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HomeMy WebLinkAboutOrd 1986-105 W&S Lien Revenue.pdf• ORDINANCE NO. J25 _1?6 AN ORDINANCE authorizing the issuance of "CITY OF ANNA, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM SUBORDINATE LIEN REVENUE CERTIFICATES OF OBLIGATION, SERIES 1986"; specifying the terms and features of said certificates; providing for the payment of said certificates of obligation by the levy of an ad valorem tax upon all taxable property within the City and a pledge of the net revenues derived from the operation of the City's combined Waterworks and Sanitary Sewer System; and resolving other matters incident and relating to the issuance, payment, security, sale and delivery of said Certificates, including the approval and distribution of an Official Statement pertaining thereto; and declaring an emergency. . WHEREAS, notice of the City Council's intention to issue certificates of obligation in the maximum principal amount of $750,000 for the purpose of paying contractual obligations to be incurred for (i) the construction of improvements and extensions to the City's combined Waterworks and Sanitary Sewer System and (ii) professional services rendered in co vection therewith, has been duly published in 7HP Ug N. ��Sfvnr Lpuer a newspaper hereby found and determined to b of general circulation in the City of Anna, Texas, on rI , 1986 and f'I io , 1986, the date of the first publication of such notice being not less than fourteen (19) days prior to the tentative date stated therein for the passage of the ordinance authorizing the issuance of such certificates; and WHEREAS, no petition protesting the issuance of the certificates of obligation described in the aforesaid notice, signed by at least 5% of the qualified electors of the City, has been presented to or filed with the City Secretary on or prior t© the date of the passage of this ordinance; and WHEREAS, the Council hereby finds and determines that all of the certificates of obligation described in such notice should be issued at this time; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE. CITY OF ANNA, TEXAS: SECTION 1: Authorization,, Desionation, Principal Amount, Purpose. Certificates of obligation'of the City shall be and are hereby authorized to be issued in the aggregate principal amount of $750,000, to be designated and bear the title "CITY OF ANNA, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM SUBORDINATE LIEN REVENUE CERTIFICATES OF OBLIGATION, SERIES 1986" (hereinafter referred to as the "Certificates"), for the purpose of paying contractual obligations to be incurred for (i) the construction of improvements and extensions to the City's combined Waterworks and Sanitary Sewer System and (ii) professional services rendered in connection therewith, pursuant to authority conferred by and in conformity with the Constitution and laws of the State of Texas, including Article 2368a.1, V.A.T.C.S., as amended. SECTION 2: Fully Registered Obligations -Certificate Date - Authorized Denominations -Stated Maturities -Interest Rates. The Certificates shall be issued as fully registered obligations only, shall be dated May 1, 1986 (the "Certificate Date"), shall be in denominations of $5,000 or any integral multiple (within a Stated Maturity) thereof, and shall become due and payable on November 1 in each of the years and in principal amounts (the "Stated Maturities") and bear interest at the rate(s) per annum in accordance with the following schedule: Year of Principal Interest Stated Maturity Amount Rate(s) 1987 $ 15,000 // % 1988 15,000 % 1989 20,000 �% 1990 20,000 % 1991 20,000 % 1992 20,000 �D.S % 1993 25,000 40, as* % 1994 25,000 /o,�S % 1995 30,000 /p-% 1996 30,000 /p % 1997 35,000 7.6 % 1998 35,000 7.75 % 1999 40,000 7.9 % 20b0 45,000 2001 50,000 2002 55,000g,2 % 2003 60,000 �—� % 2004 65,000 B,3 % 2005 70,000AV % 2006 75,000 87T_% The Certificates shall bear interest on the unpaid principal amount thereof from the Certificate Date at the per annum rate(s) shown above in this Section (computed on the basis of a 360 -day year of twelve 30 -day months). Interest on the Certificates shall be' payable semiannually on May 1 and toNovember 1 in each year, commencing November 1, 1986. -2- • SECTION 3: Terms of Payment -Paving Agent/Registrar. m The principal of, premium, if any, and the interest on the Certificates, due and payable by reason of maturity, redemption or otherwise, shall be payable only to the registered owners or holders of the Certificates (hereinafter called the "Holders") appearing on the registration and transfer books (the "Security Register") maintained by the Paying Agent/Registrar and the payment thereof shall be in any coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, and shall be without exchange or collection charges to the Holders. E The selection and appointment of First City Bank of Dallas, Dallas, Texas to serve as Paying Agent/Registrar for the Certificates is hereby approved and confirmed. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Certificates are paid and discharged, and any successor Paying Agent/Registrar shall be a bank, trust company, financial institution or other entity qualified and authorized to serve in such capacity and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Certificates, the City agrees to promptly cause a written notice thereof to be sent to each Holder by United States Mail, first class postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Principal of and premium, if any, on the Certificates shall be payable at the Stated Maturities or the redemption thereof, only upon presentation and surrender of the Certificates to the Paying Agent/Registrar at its principal office. Interest on the Certificates shall be paid to the Holders whose name appears in the Security Register at the close of business on the Record Date (the 15th day of the month next preceding each interest payment date) and shall be paid by the Paying Agent/Registrar (i) by check sent United States Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for the payment of the principal of or interest on the Certificates shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. -3- eIn the pvent 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 City. . 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 (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business next preceding the date of mailing of such notice. r1 U SECTION 9: Redemption. (a) Optional Redemption. The Certificates having Stated Maturities on and after November 1, 1997, shall be subject to redemption prior to maturity, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on November 1, 1996 or on any interest payment date thereafter at the redemption price of par plus accrued interest to the date of redemption. (b) Exercise of Redemption Option. At least forty-five (95) days prior to a redemption date for the Certificates (unless a shorter notification period shall be satisfactory to the Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of the decision to redeem Certificates, the principal amount of each Stated Maturity to be redeemed, and the date of redemption therefor. The decision of the City to exercise the right to redeem Certificates shall be entered in the minutes of the governing body of the City. (c) Selection of Certificates for Redemption. If less than all Outstanding Certificates of the same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/ Registrar shall treat such Certificates as representing the number of Certificates Outstanding which is obtained by dividing the principal amount of such Certificates by $5,000 and shall select the Certificates to be redeemed within such Stated Maturity by lot. (d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date for the Certificates, a notice of redemption shall be sent by United States Mail, first class postage prepaid, in the name of the City and at the City's expense, to each Holder of a Certificate to be redeemed in whole or in part at the adlre.ss of the Holder appearing on the Security Register at the close of business on the business day -4- • next preceding the date of mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Holder. All notices of redemption shall (i) specify the date of redemption for the Certificates, (ii) identify the Certificates to be redeemed and, in the case of a portion of the principal amount to be redeemed, the principal amount thereof to be redeemed, (iii.) state the redemption price, (iv) state that the Certificates, or the portion of the principal amount thereof to be redeemed, shall become due and payable on the redemption date specified, and, the interest thereon, or on the portion of the principal amount thereof to be redeemed., shall cease to accrue from and after the redemption date, and (v) specify that payment of the redemption price for the Certificates, or the principal amount thereof to be redeemed, shall be made at the principal office of the Paying Agent/Registrar only upon presentation and surrender thereof by the Holder. If a Certificate is subject by its terms to prior redemption and has been called for redemption and notice of redemption thereof has been duly given as hereinabove provided, such Certificate (or the principal amount thereof to be redeemed) shall become due and payable and interest thereon shall cease to accrue from and after the redemption date therefor; provided moneys sufficient for the payment of such Certificate (or of the principal amount thereof to be redeemed) at the then applicable redemption price are held for the purpose of such payment by the Paying Agent/Registrar. SECTION 5: Registration - Transfer - Exchange of Certificates -Predecessor Certificates. A Security Register relating to the registration, payment, and transfer or exchange of the Certificates shall at all times be kept and maintained by the City 'at the principal office of the Paying Agent/Registrar, as provided herein and in accordance with the provisions of an agreement with the Paying Agent/Registrar and such rules and regulations as the Paying Agent/Registrar and the City may prescribe. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each and every owner of the Certificates issued under and pursuant to the provisions of thisOrdinance, or if appropriate, the nominee thereof. Any Certificate may be transferred or exchanged for Certificates of other authorized denominations by the Holder, in person or by his duly authorized agent, upon surrender of such Certificate to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Paying jAg4�nt/Registrar. -5- OUpon surrender of any Certificate for, transfer at the Principal office of the Paying Agent/Registrar, the Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or transferees, one or more new Certificates of authorized denominations and having the same Stated Maturity and of a like aggregate principal amount as the Certificate or Certificates surrendered for transfer. 