller, and other matters with respect to the collection and transfer of the Sales Tax. The President and Secretary of the Board are hereby authorized to execute the Transfer Agreement on behalf of the Corporation. (b) The President and the Secretary of the Board are hereby ordered to do any and all things necessary to accomplish the transfer of money to the Funds established hereby in ample time to pay the principal of and interest on the Bonds. Section 14. INVESTMENTS. Money in any Fund established by this Resolution may, at the option ofthe Board, be invested in Permitted Investments; provided that all such investments shall be made in such manner that the money required to be expended from any Fund will be available at 11 the proper time or times. Investment earnings realized on investments attributable to the Debt Service Fund shall be retained therein and shall constitute a credit against the amount of money that is required to be on deposit therein for each payment of principal or interest. Investment earnings realized on investments attributable to the Reserve Fund shall be retained therein at all times when there is less than the Required Reserve on deposit therein; at all other times such earnings shall be deposited to the Debt Service Fund. Investment earnings realized on investments attributable to the Operating Fund shall be retained therein. Money in the Reserve Fund shall not be invested in securities maturing later than 18 months from the date of acquisition of such securities by the Issuer. Such investments shall be valued in terms of current market value as of the last day of each Fiscal Year. Such investments shall be sold promptly when necessary to prevent any default in connection with the Parity Obligations. Section 15. FUNDS SECURED. Money in all Funds created by this Resolution, to the extent not invested, shall be secured in the manner prescribed by law for securing funds of the City. Section 16. PAYMENT. While any of the Parity Obligations are outstanding, the Issuer shall transfer to the respective paying agent/registrar therefor, from funds on deposit in and credited to the Debt Service Fund, and, if necessary, in the Reserve Fund, amounts sufficient to fully pay and discharge promptly the interest on and principal of the Parity Obligations as shall become due on each interest or principal payment date, or date of redemption of the Parity Obligations; such transfer of funds must be made in such manner as will cause immediately available funds to be deposited with each respective paying agent/registrar for the Parity Obligations not later than the business day next preceding the date such payment is due on the Parity Obligations. The Paying Agent/Registrar shall destroy all paid Parity Obligations and furnish the Issuer with an appropriate certificate of cancellation or destruction. Section 17. DEFICIENCIES - EXCESS PLEDGED REVENUES. (a) If on any occasion there shall not be sufficient Pledged Revenues (after making all payments pertaining to all Parity Obligations) to make the required deposits and credits to the Debt Service Fund and the Reserve Fund, then such deficiency shall be cured as soon as possible from the next available unallocated Pledged Revenues, or from any other sources available for such purpose, and such deposits and credits shall be in addition to the amounts otherwise required to be deposited and credited to these Funds. (b) Subject to making the deposits and credits required by this Resolution, or any Additional Parity Obligations Resolution, or the payments and credits required by the provisions of the resolutions authorizing the issuance of Junior Lien Obligations or Subordinate Lien Obligations hereafter issued by the Issuer, the excess Pledged Revenues may be used for any lawful purpose. Section 18. ADDITIONAL PARITY OBLIGATIONS. The Issuer shall have the right and power at any time and from time to time and in one or more series or issues, to authorize, issue and deliver Additional Parity Obligations, in accordance with law, in any amounts, for any lawful purpose including the refunding of any Parity Obligations, Junior Lien Obligations, Subordinate Lien Obligations or other obligations of the Issuer. Such Additional Parity Obligations, if and when 12 authorized, issued and delivered in accordance with this Resolution, shall be secured by and made payable equally and ratably on a parity with all other Outstanding Parity Obligations, from the lien on and pledge of the Pledged Revenues herein granted. (a) The President of the Issuer (or other officer of the Issuer then having the primary responsibility for the financial affairs of the Issuer) shall have executed a certificate stating that, to the best of his or her knowledge and belief, the Issuer is not then in default as to any covenant, obligation or agreement contained in this Resolution or any additional Parity Obligation Resolution. (b) The Issuer has secured from a certified public accountant a certificate or opinion to the effect that, according to the books and records of the Issuer, the Pledged Revenues received by the Issuer for either (i) the last completed Fiscal Year next preceding the adoption of the Parity Obligation Resolution or (ii) any twelve (12) consecutive months out of the previous eighteen (18) months next preceding the adoption of the Parity Obligation Resolution equal to not less than 1.40 times the maximum annual Debt Service for all Parity Obligations then Outstanding after giving effect to the issuance of the Additional Parity Obligations then being issued and 1.0 times the average annual debt service requirements (computed in the same manner as for Parity Obligations) of the Reserve Fund Payment Obligations, Junior Lien Obligations and Subordinate Lien Obligations to be outstanding after the issuance of the then proposed Additional Parity Obligations. (c) The Issuer may create and establish a reserve fund pursuant to the provisions of any resolution authorizing the issuance of Additional Parity Obligations for the purpose of securing that particular issue or series of Parity Obligations or any specific group of issues or series of Parity Obligations and the amounts once deposited or credited to said reserve funds shall no longer constitute Pledged Revenues and shall be held solely for the benefit of the Holders of the particular Parity Obligations for which such reserve fund was established. Each such reserve fund shall be designated in such manner as is necessary to identify the Parity Obligations it secures and to distinguish such reserve fund from the Reserve Fund and the reserve funds created for the benefit of other Parity Obligations. (d) No Additional Parity Obligations may be issued without the Bond Insurer's prior written consent if any. Reserve Fund Payment Obligations are past due and owing to the Bond Insurer and the Bond Insurer is not in default under the payment provisions of the Reserve Fund Obligation. (e) Unless otherwise approved by the Bond Insurer, for purposes of the Certificate required in Section 18(b) above, the full amount of each payment on Balloon Debt must be included as debt service in the year payable (without giving effect to any assumed amortization). Section 19. JUNIOR LIEN AND SUBORDINATE DEBT. Except as may be limited by resolution, the Issuer shall have the right to issue or create Junior Lien Obligations or Subordinate Lien Obligations payable from or secured by a lien on all or any part of the Pledged Revenues for any lawful purpose without complying with the provisions of Section 18 hereof, provided the pledge and the lien securing such debt is subordinate to the pledge and lien established, made and created in 13 Section 6 of this Resolution with respect to the Pledged Revenues to the payment and security of the Parity Obligations. Section 20. GENERAL COVENANTS. The Issuer further covenants and agrees that in accordance with and to the extent required or permitted by law: (a) It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Resolution and in every Bond; it will promptly pay or cause to be paid the principal of and interest on every Bond on the dates and in the places and manner prescribed in this Resolution and the Bonds; and it will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Funds created hereby; and any registered owner of the Bonds may require the Issuer, its officials and employees to carry out, respect or enforce the covenants and obligations ofthis Resolution, by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings, in any court of competent jurisdiction, against the Issuer, its officials and employees, or by the appointment of a receiver in equity. (b) It is a duly created and existing industrial development corporation, and is duly authorized under the laws of the State of Texas, including the Act, to create and issue the Bonds; that all action on its part for the creation and issuance of the Bonds has been duly and effectively taken, and that the Bonds in the hands of the registered owners thereof are and will be valid and enforceable special obligations of the Issuer in accordance with their terms. (c) (i) The Issuer hereby confirms the earlier levy by the City of the Sales Tax at the rate voted at the Election, and the Issuer hereby warrants and represents that the City has duly and lawfully ordered the imposition and collection of the Sales Tax upon all sales, uses and transactions as are permitted by and described in the Act throughout the boundaries of the City as such boundaries existed on the date of said election and as they may be expanded from time to time. (ii) For so long as any Bonds are Outstanding, the Issuer covenants, agrees and warrants to take and pursue all action permissible under applicable law to cause the Sales Tax, at said rate or at a higher rate ifpern fitted by applicable law, to be levied and collected continuously, in the manner and to the maximum extent permitted by applicable law, and to cause no reduction, abatement or exemption in the Sales Tax or rate of tax below the rate stated, confirmed and ordered in subsection (a) of this Section to be ordered or permitted so long as any Bonds shall remain Outstanding. (iii) If the City shall be authorized hereafter by applicable law to apply, impose and levy the Sales Tax on any taxable items or transactions that are not subject to the Sales Tax on the date of the adoption hereof, the Issuer, to the extent it legally may do so, hereby covenants and agrees to use its best efforts to cause the City to take such action as may be required by applicable law to subject such taxable items or transactions to the Sales Tax. 14 (iv) The Issuer agrees to take and pursue all action permissible under applicable law to cause the Sales Tax to be collected and remitted and deposited as herein required and as required by the Act, at the earliest and most frequent times permitted by applicable law. (v) The Issuer agrees and covenants at all times to use its best efforts to cause the City to comply with the Transfer Agreement. (d) It will keep proper books of record and account in which full, true and correct entries will be made of all dealings, activities and transactions relating to the Project, the Pledged Revenues and the Funds created pursuant to this Resolution, and all books, documents and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any bondholders. (e) It will maintain its corporate existence during the time that any Bonds are Outstanding hereunder. Section 21. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Bond ") within the meaning of this Resolution, except to the extent provided in subsections (c) and (e) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date or dates (whether such due date or dates be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption) or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment, (2) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amounts and at such times as will ensure the availability, without reinvestment, of sufficient money to provide for such payment and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable or (3) any combination of (1) and (2). At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the Pledged Revenues herein levied and pledged as provided in this Resolution, and such principal and interest shall be payable solely from such money or Defeasance Securities. (b) The deposit under clause (ii) of subsection (a) shall be deemed a payment of a Bond as aforesaid when proper notice of redemption of such Bonds shall have been given, in accordance with this Resolution. Any money so deposited with the Paying Agent/Registrar as provided in this Section may at the discretion of the Board of Directors also be invested in Defeasance Securities, maturing in the amounts and at the times as hereinbefore set forth, and all income from all Defeasance Securities in possession of the Paying Agent/Registrar pursuant to this Section which is not required for the payment of such Bond and premium, if any, and interest thereon with respect to which such money has been so deposited, shall be turned over to the Board of Directors. 15 (c) Notwithstanding any provision of any other Section of this Resolution which may be contrary to the provisions of this Section, all money or Defeasance Securities set aside and held in trust pursuant to the provisions of this Section for the payment of principal of the Bonds and premium, if any, and interest thereon, shall be applied to and used solely for the payment of the particular Bonds and premium, if any, and interest thereon, with respect to which such money or Defeasance Securities have been so set aside in trust. Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services ofPaying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Resolution. (d)Notwithstanding anything elsewhere in this Resolution, ifmoney or Defeasance Securities have been deposited or set aside with the Paying Agent/Registrar pursuant to this Section for the payment of Bonds and such Bonds shall not have in fact been actually paid in full, no amendment of the provisions of this Section shall be made without the consent of the registered owner of each Bond affected thereby. (e) Notwithstanding the provisions of subsection (a) immediately above, to the extent that, upon the defeasance of any Defeased Bond to be paid at its maturity, the Issuer retains the right under Texas law to later call that Defeased Bond for redemption in accordance with the provisions of the Resolution authorizing its issuance, the Issuer may call such Defeased Bond for redemption upon complying with the provisions of Texas law and upon the satisfaction of the provisions of subsection (a) immediately above with respect to such Defeased Bond as though it was being defeased at the time of the exercise of the option to redeem the Defeased Bond and the effect of the redemption is taken into account in determining the sufficiency of the provisions made for the payment of the Defeased Bond. (f) If a forward supply contract is employed in connection with a refunding, (i) the certification by an independent public accounting firm of national reputation shall expressly state that the adequacy of the escrow to accomplish the refunding relies solely on the initial escrowed investments and the maturing principal thereof and interest income thereon and does not assume performance under or compliance with the forward supply contract, and (ii) the escrow agreement shall provide that in the event of any discrepancy or difference between the terms of the forward supply contract and the escrow agreement, the terms of the escrow agreement shall be controlling. Section 22. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) In the event any Outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case ofloss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to 16 save each of them harmless from any loss or damage with respect thereto. Also, in every case ofloss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) Notwithstanding the foregoing provisions ofthis Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Resolution equally and proportionately with any and all other Bonds duly issued under this Resolution. (e) In accordance with Chapter 1201, Texas Government Code and particularly Subchapter D, this Section shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 4(d) of this Resolution, for Bonds issued in conversion and exchange for other Bonds. Section 23. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION; CUSIP NUMBERS AND BOND INSURANCE, IF OBTAINED. The President of the Board of the Issuer is hereby authorized to have control of each Bond issued hereunder and all necessary records and proceedings pertaining to each Bond pending their delivery and their investigation, examination, 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 each Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on each Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on each Bond. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on each Bond or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. In addition, the form of bond counsel's opinion relating thereto, and an appropriate statement of insurance supplied by a municipal 17 bond insurance company providing insurance, if any, covering all or any part of the Bonds may be printed or attached to the Bonds. Section 24. COVENANTS REGARDING TAX EXEMPTION. (a) The Issuer covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 ofthe Internal Revenue Code of 1986, as amended (the "Code "), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (i) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Resolution or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (ii) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 141(6)(3) of the Code, to the governmental use; (iii) 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 ofthe Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (iv) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (v) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (vi) to refrain from using any portion of the proceeds of the Bonds, 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) ofthe Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with -- (A) proceeds of the Bonds invested for a reasonable temporary period 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, 18 (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148 -1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; (vii) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (viii) to pay to the United States of America at least once during each five -year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(0 of the Code. (b) In order to facilitate compliance with the above covenant (8), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (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 proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Superintendent to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. (d) The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the Project on its books and records in accordance with the requirements of 19 the Internal Revenue Code. The Issuer recognizes that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds 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 foregoing notwithstanding, the Issuer recognizes that in order for proceeds to be expended under the Internal Revenue Code, the sale proceeds or investment earnings must be expended no more than 60 days after the earlier of(1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are retired. The Issuer agrees to obtain the advice of nationally- recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax- exempt status of the Bonds. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e) 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 Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally - recognized bond counsel that such sale or other disposition will not adversely affect the tax- exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 25. SALE OF BONDS. The Bonds are hereby sold and shall be delivered to Morgan Keegan & Company, Inc. and the other underwriters set forth in the Bond Purchase Agreement (the "Initial Purchaser" or "Purchaser "), at a price of $25,818,660.60 (representing the par amount of the Bonds, plus a reoffering premium of $110,926,20, less an underwriter's discount of $182,265.60) plus accrued interest on the Bonds, pursuant to the terms and provisions ofthe Bond Purchase Agreement in substantially the form attached hereto, which the President of the Board of Directors of the Issuer is hereby authorized and directed to execute and deliver, and which the Secretary of the Board of Directors of the Issuer is hereby authorized and directed to attest. Section 26. APPROVAL OF OFFICIAL STATEMENT. The Board ofthe Issuer hereby approves the form and content of the Official Statement relating to the Bonds and any addenda, supplement or amendment thereto, and approves the distribution of such Official Statement in the reoffering of the Bonds by the Purchaser in final form, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. The distribution and use of the Preliminary Official Statement dated April 26, 2001, prior to the date hereof is ratified and confirmed. The Board of the Issuer hereby finds and determines that the Preliminary 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 their respective dates. 20 Section 27. USE OF BOND PROCEEDS; PROJECT AGREEMENT; PROJECT FUND. The proceeds from the sale of the Bonds, except for accrued interest, which shall be deposited to the Debt Service Fund and any deposit for the Reserve Requirement, which shall be deposited in the Reserve Fund, shall be deposited into the Project Fund of the Issuer and used to pay Costs of the Project. Notwithstanding the provisions of Section 9 hereof, interest earnings on amounts on deposit in the Project Fund shall be used to pay Costs of the Project or, at the option of the Issuer, transferred to the Debt Service Fund and used to pay amounts coming due with respect to the Bonds. The Project Agreement, in substantially the form and substance as attached hereto and made a part hereof for all purposes, is hereby approved and the President and the Secretary of the Board of Directors are hereby authorized to execute, attest, seal and deliver the Project Agreement. Section 28. EXECUTION OF DOCUMENTS. The President, Vice President and Secretary ofthe Board of the Issuer are hereby authorized to execute, deliver, attest and affix the seal of the Issuer to all documents and instruments necessary and appropriate in connection with the issuance, sale and delivery of the Bonds, including, without limitation, the Transfer Agreement, the Paying Agent/Registrar Agreement and the DTC Blanket Issuer Letter of Representations in substantially the forms attached hereto and made a part hereof for all purposes. Section 29. CONTINUING DISCLOSURE UNDERTAKING. (a) The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of any Fiscal Year, financial information and operating data of the general type included in the final Official Statement authorized by this Resolution 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 Exhibit "C" hereto, or such other accounting principles as the Issuer may be required to employ from time 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 the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the Issuer shall provide (1) unaudited financial statements for the applicable Fiscal Year within six months after the end of such Fiscal Year, and (2) audited financial statements for the applicable Fiscal Year to each NRMSIR and any SID, when and if the audit report on such statements become available. If the Issuer changes its Fiscal Year, it will notify each NRMSIR and any SID of the change (and of the date of the new Fiscal Year end) prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this paragraph (a). The financial information and operating data to be provided pursuant to this paragraph (a) may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. (b) The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: 21 i. Principal and interest payment delinquencies; ii. Non - payment related defaults; iii. Unscheduled draws on debt service reserves reflecting financial difficulties; iv. Unscheduled draws on credit enhancements reflecting financial difficulties; v. Substitution of credit or liquidity providers, or their failure to perform; vi. Adverse tax opinions or events affecting the tax exempt status of the Bonds; vii. Modifications to rights of holders of the Bonds; viii. Bond calls; ix. Defeasances; x. Release, substitution or sale of property securing repayment ofthe Bonds; and xi. Rating changes. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordance with paragraph (a) of this Section by the time required by such paragraph. (c) The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in any event will give notice of any deposit made in accordance with Section 21 of this Resolution that causes Bonds no longer to be outstanding. The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The Issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell the Bonds at any future date. 22 UNDER NO CIRCUMSTANCES SHALL THE IS SUER BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Resolution for purposes of any other provision of this Resolution. Nothing in this Section is intended or shall act to disclaim, waive or otherwise limit the duties of the Issuer under federal and state securities laws. The provisions of this Section may be amended by the Issuer from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law or a change in the identity, nature, status or type of operations of the Issuer, but only if (1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule 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 Resolution that authorizes such an amendment) of the Bonds consent to such amendment or (b) a person that is unaffiliated with the Issuer (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interest of the Holders and beneficial owners of the Bonds. The Issuer may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. If the Issuer so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with paragraph (a) of this Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. Section 30. PROVISIONS RELATING TO BOND INSURANCE. The Bonds have been sold with the principal of and interest thereon being insured by the Bond Insurer pursuant to the Bond Insurance Policy. In accordance with the terms and conditions applicable to insurance provided by the Bond Insurer, the Issuer covenants and agrees that, in the event the principal and interest due on the Bonds shall be paid by the Bond Insurer pursuant to the Bond Insurance Policy, the assignment and pledge of all funds and all covenants, agreements and other obligations of the Issuer to the Holders shall continue to exist and the Bond Insurer shall be subrogated to the rights of such Holders; and furthermore, the Issuer covenants and agrees that: 23 (a) In the event that the principal and redemption price, if applicable, and interest due on the Bonds shall be paid by the Bond Insurer pursuant to the policy referred to in this Section 30, all covenants, agreements and other obligations of the Issuer to the Holders shall continue to exist and the Bond Insurer shall be subrogated to the rights of such Holders. (b) While the Bond Insurance Policy is in effect, the Issuer shall furnish to the Bond Insurer: (i) Within 120 days after the end of each of the Issuer's, and, if applicable, the Borrower's, fiscal years, the budget for the succeeding year, the annual audited financial statements, a statement of the amount on deposit in the debt service reserve fund as of the last valuation, and, if not presented in the audited financial statements, a statement of the tax revenues pledged to payment of Bonds in each such fiscal year; (ii) The official statement or other disclosure document, if any, prepared in connection with the issuance of additional debt, whether or not on parity with the Bonds within 30 days after the sale thereof; (iii) Notice of any drawing upon or deficiency due to market fluctuation in the amount, if any, on deposit, in the debt service reserve fund; (iv) Notice of the redemption, other than mandatory sinking fund redemption, of any of the Bonds, or of any advance