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HomeMy Public PortalAboutOrdinance No. 915-01 10-23-2001 • ORDINANCE NO. 915 -O1 AN ORDINANCE OF THE CITY COUNCIL. OF THE CITY OF RICHLAND HILLS, TEXAS, AUTHORIZING THE ISSUANCE AND SALE OF CITY OF RICHLAND HILLS, TEXAS, PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES 2001; LEVYING AN ANNUAL AD VALOREM TAX FOR THE PAYMENT OF SAID OBLIGATIONS; PRESCRIBING THE FORM OF SAID OBLIGATIONS; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT THE STATE OF TEXAS § COUNTY OF TARRANT § CITY OF RICHLAND HILLS § WHEREAS, the Public Property Finance Act, Tex. Loc. Gov't Code §§271.001 through 271.009, inclusive (the "Act"), authorizes, among others, cities to execute, perform, and make payments under contracts with any person for the use, acquisition or purchase of personal property as described in the Act; WHEREAS, the City Council (the "City Council") of the City of Richland Hills, Texas (the • "Issuer" or the "City') has found and determined that it is necessary, useful and appropriate for its public purposes to acquire or purchase the personal property described in Schedule I (the "Project"); WHEREAS, the Project will be used for authorized public purposes of the Issuer, will be acquired in compliance with applicable laws relating to competitive bidding, and will not be attached or affixed to real property or any building thereon in any manner that would cause the Project to be considered real property or a fixture to real property under applicable state law, and shall remain personal property of a type and character authorized to be acquired by the Issuer under the Act; WHEREAS, the City Council has found and deems it necessary, useful and appropriate for its public purposes to acquire the Project and to adopt this Ordinance and issue the Contractual Obligations herein authorized as permitted by the Act; and WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and public notice of the time, place and purpose of said meeting was given as required by Chap. 551, Texas Government Code, as amended; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL, OF THE CITY OF RICHLAND HILLS: Section 1. RECITALS, AMOUNT AND PURPOSE OF THE CONTRACTUAL • OBLIGATIONS. The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in this Section. The contractual obligations of the City are • hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State of Texas, including particularly Tex. Loc. Gov't Code §§271.001 through 271.009, inclusive, in the aggregate principal amount of $350,000, for the purpose of paying contractual obligations incurred or to be incurred in connection with the acquisition or purchase of personal property for the City as described in Schedule I attached hereto, and for paying costs related to the issuance of the contractual obligations. Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND MATURITIES OF CONTRACTUAL OBLIGATION. Each contractual obligation issued pursuant to this Ordinance shall be designated: "CITY OF RICHLAND HILLS, TEXAS, PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATION, SERIES 2001," and initially there shall be issued, sold, and delivered hereunder one fully registered contractual obligation, without interest coupons, dated October 1 S, 2001, in the principal amount stated above, numbered R-1, with any contractual obligation issued in replacement thereof being in the denomination and principal amount hereinafter stated and numbered consecutively from R-2 upward, payable to the registered owner thereof, or to the registered assignee of said contractual obligation (in each case, the "Registered Owner"), and said contractual obligation shall mature and be payable on September 1 S, 2006. The contractual obligation shall bear interest from the date of delivery to the date of maturity or prepayment prior to maturity at a rate of 3.62% per annum. Said interest shall be payable in the manner provided and on the dates stated in the FORM OF CONTRACTUAL OBLIGATION set forth in this Ordinance. The term "Contractual Obligation" as used in this Ordinance shall mean and include collectively • the contractual obligation initially issued and delivered pursuant to this Ordinance and all substitute contractual obligations exchanged therefor, as well as all other substitute contractual obligations and replacement contractual obligations issued pursuant hereto, and the term "Contractual Obligation" shall mean any of such contractual obligations. Section 3. CHARACTERISTICS OF THE CONTRACTUAL OBLIGATIONS. (a) Registration, Transfers and Exchange Authentication. The Issuer shall keep or cause to be kept at the principal corporate trust office of LaSalle Bank National Association, Chicago, Illinois, Texas, (the "Paying Agent/Registrar"), books or records for the registration of the transfer and exchange of the Contractual Obligations (the "Registration Books"), and the Issuer hereby appoints the Paying 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 registrations, transfers, and exchanges as herein provided within three days of presentation in due and proper form. The Paying AgentlRegistrar shall obtain and record in the Registration Books the address of the registered owner of each Contractual Obligation to which payments with respect to the Contractual Obligations shall be mailed, as herein provided; but it shall be the duty of each Registered Owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books • confidential and, unless otherwise required by law, shall not permit their inspection by any other 2 entity. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, exchange and delivery of a substitute Contractual Obligation or Contractual Obligations. Registration of assignments, transfers, and exchanges of Contractual Obligations shall be made in the manner provided and with the effect stated in the FORM OF CONTRACTUAL OBLIGATION set forth in this Ordinance. Each substitute Contractual Obligation shall bear a letter and/or number to distinguish it from each other Contractual Obligation. Except as provided in Section 3(d) of this Ordinance, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Contractual Obligation, date and manually sign said Contractual Obligation, and no such Contractual Obligation shall be deemed to be issued or outstanding unless such Contractual Obligation is so executed. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing exchange of any Contractual Obligation or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Contractual Obligations in the manner prescribed herein, and said Contractual Obligations shall be printed or typed on paper of customary weight and strength. Pursuant to Chapter 1201, Government Code, as amended, the duty of transfer of Contractual Obligations as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Contractual Obligation, the exchanged Contractual Obligation shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Contractual Obligation that initially was issued and delivered pursuant to this Ordinance, approved by the Attorney General and registered by the Comptroller of Public Accounts. • The Issuer covenants with the Registered Owners of the Contractual Obligations that at all times while the Contractual Obligations are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution or other agency to act as and perform the services of Paying AgentlRegistrar for the Contractual Obligations under this Ordinance, 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 not less than 20 days written notice to the Paying Agent/Registrar, to be effective not later than 15 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying 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 Ordinance. Any such successor shall have capital and surplus, exclusive of borrowed capital, aggregating at least $25,000,000 and shall be subject to examination or supervision by a federal or state banking authority. 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 Contractual Obligations, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying AgentJRegistrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to the Registered Owners of the Contractual Obligations, by United States mail, first- class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. • By accepting the position and performing as such, each Paying AgentlRegistrar shall be deemed to 3 • have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. (b) Limitation on Transfers. Notwithstanding any provision of this Ordinance to the contrary, a Contractual Obligation may not be transferred to any person, firm or other entity, unless prior to such transfer the Registered Owner of the Contractual Obligation obtains and delivers to the Issuer a certificate, executed by the person, firm or other entity to whom the Contractual Obligation is to be transferred (the "Transferee") and in form acceptable to the Issuer, certifying that: (A) the Transferee is an "accredited investor" within the meaning of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, or a state or national bank organized under the laws of the United States; (B) the Transferee has sufficient knowledge and experience in financial and business matters, including purchase and ownership of tax- exempt municipal obligations, to be able to evaluate the economic risks and merits of the investment represented by the purchase of the Contractual Obligations; (C) the Transferee has made its own inquiry and analysis with respect to the Contractual Obligations and the security therefor, and other material factors affecting the security and payment of the Contractual Obligations, and has not relied upon any statement by the Issuer's financial consultants or legal advisors in connection with such inquiry or analysis or in connection with the offer and sale of the Contractual Obligations; (D) the Transferee has either been furnished with or has had access to all necessary information that it desires in order to enable it to make an informed decision concerning the investment evidenced by the Contractual Obligations, and the Transferee has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the purpose for which the proceeds of the • Contractual Obligations will be utilized, and the security therefor, so that it has been able to make an informed decision to purchase the Contractual Obligations; (E) the Transferee is purchasing the Contractual Obligation for its own account and not with a view to, and with no then present intention of, distributing or reselling the Contractual Obligation or any part thereof and that in the event the Transferee sells or otherwise disposes of the Contractual Obligation that such sale or disposition shall be made only to an investor described in (A), above, and that such investor shall execute and provide to the Transferee and to the Issuer a certificate as required by and to the effect provided in this subsection; and (F) the Transferee further acknowledges that it is responsible for consulting with its advisors concerning any obligations, including, but not limited to, any obligations pursuant to federal and state securities and income tax laws, it may have with respect to subsequent purchasers of the Contractual Obligations if and when any such future disposition of the Contractual Obligations may occur. Upon receipt and acceptance of said certificate, the Issuer shall notify the Paying Agent/Registrar in writing that the requirements of this section have been satisfied and the name of the person, firm or other entity to whom the Contractual Obligation may be transferred. (c) Payment of Contractual Obligations and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Contractual Obligations, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Contractual Obligations and shall properly and accurately record all payments on the Contractual Obligation on the Registration Books, and shall keep proper records of all exchanges of Contractual • Obligations, and all replacements of Contractual Obligations, as provided in this Ordinance. In the 4 • event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the past due interest shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of the Registered Owner appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. (d) In General. The Contractual Obligations (i) shad be issued in fully registered form, without interest coupons, with the principal of and interest on such Contractual Obligations to be payable only to the Registered Owners thereof, (ii) may and shall be prepaid or redeemed prior to their scheduled maturities (notice of which shall be given to the Paying Agent/Registrar by the Issuer at least 50 days prior to any such redemption date), (iii) may be exchanged for other Contractual Obligations, (iv) may be transferred and assigned, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Contractual Obligations 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 Contractual Obligations, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF CONTRACTUAL OBLIGATION set forth in this Ordinance. The Contractual Obligation initially issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Contractual Obligation issued in exchange for any Contractual Obligation or Contractual Obligations issued under this Ordinance the Paying • AgentlRegistrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF CONTRACTUAL OBLIGATION. (e) Delivery of Initial Contractual Obligation. On the closing date, the initial Contractual Obligation representing the entire principal amount of the Contractual Obligation, payable to the Purchaser (hereinafter defined), executed by manual or facsimile signature of the Mayor and City Secretary 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, and