11 At the option of the Holder, Certificates may be exchanged for other Certificates of authorized denominations and having the same Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the Certificates surrendered for exchange, upon surrender of the Certificates to be exchanged at the principal office of the Paying Agent/ Registrar. Whenever any Certificates are surrendered for exchange, the Paying Agent/Registrar shall register and deliver new Certificates to the Holder requesting the exchange. All Certificates issued in any transfer or exchange of Certificates shall be delivered to the Holders at the principal office of the Paying Agent/Registrar or sent by United States Mail, first class, postage prepaid to the Holders, and, upon the registration and delivery thereof, the same shall be the valid obligations of the City, evidencing the same obligation to pay, and entitled to the same benefits under this Ordinance, as the Certificates surrendered in such transfer or exchange. All transfers or exchanges of Certificates pursuant to this Section shall be made without expense or service charge to the Holder, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Certificates cancelled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined to be "Predecessor Certificates," evidencing all or a portion, as the case may be, of the same obligation to pay evidenced by the new Certificate or Certificates registered and delivered in the exchange or transfer therefor. Additionally, the term "Predecessor Certificates" shall include any mutilated, lost, destroyed, or stolen Certificate for which a replacement Certificate has been issued, registered and delivered in lieu thereof pursuant to the provisions of Section 23 hereof and such new replacement Certificate shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Certificate. ME Neither the City nor the Paying Agent/ Registrar shall be required to issue or transfer to an assignee of a Holder any Certificate called for redemption, in whole or in part, within 95 days of the date fixed for the redemption of such Certificate; provided, however, such limitation on transferability shall not be applicable to an exchange by the Holder of the unredeemed balance of a Certificate called for redemption in part. SECTION 6: Execution - Registration. The Certificates shall be executed on behalf of the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the City Secretary. The signature of said officers on the Certificates may be manual or facsimile. Certificates bearing the manual or facsimile signatures of individuals who are or were the proper officers of the City on the Certificate Date shall be deemed to be duly executed on behalf of the City, notwithstanding that such individuals or either of them shall cease to hold such offices at the time of delivery of the Certificates to the initial purchaser(s) and with respect to Certificates delivered in subsequent exchanges and transfers, all as authorized and provided in the Bond Procedures Act of 1981, as amended. No Certificate shall be entitled to any right or benefit under this Ordinance, or be valid or obligatory for any . purpose, unless there appears on such Certificate either a certificate of registration substantially in the form provided in Section 8C, manually executed by the Comptroller of Public Accounts of the State of Texas, or his duly 'authorized agent, or a certificate of registration substantially in the form provided in Section 8D, manually executed by an authorized officer, employee or representative of the Paying Agent/Registrar, and either such certificate duly signed upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly certified, registered and delivered. SECTION 7: Initial Certificate(s). The Certificates herein authorized shall be initially issued either (i) as a single fully registered certificate in the total principal. amount of $750,000 with principal installments to become due and payable as provided in Section 2 hereof and numbered T-1, or (ii) as twenty (20) fully registered certificates, being one certificate for each year of maturity in the applicable principal amount and denomination and to be numbered consecutively from T-1 and upward (hereinafter called the "Initial Certificate(s)") and, in either case, the Initial Certificate(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The Initial -7- Certificate(s) shall be the Certificates submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser(s). Any time after the delivery of the Initial Certificate(s), the Paying Agent/Registrar, pursuant to written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial Certificate(s) delivered hereunder and exchange therefor definitive Certificates of authorized denominations, Stated Maturities, principal amounts and bearing applicable interest rates for transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to and in accordance with such written instructions from the initial purchaser(s), or the designee thereof, and such other information and documentation as the Paying Agent/Registrar may reasonably require. SECTION 8: Forms. A. Forms Generally. The Certificates, the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Registration Certificate of Paying Agent/Registrar, and the form of Assignment to be printed on each of the Certificates, shall be substantially in the forms set forth in this Section with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City or determined by the officers executing such Certificates as evidenced by their execution. Any portion of the text of any Certificates may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. I The definitive Certificates shall be printed, lithographed, or engraved or produced in any other similar manner, all as determined by the officers executing such Certificates as evidenced by their execution, but the Initial Certificate(s) submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise reproduced. 