refunding of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; and (v) Such additional information as the Bond Insurer may reasonably request from time to time. The notice address for the Bond Insurer is: Financial Guaranty Insurance Company, 115 Broadway, New York, New York 10006, Attention: Risk Management; and State Street Bank and Trust Company, N.A., 61 Broadway, New York, New York 10006, Attention: Corporate Trust Department. (c) Any provision of this Resolution expressly recognizing or granting rights in or to the Bond Insurer may not be amended in any manner which affects the rights of the Bond Insurer hereunder without prior written consent of the Bond Holder. Furthermore, anything in this Resolution to the contrary shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders of the Bonds for the benefit of such Holders as long as they Bond Insurer has not failed to comply with its payment obligation under the Bond Insurance Policy. (d) As long as insurance for the Bonds shall be in full force and effect, the Issuer agrees to comply wither the following provisions: 24 (i) if, on the day preceding any interest payment date for the Bonds there is not on deposit with the Paying Agent/Registrar sufficient moneys available to pay all principal of and interest on the Bonds due on such date, the Paying Agent/Registrar shall immediately notify the Bond Insurer and State Street Bank and Trust Company, N.A., New York, New York or its successor as its Fiscal Agent (the "Fiscal Agent ") of the amount of such deficiency. If, by said interest payment date, the Issuer has not provided the amount of such deficiency, the Paying Agent/Registrar shall simultaneously make available to the Bond Insurer and to the Fiscal Agent the registration books for the Bonds maintained by the Paying Agent/Registrar. In addition: (A) The Paying Agent/Registrar shall provide the Bond Insurer with a list of the Bondholders entitled to receive principal or interest payments from the Bond Insurer under the terms of the Bond Insurance Policy and shall make arrangements for the Bond Insurer and its Fiscal Agent (I) to mail checks or drafts to Bondholders entitled to receive full or partial interest payments from the Bond Insurer and (2) to pay principal of the Bonds surrendered to the Fiscal Agent by the Bondholders entitled to receive full or partial principal payments from the Bond Insurer; and (B) The Paying Agent/Registrar shall, at the time it makes the registration books available to the Bond Insurer pursuant to (A) above, notify Bondholders entitled to receive the payment of principal of or interest on the Bonds from the Bond Insurer (1) as to the fact of such entitlement, (2) that the Bond Insurer will remit to them all or part of the interest payments coming due subject to the terms of the Bond Insurance Policy, (3) that, except as provided in paragraph (ii) below, in the event that any Bondholder is entitled to receive full payment of principal from the Bond Insurer, such Bondholder must tender his Bond with the instrument of transfer in the form provided on the Bond executed in the name of the Bond Insurer, and (4) that, except as provided in paragraph (ii) below, in the event that such Bondholder is entitled to receive partial payment of principal from the Bond Insurer, such Bondholder must tender his Bond for payment first to the Paying Agent/Registrar, which shall note on such Bond the portion of principal paid by the Paying Agent/Registrar, and then, with an acceptable form of assignment executed in the name of the Bond Insurer, to the Fiscal Agent, which will then pay the unpaid portion of principal to the Bondholder subject to the terms of the Bond Insurance Policy. (ii) In the event that the Paying Agent/Registrar has notice that any payment of principal of or interest on a Bond has been recovered from a Bondholder pursuant to the United States Bankruptcy Code by a Paying Agent/Registrar in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Paying Agent/Registrar shall, at the time it provides notice to the 25 Bond Insurer, notify all Bondholders that in the event that any Bondholder's payment is so recovered, such Bondholder will be entitled to payment from the Bond Insurer to the extent of such recovery, and the Paying Agent/Registrar shall furnish to the Bond Insurer its records evidencing the payments of principal of and interest on the Bonds which have been made by the Paying Agent/Registrar and subsequently recovered from Bondholders, and the dates on which such payments were made. (iii) The Bond Insurer shall, to the extent it makes payment of principal of or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Bond Insurance Policy and, to evidence such subrogation, (A) in the case of subrogation as to claims for past due interest, the Paying Agent/Registrar shall note the Bond Insurer's rights as subrogee on the registration books maintained by the Paying Agent/Registrar upon receipt from the Bond Insurer of proof of the payment of interest thereon to the Bondholders of such Bonds and (B) in the case of subrogation as to claims for past due principal, the Paying Agent/Registrar shall note the Bond Insurer's rights as subrogee on the registration books for the Bonds maintained by the Paying Agent/Registrar upon receipt of proof of the payment of principal thereof to the Bondholders of such Bonds. Notwithstanding anything in this Resolution or the Bonds to the contrary, the Paying Agent/Registrar shall make payment of such past due interest and past due principal directly to the Bond Insurer to the extent that the Bond Insurer is a subrogee with respect thereto. (e) Any amendment or supplement to the Resolution shall be subject to the prior written consent of the Bond Insurer. Any rating agency rating the Bonds must receive notice of each amendment and a copy thereof at least 15 days in advance of its execution or adoption. The Bond Insurer shall be provided with a full transcript of al proceedings relatig to the execution of any such amendment or supplement. (f) The Bond Insurer shall receive immediate notice of any payment default and notice of any other default known to the Paying Agent/Registrar or the Issuer within 30 days of the Paying Agent/Registrar's or the Issuer's knowledge thereof. (g) The Bond Insurer is a party in interest and is entitled to (i) notify the Issuer, the Paying Agent/Registrar or any applicable receiver of the occurrence of an event of default and (ii) request the receiver to intervene in judicial proceedings that affect the Bonds or the security therefor. The receiver shall be required to accept notice of default from the Bond Insurer. (h) Any swap agreement executed in connection with any Additional Parity Obligations shall be subject to the prior written consent of the Bond Insurer. Section 31. REMEDIES IN THE EVENT OF DEFAULT. In addition to all of the rights and remedies provided by the laws of the State of Texas, it is specifically covenanted and agreed 26 particularly that in the event the Issuer (i) defaults in the payments to be made to the Debt Service Fund, as required by this Resolution, (ii) defaults in the observance or performance of any other of the covenants, conditions, or obligations set forth in this Resolution, the Holder or Holders of any Parity Obligations shall be entitled to a writ of mandamus issued by a court of proper jurisdiction, compelling and requiring the Issuer, its officers, the Board ofDirectors, and/or all of them, to observe and perform any covenants, conditions, or obligations prescribed in this Resolution. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. The specific remedies herein provided shall be cumulative of all other existing remedies and the specifications of such remedies shall not be deemed to be exclusive. In determining whether a payment default has occurred or whether payment of the Bonds has been made under the Resolution, no effect shall be given to payments under the Bond Insurance Policy. Section 32. NO RECOURSE AGAINST OFFICIALS. No recourse shall be had for the payment of principal of or interest on any Parity Obligations or for any claim based thereon or on this Resolution against any official of the Issuer or the City or any person executing any Parity Obligations. Section 33. FURTHER ACTIONS. The officers and employees of the Issuer and the City are hereby authorized, empowered and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of the Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Resolution, the Bonds, the initial sale and delivery of the Bonds, the Paying Agent/Registrar Agreement, any insurance commitment letter or insurance policy and the Official Statement. In addition, prior to the initial delivery of the Bonds, the Mayor, the President of the Board, the City Attorney and Bond Counsel are hereby authorized and directed to approve any technical changes or corrections to this Resolution or to any of the instruments authorized and approved by this Resolution necessary in order to (i) correct any ambiguity or mistake or properly or more completely document the transactions contemplated and approved by this Resolution and as described in the Official Statement, (ii) obtain a rating from any of the national bond rating agencies or satisfy requirements of the Bond Insurer, (iii) obtain a surety policy covering the Required Reserve or (iv) obtain the approval of the Bonds by the Texas Attorney General's office. In case any officer of the Issuer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 34. AMENDMENT OF RESOLUTION. (a) The Bond Insurer and the holders ofthe Parity Obligations aggregating a majority in principal amount of the aggregate principal amount 27 of then Outstanding Parity Obligations shall have the right from time to time to approve any amendment to this Resolution which may be deemed necessary or desirable by the Issuer, provided, however, that without the consent of the Bond Insurer and the holders of all of the effected Parity Obligations at the time outstanding, nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Resolution or in the Parity Obligations so as to: (i) Make any change in the maturity of the Outstanding Parity Obligations; (ii) Reduce the rate of interest borne by any of the outstanding Parity Obligations; (iii) Reduce the amount of the principal payable on the outstanding Parity Obligations; (iv) Modify the terms of payment of principal of or interest on the outstanding Parity Obligations or impose any conditions with respect to such payment; (v) Affect the rights of the holders of less than all of the Parity Obligations then outstanding; (vi) Change the minimum percentage of the principal amount of Parity Obligations necessary for consent to such amendment. (b) If at any time the Issuer shall desire to amend this Resolution under this Section, the Issuer shall cause notice of the proposed amendment to be delivered to the Bond Insurer and published in a financial newspaper or journal of general circulation in the city of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file for inspection by all registered owners of Parity Obligations at the designated trust office of the registrar for the Parity Obligations. Such publication is not required, however, if notice in writing is given to each registered owner of the Parity Obligations. (c) Whenever at any time not less than thirty days, and within one year, from the date of the first publication of said notice or other service of written notice the Issuer shall receive an instrument or instruments executed by the holders of at least a majority in aggregate principal amount of all Parity Obligations then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agent/Registrar, the Issuer Board of Directors may pass the amendatory resolution in substantially the same form. (d) Upon the passage of any amendatory resolution pursuant to the provisions of this Section, this Resolution shall be deemed to be amended in accordance with such amendatory resolution, and the respective rights, duties and obligations under this Resolution of the Issuer and all the holders of then outstanding Parity Obligations shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such amendments. 