with the date of delivery inserted thereon by the Paying Agent/Registrar, will be delivered to the Purchaser. Section 4. FORM OF CONTRACTUAL OBLIGATIONS. The form of the Contractual Obligations, 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 to the Contractual Obligation initially issued and delivered pursuant to this Ordinance, shall be, respectively, substantially as follows, with such appropriate variations, omissions or insertions as are permitted or required by this Ordinance. (a) [Form of Contractual Obligation] TRANSFER OF OWNERSHIP OF THIS CONTRACTUAL OBLIGATION IS SUBJECT TO CERTAIN LIlVIITATION5 SET FORTH IN THE CONTRACTUAL OBLIGATION • 5 ORDINANCE. REFERENCE IS HEREBY MADE TO THE CONTRACTUAL OBLIGATION ORDINANCE FOR A DESCRIPTION OF SUCH LIMITATIONS. NO. R- UNITED STATES OF AMERICA PRINCIPAL STATE OF TEXAS AMOUNT CITY OF RICHLAND HILLS, TEXAS PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATION SERIES 2001 Interest Rate Delivery Date Maturity Date 3.62% , 2001 September 15, 2006 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS ON THE MATURITY DATE specified above, the City of Richland Hills, in Tarrant County, • Texas (the "Issuer"), being a political subdivision and municipal corporation of the State of Texas, hereby promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"), on the Maturity Date specified above, the Principal Amount specified above, unless prepaid by the Issuer as permitted hereby. 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 the Delivery Date specified above at the Interest Rate per annum specified above. Interest is payable on March 15, 2002, and semiannually on each March 15 and August 15 thereafter to the Maturity Date specified above, or the date of redemption prior to maturity; except, if this Contractual Obligation 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 Contractual Obligation or Contractual Obligations, if any, for which this Contractual Obligation is being exchanged is due but has not been paid, then this Contractual Obligation shall bear interest from the date to which such interest has been paid in full. THE PRINCIPAL OF AND INTEREST ON this Contractual Obligation are payable in lawful money of the United States of America, without exchange or collection charges. The principal of and interest on this Contractual Obligation shall be paid to the Registered Owner by check or draft mailed by LaSalle Bank National Association, Chicago, Illinois (the "Paying AgentlRegistrar") to the person • 6 • in whose name this Certificate is registered at the close of business on the Record Date for each payment date, which shall be the last day (whether or nor a business day) of the calendar month next preceding such payment date; provided payment of the final amount due on this Contractual Obligation shall be made only upon presentation and surrender of this Contractual Obligation to the Paying AgentlRegistrar. In addition, interest and principal may be paid by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Registered Owner. In the event of anon-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of each owner of a Contractual Obligation appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. ANY ACCRUED INTEREST due at maturity or upon the redemption of this Contractual Obligation at the option of the Issuer prior to maturity as provided herein shall be paid to the Registered Owner upon presentation and surrender of this Contractual Obligation for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the Registered Owner of this Contractual Obligation that on or before each principal payment date and interest payment date for this Contractual Obligation it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Contractual Obligation • Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Contractual Obligations, when due. IF THE DATE for the payment of the principal of or interest on this Contractual Obligation shall be a Saturday, Sunday, a legal holiday or a day on which banking institutions in the city where the principal corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day that 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 Contractual Obligation is one of a series of Contractual Obligations dated October 15, 2001, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $350,000 for the purpose of the acquisition or purchase of personal property for the City and for paying costs related to the issuance of the Contractual Obligations. THIS CONTRACTUAL OBLIGATION maybe redeemed prior to its scheduled maturity, at the option of the Issuer, on any date, with funds derived from any available and lawful source, in whole but not in part, at a redemption price equal to the outstanding principal amount thereof plus accrued interest to the date fixed for redemption. • ~ • THE AGGREGATE PRINCIPAL AMOUNT of this Contractual Obligation is subject to scheduled mandatory redemption by the Paying Agent/Registrar, at a price equal to the principal amount to be redeemed, plus accrued interest to the redemption date, out of moneys available for such purpose in the interest and sinking fund for the Contractual Obligations, on the dates and in the respective principal amounts, set forth in the following schedule: Mandatory Principal Redemption Date Amount September 15, 2002 $ 50,000 September 15, 2003 70,000 September 15, 2004 75,000 September 15, 2005 75,000 September 15, 2006(maturity) 80,000 UPON THE SCHEDULED MANDATORY REDEMPTION of a portion of the principal of this Contractual Obligation, in accordance with the schedule set forth above, the Paying Agent/Registrar shall record in the Registration Books the amount of such partial redemption, the date said payment was made and the remaining unpaid principal balance of this Contractual Obligation. AT LEAST 30 days prior to the date fixed for any redemption of Contractual Obligations or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying • AgentlRegistrar by United States mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such redemption, to the Registered Owner of the Contractual Obligation at its address as it appeared on the Registration Books on the date such notice of redemption is mailed; provided, however, that the failure of the Registered Owner to receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Contractual Obligation. 