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LAW OFFICES <br />M`-CALL, PARKHURST & HORTON L.L.P. <br />600 CONGRESS AVENUE <br />717 NORTH HARWOOD <br />1250 ONE AMERICAN CENTER <br />NINTH FLOOR <br />AUSTIN, TEXAS 78701-3248 <br />DALLAS, TEXAS 75201-6587 <br />TELEPHONE: 512 478-3805 <br />TELEPHONE: 214 754-9200 <br />FACSIMILE: 512 472-0871 <br />FACSIMILE: 214 754-9250 <br />January 25, 2010 <br />Mayor and Members of the City Council <br />City of Paris <br />135 lst Street SE <br />Paris, Texas 75460-5803 <br />700 N. ST. MARY'S STREET <br />1525ONE RIVERWALK PLACE <br />SAN ANTONIO, TEXAS 78205-3503 <br />TELEPHONE: 210 225-2800 <br />FACSIMILE:210 225-2984 <br />Re: Proposed City of Paris, Texas General Obligation Refunding Bonds, Series 2010 <br />Ladies and Gentlemen: <br />The purpose of this engagement letter is to set forth certain matters concerning the services <br />we will perform as bond counsel to the CiTy of Paris, Texas (the "Issuer") in connection with the <br />issuance of the above-referenced bonds (the "Bonds"). We understand that the Bonds are being <br />issued for the purpose of refunding the following series of bonds and certificates of obligation of the <br />Issuer: Tax and Revenue Refunding Bonds, Series 1998; Combination Tax and Revenue Certificates <br />of Obligation, Series 2000; Tax and Revenue Refunding Bonds, Series 2001; Waterworks and Sewer <br />System Revenue Bonds, Series 1997; Waterworks and Sewer System Revenue Bonds, Series 1998; <br />and Waterworks and Sewer System Revenue Bonds, Series 2000 (collectively, the "Refunded <br />Obligations We also understand that the Bonds will be secured by a pledge of an ad valorem tax <br />levied by the Issuer within the limit prescribed by law. We further understand that the Bonds will <br />be authorized to be sold by the City Council of the Issuer (the "City Council") pursuant to an <br />ordinance (the "Ordinance") adopted on the date hereof (the "Sale Date") in accordance with Chapter <br />1207, Texas Government Code, and that the Bonds will be sold by negotiation to a purchaser or <br />purchasers (collectively, the "Underwriter") on the Sale Date. <br />A. THE FINANCING <br />As Bond Counsel to the Issuer, we would like for the City Council to understand how the <br />issuance of the Bonds will be effected and the ramifications of the financing. I will briefly describe <br />the procedures and certain applicable law that pertains to the issuance of the Bonds, below. <br />However, you should feel free to call me at any time to discuss any questions that you or your staff <br />may have. <br />(1) The Bonds are being issued to provide debt service savings with respect to the Issuer's future <br />debt service payments. You should discuss the full impact of the debt service restructuring <br />with Southwest Securities, Inc., your financial advisor. <br />(2) The Bonds will be "authorized to be issued" when and if the City Council approves the <br />Ordinance. The Ordinance provides for the terms of the Bonds. Among the matters <br />approved in the Ordinance are: (i) the terms of the Bonds, including the principal <br />amortization schedule and interest rates and provision for certain of the Bonds to be issued <br />as current interest bonds that pay interest semiannually; (ii) the Issuer's commitment to levy <br />- 00017i <br />