28 (e) Any consent given by the Registered Owner of a Parity Obligation pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Parity Obligation during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the holder who gave such consent, or by a successor in title, by filing notice thereof with the Paying Agent and the Issuer, but such revocation shall not be effective if the Registered Owners of at least a majority in aggregate principal amount of the then outstanding Parity Obligations as in this Section defined have, prior to the attempted revocation, consented to and approve the amendment. (f) For the purpose of this Section, the fact of the holding of Parity Obligations issued in registered form without coupons and the amounts and numbers of such Parity Obligations and the date of their holding same shall be proved by the Registration Books of the Paying Agent/Registrar. For purposes of this Section, the holder of a Parity Obligation in such registered form shall be the owner thereof as shown on such Registration Books. The Issuer may conclusively assume that such ownership continues until written notice to the contrary is served upon the Issuer. (g) The foregoing provisions of this Section notwithstanding, the Issuer by action of the Issuer Council may amend this Resolution for any one or more of the following purposes: (1) To add to the covenants and agreements of the Issuer in this Resolution contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to bondholders or to surrender, restrict or limit any right or power herein reserved to or conferred upon the Issuer; (2) To make such provisions for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained in this Resolution, or in regard to clarifying matters or questions arising under this Resolution, as are necessary or desirable and not contrary to or inconsistent with this Resolution and which shall not adversely affect the interests of the holders of the Parity Obligations; (3) To make any changes or amendments requested by any Rating Agency, as a condition to the issuance or maintenance of a rating, which changes or amendments do not, in the judgment of the Issuer, materially adversely affect the interests of the owners of the outstanding Parity Obligations; (4) To make such changes, modifications or amendments as may be necessary or desirable, which shall not adversely affect the interests of the owners of the outstanding Parity Obligations, in order, to the extent permitted by law, to facilitate the economic and practical utilization of credit agreements with respect to the Parity Obligations including, without limitation, supplementing the definition of "Annual Debt Service Requirements" to address the amortization of payments due and owing under a credit agreement; (5) To modify any of the provisions of this Resolution in any other respect whatever, provided that (i) such modification shall be, and be expressed to be, effective only after all Parity Obligations outstanding at the date of the adoption of such modification shall 29 cease to be outstanding, and (ii) such modification shall be specifically referred to in the text of all Additional Parity Obligations issued after the date of the adoption of such modification. Notice of any such amendment may be published or given by the Issuer in the manner described in subsection (b) of this Section; provided, however, that the publication of such notice shall not constitute a condition precedent to the adoption of such amendatory resolution and the failure to publish such notice shall not adversely affect the implementation of such amendment as adopted pursuant to such amendatory resolution. Section 35. INTERPRETATIONS. All terms defined herein and all pronouns used in this Resolution shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the articles and sections of this Resolution and the Table of Contents of this Resolution have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Resolution and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Bonds and the validity of the lien on and pledge of the Pledged Revenues to secure the payment of the Bonds. Section 36. INCONSISTENT PROVISIONS. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict and the provisions of this Resolution shall be and remain controlling as to the matters contained herein. Section 37. INTERESTED PARTIES. Nothing in this Resolution expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Issuer and the Registered Owners of the Bonds, any right, remedy or claim under or by reason of this Resolution or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Resolution contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer and the registered owners of the Bonds. Section 38. INCORPORATION OF RECITALS. The Issuer hereby finds that the statements set forth in the recitals of this Resolution are true and correct, and the City hereby incorporates such recitals as a part of this Resolution. Section 39. SEVERABIIdTY. If any provision of this Resolution or the application thereof to any circumstance shall be held to be invalid, the remainder of this Resolution and the application thereof to other circumstances shall nevertheless be valid, and this governing body hereby declares that this Resolution would have been enacted without such invalid provision. Section 40. REPEALER. All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. 30 Section 41. Er DATE. This Resolution shall become effective upon adoption and approval by the City. Section 42. PREAMBLE. The findings and preambles set forth in this Resolution are hereby incorporated into this Resolution and made a part hereof for all purposes. 31 EXHIBIT A DEFINITIONS "Act" shall mean the Development Corporation Act of 1979, Article 5190.6, V.A.T.C.S., as amended. "Additional Parity Obligations" shall mean bonds, notes warrants, certificates of obligation or other debt obligations which the Issuer reserves the right to issue or enter into, as the case may be, in the future in accordance with the terms and conditions provided in Section 18 of the Resolution and which, together with the Bonds, are equally and ratably secured by a first lien on and pledge of the Pledged Revenues on a parity with the Bonds under the terms of this Resolution and an Additional Parity Obligation Resolution. "Additional Parity Obligation Resolution" shall mean any resolution ofthe Board authorizing and providing the terms and provisions of the Additional Parity Obligations. "Amortization Installment" means, with respect to any Term Bonds of any series of Parity Obligations, the amount of money which is required to be deposited into a mandatory redemption account for retirement of such Term Bonds (whether at maturity or by mandatory redemption and including redemption premium, if any) provided that the total Amortization Installments for such Term Bonds shall be sufficient to provide for retirement of the aggregate principal amount of such Term Bonds. "Annual Debt Service Requirements" means, as ofthe date of calculation, the principal of and interest on all Parity Obligations coming due at Maturity or Stated Maturity (or that could come due on demand of the owner thereof other than by acceleration or other demand conditioned upon default by the Issuer on such Debt, or be payable in respect of any required purchase of such Debt by the Issuer) in such Fiscal Year, and, for such purposes, any one or more ofthe following rules shall apply at the election of the Issuer: (a) If the principal (including the accretion of interest resulting from original issue discount or compounding of interest) of any series or issue of Funded Debt due (or payable in respect of any required purchase of such Funded Debt by the Issuer) in any Fiscal Year either is equal to at least 25% of the total principal (including the accretion of interest resulting from original issue discount or compounding of interest) of such Funded Debt or exceeds by more than 50% the greatest amount of principal of such series or issue of Funded Debt due in any preceding or succeeding Fiscal Year (such principal due in such Fiscal Year for such series or issue of Funded Debt being referred to herein and throughout this Resolution as "Balloon Debt "), the amount of principal of such Balloon Debt taken into account during any Fiscal Year shall be equal to the debt service calculated using the original principal amount of such Balloon Debt amortized over the Term of Issue on a level debt service basis at an assumed interest rate equal to the rate borne by such Balloon Debt on the date of calculation; A -1 (b) In the case of Balloon Debt, if a Designated Financial Officer shall deliver to the Issuer a certificate providing for the retirement of (and the instrument creating such Balloon Debt shall permit the retirement of), or for the accumulation of a sinking fund for (and the instrument creating such Balloon Debt shall permit the accumulation of a sinking fund for), such Balloon Debt according to a fixed schedule stated in such certificate ending on or before the Fiscal Year in which such principal (and premium, if any) is due, then the principal of (and, in the case of retirement, or to the extent provided for by the sinking fund accumulation, the premium, if any, and interest and other debt service charges on) such Balloon Debt shall be computed as if the same were due in accordance with such schedule, provided that this clause (2) shall apply only to Balloon Debt for which the installments previously scheduled have been paid or deposited to the sinking fund established with respect to such Debt on or before the times required by such schedule; and provided further that this clause (2) shall not apply where the Issuer has elected to apply the rule set forth in clause (1) above; (c) Principal of and interest on the Bonds and Additional Parity Obligations, or portions thereof, shall not be included in the computation of the Annual Debt Service Requirements for any Fiscal Year for which such principal or interest are payable from funds on deposit or set aside in trust for the payment thereof at the time of such calculations (including without limitation capitalized interest and accrued interest so deposited or set aside in trust) with a financial institution acting as fiduciary with respect to the payment of such Debt; and (d) As to any Parity Obligations that bear interest at a variable interest rate which cannot be ascertained at the time of calculation of the Annual Debt Service Requirement then, at the option of the Issuer, either (A) an interest rate equal to the average rate borne by such Parity Obligations (or by comparable debt in the event that such Parity Obligations has not been outstanding during the preceding 24 months) for any 24 month period ending within 30 days prior to the date of calculation, or (B) an interest rate equal to the 30 -year Revenue Bond Index (as most recently published in The Bond Buver), shall be presumed to apply for all future dates, unless such index is no longer published in The Bond Buver, in which case an index of revenue bonds with maturities of at least 20 years which is published in a financial newspaper or journal with national circulation may be used for this purpose (if two Series of Parity Obligations which bear interest at variable interest rate, or one or more maturities within a Series, of equal par amounts, are issued simultaneously with inverse floating interest rates providing a composite fixed interest rate for such Parity Obligations taken as a whole, such composite fixed rate shall be used in determining the Annual Debt Service Requirement with respect to such Parity Obligations); With respect to any calculation of historic data, only those payments actually made in the subject period shall be taken into account in making such calculation and, with respect to prospective calculations, only those payments reasonably expected to be made in the subject period shall be taken into account in making the calculation. A -2 'Average Annual Debt Service Requirements" means that average amount which, at the time of computation, will be required to pay the Annual Debt Service Requirements when due (either at Stated Maturity or mandatory redemption) and derived by dividing the total of such Annual Debt Service Requirements by the number of Fiscal Years then remaining before Stated Maturity of such Parity Obligations. For the purposes of this definition, a fractional period of a Fiscal Year shall be treated as an entire Fiscal Year. Capitalized interest payments provided from bond proceeds, accrued interest on any Debt, and interest earnings thereon shall be excluded in making such computation. "Board" shall mean the Board of Directors of the Issuer. "Bond" or "Bonds" shall mean the Round Rock Transportation System Development Corporation Sales Tax Revenue Bonds, Series 2001, in the aggregate principal amount of $25,890,000, authorized to be issued by this Resolution. "Bond Insurer" means with respect to the Bonds, Financial Guaranty Insurance Company, a New York stock insurance company, or any successor thereto or any other entity that issues or guarantees the payment of principal and interest on any Parity Obligations or the provider of a Reserve Fund Obligation. "Bond Insurance Policy" means the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment of principal of and interest on the Bonds. "Book System" means the book - entry system of bond registration provided in Section 4, or any successor system of book - entry registration. "Cede & Co. " means the designated nominee and its successors and assigns of The Depository Trust Company, New York. "City" shall mean the City of Round Rock, Texas. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas, and any successor official or officer thereto. "Cost" shall mean with respect to the Project, the cost of acquisition, construction and improvement of the Project as provided in the Act, including, without limitation, the cost of the acquisition of all land, rights -of -way, property rights, easements, and interests, the cost of all machinery and equipment, financing charges, interest during construction, necessary reserve funds, premiums for reserve fund surety policies and municipal bond insurance policies, costs of ratings for the Bonds, cost of estimates and of engineering, accountant, financial advisor and legal services, plans, specifications, surveys, estimates of cost and of revenue, other expenses necessary or incident to determining the feasibility and practicability of acquiring, constructing, reconstructing, improving, and expanding any such Project, administrative expense, and such other expense as may be necessary A -3 or incident to the acquisition, construction, reconstruction, improvement and expansion thereof, the placing of the same in operation, and the financing of the Project. "Debt" and 'Debt of the Issuer payable from Pledged Revenues" mean: (a) all indebtedness payable from Pledged Revenues incurred or assumed by the Issuer for borrowed money and all other financing obligations payable from Pledged Revenues that, in accordance with generally accepted accounting principles, are shown on the liability side of a balance sheet; and (b) all other indebtedness payable from Pledged Revenues (other than indebtedness otherwise treated as Debt hereunder) for borrowed money or for the acquisition, construction or improvement of property or capitalized lease obligations that is guaranteed, directly or indirectly, in any manner by the Issuer, or that is in effect guaranteed, directly or indirectly, by the Issuer through an agreement, contingent or otherwise, to purchase any such indebtedness or to advance or supply funds for the payment or purchase of any such indebtedness or to purchase property or services primarily for the purpose of enabling the debtor or seller to make payment of such indebtedness, or to assure the owner of the indebtedness against loss, or to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether or not such property is delivered or such services are rendered), or otherwise. For the purpose of determining Debt, there shall be excluded any particular Debt if, upon or prior to the Maturity thereof, there shall have been deposited with the proper depository (a) in trust the necessary funds (or investments that will provide sufficient funds, if permitted by the instrument creating such Debt) for the payment, redemption, or satisfaction of such Debt or (b) evidence of such Debt deposited for cancellation; and thereafter it shall not be considered Debt. No item shall be considered Debt unless such item constitutes indebtedness under generally accepted accounting principles applied on a basis consistent with the financial statements of the Issuer in prior Fiscal Years. "Defeasance Securities" means (i) Federal Securities, (ii) noncallable obligations ofan agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the Board of Directors adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide for the funding ofan escrow to effect the defeasance of the Bonds are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent, and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the Board of Directors adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide for the funding ofan escrow to effect the defeasance of the Bonds, are rated as to investment quality by a nationally recognized investment rating firm no less than "AAA" or its equivalent. 