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HomeMy Public PortalAboutOrdinance No. 1004-05 01-25-2005 Draft: January 21, 2005 ORDINANCE N0.1004 _ 05 ORDINANCE OF THE CITY COUNCIL OF THE CITY OF RICHLAND HILLS, TEXAS, PROVIDING FOR THE ISSUANCE AND SALE OF CITY OF RICHLAND HILLS, TEXAS TAX NOTE, SERIES 2005; PRESCRIBING THE FORM OF THE NOTE; LEVYING AD VALOREM TAXES TO SECURE THE NOTE; AND ORDAINING OTHER MATTERS IN CONNECTION WITH THE ISSUANCE AND SALE OF THE TAX NOTE THE STATE OF TEXAS § COUNTY OF TARRANT § CITY OF RICHLAND HILLS § WHEREAS, pursuant to Chapter 1431, Texas Government Code (hereinafter called the "Act"), the City Council of the City of Richland Hills (the "City" or the "Issuer") is authorized and empowered to issue tax notes to pay contractual obligations incurred or to be incurred (i) for the construction of any public work, (ii) for the purchase of materials, supplies, equipment, machinery, buildings, lands andrights-of--way for the City's authorized needs and purposes and (iii) to pay costs of professional services, including a service by a tax appraisal engineer, engineer, architect, attorney, mapmaker, auditor, fmancial advisor, or fiscal agent; and WHEREAS, in accordance with the provisions of the Act, the City Council hereby finds and determines that a tax note should be issued and sold at this time for paying all or a portion of the Issuer's contractual obligations incurred in connection with (i) the purchase of computer equipment and software i for police and other departments of the City, vehicles, police department equipment and waterworks and sewer system equipment and (ii) legal and fiscal fees in connection with such projects (collectively, the "Project"); and WHEREAS, the governing body of the Issuer deems it appropriate to adopt this Ordinance (the "Ordinance") and issue the City of Richland Hills, Texas Tax Note, Series 2005 herein authorized as permitted by the Act. NOW, THEREFORE, BE 1T ORDAINED BY THE CITY COUNCIL OF THE CITY OF RICHLAND HILLS: Section 1. AMOUNT AND PURPOSE OF THE NOTE. The Note of the City of Richland Hills (the "issuer") is hereby authorized to be issued and delivered in the aggregate principal amount of $400,000, for the purpose of financing the costs of the Project (as such term is defined in the preambles hereto). Section 2. DESIGNATION, DATE, DENOMINATION, NUMBERS, AND MATURITIES OF NOTE. The Note initially authorized hereby shall be designated: "City of Richland Hills Tax Note, Series 2005," and initially there shall be issued, sold, and delivered hereunder one fully registered Note, without interest coupons (such note is hereinafter referred to as the "Note"), payable in installments to the registered owners thereof, or registered assigns, dated February 1, 2005, in the denomination and principal amount of $400,000, numbered R-1, with Notes issued in replacement thereof numbered consecutively from R-2 upward, payable to the respective registered owners thereof (in each case, the "Registered Owner" or the "registered owner"), with the initial Note being made payable to Zions First National Bank, as the purchaser as described in Section 14 hereof, with the principal ofthe Note to be payable on the dates and in the amounts • • as set forth in the FORM OF NOTE in Section 5. The date of delivery of the Note to the initial purchaser thereof shall be referred to in the Note and in this Ordinance as the "Delivery Date" or "Date of Delivery". The term "Notes" as used in this Ordinance shall mean and include collectively the Note initially issued and delivered pursuant to this Ordinance and all substitute notes exchanged therefor, as well as all other substitute notes and replacement notes issued pursuant hereto.. Section 3. INTEREST ON THE NOTE. The Note initially authorized hereby shall bear interest on the unpaid balance of the principal amount thereof from the Delivery Date (which date shall be indicated by the Paying Agent/Registrar under the heading "Date of Delivery" appearing on the Note) to the scheduled due date, or date of prepayment or redemption prior to the scheduled due date, of the principal installments of the Note, at the rate of interest set forth in the FORM OF NOTE in Section 5. The interest shall be calculated and payable on the dates and in the manner provided in the FORM OF NOTE set forth in Section 5. Section 4. GENERAL CHARACTERISTICS. (a) In General. The Note initially authorized hereby shall be issued, shall be payable, may or shall be prepaid or redeemed prior to the scheduled principal installment payment dates, may be transferred and assigned, shall have the characteristics, and shall be signed and executed (and the Note shall be sealed), all as provided, and in the manner indicated, in the FORM OF NOTE set forth in Section 5. After the Note has been authorized to be issued by the City Council of the Issuer, and prior to the delivery of the Note, the Comptroller of Public Accounts shall execute the Comptroller's Registration Certificate as provided in Section 5. In addition, on the date of delivery of the Note to the initial purchaser thereof, the Paying Agent/Registrar shall fill in the Date of Delivery of the Note under the heading "Date