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 Contractual Obligations or portions thereof that are to be so redeemed. If such written notice of redemption is sent and if due provision for such payment is made, all as provided above, the Contractual Obligations or portions thereof that are to be so redeemed thereby automatically shall be treated as redeemed prior to its scheduled maturity, and shall not bear interest after the date fixed for redemption, and shall not be regarded as being outstanding except for the right of the Registered Owner to receive the redemption price from the Paying AgentlRegistrar out of the funds provided for such payment. THIS CONTRACTUAL OBLIGATION IS ISSUED solely as fully registered Contractual Obligations, without interest coupons, in the denomination of the principal amount hereof. As provided in the Contractual Obligation Ordinance, this Contractual Obligation may, at the request of the Registered Owner or the assignee hereof, be assigned and transferred for a like fully registered Contractual Obligation, in the denomination of the principal amount hereof, without interest coupons, payable to the appropriate Registered Owner or assignee, as the case may be, upon surrender of this Contractual Obligation to the Paying Agent/Registrar for cancellation, all in accordance with the form • g • and procedures set forth in the Contractual Obligation Ordinance. Among other requirements for such assignment and transfer, this Contractual Obligation 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 AgentlRegistrar, evidencing assignment of this Contractual Obligation to the assignee in whose name this Contractual Obligation is to be registered. The form of Assignment printed or endorsed on this Contractual Obligation may be executed by the Registered Owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Contractual Obligation by the Registered Owner. The Paying Agent/Registrar's reasonable standard or customary fees and charges for assigning, transferring, and exchanging any Contractual Obligation or portion thereof will be paid by the Issuer. In any circumstance, any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer, or exchange, as a condition precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to make any such transfer or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or (ii) within 45 days prior to a redemption date. NOTWITHSTANDING THE FOREGOING, a Contractual Obligation may not be transferred to any person, firm or other entity, unless prior to such transfer the Registered Owner of the Contractual Obligation obtains and delivers to the Issuer a certificate, executed by the person, firm or other entity to whom the Contractual Obligation is to be transferred (the "Transferee") and in form • acceptable to the Issuer, certifying that: (A) the Transferee is an "accredited investor" within the meaning of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, or a state or national bank organized under the laws of the United States; (B) the Transferee has sufficient knowledge and experience in financial and business matters, including purchase and ownership oftax-exempt municipal obligations, to be able to evaluate the economic risks and merits of the investment represented by the purchase of the Contractual Obligations; (C) the Transferee has made its own inquiry and analysis with respect to the Contractual Obligations and the security therefor, and other material factors affecting the security and payment of the Contractual Obligations, and has not relied upon any statement by the Issuer's financial consultants or legal advisors in connection with such inquiry or analysis or in connection with the offer and sale of the Contractual Obligations; (D) the Transferee has either been furnished with or has had access to alt necessary information that it desires in order to enable it to make an informed decision concerning the investment evidenced by the Contractual Obligations, and the Transferee has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the purpose for which the proceeds of the Contractual Obligations will be utilized, and the security therefor, so that it has been able to make an informed decision to purchase the Contractual Obligations; (E) the Transferee is purchasing the Contractual Obligation for its own account and not with a view to, and with no then present intention of, distributing or reselling the Contractual Obligation or any part thereof and that in the event the Transferee sells or otherwise disposes of the Contractual Obligation that such sale or disposition shall be made only to an investor described in (A), above, and that such investor shall execute and provide to the Transferee and to the Issuer a certificate as required by and to the effect provided in this subsection; and (F) the Transferee further • 9 • acknowledges that it is responsible for consulting with its advisors concerning any obligations, including, but not limited to, any obligations pursuant to federal and state securities and income tax laws, it may have with respect to subsequent purchasers of the Contractual Obligations if and when any such future disposition of the Contractual Obligations may occur. Upon receipt and acceptance of said certificate, the Issuer shall notify the Paying Agent/Registraz in writing that the requirements of this section have been satisfied and the name of the person, firm or other entity to whom the Contractual Obligation may be transferred. IN THE EVENT any Paying Agent/Registraz for the Contractual Obligation is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Contractual Obligation Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and cause written notice thereof to be mailed to the Registered Owner of the Contractual Obligation. IT IS HEREBY certified, recited and covenanted that this Contractual Obligation has been duly and validly authorized, issued and delivered; that all acts, conditions and things required or proper to be performed, exist and be done precedent to or in the authorization, issuance and delivery of this Contractual Obligation have been performed, existed and been done in accordance with law; that this Contractual Obligation is a general obligation of said Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Contractual Obligation, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in said Issuer, and have been pledged for • such payment, within the limit prescribed by law, all as provided in the Contractual Obligation Ordinance. THE ISSUER HAS RESERVED THE RIGHT to amend the Contractual Obligation Ordinance as provided therein, and under some (but not all) circumstances amendments thereto must be approved by the Registered Owner of the Contractual Obligation. BY BECOMING the Registered Owner of this Contractual Obligation, the Registered Owner thereby acknowledges all of the terms and provisions of the Contractual Obligation Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Contractual Obligation Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Contractual Obligation and the Contractual Obligation Ordinance constitute a contract between the Registered Owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Contractual Obligation to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City Secretary of said Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Contractual