'Depository" means one or more official depository banks of the Issuer. A-4 assigns. "DTC" means The Depository Trust Company, New York, New York and its successors and "DTC Participant" means securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants. "Election" means the sales and use tax election held by the City on August 9, 1997 pursuant to the provisions of the Act. "Federal Securities" as used herein means direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States ofAmerica (including Interest Strips of the Resolution Funding Corporation). "Fiscal Year" means the twelve -month accounting period used by the Issuer in connection with the operation of the System, currently ending on September 30 of each year, which may be any twelve consecutive month period established by the Issuer, but in no event may the Fiscal Year be changed more than one time in any three calendar year period. "Funded Debt" means all Parity Obligations created or assumed by the Issuer that mature by their terms (in the absence of the exercise of any earlier right of demand), or that are renewable at the option of the Issuer to a date, more than one year after the original creation or assumption of such Debt by the Issuer. "Holder" or "Holders" means the registered owner, whose name appears in the Security Register, for any Parity Obligation. "Investment Act" shall mean the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended. "Issuer" shall mean Round Rock Transportation System Development Corporation. "Junior Lien Obligations" shall mean the State Infrastructure Bank Loan Agreement between the Issuer and the Texas Department of Transportation relating to a loan in the amount of $16,000,000 for the acquisition of right -of -way and the relocation of utilities for the expansion of SH 45 and any other obligations issued on a parity therewith which the Issuer reserves the right to issue in Section 19 of this Resolution. "MSRB" means the Municipal Securities Rulemaking Board. "Maturity" means, when used with respect to any Debt, the date on which the principal of such Debt or any installment thereof becomes due and payable as therein provided, whether at the Stated Maturity thereof or by declaration of acceleration, call for redemption, or otherwise. A -5 "Maximum Annual Debt Service Requirements" means the greatest requirements of Annual Debt Service Requirements (taking into account all mandatory principal redemption requirements) scheduled to occur in any future Fiscal Year or in the then current Fiscal Year for the particular obligations for which such calculation is made. Capitalized interest payments provided from Debt proceeds, accrued interest on any Debt, and interest earnings thereon shall be excluded in making such computation. "NRVISIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Outstanding" - When used in this Resolution with respect to Parity Obligations means, as of the date of determination, all Bonds and Parity Obligations theretofore sold, issued and delivered by the Issuer, except: (a) those Parity Obligations canceled or delivered to the transfer agent or registrar for cancellation in connection with the exchange or transfer of such obligations; (b) those Parity Obligations paid or deemed to be paid in accordance with the provisions of Section 21 hereof or similar provisions of any Additional Parity Obligations Resolution. (c) those Parity Obligations that have been mutilated, destroyed, lost, or stolen and replacement obligations have been registered and delivered in lieu thereof. "Parity Obligations" shall mean, collectively, the Bonds and any Additional Parity Obligations. "PayingAgent/Registrar" shall mean the financial institution so designated in accordancewith the provisions of Section 4 of this Resolution and any successor thereto. 'Permitted Investments" means, to the extent authorized by the Investment Act and the Issuer's Investment Policy, those investments set forth in Exhibit "D" attached hereto. "Pledged Revenues" shall mean all of the Issuer's receipts of the Sales Tax, less any amounts due or owing to the Comptroller as charges for collection or retention by the Comptroller for refunds and to redeem dishonored checks and drafts, to the extent such charges and retentions are authorized or required by law. "Project" shall mean collectively, the construction, equipment and acquisition of certain street, road, drainage and other related transportation system improvements as provided in the City's Transportation Capital Improvement Plan and costs necessary or incident to the undertaking of the Project. A-6 "Project Agreement" means the agreement dated May 15, 2001 between the Issuer and the City relating to the Project. "Record Date" means Record Date as defined in the Form of Bond in Exhibit "B" to this Resolution. "2001 Required Reserve" shall mean the amount to be maintained on deposit in, or held as securities, a Surety Bond or other similar instrument permitted by State law for the benefit of the 2001 Reserve Fund (as defined in Section 11 hereof) which shall equal or exceed, or have a face value of Average Annual Debt Service on the Bonds. "Registration Books" means the books or records for the registration of the transfer and exchange of the Bonds. "Required Reserve Amount" means the amount required to be maintained in the Reserve Fund pursuant to the provisions of Section 11 of this Resolution. "Required Reserve Fund Deposits" means the deposits and credits, if any, required to be made to the Reserve Fund pursuant to the provisions of Section 11 of this Resolution. 'Reserve Fund" means the special fund created, established and maintained by the provisions of Sections 7 and 11 of this Resolution. "Reserve Fund Obligation" means, to the extent permitted by law, as evidenced by an opinion of nationally recognized bond counsel, a surety bond or insurance policy deposited in the Reserve Fund to satisfy the Required Reserve Amount whereby the issuer is obligated to provide funds up to and including the maximum amount and under the conditions specified in such agreement or instrument. With respect to the Bonds, the Reserve Fund Obligation means the Debt Service Reserve Fund Policy Agreement between the Issuer and Financial Guaranty Insurance Company. "Reserve Fund Obligation Payment" means any subrogation payment the Issuer is obligated to make from Pledged Revenues deposited in the Reserve Fund with respect to a Reserve Fund Obligation. With respect to the Bonds, the Reserve Fund Obligation Payment means the repayment of any draws and expenses under the Reserve Fund Obligation together with interest at a rate equal to the lower of (i) the prime rate of Morgan Guaranty Trust Company of New York in effect from time to time plus 2% per annum and (ii) the highest rate permitted by law. 'Rule" means SEC Rule 15c2 - 12, as amended from time to time. "Sales Tax" shall mean the one -half of one percent sales and use tax levied by the City within the boundaries of the City as they now or hereafter exist, together with any increases in the aforesaid rate if provided and authorized by the laws of the State of Texas, including specifically the Act, and collected for the benefit of the Issuer, all in accordance with the Act, including particularly Section 4B thereof. A -7 "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. 'StatedMaturity " means the annual principal payments of the Parity Obligations payable on the respective dates set forth in the Resolutions which authorized the issuance of such Parity Obligations. "Subordinate Lien Obligations" means (i) any bonds, notes, warrants, certificates of obligation, contractual obligations or other Debt issued by the Issuer that are payable, in whole or in part, from and equally and ratably secured by a lien on and pledge of the Pledged Revenues, such pledge being subordinate and inferior to the lien on and pledge of the Pledged Revenues that are or will be pledged to the payment of any Parity Obligations and Junior Lien Obligations issued by the Issuer, and (ii) obligations hereafter issued to refund any of the foregoing if issued in a manner that provides that the refunding bonds are payable from and equally and ratably secured, in whole or in part, by a lien on and pledge of the Pledged Revenues on a parity with the Subordinate Lien Obligations. 'SupplementalResolution "means any resolution supplementing or amending this Resolution for any authorized purpose permitted in this Resolution. "Surety Bond" shall mean a policy of municipal bond insurance, a surety bond or other obligation permitted by law which is issued by an insurance company or other issuer of such instruments for the purpose of funding all or part of the Required Reserve; provided that the issuing company or institution shall have a rating in the highest rating category by two nationally recognized rating agencies or services. "Term Bonds" means those Parity Obligations so designated in the resolutions authorizing such bonds which shall be subject to retirement by operation of a mandatory redemption account. "Term oflssue" means with respect to any Balloon Debt, a period of time equal to the greater of(i) the period of time commencing on the date of issuance of such Balloon Debt and ending on the final maturity date of such Balloon Debt or (ii) twenty-five years. "Transfer Agreement" shall mean the Sales Tax Remittance Agreement dated as of May 15, 2001, between the City and the Issuer. A -8 NO. Interest Rate REGISTERED OWNER: May 15, 2001 EXHIBIT B FORM OF BOND PRINCIPAL AMOUNT UNITED STATES OF AMERICA STATE OF TEXAS ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT CORPORATION SENIOR LIEN SALES TAX REVENUE BOND SERIES 2001 Dated Date Maturity Date CUSIP No. PRINCIPAL AMOUNT: DOLLARS ON THE MATURITY DATE specified above, Round Rock Transportation System Development Corporation (the "Issuer "), being a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas, including particularly the Development Corporation Act of 1979, Article 5190.6, V.A.T.C.S., as amended (the "Act "), and acting on behalf of the City of Round Rock, Texas (the "City "), hereby promises to pay to the Registered Owner set forth above or to the assignee or assignees thereof (either being hereinafter called the "Registered Owner ") on the Maturity Date specified above, the Principal Amount specified above. The Issuer promises to pay interest on the unpaid principal amount hereof (calculated on the basis of a 360 -day year of twelve 30 -day months) from May 15, 2001 at the Interest Rate per annum specified above. Interest is payable on February 15, 2002 and semiannually on each and August 15 and February 15 thereafter to the Maturity Date specified above, or the date of redemption prior to maturity; except, if this Bond is required to be authenticated and the date of its authentication 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 bear interest from such next following interest payment date; provided, however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being exchanged is due but has not been paid, then this Bond shall bear interest from the date to which such interest has been paid in full. Notwithstanding the foregoing, during any period in which ownership of the Bonds is determined only by a book entry at a securities depository B-I for the Bonds, any payment to the securities depository, or its nominee or registered assigns, shall be made in accordance with existing arrangements between the Issuer and the securities depository. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money ofthe United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the Registered Owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the designated office for payment of The Chase Manhattan Bank, Dallas, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the Registered Owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the Resolution authorizing the issuance of this Bond (the "Bond Resolution ") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first -class postage prepaid, on each such interest payment date, to the Registered Owner hereof, at 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/Registrar, as hereinafter described. In the event of a non - 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/Registrar if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date" 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 States mail, first class, postage prepaid, to the address of each Registered Owner appearing on the Registration Books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the Registered Owner upon presentation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar (unless the redemption date is a regularly scheduled interest payment date, in which case accrued interest on such redeemed Bonds shall be payable in the regular manner described above). The Issuer covenants with the Registered Owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Debt Service Fund" created by the Bond Resolution, the amounts required to provide for the pay- ment, in immediately available funds, of all principal of and interest on the Bonds, when due. DURING ANY PERIOD in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between the Issuer and the securities depository. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such B -2 payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS BOND is one of an issue of Bonds initially dated the Dated Date specified on the face ofthis Bond, authorized in accordance with the Constitution and laws of the State of Texas, including particularly the Act, in the original principal amount of $25,890,000 to provide funds to finance the construction and improvements of streets, roads, drainage and other related transportation system improvements. THE BONDS OF THIS SERIES maturing on August 15, 2019 and August 15, 2021 are subject to mandatory redemption prior to maturity in part at random, by lot or other customary method selected by the Paying Agent/Registrar, at par plus accrued interest to the redemption date, in amounts sufficient to redeem said Bonds on August 15, in the years and principal amounts shown on the following schedule. Such Bonds shall be redeemed with funds from the "Debt Service Fund" created by the Bond Resolution and shall be redeemed by the Paying Agent/Registrar in part prior to maturity with funds from the Debt Service Fund, for the principal amount thereof and accrued interest to the date of redemption, and without premium, on each of the aforesaid dates, in the principal amounts, respectively, as set forth in the following schedule: Final maturity of Bond • Final maturity of Bond Bonds Maturing August 15, 2019 Year Principal Amount 2017 $1,620,000 2018 1,710,000 2019* 1,805,000* Bonds Maturing August 15, 2021 Year Principal Amount 2020 $1,900,000 2021* 2,000,000* The principal amount of the Bonds required to be redeemed pursuant to the operation of such mandatory sinking fund shall be reduced by the principal amount of any Bonds which, at least 45 days prior to the mandatory sinking fund redemption date shall have been (1) purchased by the Issuer and delivered to the Paying Agent/Registrar for redemption or (2) redeemed pursuant to the optional redemption provision described below and delivered to the Paying Agent/Registrar for cancellation. B -3 ON AUGUST 15, 2011, or on any date thereafter, the Bonds of this Series maturing on and after August 15, 2012 may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at a redemption price equal to the principal amount to be redeemed plus accrued interest to the date fixed for redemption. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity, the Issuer shall cause written notice of such redemption to be sent by United States mail, first class, postage prepaid, to each Registered Owner of a Bond to be redeemed, in whole or in part, at the address of the Registered Owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing of such notice. Any notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Registered Owner. By the date fixed for any such redemption, due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed. If such written notice of redemption is mailed and if due provision for such payment is made, all as provided above, the Bonds or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being Outstanding except for the right of the Registered Owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request ofthe Registered Owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the Registered Owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Resolution. Any notice of redemption shall either (i) explicitly state that the proposed redemption is conditioned on there being on deposit in the Debt Service Fund sufficient money to pay the full redemption price of the Bonds to be redeemed or (ii) be sent only if sufficient money to pay the full redemption price ofthe Bonds to be redeemed is on deposit in the Debt Service Fund. ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Resolution, this Bond, or any unredeemed portion hereof, may, at the request of the Registered Owner or the assignee or assignees hereof, be assigned, transferred and exchanged for a like aggregate principal amount of fully registered Bonds, without interest coupons, payable to the appropriate Registered Owner, assignee or assignees, as the case may be, having the same denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate Registered Owner, assignee or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Resolution. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of B-4 assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond shall be executed by the Registered Owner or its duly authorized attorney or representative to evidence the assignment hereof. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any taxes or other govemmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. The Registered Owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. WHENEVER the beneficial ownership of this Bond is determined by a book entry at a securities depository for the Bonds, the foregoing requirements of holding, delivering or transferring this Bond shall be modified to require the appropriate person or entity to meet the requirements of the securities depository as to registering or transferring the book entry to produce the same effect. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Resolution that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the Registered Owners of the Bonds. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery ofthis Bond have been performed, existed, and been done in accordance with law; that this Bond is a special obligation of the Issuer; that neither the State of Texas, the City, nor any political corporation, subdivision, or agency of the State of Texas, nor any member of the Board of Directors of the Issuer, either individually or collectively, shall be obligated to pay the principal of or the interest on this Bond and neither the faith and credit nor the taxing power (except as described below) of the State of Texas, the City, or any other political corporation, subdivision, or agency thereof is pledged to the payment of the principal of or the interest on this Bond; that the principal of and interest on this Bond, together with any Additional Parity Obligations hereafter issued, are secured by and payable from a first lien on and pledge of certain funds created under the Resolution and the revenues defined in the Resolution as the "Pledged Revenues ", which include the proceeds of a one -half of one percent sales and use tax levied for the benefit of the Issuer by the City (the "Sales Tax") pursuant to Section 4B of the Act which lien on and pledge is prior in right and claim to the lien and pledge on the Pledged Revenues securing the payment of the outstanding Junior Lien Obligations and any Subordinate Lien Obligations; and that the Registered Owner hereof shall not have the right to B -5 demand payment of the principal of or interest on this Bond from any tax proceeds other than the Sales Tax proceeds levied for the benefit of the Issuer by the City pursuant to Section 4B of the Act, or from any other source. THE ISSUER HAS RESERVED the right in the Bond Resolution, subject to certain conditions set forth therein, to issue obligations or incur indebtedness from time to time in the future on a parity with the Bonds with respect to the pledge of and lien on the Pledged Revenues which secures the Bonds. The Issuer may also issue obligations or incur indebtedness which is secured on a junior and subordinate lien with respect to the Pledged Revenues. The Bond Resolution further provides that the Issuer may create a debt service reserve fund and fund it or provide for it to be funded in connection with the issuance of any obligations or the incurrence of any indebtedness which possesses a lien on and pledge of the Pledged Revenues on a parity with the Bonds, and that such reserve shall secure only the obligations or indebtedness for which it was funded or is to be funded. The Issuer has created a debt service reserve fund for the benefit of the Bonds. THE ISSUER ALSO HAS RESERVED THE RIGHT to amend the Bond Resolution as provided therein, and under some (but not all) circumstances amendments thereto must be approved by the Registered Owners of a majority in aggregate principal amount of the Outstanding Bonds. BY BECOMING the Registered Owner of this Bond, the Registered Owner thereby acknowledges all of the terms and provisions of the Resolution, agrees to be bound by such terms and provisions, acknowledges that the Resolution is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Resolution constitute a contract between each Registered Owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature of the President of the Board of Directors of the Issuer and countersigned with the manual or facsimile signature of the Secretary of the Board of Directors of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. (facsimile signature) (facsimile signature) Secretary, Board of Directors President, Board of Directors (SEAL) FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) B-6 It is hereby certified that this Bond has been issued under the provisions of the Resolution described in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in exchange for, a Bond, Bonds, or a portion of a Bond or Bonds of a series which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated: Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a securities transfer association recognized signature guarantee program. The Chase Manhattan Bank Dallas, Texas Paying Agent/Registrar By: B - 7 Authorized Representative FORM OF ASSIGNMENT ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto Please insert Social Security or Taxpayer Identification Number of Transferee (Please print or typewrite name and address, including zip code, of Transferee.) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints , attorney, to register the transfer ofthe within Bond on the books kept for registration thereof, with full power of substitution in the premises. NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, without alteration or enlargement or any change whatsoever. FORM OF REGISTRATION CERTIFICATE OF '1'H COMPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this (COMPTROLLERS SEAL) Comptroller of Public Accounts of the State of Texas B -8 EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 29(a) of this Resolution: 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 under the headings of the Official Statement referred to) below: (A) The annual audited financial statements of the Issuer if an audit is conducted separate and independent of the audit of the City of Round Rock, but if the audit of the City of Round Rock includes an audit of the Issuer, then those portions of the City's audit relating to the Issuer, or the unaudited financial statements of the Issuer in the event audited financial statement are not completed within six months after the end of any fiscal year. All quantitative financial information and operating data with respect to the Issuer of the general type included in the Official Statement under Tables 1 through 4. 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 A above. (B) C -1 EXHIBIT D PERMITTED INVESTMENTS 1. Direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America ( "U.S. Government Securities"). 2. Direct obligations *of the following federal agencies which are fully guaranteed by the full faith and credit of the United States of America: (a) Export -Import Bank of the United States — Direct obligations and fully guaranteed certificates of beneficial interest (b) Federal Housing Administration — debentures (c) General Services Administration — participation certificates (d) Government National Mortgage Association ("GNMAs ") — guaranteed mortgage - backed securities and guaranteed participation certificates (e) Small Business Administration — guaranteed participation certificates and guaranteed pool certificates (fj U.S. Department of Housing & Urban Development — local authority bonds (g) U.S. Maritime Administration — guaranteed Title XI financings (h) Washington Metropolitan Area Transit Authority — guaranteed transit bonds 3. Direct obligations* of the following federal agencies which are not fully guaranteed by the faith and credit of the United States of America: (a) Federal National Mortgage Association ( "FNMAs ") — senior debt obligations rated Aaa by Moody's Investors Service ( "Moody's ") and AAA by Standard & Poor's Corporation("S&P ") (b) Federal Home Loan Mortgage Corporation ("FHLMCs ") — participation certificates andsenior debt obligations rated Aaa by Moody's and AAA by S&P (c) Federal Home Loan Banks — consolidated debt obligations (d) Student Loan Marketing Association — debt obligations (e) Resolution Funding Corporation — debt obligations 4. Direct, general obligations of any state of the United States of America or any subdivision oragency thereof whose uninsured and unguaranteed general obligation debt is rated, at the time ofpurchase, A2 or better by Moody's and A or better by S &P, or any obligation fully andunconditionally guaranteed by any state, subdivision or agency whose uninsured andunguaranteed general obligation debt is rated, at the time of purchase, A2 or better by Moody'sand A or better by S&P. 5. Commercial paper (having original maturities of not more than 270 days) rated, at the time ofpurchase, P -1 by Moody's and A -1 or better by S&P. efhe following are explicitly excluded from the securities enumerated in 2 and 3: (Q All derivative obligations, including without limitation inverse floaters, residuals, inter est-only,principat -only and range notes, (n) Obligations that have a possibility of returning a zero or negative yield if held to maturity, (iii) Obligations that do not have a fixed par value or those whose terms do not promise a fixed dollaramount at maturity or call date; and (iv) Collateralized Mortgage - Backed Obligations ("CMOs ") D -1 6. Certificates of deposit, savings accounts, deposit accounts or money market deposits in amounts that are continuously and fully insured by the Federal Deposit Insurance Corporation ( "FDIC "), including the Bank Insurance Fund and the Savings Association Insurance Fund. 7. Certificates of deposit, deposit accounts, federal funds or bankers' acceptances (in each case having maturities of not more than 365 days following the date of purchase) of any domestic commercial bank or United States branch office of a foreign bank, provided that such bank's short-term certificates of deposit are rated P -1 by Moody's and A -1 or better by S &P (not considering holding company ratings). 