of Delivery" appearing on the Note as • set forth in Section 5. (b) Registration Books. The Issuer shall keep or cause to be kept at the principal operations office of the Paying Agent/Registrar books for the registration and transfer of the Note (the "Registration Books") and the Issuer hereby appoints the Paying AgenbRegistrar as its registrar and transfer agent to keep such books and make such registrations and transfers under such reasonable regulations as the Issuer or the Paying AgenURegistrar may prescribe; and the Paying Agent/Registrar will register or transfer as herein provided, the Note upon presentation thereof at such office. Registration of any Note may be transferred (in whole, not in part) only on the Registration Books upon surrender thereof by the registered owner in person or by its duly authorized attorney, by proper written instrument of transfer, in the form and with guaranty of signatures satisfactory to the Paying Agent/Registrar, duly executed by such owner or attorney. Upon such surrender for transfer of registration, the Paying AgenURegistrar shall make notation of such transfer on such Note in the assignment section appearing thereon and in the Registration Books. Such transfers of registration shall be made without charge to the owner of such Note, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Bondholder requesting such transfer of registration, as a condition precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to make transfers of any Note within five (5) days prior to an interest payment date or redemption date or subsequent to the date of mailing of notice of redemption of such Note or a portion thereof, anything in such Note to the contrary notwithstanding. 2 • (c) Payment to registered owner. The person in whose name any Note shall be registered on the Registration Books may be deemed and treated as the absolute owner thereof for all purposes of this Ordinance whether or not such Note shall be overdue, and neither the Issuer nor the Paying Agent/Registrar shall be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, agreed liquidated damages, if any, and interest on any such Note shall be made only to such registered owner thereof; but such registration may be changed as provided herein. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Note to the extent of the sum or sums so paid. (d) Notation of Payment and Prepayment. The lssuerhereby appoints Wachovia Bank, National Association, Houston, Texas as the Paying Agent/Registrar for the Note. Upon the prepayment or partial redemption of the Note, the Paying Agent/Registrar, shall note in the Prepayment Record appearing on such Note the amount of such prepayment or partial redemption, the date said payment was made and the remaining unpaid principal balance of said Note and shall then have said entry signed by an authorized official of the Paying Agent/Registrar. The Paying Agent/RegistrarshaIl also record such information in the Registration Books, and the Paying Agent/Registrar shall also record in the Registration Books all payments of principal installments on such Note when made on their respective due dates. (e) Substitute Paving A eg nt/Re ig stray. The Issuer covenants with the registered owners of the Note that at all times while the Note is outstanding the Issuer will provide a national or state banking corporation doing business under the laws of the United States or any state, with trust powers subject to examination by federal or state authority to act as and perform the services of Paying Agent/Registrar for the Note under this Ordinance, and that the Paying AgenURegistrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 40 days written notice to the Paying AgenURegistrar, to be effective not later than 30 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 entity to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying AgenURegistrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Note, to the new Paying Agent/Registrardesfgnated 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 toeach registered owner of the Note, 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 Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. Section 5. FORM OF NOTE. The form of the Note, together with the forms of the various certificates and forms to appear on the Note, shall be, respectively, substantially as follows, with necessary and appropriate variations, omissions, and insertions as permitted or required by this Ordinance: (a) FORM OF NOTE • 3 • NO. R- UNITED STATES OF AMERICA PRINCIPAL STATE OF TEXAS AMOUNT COUNTY OF TARRANT $400,000 CITY OF RICHLAND HILLS, TEXAS TAX NOTE, SERIES 2005 Interest Rate Date of Delivery Maturity Date CUSIP 3.780% February 15, 2012 REGISTERED OWNER: PRINCIPAL AMOUNT: The City of Richland Hills, Texas (the "Issuer"), being a political subdivision of the State of Texas located in Tarrant County, for value received, promises to pay, from the sources described herein, to the registered owner specified above, or registered assigns, the principal amount specified above, and to pay interest thereon, from the Date of Delivery set forth above, on the balance of said principal amount from time to