0 iB. , Form of Definitive Certificates. REGISTERED REGISTERED NO. $ UNITED STATES OF AMERICA STATE OF TEXAS CITY OF ANNA, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM SUBORDINATE LIEN REVENUE CERTIFICATE OF OBLIGATION, SERIES 1986 Certificate Date: Interest Rate: Stated Maturity: CUSIP NO: May 1, 1986 % Registered Owner: Principal Amount: DOLLARS The City of Anna (hereinafter referred to as the "City"), a body corporate and political subdivision in the County of Collin, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the order of the Registered Owner named above, or the registered assigns thereof, on the Stated Maturity date specified above the Principal Amount hereinabove stated (or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the unpaid principal amount hereof from the Certificate Date at the per annum rate of interest specified above computed on the basis of a 360 -day year of twelve 30 -day months; ;such interest being payable on May 1 and November 1 in each year, commencing November 1, 1986. Principal of this Certificate is payable at its Stated Maturity or redemption to the registered owner hereof, upon presentation and surrender, at the principal office of the Paying Agent/Registrar executing the registration certificate appearing hereon, or its successor. Interest is payable to the registered owner of this Certificate (or one or more Predecessor Certificates, as defined in the Ordinance hereinafter referenced) whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the 15th day, of the month next preceding each interest payment date, and interest shall be paid by the Paying 0 Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Certificate shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. This Certificate is one of the series specified in its title issued in the aggregate principal amount of $750,000 (herein referred to as the "Certificates") for the purpose of paying contractual obligations to be incurred for (i) the construction of improvements and extensions to the City's combined Waterworks and Sanitary Sewer System and (ii) professional services rendered in connection therewith, under and in strict conformity with the Constitution and laws of the State of Texas, particularly Article 2368a.1, V.A.T.C.S., as amended, and pursuant to an Ordinance adopted by the City Council of the City (herein referred to as the "Ordinance"). The Certificates maturing on and after November 1, 1997, may be redeemed prior to their Stated Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on November 1, 1996, or on any interest payment date thereafter, at the redemption price of par, together with accrued interest to the date of redemption and upon 30 days prior written notice being sent by United States Mail, first class postage prepaid, to the registered owners of the Certificates to be redeemed, and subject to the terms and provisions relating thereto contained in the Ordinance. If this Certificate (or any portion of the principal sum hereof) shall have been duly called for redemption and notice of such redemption duly given, then upon such rebemption date this Certificate (or the portion of the principal sum hereof to be redeemed) shall become due and payable, and interest thereon shall cease to accrue from and after the redemption date therefor, provided moneys for the payment of the redemption price and the interest on the principal amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying Agent/Registrar. In the event of a partial redemption of the principal amount of this Certificate, payment of the redemption price of such principal amount shall ,be made to the registered owner only upon presentation and §ur'render of this Certificate to the -10- • Paying Agent/Registrar at its principal office and there shall be issued, without charge therefor to the registered owner hereof, a new Certificate or Certificates of like maturity and interest rate in any authorized denominations provided by the Ordinance for the then unredeemed balance of the principal sum hereof. If, this Certificate is selected for redemption, in whole or in part, the City and the Paying Agent/Registrar shall not be required to transfer this Certificate to an assignee of the registered owner within 45 days of the redemption date therefor; provided, however, such limitation on transferability shall not be applicable to an exchange by the registered owner of the unredeemed balance hereof in the event of its redemption in part. The Certificates are payable from the proceeds of an ad valorem tax levied, within the limitations prescribed by law, upon all taxable property in the City and are additionally payable from and secured by a lien on and pledge of the Net Revenues (as defined in the Ordinance) of the City's combined Waterworks and Sanitary Sewer System (the "System"), such lien and pledge, however, being junior and subordinate to the lien on and pledge of the Net Revenues of the System securing the payment of "Prior Lien Bonds" (identified and defined in the