8. Investments in money - market funds rated AAAm or AAAm - G by S &P. 9. State - sponsored investment pools rated AA- or better by S&P. 10. Repurchase agreements that meet the following criteria: (a) A master repurchase agreement or specific written repurchase agreement, substantially similar in form and substance to the Public Securities Association or Bond Market Association master repurchase agreement, govems the transaction. (b) Acceptable providers shall consist of (i) registered broker /dealers subject to Securities Investors' Protection Corporation ( "SIPC ") jurisdiction or commercial banks insured by the FDIC, if such broker /dealer or bank has an uninsured, unsecured and unguaranteed rating of A3/P -1 or better by Moody's and A - /A -1 or better by S &P, or (ii) domestic structured investment companies approved by Financial Guaranty and rated Aaa by Moody's and AAA by S &P. (c) (d) The repurchase agreement shall limit acceptable securities to U.S. Government Securities and to the obligations of GNMA, FNMA or FHLMC described m 2(d), 3(a)and 3(b) above. The fair market value of the securities in relation to the amount of the repurchase obligation, including principal and accrued interest, is equal to a collateral level of at least 104% for U.S. Government Securities and 105% for GNMAs, FNMAs or FHLMCs. The repurchase agreement shall require (i) the Trustee or the Agent to value the collateral securities no less frequently than weekly, (ii) the delivery of additional securities if the fair market value of the securities is below the required level on any valuation date, and (iii) liquidation of the repurchase securities if any deficiency in the required percentage is not restored within two (2) business days of such valuation. (e) The repurchase agreement shall require termination thereof if the counterparty's ratings are suspended, withdrawn or fall below A3 or P -1 from Moody's, or A -orA -1 from S &P. Within ten (10) days, the counterparty shall repay the principal amount plus any accrued and unpaid interest on the investments. The repurchase securities shall be delivered free and clear of any lien to an independent third party acting solely as agent ( "Agent ") of the Issuer, and such Agent is (i) a Federal Reserve Bank, or (ii) a bank which is a member of the FDIC and which has combined capital, surplus and undivided profits or, if appropriate, a net worth, of not less than $50 million, and the Issuer shall have received written confirmation from such third party that such third party holds such securities, free and clear of any lien, as agent for the Issuer. D -2 (f) A perfected first security interest in the repurchase securities shall be created for the benefit of the Issuer, and the Issuer shall receive an opinion of counsel as to the perfection of the security interest in such repurchase securities and any proceeds thereof. (g) (h) (b) (e) The repurchase agreement shall have a term of one year or less, or shall be due on demand. The repurchase agreement shall establish the following as events of default, the occurrence of any of which shall require the immediate liquidation of the repurchase securities, unless the Bond Insurer directs otherwise: (i) insolvency of the broker /dealer or commercial bank serving as the counterparty under the repurchase agreement; (ii) failure by the counterparty to remedy any deficiency in the required collateral level or to satisfy the margin maintenance call under item 10(d) above; or (iii) failure by the counterparty to repurchase the repurchase securities on the specified date for repurchase. 11. Investment agreements (also referred to as guaranteed investment contracts) that meet the following criteria: (a) A master agreement or specific written investment agreement governs the transaction. Acceptable providers of uncollateralized investment agreements shall consist of (i)domestic FDIC - insured commercial banks, or U.S. branches of foreign banks, rated at least Aa2 by Moody's and AA by S &P; (ii) domestic insurance companies rated Aaa by Moody's and AAA by S &P; and (iii) domestic structured investment companies approved by Financial Guaranty and rated Aaa by Moody's and AAA by S &P. (c) Acceptable providers of collateralized investment agreements shall consist of (i)registered broker /dealers subject to SIPC jurisdiction, if such broker /dealer has an uninsured, unsecured and unguaranteed rating of Al or better by Moody's and A+ or better by S &P; (ii) domestic FDIC - insured commercial banks, or U.S. branches of foreign banks, rated at least Al by Moody's and A+ by S &P; (iii) domestic insurance companies rated at least Al by Moody's and A+ by S &P; and (iv) domestic structured investment companies approved by the Bond Insurer and rated Aaa by Moody's and AAA by S &P. Required collateral levels shall be as set forth in 11(f) below. (d) The investment agreement shall provide that if the provider's ratings fall below Aa3 by Moody's or AA- by S &P, the provider shall within ten (10) days either (i) repay the principal amount plus any accrued and interest on the investment; or (ii) deliver Permitted Collateral as provided below. The investment agreement must provide for termination thereof if the provider's ratings are suspended, withdrawn or fall below A3 from Moody's or A- from S &P. Within ten (10) days, the provider shall repay the principal amount plus any accrued interest on the agreement, without penalty. D -3 (f) The investment agreement shall provide for the delivery of collateral described in (i) or(ii) below ( "Permitted Collateral ") which shall be maintained at the following collateralization levels at each valuation date:(i) U.S. Government Securities at 104% of principal plus accrued interest; or(ii) Obligations of GNMA, FNMA or FHLMC (described in 2(d), 3(a) and 3(b)above) at 105% of principal and accrued interest. (g) (1 (k) The investment agreement shall require the Agent to determine the market value of the Permitted Collateral not less than weekly and notify the investment agreement provider on the valuation day of any deficiency. Permitted Collateral may be released by the Agent to the provider only to the extent that there are excess amounts over the required levels. Market value, with respect to collateral, may be determined by any of the following methods: (i) the last quoted "bid" price as shown in Bloomberg, Interactive Data Systems, Inc., The Wall Street Journal or Reuters; (ii) valuation as performed by a nationally recognized pricing service, whereby the valuation method is based on a composite average of various bid prices; or (iii) the lower of two bid prices by nationally recognized dealers. Such dealers or their parent holding companies shall be rated investment grade and shall be market makers in the securities being valued. (h) Securities held as Permitted Collateral shall be free and clear of all liens and claims of third parties, held in a separate custodial account and registered in the name of the Agent. The provider shall grant the Agent a perfected first security interest in any collateral delivered under an investment agreement. For investment agreements collateralized initially and in connection with the delivery of Permitted Collateral under 11(f) above, the Agent and the Bond Insurer shall receive an opinion of counsel as to the perfection of the security interest in the collateral. (j) The investment agreement shall provide that moneys invested under the agreement must be payable and putable at par to the Issuer without condition, breakage fee or other penalty, upon not more than two (2) business days' notice, or immediately on demand for any reason for which the funds invested may be withdrawn from the applicable fund or account established under the authorizing document, as well as the following: (i) In the event of a deficiency in the debt service account; (ii) Upon acceleration after an event of default; (iii) Upon refunding of the bonds in whole or in part; (iv) Reduction of the debt service reserve requirement for the bonds; or (v) If a determination is later made by a nationally recognized bond counsel that investments must be yield- restricted. Notwithstanding the foregoing, the agreement may provide for a breakage fee or other penalty that is payable in arrears and not as a condition of a draw by the Issuer if the Issuer's obligation to pay such fee or penalty is subordinate to its obligation to pay debt service on the bonds and to make deposits to the debt service reserve fund. The investment agreement shall establish the following as events of default, the occurrence of any of which shall require the immediate liquidation of the investment securities, unless: D-4 ( (b) (c) (i) Failure of the provider or the guarantor (if any) to make a payment when due or to deliver Permitted Collateral of the character, at the times or in the amounts described above; (ii) Insolvency of the provider or the guarantor (if any) under the investment agreement; (iii) Failure by the provider to remedy any deficiency with respect to required Penn fitted Collateral; (iv) Failure by the provider to make a payment or observe any covenant under the agreement; (v) The guaranty (if any) is terminated, repudiated or challenged; or (vi) Any representation of warranty furnished to the Trustee or the issuer in connection with the agreement is false or misleading. The investment agreement must incorporate the following general criteria: (i) "Cure periods" for payment default shall not exceed two (2) business days; (ii) The agreement shall provide that the provider shall remain liable for any deficiency after application of the proceeds of the sale of any collateral, including costs and expenses incurred by the Issuer or the Bond Insurer; (iii) Neither the agreement or guaranty agreement, if applicable, may be assigned(except to a provider that would otherwise be acceptable under these guidelines)or amended without the prior consent of the Bond Insurer; (iv) If the investment agreement is for a debt service reserve fund, reinvestments of funds shall be required to bear interest at a rate at least equal to the original contract rate. (v) The provider shall be required to immediately notify the Bond Insurer and the Issuer of any event of default or any suspension, withdrawal or downgrade of the provider's ratings; (vi) The agreement shall be unconditional and shall expressly disclaim any right of set -off or counterclaim; (vii) The agreement shall require the provider to submit information reasonably requested by the Bond Insurer, including balance invested with the provider, type and market value of collateral and other pertinent information. 12. Forward delivery agreements in which the securities delivered mature on or before each interest payment date (for debt service or debt service reserve funds) or draw down date (construction funds) that meet the following criteria: (a) A specific written investment agreement governs the transaction Acceptable providers shall be limited to (i) any registered broker /dealer subject to the Securities Investors' Protection Corporation jurisdiction, if such broker /dealer or bank has an uninsured, unsecured and unguaranteed obligation rated A3/P -1 or better by Moody's and A- /A-1 or better by S &P; (ii) any commercial bank insured by the FDIC, if such bank has an uninsured, unsecured and unguaranteed obligation rated A3/P -1 or better by Moody's and A- /A-1 or better by S &P; and (iii) domestic structured investment companies approved by Financial Guaranty and rated Aaa by Moody's and AAA by S &P. The forward delivery agreement shall provide for termination or assignment (to a qualified provider hereunder) of the agreement if the provider's ratings are suspended, withdrawn or fall below A3 or P -1 from Moody's or A- or A -1 from S &P. Within ten(10) days, the provider D -5 shall fulfill any obligations it may have with respect to shortfalls in market value. There shall be no breakage fee payable to the provider in such event. (d) Permitted securities shall include the investments listed in 1, 2 and 3 above. (e) The forward delivery agreement shall include the following provisions: (i) The permitted securities must mature at least one (1) business day before a debt service payment date or scheduled draw. The maturity amount of the permitted securities must equal or exceed the amount required to be in the applicable fund on the applicable valuation date. (ii) The agreement shall include market standard termination provisions, including the right to terminate for the provider's failure to deliver qualifying securities or otherwise to perform under the agreement. There shall be no breakage fee or penalty payable to the provider in such event. (iii) Any breakage fees shall be payable only on debt service payment dates and shall be subordinated to the payment of debt service and debt service reserve fund replenishments. (iv) The provider must submit at closing a bankruptcy opinion to the effect that upon any bankruptcy, insolvency or receivership of the provider, the securities will not be considered to be a part of the provider's estate, and otherwise acceptable to the Bond Insurer. (v) The agreement may not be assigned (except to a provider that would otherwise be acceptable under these guidelines) or amended without the prior written consent of the Bond Insurer. 13. Forward delivery agreements in which the securities delivered mature after the funds may be required but provide for the right of the Issuer to put the securities back to the provider under a put, guaranty or other hedging arrangement, only with the prior written consent of the Bond Insurer. 