time remaining unpaid, at the rate per annum set forth above, calculated on the basis of a 360-day year of twelve 30-day months. The unpaid principal of this Note shall mature on February 15, 2012, but shall be paid in installments on the dates and in the amounts set forth in the table below: Principal Payment Date Installment February 15, 2006 $45,000 • February 15, 2007 54,000 February 15, 2008 56,000 February 15, 2009 58,000 February 15, 2010 60,000 February I5, 2011 62,000 February 15, 2012 (maturity) 65,000 The principal of and interest on this Note are payable in. lawful money of the United States of America, without exchange or collection charges. The Issuer shall pay interest on this Note on February I5, 2006 and on each August 15 and February 15 thereafter to the date of maturity or redemption prior to maturity. The last principal installment of this Note shall be paid to the registered owner hereof upon presentation and surrender of this Note at maturity, or upon the date fixed for its redemption prior to maturity, at the principal office of Wachovia Bank, National Association, Houston, Texas, which is the "Paying Agent/Registrar" for this Note. The payment of all other principal installments of and interest on this Note shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and interest payment date by check or draft, dated as of such principal and interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the Ordinance to be on deposit with the Paying AgendRegistrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying Ageni/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 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 addition, principal and interest 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. 4 • • Any accrued interest due in connection with the payment of the final installment of principal of this Note shall be paid to the registered owner upon presentation and surrender of this Note for payment or redemption at the designated principal office of the Paying Agent/Registrar. The Issuer covenants with the registered owner of this Note that on or before each principal payment date, interest payment date, and accrued interest payment date for this Note it will make available to the Paying Agent/Registrar, from the "interest and Sinking Fund" created by the Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Note, when due. If the date for the payment of this Note shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the designated principal 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 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 NOTE is the sole note of the authorized series of the Issuer designated "City of Richland Hills, Texas Tax Note, Series 2005," in the aggregate principal amount of $400,000 (the "Note"), issued for the purpose of the payment of contractual obligations incurred in connection with (i) the purchase of computer equipment and software for police and other departments of the City, vehicles, police department equipment and waterworks and sewer system equipment and (ii) legal and fiscal fees in connection with such projects. ON AUGUST 15, 2008, or on any date thereafter, any outstanding principal installment of this Note may be redeemed in whole, prior to its scheduled payment date, at the option of the issuer, with funds derived from any available and lawful source, at a redemption price equal to the principal amount to be redeemed plus accrued interest to the date fixed for redemption. • AT LEAST 45 days prior to the date fixed for any optional redemption of the Note or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, to the Registered Owner of the Note at its address as it appeared on the Registration Books on the day 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 this Note. 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 Note or portions thereofwhich 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 Note or portions thereof which 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 Agent/Registrar out of the funds provided for such payment. UPON THE PREPAYMENT OR PARTIAL REDEMPTION of this Note, the Paying Agent/Registrar, shall note in the Prepayment Record appearing on this Note the amount of such prepayment or partial redemption, the date said payment was made and the remaining unpaid principal balance of this Note and shall then have said entry signed by an authorized official of the Paying Agent/Registrar. The Paying Agent/Registrar shall also record such information in the Registration Books, and the Paying Agent/Registrar shall also record in the Registration Books all payments of principal installments on such Note when made on their respective due dates. 