Obligation. (si~nature~ ~signature~ • City Secretary Mayor 10 • (SEAL) (b) [Form of Paying Agent/Registrar's Authentication Certificate] PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Contractual Obligation is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Contractual Obligation has been issued under the provisions of the Contractual Obligation Ordinance described in the text of this Contractual Obligation; and that this Contractual Obligation has been issued in replacement of, or in exchange for, a Contractual Obligation, Contractual Obligations, or a portion of a Contractual Obligation or Contractual Obligations of a series that 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: LaSalle Bank National Association Chicago, Illinois Paying AgentlRegistrar By: Authorized Representative • (c) [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 Contractual Obligation and all rights thereunder, and hereby irrevocably constitutes and appoints ,attorney, to register the transfer of the within Contractual Obligation on the books kept for registration thereof, with full power of substitution in the premises. 11 • Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed NOTICE: The signature above must by an eligible guarantor institution correspond with the name of the registered participating in a securities transfer owner as it appears upon the front of this association recognized signature guarantee Contractual Obligation in every particular, program. without alteration or enlargement or any change whatsoever. (d) [Form of Registration Certificate of the Comptroller of Public Accounts] COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Contractual Obligation has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and that this Contractual Obligation has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this • Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 5. INTEREST AND SINKING FUND. A special "Interest and Sinking Fund" is hereby created and shall be established and maintained by the Issuer at an official depository bank of said Issuer. Said Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of said Issuer, and shall be used only for paying the interest on and principal of said Contractual Obligations. All amounts received from the sale of the Contractual Obligations as accrued interest and premium, if any, shall be deposited upon receipt to the Interest and Sinking Fund, and all ad valorem taxes levied and collected for and on account of said Contractual Obligations shall be deposited, as collected, to the credit of said Interest and Sinking Fund. During each year while any of said Contractual Obligations are outstanding and unpaid, the governing body of said Issuer shall compute and ascertain a rate and amount of ad valorem tax that will be sufficient to raise and produce the money required to pay the interest on said Contractual Obligations as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of said Contractual Obligations as such principal matures (but never less than 2% of the original amount of said Contractual Obligations as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of said Issuer, with full allowances being made for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to • 12 • be levied, against all taxable property in said Issuer, for each year while any of said Contractual Obligations are outstanding and unpaid, and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of said Contractual Obligations, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. Section 6. DEFEASANCE OF CONTRACTUAL OBLIGATIONS. (a) Any Contractual Obligation and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Contractual Obligation") within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Contractual Obligation, plus interest thereon to the due date (whether such due date be by reason of maturity or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar in accordance with an escrow agreement or other instrument (the "Future Escrow Agreement") for such payment (1) lawful money of the United States of America. sufficient to make such payment or (2) Defeasance Securities that mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Contractual Obligations shall have become due and payable. At such time as a Contractual Obligation shall be deemed to be a Defeased Contractual Obligation hereunder, as aforesaid, such Contractual • Obligation and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Defeasance Securities. Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any determination not to redeem Defeased Contractual Obligations that is made in conjunction with the payment arrangements specified in subsection 6(a)(i) or (ii) shall not be irrevocable, provided that: (1) in the proceedings providing for such payment arrangements, the Issuer expressly reserves the right to call the Defeased Contractual Obligations for redemption; (2) gives notice of the reservation of that right to the owners of the Defeased Contractual Obligations immediately following the making of the payment arrangements; and (3) directs that notice of the reservation be included in any redemption notices that it authorizes. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer be invested in Defeasance Securities, maturing in the amounts and times as hereinbefore set forth, and all income from such Defeasance Securities received by the Paying Agent/Registrar that is not required for the payment of the Contractual Obligations and interest thereon, with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. Any Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held for the payment of Defeased Contractual Obligations may contain provisions permitting the investment or reinvestment of such moneys in Defeasance Securities or the substitution of other Defeasance Securities upon the satisfaction of the requirements specified in • subsection 6(a)(i) or (ii) and subsection 6(e). All income from such Defeasance Securities received 13 • by the Paying Agent/Registrar which is not required for the payment of the Defeased Contractual Obligations, with respect to which such money has been so deposited, shall be remitted to the Issuer or deposited as directed in writing by the Issuer. (c) The term "Defeasance Securities" means (i) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America., (ri) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the purchase thereof are rated as to investment quality by a nationally recognized investment rating f rm 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 governing body of the issuer adopts or approves the proceedings authorizing the financial arrangements are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. (d) Until all Defeased Contractual Obligations shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Contractual Obligations the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. (e) A defeasance of the Certificates under Section 6(a)(ii) shall also require a report of a certified public accountant that the money and Defeasance Securities, together with the investment • earnings thereon, deposited into the escrow fund established pursuant to the Future Escrow Agreement will be sufficient to pay the principal of the Certificates, plus interest thereon to the due date (whether such due date be by reason of maturity or otherwise) and shall also require an opinion of nationally recognized bond counsel that such defeasance will not adversely effect the exclusion from gross income of interest on the Certificates. Section 7. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED CONTRACTUAL OBLIGATIONS. (a) Replacement Contractual Obligations. In the event any outstanding Contractual Obligation is damaged, mutilated, lost, stolen or destroyed, the Paying Agent/Registrar shall cause to be printed, executed and delivered, a new contractual obligation of the same principal amount, maturity and interest rate, as the damaged, mutilated, lost, stolen or destroyed Contractual Obligation, in replacement for such Contractual Obligation in the manner hereinafter provided. (b) A~nlication for Replacement Contractual Obligations. Application for replacement of damaged, mutilated, lost, stolen or destroyed Contractual Obligations shall be made by the Registered Owner thereof to the Paying Agent/Registrar. In every case of loss, theft or destruction of a Contractual Obligation, the Registered Owner applying for a replacement contractual obligation shall furnish 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 loss or damage with respect thereto. Also, in every case of loss, theft or destruction of a Contractual Obligation, the Registered Owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft or • 14 • destruction of such Contractual Obligation, as the case may be. In every case of damage or mutilation of a Contractual Obligation, the Registered Owner shall surrender to the Paying Agent/Registrar for cancellation the Contractual Obligation so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Contractual Obligation shall have matured, and no default has occurred that is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Contractual Obligation, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Contractual Obligation) instead of issuing a replacement Contractual Obligation, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Contractual Obligations. Prior to the issuance of any replacement Contractual Obligation, the Paying Agent/Registrar shall charge the Registered Owner of such Contractual Obligation with all legal, printing, and other expenses in connection therewith. Every replacement Contractual Obligation issued pursuant to the provisions of this Section by virtue of the fact that any Contractual Obligation is lost, stolen or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen or destroyed Contractual Obligation shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Contractual Obligations duly issued under this Ordinance. (e) Authority for Issuing Replacement Contractual Obli atg ions. In accordance with Sec. • 1206.022, Texas Government Code, this Section 7 of this Ordinance shall constitute authority for the issuance of any such replacement contractual obligation 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 contractual obligations is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Contractual Obligations in the form and manner and with the effect, as provided in Section 3(a) of this Ordinance for Contractual Obligations issued in exchange for other Contractual Obligations. Section 8. CUSTODY, APPROVAL, AND REGISTRATION OF CONTRACTUAL OBLIGATIONS; BOND COUNSEL'S OPII~TION; CUSII' NUMBERS; ENGAGEMENT OF BOND COUNSEL. (a) The Mayor of the Issuer is hereby authorized to have control of the Contractual Obligation initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Contractual Obligation pending its delivery and its investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Contractual Obligation said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Contractual Obligation, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Contractual Obligation. The approving legal opinion of the Issuer's Bond Counsel and the assigned CU5IP numbers, (if any), may, at the option of the Issuer, be printed on the Contractual Obligation issued and delivered under this Ordinance, but neither shall have any legal effect, and shall • 15 • be solely for the convenience and information of the Registered Owners of the Contractual Obligation. (b) The obligation of the initial purchaser to accept delivery of the Contractual Obligation is subject to the initial purchaser being furnished with the final, approving opinion of McCall, Parkhurst & Horton L.L.P., bond counsel to the Issuer, which opinion shall be dated as of and delivered on the date of initial delivery of the Contractual Obligations to the initial purchaser. The engagement of such firm as bond counsel to the Issuer in connection with issuance, sale and delivery of the Contractual Obligations is hereby approved and confirmed. The execution and delivery of an engagement letter between the Issuer and such firm, with respect to such services as bond counsel, is hereby authorized in such form as may be approved by the Mayor, and the Mayor is hereby authorized to execute such engagement letter. Section 9. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE CONTRACTUAL OBLIGATIONS. (a) Covenants. The Issuer covenants to take any action necessary to assure, or refrain from any action that would adversely affect, the treatment of the Contractual Obligations as an obligation described in section 103 of the 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: (1) to take any action to assure that no more than 10 percent of the proceeds of the Contractual Obligations (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Contractual Obligations, in contravention of section 141(b)(2) of the Code; (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Contractual Obligations or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used fora "private business use" that is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use; (3) to take any action to assure that no amount that is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Contractual Obligations (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; • 16 (4) to refrain from taking any action that would otherwise result in the Contractual Obligations being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (5) to refrain from taking any action that would result in the Contractual Obligations being "federally guaranteed" within the meaning of