Ordinance) now outstanding and hereafter issued by the City. In the Ordinance, the City reserves and retains the right to issue Prior Lien Bonds while the Certificates are • outstanding without limitation as to principal amount but subject to any terms, conditions or restrictions as may be applicable thereto under law or otherwise. Reference is hereby made to the Ordinance, a copy of which is on file in the principal office of the Paying Agent/Registrar, and to all the provisions of which the owner or holder of this Certificate by the acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the tax levied for the payment of the Certificates; the properties constituting the System; the Net Revenues pledged to the payment of the principal of and interest on the Certificates; the nature and 'extent and manner of enforcement of the pledge; the terms and conditions relating to the transfer or exchange of this Certificate; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders; the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon which the tax levy and the liens, pledges, charges and covenants made therein may be discharged at or prior to the maturity of this Certificate, and this Certificate deemed to be no longer Outstanding thereunder; and for the other terms and„ provisions contained therein. Capitalized terms used here'in'have the meanings assigned in the Ordinance. 0 • This Certificate, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and surrender at the principal office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by, the registered owner hereof, or his duly authorized agent. When a transfer on the Security Register occurs, one or more new fully registered Certificates of the same Stated Maturity, of authorized denominations, bearing the same rate of interest, and of the same aggregate principal amount will be issued by the Paying Agent/Registrar to the designated transferee or transferees. The City and the Paying Agent/Registrar, and any agent of either, shall treat the registered owner whose name appears on the Security Register (i) on the Record Date as the owner entitled to payment of interest hereon, (ii) on the date of surrender of this Certificate as the owner entitled to payment of principal hereof at its Stated Maturity or its redemption, in whole or in part, and (iii) on any other date as the owner for all other purposes, and neither the City nor the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In the event of 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 City. 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 (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. IC is hereby certified, recited, represented and declared that the City is a body corporate and political subdivision duly organized and legally existing under and by virtue of the Constitution and laws of the State of Texas; that the issuance of the Certificates is duly authorized by law; that all acts, conditions and things required to exist and be done precedent to and in the issuance of the Certificates to render the same lawful and valid obligations of the City have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitution and laws of the State of Texas, and the Ordinance; that the Certificates do not exceed any Constitutional or statutory limitation; and. that due provision has 'been made for the payment of the principal of and interest on the Certificates by the levy of a O swm 11 • tax and a pledge of and lien on the Net Revenues of the System as aforestated. In case any provision in this Certificate shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. The terms and provisions of this Certificate and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the City Council of the City has caused this Certificate to be duly executed under the official seal of the City as of the Certificate Date. COUNTERSIGNED: City Secretary (SEAL) C. CITY OF ANNA, TEXAS Mayor r REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS ( REGISTER NO, THE STATE OF TEXAS I HEREBY CERTIFY that this Certificate has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and duly registered by the Comptroller of Public Accounts of the State of Texas. this WITNESS my signature and seal of office Comptroller of Public Accounts (SEAL) of the State of Texas *NOTE TO PRINTER: Do Not Print on Definitive Certificates -13- r D. REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR This Certificate has been duly issued and registered under the provisions of the within -mentioned Ordinance; the certificate or certificates of the above entitled and designated series originally delivered having been approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts, as shown by the records of the Paying Agent/Registrar. Registration Date: FIRST CITY BANK OF DALLAS Dallas, Texas, as Paying Agent/Registrar By Authorized Signature 0 E. Form of Assignment. E ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print or typewrite name, address, and zip code of transferee:) ..................... ............................................................ (Social Security or other identifying number: ••....) the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: NOTICE: The signature on this assign - Signature guaranteed: ment must'correspond with the name of the registered owner as it appears on the face of the within Certificate inlevery particular. -14- 0 0 F. (i) immediately under the name of the certificate the headings "Interest Rate " and "Stated Maturity shall both be completed "as shown below"; (ii) paragraph one shall read as follows: Registered Owner: Principal Amount: Dollars The City of Anna (hereinafter referred to as the "City,,), a body corporate and municipal corporation in the County of Collin, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the order of the the Registered Owner named above, or the registered assigns thereof, on November 1 in each of the years and in principal amounts and bearing interest at per annum rates in accordance with the following schedule: PRINCIPAL YEAR INSTALLMENTS (Information to be inserted from schedule in Section 2 hereof). INTEREST RATE (or so much thereof as shall not have been prepaid prior to maturity) and to. pay interest on the unpaid principal amounts hereof from the Certificate Date at the per annum rate(s) of interest specified above computed on the basis of a 360 -day year of twelve 30 -day months; such interest being payable on May 1 land November 1 of each year, commencing November 1, 1986. Principal of this Certificate is payable at its Stated Maturity or prepayment date to the registered owner hereof, upon presentation and surrender, at the principal office of First City Bank of Dallas, Dallas, Texas (the "Paying Agent/ Registrar"). Interest is payable to the registered owner of this Certificate whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the 15th day of the month next preceding each interest payment date hereof and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered •owner recorded in the Security -15- E Register or by such other method, acceptable to the Paying Agent/ Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Certificate shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of. America which at the time of payment is legal tender for the payment of public and private debts. SECTION 9: Definitions. That for purposes of this Ordinance and for clarity with respect to the issuance of the Certificates herein authorized, and the levy of taxes and appropriation of Net Revenues therefor, the following words or terms, whenever the same appears herein without qualifying language, are defined to mean as follows: (a) The term "System" shall mean the City's entire Waterworks and Sanitary Sewer System, together with all future improvements, extensions, enlargements and additions thereto, and replacements thereof. (b) The term "Net Revenues" shall mean all gross revenues of the System, after decucting the expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs, and extensions necessary to render efficient service, provided, however, that only such repairs and extensions, as in the judgment of the City Council, reasonably and fairly exercised, are necessary to keep the System in operation and render adaquate service to said City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair obligations payable from the net revenues thereof, shall be deducted in determining "Net Revenues". Depreciation and payments into and out of the funds established for the payment and security of the Prior Lien Bonds and the Certificates shall never be considered as expenses of operation and maintenance. (c) The term "Certificates" shall mean the $750,000 "City of Anna, Texas, Tax and Waterworks and Sewer System Subordinate Lien Revenue Certificates of Obligation, Series 1986" authorized by this Ordinance. (d) The term "Certificate Fund" shall mean the special Fund created and established under the Provisions of Section 10'of this Ordinance. -16- • (e) The term "Prior Lien Bonds" shall mean all revenue bonds or similar obligations that are payable solely from and secured only by a lien on and pledge of the Net Revenues of the System, which is prior in right and claim to the lien on and pledge of the Net Revenues securing the payment of the Certificates, including, but not limited to the outstanding bonds of the following series or issues, to wit: (1) "City of Anna Waterworks and Sewer System Revenue Bonds, Series 1960", dated September 1, 1960, and originally issued in the aggregate principal amount of $108,500; and (2) "City of Anna Junior Lien Waterworks and Sewer System Revenue Bonds, Series 1976", dated February 1, 1976, and originally issued in the aggregate principal amount of $95,000. (f) The term "Fiscal Year" shall mean the annual financial accounting period for the System now ending on December 31st of each year; provided, however, the City Council may change such annual financial accounting period to end on another date if such change is found and determined to be necessary. • "Collection (g) The term Date" shall mean, when reference is being made to the levy and collection of annual ad valorem taxes, the date the annual ad valorem taxes levied each year by the City become delinquent. n LJ (h) The term "Additional Certificates" shall mean combination tax and revenue certificates of obligation hereafter issued under and pursuant to the provisions of Article 2368a.1, V.A.T.C.S., or similar law hereafter enacted and payable from ad valorem taxes and additionally payable from and secured by a lien on and pledge of the Net Revenues of the System on a parity with and of equal rank and dignity with the lien and pledge securing the payment of the Certificates. (i) The term "Outstanding" when used in this Ordinance with respect to Certificates means, as of the date of determination, all Certificates theretofore issued and delivered under this Ordinance, except: -17- o(1) those