5 THE NOTE OF THIS SERIES is issuable in the form of one fully-registered Note without coupons in the denomination of $400,000. This Note maybe transferred or exchanged as provided in the Ordinance, only upon the Registration Books kept for that purpose at the above-mentioned office of the Paying Agent/Registrar upon surrender of this Note together with a written instrument of transfer or authorization for exchange satisfactory to the Paying Agent/Registraravd duly executed by the registered owner or his duly authorized attorney, and thereupon a new Note of the same maturity and in the same aggregate principal amount shall be issued by the Paying Agent/Registrar to the transferee in exchange therefor as provided in the Ordinance, and upon payment of the charges therein prescribed. The lssuer and the Paying Agent/Registrarrnay deem and treat the person in whose name this Note is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal or redemption price hereof and interest due hereon and for all other purposes. 1N THE Ordinance, the lssuer has reserved the right to amend the Ordinance as provided therein, and under some (but not all) circumstances amendments thereto must be approved by the registered owner of the outstanding N ote. THIS NOTE shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Ordinance until the Certificate of Authentication shall have been executed by the Paying Agent/Registrar or the Comptroller's Registration Certificate hereon shall have been executed by the Texas Comptroller of Public Accounts. 1T IS HEREBY certified, recited, and covenanted that this Note 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 Note have been performed, existed, and been done in accordance with law; that this Note is a general obligation of the lssuer, issued on the full . faith and credit thereof; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal ofthis Note, as such interest and principal come due, have been levied and ordered to be levied against all taxable property in the lssuer, and have been pledged for such payment, within the limit prescribed by law. BY BECOMING the registered owner of this Note, the registered owner thereby acknowledges all ofthe terms and provisions ofthe Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the lssuer, and agrees that the terms and provisions of this Note and the Ordinance constitute a contract between the registered owner hereof and the lssuer. [The remainder of this page is intentionally left blank] 1N WITNESS WHEREOF, the lssuer has caused this Note to be signed with the manual or facsimile signature of the Mayor of the lssuer (or the Mayor Pro-Tern in the absence of the Mayor), countersigned with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed or placed in facsimile on this Note, which is dated February 1, 2005. (signature) (si~naturel City Secretary, City of Richland Hills, Texas Mayor, City of Richland Hills, Texas (CITY SEAL) • (b) FORM OF REGISTRATION CERTIFICATE OF THE 6 • COMPTROLLER OF PUBLIC ACCOUNTS: COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. 1 hereby certify that this Note has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Note 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) (c) FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Note 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 Note has been issued under the provisions of the Ordinance described • on the face of this Note; and that this Note has been issued in exchange for or replacement of a Note 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: Wachovia Bank, National Association By Authorized Representative (d) FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Print or Type Name, Address and Social Security Number or other Taxpayer Identification Number of Transferee the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Note on the books kept by the Paying AgenURegistrar for the registration and transfer of the Note, with full power of substitution in the premises. Dated: 7 i Assignee Signature: Printed Name: NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular. Signature Guaranteed By: By: Title: (e) FORM OF PREPAYMENT RECORD PREPAYMENT RECORD Principal Name and Title of Prepayment or Remaining Authorized Officer • Date of Redemption Principal making Entry Signature of Authorized Payment Balance Officer Section 6. INTEREST AND SINKING FUND. City ofRichland Hills, Texas Tax Note, Series 2005 Interest and Sinking Fund, hereinafter called the "interest and Sinking Fund" is hereby authorized and shall be established and maintained in a depository bank of the Issuer, so long as the Note, or interest thereon, is outstanding and unpaid. The interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of the Note. All ad valorem taxes levied and collected for and on account of said Note shall be deposited, as collected, to the credit of the Interest and Sinking Fund. Section 7. TAX LEVY. During each year while any of said Note is outstanding and unpaid, the governing body ofthe issuer shall compute and ascertain a rate and amount of ad valorem tax which together with any other lawfully available funds that are on deposit in the Interest and Sinking Fund at the time of such 8 levy will be sufficient to pay the interest on said Note as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of such Note as such principal matures (but never less than 2% of the original principal amount of said Note as a Sinking Fund each year); and said tax shall be based on the latest approved tax rolls of said Issuer, with full allowance being made for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied and is hereby ordered to be levied, against all