section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the Contractual Obligations, directly or indirectly, to acquire or to replace funds that were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) that produces a materially higher yield over the term of the Contractual Obligations, other than investment property acquired with - (A) proceeds of the Contractual Obligations invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 30 days or less until such proceeds are needed for the purpose for which the bonds are issued, (B) amounts invested in a bona fide debt service fund, 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 Contractual • Obligations; (7) to otherwise restrict the use of the proceeds of the Contractual Obligations or amounts treated as proceeds of the Contractual Obligations, as may be necessary, so that the Contractual Obligations do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Contractual Obligations) 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 Contractual Obligations have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. (b) Rebate Fund. In order to facilitate compliance with the above covenant (h), 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 Registered Owners. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. • 17 • (c) Use of Proceeds. For purposes of the foregoing covenants (a)(1) and (a)(2), the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations (hereinafter defined) 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 Contractual Obligations. 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 (the "Treasury Regulations"). In the event that regulations or rulings are hereafter promulgated that modify or expand provisions of the Code, as applicable to the Contractual Obligations, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income Nation of interest on the Contractual Obligations under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated that impose additional requirements applicable to the Contractual Obligations, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Contractual Obligations under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, that may be permitted by the Code as are consistent with the purpose for the issuance of the Contractual Obligations. (d) Designation as Qualified Tax-Exempt Obligations. The Issuer hereby designates the Contractual Obligations as "qualified tax-exempt obligations" as defined in section 265(b)(3) of the • Code. In furtherance of such designation, the Issuer represents, covenants and warrants the following: (a) that during the calendar year in which the Contractual Obligations are issued, the Issuer (including any subordinate entities) has not designated nor will designate obligations that when aggregated with the Contractual Obligations, will result in more than $10,000,000 of "qualified tax- exemptbonds" being issued; (b) that the Issuer reasonably anticipates that the amount oftax-exempt obligations issued, during the calendar year in which the Contractual Obligations are issued, by the Issuer (or any subordinate entities) will not exceed $10,000,000; and, (c) that the Issuer will take such action or refrain from such action as necessary, and as more particularly set forth in this Section 9, in order that the Contractual Obligations will not be considered "private activity bonds" within the meaning of section 141 of the Code. (e) Allocation of ,and Limitation on Exnenditures for the Project. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the acquisition of the Project on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the acquisition of the Project is completed. The foregoing notwithstanding, the Issuer shall not expend proceeds of the sale of the Contractual Obligations or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Contractual Obligations, or (2) the date the Contractual Obligations are retired, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the status, for federal income tax purposes, of the Contractual Obligations or the urterest thereon. For purposes hereof, the Issuer shall not be obligated • is • 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. (t) Disposition of Project. The Issuer covenants that 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 ofnationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Contractual Obligations. 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 a legal opinion that such failure to comply will not adversely affect the excludability for federal income tax proposes from gross income of the interest. Section 10. SALE OF CONTRACTUAL OBLIGATION; FURTHER PROCEDURES. (a) The Contractual Obligation is hereby initially sold and shall be delivered to LaSalle Bank National Association, Chicago, Illinois (the "Purchaser"), for cash for the par value thereof pursuant to the Private Placement Letter dated the date of adoption of this Ordinance. The Contractual Obligation shall initially be registered in the name of the Purchaser. It is hereby officially found, determined and declared that the terms of this sale are the most advantageous reasonably obtainable. The Initial Contractual Obligation shall be registered in the name of LaSalle Bank National Association. (b) The Mayor and Mayor Pro Tem, the City Manager, City Secretary and Director of • Finance and all other officers, employees and agents of the Issuer, and each of them, shall be and they are hereby expressly 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 a Paying Agent/Registrar Agreement with the Paying Agent/Registrar and all other instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Contractual Obligations and the sale of the Contractual Obligations. In case any officer whose signature shall appear on any Contractual Obligation shall cease to be such officer before the delivery of such Contractual Obligation, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 11. INTEREST EARNINGS ON CONTRACTUAL OBLIGATION PROCEEDS. Interest earnings derived from the investment of proceeds from the sale of the Contractual Obligations shall be used along with other contractual obligation proceeds for the Project; provided that after completion of such purpose, if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however, that any interest earnings on contractual obligation proceeds that are required to be rebated to the United States of America pursuant to Section 9 hereof in order to prevent the Contractual Obligations from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section. • 19 • Section 12. PROJECT FUND; INVESTMENTS; SECURITY FOR FUNDS. (a) The Issuer hereby creates and establishes and shall maintain on the books of the Issuer a separate fund to be entitled the "Series 2001 Contractual Obligation Project Fund" for use by the Issuer for payment of all lawful costs associated with the acquisition of the