14 Maturity of investments shall be governed by the following: (a) Investments of monies (other than reserve funds) shall be in securities and obligations maturing not later than the dates on which such monies will be needed to make payments. (b) Investments shall be considered as maturing on the first date on which they are redeemable without penalty at the option of the holder or the date on which the Issuer may require their repurchase pursuant to repurchase agreements. (c) Investments of monies in reserve funds not payable upon demand shall be restricted to maturities of five years or less. D-6 vor 1o:cv a nr: 'AT: . vid Kautz City of Round Rock, Texas AFFECTS $26 MILLION OF DEBT Round Rock Transportation Sys. Dev. Corp., TX Municipality Texas Moody's Rating Issue Rating RAPIDLY GROWING ECONOMY, WITH HIGH TECH SLOWDOWNS nuNW4OL.NNVN rm mmu IJ IN:O/4410044G rage 1 OT S Ct neL FYI MOODY'S ASSIGNS AN Al RATING TO ROUND ROCK TRANSPORTATION SYSTEM DEVELOPMENT C9RPORATION'S (4B) SENIOR LIEN SALES TAX REVENUE BONDS SERIES 2001 Senior Lien Sales Tax Revenue Bonds, Series 2001 Al Sale Amount $26,000,000 Expected Sale Date 05/23/01 Rating Description Sales and Use Tax Bonds NEW YORK, May 21, 2001 -- Moody's Investors Service has assigned an Al rating to the Round Rock Transportation System (4B) Development Corporation's $26,000,000 Senior Lien Sales Tax Revenue Bonds, Series 2001. The bonds are secured by a 1/2 2 sales tax dedicated to the Corporation for streets, roads, drainage and other related transportation system improvements. Proceeds will provide funding for several highway and street improvement projects. The Corporation was created by the City of Round Rock, following a successful election in 1997 to increase the local sales and use tax rate for road improvement projects. The Corporation's rating reflects estimated satisfactory coverage levels, as well as the fundamental positive credit characteristics of the city of Round Rock (general obligation limited tax bonds rated Aa3 /positive outlook). Round Rock, with a population of approximately 61,000, is the largest city in Williamson County (GO debt rated Aa2). Located eight miles north of Austin (GO debt rated Aa2), Round Rock's population nearly doubled between 1990 and 2000, and assessed valuation growth has averaged 17.37.- -more than quadrupling taxable values since 1992 - -as job creation both in the city and in the Austin area continue to spur substantial new residential, commercial, and industrial construction. Fiscal 2001 taxable values are projected to exceed $3.4 billion, nearly 172 Over 2000 values_ Moody's be.lievAn the Area acnnnmy will cont.innA to drive sales tax growth, although the rate of growth may decelerate due to reduced performance and expected layoffs by several regional information technology firms. Dell Computers (A3), the city's largest private employer, recently announced plans to reduce its workforce by 4,000 -- mostly in the Round Rock area. Total Dell employment in Round Rock is 12,200, and approximately 302 of them live within Round Rock city limits. City officials do not anticipate long term negative impacts from layoffs and reduced revenue growth from Dell. Regional economists predict Dell's earnings will not decline, and they expect sales to grow at an 18% rate in the near future. Moody's believes short term job cuts and decreased revenue growth will not deter long term residential and commercial growth in the area. Expansion of existing business and the addition of new industry have resulted in 10 -11% average annual job growth over the last three years and has added more than $500 million to commercial and industrial taxable values since 1996. In addition, the city continues to see development of its commercial base, 05/21/2001 MON 17:22 [T% /R% N0 8494] [001 ,U.141 /euvl au.cv a KR: nuuuu4,Z.vuuu ra:nvuu:J :v:DRZ100442 Page Z of 3 including the $500 million commercial /office /hotel La Frontera complex. The recent opening of the Dell Diamond, home of the Texas League Round Rock Express, is expected to attract between 5,500 and 6,000 people each game and could spur significant commercial development in the surrounding area. AMPLE DEBT SERVICE COVERAGE ANTICIPATED Based on Fiscal 2000 Corporation sales tax collections of $8.4 million (the most recent year of full tax collections), average annual debt service cove rape for the current issue and outstanding debt is estimated at 2.0 times. Officials plan to augment that coverage by maintaining a $4.5 million minimum fund balance reserve for the Corporation. The Corporation's only outstanding debt is a $16,000,000 loan from the Texas Department of Transportation's State Infrastructure Bank, which is a junior lien obligation. Future debt issuance by the Corporation has not yet been specified. Legal provisions are satisfactory with an additional bonds test of 1.4 times maximum annual debt service for parity obligations and a debt service reserve to be provided by a cash reserve or surety bond at average annual debt service. WELL - MAINTAINED RESERVES ADD STABILITY, AMID SIGNIFICANT INFRASTRUCTURE IMPROVEMENTS City finances reflect management's commitment to long -term fiscal stability, given assertive infrastructure improvement efforts. The city's overall debt burden, at 7.5 %, is above average, with only 482 of principal repaid within ten years. Moody's believes growth in taxable values will mitigate additional debt over time. Also, reserves are well maintained, with year -end general fund balance consistently around 50% of general fund revenues for the past five years. While continued rapid growth is expected to place a burden upon the city, management's demonstrated ability to manage a growing capital plan and the city's strong finances should help maintain a comfortable level of flexibility. OUTLOOK: Thp. RtahlP. nntlook for fha Al rating inaorporatea Mnndy'R expentstinns of continued growth and diversification in the city's sales tax resources, mitigating current volatility in the information technology sector. In addition, it reflects Moody's belief that city management will continue to maintain healthy reserve levels. KEY STATISTICS 2000 Population: 61,136 2000 Full value: $2.9 billion Debt burden: 7.5 2 Payout of principal (10 years): 47.5% FY 2000 General Fund balance: $19.8 million (502 of General Fund revenues) Full value per capita: $50,177 Unemployment rate (2/01): 1.8% ANALYSTS: Dwight Burns, Analyst, Public Finance Group, Moody's Investors Service 05/21/2001 MON 17:22 (TX/RI NO 8494] U002 !nrcwww_.v•.v In.nyymio Ivi7uc40499c rage a UT a Rebecca Blackmon, Backup Analyst, Public Finance Group, Moody's Investors Service Linda Lipnick, Director, Public Finance Group, Moody's Investors Service CONTACTS: Journalists: (212) 553 -0376 Research Clients: (212) 553 -1625 05/21/2001 MON 17:22 [T% /R% NO 8494] e003 MAY -2; -01 MON 03:47 PM FIRST SOUTHWEST COMPANY FAX NO. 512 481 2010 P.02 Cow,ua) Fyi Press Release •r onat 711T FITCH BWA oresmm&mailms New York NT 10004 (212) 008.0810 www.Titchratli .c0m Fitch Rts Round Roek Transportation Corp Sales Tax Bonds `A +' Fitch -NY -May 21, 2001: Round Rock Transportation System Development Corporation (the Corp.), TX's 526,000,000 senior lien sales tax revenue bonds, series 2001 are rated 'A+' by Fitch. The bonds are expected to price on a negotiated basis on May 23 via a syndicate led by Morgan Keegan & Co., Inc. Dated May 15, 2001, the bonds mature serially Aug. 15, 2002- 21. Bonds maturing on or after Aug. 15, 2012 are subject to optional redemption beginning Aug. 15, 2011 at par plus accrued interest to date of redemption. The bends are secured by a 1/2% sales tax approved by two - thirds of the voters in August 1997. Proceeds will be used to fund various transportation improvements and pay costs of issuance. The 'A+' rating reflects strong growth in sales tax collections, favorable debt service coverage levels, Satisfactory legal provisions, and a manageable capital plan. Although there is taxpayer concentration, risks are partially offset by significant ongoing and planned economic expansion as well as solid senior lien debt service coverage even after discounting Dell Computer Corporation's share of taxes. In addition, the Corp. intends to maintain a sizable working cash reserve, and issue ;union lien bonds whenever possible, helping to ensure healthy senior lien coverage levels. The Corp. is a non - profit industrial development corporation created by the city of Round Rock following voter approval of the 1/2i sales tax. The Sales tax is to be used for various transportation improvements. Corp. board members are appointed by the city council and the financial administration of the sales tax is handled by the city. Historical city collections of a 1/2% equivalent have averaged nearly 19% over the past five fiscal years, and 22% over the past 10 years. Year -to -date collections are running 348 above last year's level for the same time period. Actual fiscal 2000 collections provide 3.9 times (x) coverage on senior lien bonds and 2x coverage on senior and junior lien T u •)ir i R1i[uu ➢4VZO :I 11002 'AM 05/21/2001 MON 16:20 [TX /RX NO 84927 e002 MAY =21 -01 MON 03:48 PM FIRST SOUTHWEST COMPANY Press Release FAX NO. 512 481 2010 P.03 F I T S gT 1 iMC/� M2W 6PNW2� FITCH Ono Slot9 Shat Plain Nett YO[K� Nl' 70004 (212) 9011.0810 Www.lhavatlnga.com bonds. The Corp. currently has Sld million in junior lien bonds with the State Infrastructure Sark (SIB). Coverage of senior lien bonds is projected to remain above 3x, given the maintenance of a S4.5 million to 55.5 million working cash reserve as well as the Corp.'s intent to issue junior lien bands through the SIB whenever possible. The SIB provides for lower interest Costs and more flexible borrowing provisions, including a no reserve requirement. Legal. provisions are satisfactory and allow the Corp. to create a separate reserve for each series of senior lien bonds. The 2001 series reserve requirement will be funded at closing at average annual debt service. Dell Computer Corporation accounts for 470 of city sales taxes, up from 35t in 1998. while concentration risk exists, concerns are partially mitigated by satisfactory debt service coverage excluding Dell receipts. Based on 2000 collections, debt service coverage was a solid 2x for senior lien and 1.2x for senior and junior lien bonds without the Dell portion. Further, the city is evolving as a major retail center for north Austin and its suburbs, helping to diversify sales tax collections. In particular, the 328 acre La Frontera mixed - use development is projected to have a significant impact of sales taxes; the first phase shopping center recently opened, with a second upscale retail center on the drawing board. The project also includes offices, restaurants, a hotel, apartments, parks, and ether projects which are open or under construction. The 20 -year comprehensive transportation plan for Round Rock totals $138 million, of which $78 million is funded through •local share. The balance is funded from state, county, and private (developer) contributions. The two -year plan, which addresses the city's most critical needs, totals around 557 million, to be funded from a combination of available funds and the current offering. No additional senior lien bond issuance is planned for at least the next two years. The projected cash flows also take into account 59.5 million in additional projects tentatively scheduled for the back -end of C 't Rf1Ri. AS LSNI 'NIA H31,Ii 1'1VZO: I 1 1001 '12 'LVPI 05/21/2001 MON 16:20 (TX /RX NO 8492] a003 MAY -21 -01 MON 03:49 PM FIRST SOUTHWEST COMPANY Press Release FAX NO. 512 481 2010 P. 05 FICH IDCn. MVP &PHDIS FRCN One Snob Street Plaza New Vora, NY loons (212) 9C8•0810 vww.RChradnps.com the two -year planning horizon and which would likely qualify for junior lien SIB funding. Located just north of Austin, Round Rock continues to record significant growth. Attracted by the availability of more affordable housing with easy access to all parts of Austin and a well- regarded school system, the city's population nearly doubled from 1990 -2000 to about 61,000. Taxable values have shown impressive gains, averaging 16.581 annually over the last five years. Preliminary assessed valuation information points to a 20`' increase (before protested values are considered) for the coming year. Less than 50tr of the city is developed. Resident wealth levels are above state and national norms. City unemployment rates are very low; the 2000 rate was 1.3%, with the most recently rate at 1.8. Also contributing to the city's rapid expansion was the location of Dell Computer Corporation's customer support facility in 1994. Dell is the largest private employer in the Austin metropolitan area, employing around over 20,000. The Round Rock facility alone employs about 12,000, 30% of which are believed to reside in the city. However, in response to slow demand and in effort to improve its competitive position, Dell recently announced up 5,700 layoffs, the majority of which will be felt in Austin and Round Rock. Nevertheless, Dell operations remain substantial; the company recently became the largest personal computer seller in the world, and continues to diversify its services. The impact of the layoffs on the city is unclear; construction, permit, and sales activity remain strong and several major employers have announced expansions in the metropolitan area. The city's own financial position is strong, buoyed by steady economic gains and conservative fiscal policies. The fiscal 2000 undesignated general fund balance represented over 50% of expenditures and transfers out, well above the prescribed three - month reserve policy. The city's property ax rate is low. Direct debt levels are moderate, while overall debt Rnfi).'nN JStiINi3 P1YZO:11 I00Z'iZ 05/21/2001 HON 16:20 [T% /R% NO 8492] a005 MAY -21 -01 MON 03:48 PM FIRST SOUTHWEST COMPANY Press Release FAX 140. 512 481 2010 P.04 Contact: Mark Campa 1- 512 -322 -5316 or Doug Scott 1- 512 -322- 5321, Austin. FIT{ cN One Stem &neat Plaza Now Yolk NY '10004 (212) 808-0610 www.tocnracngs.com ratios are above average due to growth - generated issuances by the school district. ',i Anfi1. 'nu ISN: 1113 R i.Ii Ytv£O: t i IOOZ '13 '3YPi 05/21/2001 MON 16:20 [TX /RX NO 8492) a004