taxable property in said Issuer for each year while any of said Note is 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 Note, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. In addition, until expended for the herein authorized purposes, the proceeds of the Note are pledged to the payment of the principal and interest on the Note. Section 8. DEFEASANCE OF NOTE. (a) The Note and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (the "Defeased Note") within the meaning of this Ordinance, except to the extent provided in Subsection (d) of this Section, when payment of the principal of the Note, 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 for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, or 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 the Defeased • Note shall have become due and payable. At such time as the Note shall be deemed to be a Defeased Note hereunder, as aforesaid, such Note and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any moneys so deposited with the Paying Agent/Registrarrnay at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar/ Registrar which is not required for the payment of the Note 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. (c) The term "Government Obligations" as used in this Section, shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, which may be in book-entry form. (d) Until the Defeased Note shall have become due and payable, the Paying Agent/RegistrarshaIl perform the services of Paying Agent/Registrar for such Defeased Note 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. Section 9. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED NOTE. • 9 (a) Replacement Notes. In the event any outstanding Note is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new Note of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Note, in replacement for such Note in the manner hereinafter provided. (b) Application for Replacement Notes. Application for replacement of a damaged, mutilated, lost, stolen, or destroyed Note shall be made by the registered owner thereof to the Paying Agent/Registrar/ Registrar. In every case of loss, theft, or destruction of a Note, the registered owner applying for a replacement Note shall furnish to the lssuer 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 Note, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction ofthe loss, theft, or destruction of such Note, as the case may be. In every case of damage or mutilation of a Note, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Note so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Note 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 this Note, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Note) instead of issuing a replacement Note, provided security or indemnity is furnished as above provided in this Section 9. (d) Charge for Issuing Replacement Notes. Prior to the issuance of any replacement Note, the Paying Agent/Registrar shall charge the registered owner of such Note with all legal, printing, and other • expenses in connection therewith. Every replacement Note issued pursuant to the provisions of this Section by virtue of the fact that any Note is lost, stolen, or destroyed shall constitute a Note of the lssuer whether or not the lost, stolen, or destroyed Note 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 Notes duly issued under this Ordinance. (e) Authority for Issuing Replacement Notes. In accordance with Subchapter D, Chapter 1201, Texas Government Code, as amended, this Section 9 shall constitute authority for the issuance of any such replacement certificate without necessity of further action by the Issuer or any other body or person, and the duty of the replacement of such notes is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Notes in the form and manner and with the effect, as provided in Section 4(a) of this Ordinance for a Note issued in exchange of another Note. Section 10. CUSTODY, APPROVAL, AND REGISTRATION OF NOTE. The Mayor ofthe lssuer (or the Mayor Pro-Tem in the absence of the Mayor) is hereby authorized to have control of the Note initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Note pending its delivery and its 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 the Note, the Comptroller of Public Accounts (or a deputy designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate attached to the Note, and the seal ofthe Comptroller shall be impressed, or placed in facsimile, on such Certificate. Section 11. REMEDIES 1N EVENT OF DEFAULT. In additional to all ofthe rights and remedies 10 • provided by the laws of the State of Texas, the lssuer covenants and agrees that in the event of default in payment of principal or interest on the Note when due, or, in the event it fails to make the payments required to be made into the Interest and Sinking Fund or defaults in the observance of performance of any other of the contracts, covenants, conditions or obligations set forth in this Ordinance or in the Note, the following remedies shall be available: (a) the registered owners shall be entitled to a writ of mandamus issued by a court of competent jurisdiction compelling and requiring the Issuer and the officials thereofto observe and perform the contracts, covenants, obligations or conditions prescribed in this Ordinance; and (b) any delay or omission to exercise any right or power accruing upon any default shall not impair any such right or power nor 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. Section 12. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE NOTE. (a) Covenants. The lssuer covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Note 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 Note 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 lssuer, 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 Note, 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 ofthe Note 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; (3) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Note (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141 (c) of the Code; (4) to refrain from taking any action which would otherwise result in the Note being treated as a "private activity bond" within the meaning of section 141(b) of the Code; (5) to refrain from taking any action that would result in the Note being "federally guaranteed" within the meaning of section 149(b) of the Code; it (6) to refrain from using any portion of the proceeds of the Note, 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 Note, other than investment property acquired with (A) proceeds of the Note 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 Note is issued, (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148- I (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 Note; (7) to otherwise restrict the use of the proceeds of the Note or amounts treated as proceeds of the Note, as maybe necessary, so that the Note does 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 refizndings); 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 Note 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 • ofAmerica, not later than 60 days after the Note has been paid in fu11,100 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 (8), a "Rebate Fund" is hereby established by the lssuer 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 Owner. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) Proceeds. 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 Note. It is the understanding of the lssuer 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 Note, the lssuer 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 Note 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 Note, the lssuer 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 Note 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 lssuer, which may be permitted by the Code as are I2 • • consistent with the purpose for the issuance of the Note. (d) Allocation Of and Limitation On, Expenditures for the Project. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this Ordinance (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 Note, or (2) the date the Note is retired. The Issuer agrees to obtain the advice ofnationally-recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Note. 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) Disposition of Project. 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 ofnationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Note. 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. (f) Designation as Qualified Tax-Exempt Obli atg ions. The Issuer hereby designates the Note as a "qualified tax-exempt obligation" 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 Note is issued, the Issuer (including any subordinate entities) has not designated nor will designate obligations, which when aggregated with the Note, will result in more than $10,000,000 of "qualified tax- exempt obligations" being issued; (b) that the Issuer reasonably anticipates that the amount of tax-exempt obligations issued, during the calendar year in which the Note is 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, in order that the Note will not be considered a "private activity bond" within the meaning of section 141 of the Code. Section 13. OTHER REPRESENTATIONSAND COVENANTS. The Issuer further covenants or warrants as follows: (a) The Issuer is a duly organized and existing political subdivision of the State of Texas under the Constitution and laws of the State of Texas. (b) The Issuer is duly authorized under the laws of the State of Texas to issue the Note; all action on its part of the authorization and issuance of the Note has been duly and effectively taken; and the Note in the hands of the Registered Owners thereof are and will be valid and enforceable obligation of the Issuer in 13 • • accordance with its terms. (c) The Note upon issuance, upon approval by the Attorney General of the State of Texas, will be a legal, valid and binding obligation of the lssuer, subject to bankruptcy, insolvency, or other laws affecting creditors' rights generally and as may be affected by matters involving the exercise of equitable or judicial discretion. (d) The execution and delivery of the Note, and the adoption of the Ordinance, and the compliance by the lssuer with the respective provisions