Property as hereinbefore provided. Upon payment of all such costs, any moneys remaining on deposit in said Fund shall be transferred to the Interest and Sinking Fund. Amounts so deposited to the Interest and Sinking Fund shall be used in the manner described in Section 5 of this Ordinance. (b) The City Council may make any changes in the description of the Project listed on Schedule I to this Ordinance or of any component thereof whenever the City Council deems such changes to be necessary and appropriate and provided that the nature of the Property after such changes will constitute qualified property eligible for financing under the Act and such changes shall not adversely affect the tax-exempt status of the Contractual Obligations. (c) The Issuer may place proceeds of the Contractual Obligations (including investment earnings thereon) and amounts deposited into the Interest and Sinking Fund in investments authorized by the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended; provided, however, that the Issuer hereby covenants that the proceeds of the sale of the Contractual Obligations will be used as soon as practicable for the purposes for which the Contractual Obligations are issued. (d) All deposits authorized or required by this Ordinance shall be secured to the fullest extent required by law for the security of public funds. • Section 13. CONTINUING DISCLOSURE OF INFORMATION. In reliance upon the exemption provided in United States Securities and Exchange Commission Rule 15c2-12 (the "Rule") for obligations with an aggregate principal amount of less than $1,000,000, the Issuer will not make an undertaking as otherwise provided by the Rule. Section 14. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend this Ordinance subject to the following terms and conditions, to-wit: (a) The Issuer may from time to time, without the consent of the Registered Owner, except as otherwise required by paragraph (b) below, amend or supplement this Ordinance in order to (i) cure any ambiguity, defect or omission in this Ordinance that does not materially adversely affect the interests of the holders, (ii) grant additional rights or security for the benefit of the holders, (iii) add events of default as shall not be inconsistent with the provisions of this Ordinance and that shall not materially adversely affect the interests of the holders, (v) qualify this Ordinance under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time in effect, or (iv) make such other provisions in regard to matters or questions arising under this Ordinance as shall not be inconsistent with the provisions of this Ordinance and that shall not in the opinion of the Issuer's Bond Counsel materially adversely affect the interests of the holders. (b) Except as provided in paragraph (a) above, the Registered Owner shall have the right from time to time to approve any amendment hereto that may be deemed necessary or desirable by the • 20 • Issuer; provided, however, that without the consent of the Registered Owner, nothing herein contained shall permit or be construed to permit amendment of the terms and conditions of this Ordinance or in any of the Contractual Obligations so as to: (1 } Make any change in the maturity of any of the outstanding Contractual Obligations; (2) Reduce the rate of interest borne by any of the outstanding Contractual Obligations; (3) Reduce the amount of the principal of, or redemption premium, if any, payable on any outstanding Contractual Obligations; (4) Modify the terrns of payment of principal or of interest or redemption premium on outstanding Contractual Obligations or any of them or impose any condition with respect to such payment; or (5) Change the minimum percentage of the principal amount of any series of Contractual Obligations necessary for consent to such amendment. (c) If at any time the Issuer shall desire to amend this Ordinance under this Section, the Issuer shall send by U. S. mail to the Registered Owner a copy of the proposed amendment. (d) Whenever at any time within one year from the date of mailing of such proposed • amendment the Issuer shall receive an instrument or instruments executed by the Registered Owner, which instrument or instruments shall refer to the proposed amendment and that shall specifically consent to and approve such amendment, the Issuer may adopt the amendment in substantially the same form. (e) Upon the adoption of any amendatory ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be modified and amended in accordance with such amendatory Ordinance, and the respective rights, duties, and obligations of the Issuer and the Registered Owner shall thereafter be determined, exercised, and enforced, subject in all respects to such amendment. (f) Any consent given by the Registered Owner of a Contractual Obligation pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of such consent, and shall be conclusive and binding upon all future holders of the same Contractual Obligation during such period. Such consent may be revoked at any time after six months from the date of consent by the Registered Owner who gave such consent, or by a successor in title, by filing notice with the Issuer. For the purposes of establishing ownership of the Contractual Obligations, the Issuer shall rely solely upon the registration of the ownership of such Contractual Obligations on the registration books kept by the Paying Agent/Registrar. 21 SCHEDULEI Acquisition of computer and audio equipment and software, vehicles, fire department prevention trailer and equipment and street department equipment. • A-1 ORDINANCE NO. 915 -O1 Authorizing the Issuance of $350,000 CITY OF RICHLAND HILLS, TEXAS PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS SERIES 2001 Adopted October 23, 2001 • TABLE OF CONTENTS Section 1. Recitals, Amount and Purpose of the Contractual Obligations 1 Section 2. Designation, Date, Denominations, Numbers, and Maturities of Contractual Obligations ............................................................2 Section 3 . Characteristics of the Contractual Obligations 2 Section 4. Form of Contractual Obligations 5 Section 5. Interest and Sinking Fund 12 Section 6. Defeasance of Contractual Obligations 13 Section 7. Damaged, Mutilated, Lost, Stolen, or Destroyed Contractual Obligations 14 Section S. Custody, Approval, and Registration of Contractual Obligations; Bond Counsel's Opinion; CUSIl' Numbers; Engagement of Bond Counsel 15 Section 9. Covenants Regarding Tax Exemption of Interest on the Contractual Obligations 16 • Section 10 Sale of Contractual Obligations; Further Procedures 19 Section 11. Interest Earnings on Contractual Obligation Proceeds 19 Section 12. Project Fund; Investments; Security for Funds 20 Section 13. Continuing Disclosure of Information 20 Section 14. Method of Amendment 20 Schedule I Use of Proceeds • i