thereof, will not conflict with or constitute a breach of or default under any court decree or order or any agreement, indenture, lease or other instrument, or any existing law or administrative regulation, decree or order binding on the lssuer. (e) No litigation is pending that would adversely affect the financial condition of the Issuer, and no litigation of any nature has been filed or is now pending to restrain or enjoin the issuance or delivery of the Note, that would affect the provisions made for the payment or security of the Note, or that in any manner questions the proceedings or authority concerning the issuance of the Note. (f) There has been no default or non-appropriation of any obligations of the lssuer. (g) So long as Zions First National Bank or its assignee is the sole registered owner of the Note, the lssuer shall provide a copy of its audited annual financial statements within 90 days from the date that such statements become available to the Issuer. • Section 14. SALE OF NOTE. The Note is hereby sold and shall be delivered to Zions First National Bank for the par value thereof in accordance with the Investment Letter presented to the City Council on the date of adoption of this Ordinance. The Mayor (or the Mayor Pro-Tem in the absence of the Mayor) is authorized to accept the offer of Zions First National Bank in the Investment Letter. Section 15. PUBLIC NOTICE. It is hereby officially found and determined that public notice of the time, place and purpose of said meeting was given, all as required by the Government Code, Chapter 551. Section 16. ORDINANCE EFFECTIVE ON PASSAGE. This Ordinance shall become effective immediately upon passage. Section 17. METHOD OF AMENDMENT. The lssuer hereby reserves the right to amend this Ordinance subject to the following terms and conditions, to-wit: (a) The lssuer may from time to time, without the consent of any 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 registered owners, (ii) grant additional rights or security for the benefit of the registered owners, (iii) add events of default as shall not be inconsistent with the provisions of this Ordinance and which shall not materially adversely affect the interests of the registered owners, (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 which shall not in the opinion of bond counsel to 14 • • the lssuer materially adversely affect the interests of the registered owners. (b) Except as provided in paragraph (a) above, the registered owner of the Note shall have the right from time to time to approve any amendment hereto which may be deemed necessary or desirable by the lssuer. (c) If at any time the lssuer shall desire to amend this Ordinance under this Section, the lssuer shall send by U.S. mail to the registered owner of the Note a copy of the proposed amendment. (d) Whenever at any time within one year from the date of mailing of such notice the lssuer shall receive an instrument or instruments executed by the registered owner, which instrument or instruments shall refer to the proposed amendment and which shall specifically consent to and approve such amendment, the lssuer 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 ofthe lssuer and all registered owners of such affected Note shall thereafter be determined, exercised, and enforced, subject in all respects to such amendment. For the purposes of establishing ownership of the Note, the Issuer shall rely solely upon the registration of the ownership of such bonds on the Registration Books kept by the Paying Agent/Registrar. Section 18. NO RULE 15c2-12 UNDERTAKING. The offering of the Note is exempt from the • requirements of Rule 15c2-12 and the Issuer has therefore not made an undertaking with respect to the Note in accordance with such Rule. Section 19. INCONSISTENT PROVISIONS. All indentures, ordinances or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain controlling as to the matters contained herein. Section 20. GOVERNING LAW. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. Section 21. SEVERABILITY. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application thereof to other circumstances shall nevertheless be valid, and this governing body hereby declares that this Ordinance would have been enacted without such invalid provision. Section 22. FURTHER PROCEDURES. The Mayor, Mayor Pro-Tem, City Manager, Director of Finance and City Secretary of the Issuer and all other officers, employees and agents of the lssuer, 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, aPaying Agent/Registrar Agreement with the Paying AgenURegistrar and all other instruments, receipts, instructions and certifications whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance 15 • • and the sale of the Note. In case any officer whose signature shall appear on any Note shall cease to be such officer before the delivery of such Note, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. (Execution Page Follows) • ADOPTED THIS 25~' DAY OF JANUARY, 2005. ATTEST: ayor, City of Richland Hills, Texas e+ fir,. ~ . i Secretary, City of Richland Hills, Te~as'~=" ~ ~'.F°a~ ; [CITY SEAL] ~ ~ ~:,-~i ~ ( ''`t . .a~- d o a w !!r1l11j19 APPROVED AS TO FORM AND LEGALITY: 16