Certificates cancelled by the Paying Agent/Registrar or delivered to the Paying Agent/Registrar for cancellation; • (2) those Certificates paid or deemed to be paid in accordance with the provisions of Section 24 hereof by the irrevocable deposit with the Paying Agent/Registrar, or an authorized escrow agent, of money or Government Securities, or both, in the amount necessary to fully pay the principal of, premium, if any, and interest thereon to maturity or redemption, as the case may be, provided that, if such Certificates are to be redeemed, notice of redemption thereof shall have been duly given pursuant to this Ordinance or irrevocably provided to be given to the satisfaction of the Paying Agent/Registrar, or waived; and (3) those Certificates that have been mutilated, destroyed, lost, or stolen and replacement Certificates have been registered and delivered in lieu thereof as provided in Section 23 hereof. SECTION 10: Certificate Fund. That, for the purpose of paying the interest on and to provide a sinking fund for the payment, redemption and retirement of the Certificates, there shall be and is hereby created a special Fund to be designated "SPECIAL TAX AND WATERWORKS AND SEWER SYSTEM REVENUE CERTIFICATE OF OBLIGATION FUND", which Fund shall be kept and maintained at the City's depository bank, and moneys deposited in said Fund shall be used for no other purpose. Authorized officials of the City are hereby authorized and directed to make wihhdrawals from said Fund sufficient to pay the principal of and 'interest on the Certificates as the same become due and payable, and, shall cause to be transferred to the Paying Agent/Registrar from moneys on deposit in the Certificate Fund an amount sufficient to pay the amount of principal and/or interest falling due on the Certificates, such transfer of funds to the Paying Agent/Registrar to be made in such manner as will cause immediately available funds to be deposited with the Paying Agent/Registrar on or before the last business day next preceding each interest and principal payment date for the Certificates. ctm • Pending the transfer of funds to the Paying Agent/ Registrar, money in the Certificate Fund may, at the option of the City, be placed in time deposits or certificates of deposit secured by obligations of the type hereinafter described, or be invested, including investments held in book -entry form, in direct obligations of the United States of America, obligations guaranteed or insured by the United States of America, which, in the opinion of the Attorney General of the United States, are backed by its full faith and credit or represent its general obligations, or invested in indirect obligations of the United States of America, including, but not limited to, evidences of indebtedness issued, insured or guaranteed by such governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, Farmers Home Administration, Federal Home Loan Mortgage Association, Small Business Administration, Federal Housing, Association, or Participation Certificates in the Federal Assets Financing Trust; provided that all such deposits and investments shall be made in such a manner that the money required to be expended from said Fund will be available at the proper time or times. All interest and income derived from deposits and investments in said Certificate Fund shall be credited to, and any losses debited to, the said Certificate Fund. All such investments shall be sold promptly when necessary to prevent any default in connection with the Certificates. SECTION 11: Tax Levy. That, to provide for the payment of the "Debt Service Requirements" on the Certificates being (i) the interest on said Certificates and (ii) a sinking fund for their redemption at maturity or a sinking fund of 2% (whichever amount shall be the greater), there shall be and there is hereby levied for the current year and each succeeding year thereafter while said Certificates or any interest thereon shall remain Outstanding, a sufficient tax on each one hundred dollars' valuation of taxable property in said City, adequate to pay such Debt Service Requirements, full allowance being made far delinquencies and costs of collection; said tax shall be assessed and collected each year and applied to the payment of the Debt Service Requirements, and the same shall not be diverted to any other purpose. The taxes so levied and collected shall be paid into the Certificate Fund. The City Council hereby declares its purpose and intent to provide and levy a tax legally and fully sufficient to pay the said Debt Service Requirements, it having been determined that the existing. and available taxing authority of the City for such purpose is adequate to permit a legally sufficient tax in consideration of all other outstanding indebtedness. -19- The amount of taxes to be provided annually for the payment of the principal of and interest on the Certificates shall be determined and accomplished in the following manner: (a) Prior to the date the City Council establishes the annual tax. rate and passes an ordinance levying ad valorem taxes each year, the Council shall determine: (1) The amount on deposit in the Certificate Fund after (a) deducting therefrom the total amount of Debt Service Requirements to become due on Certificates prior to the Collection Date for the ad valorem taxes to be levied and (b) adding thereto the amount of the Net Revenues of the System appropriated and allocated to pay such Debt Service Requirements prior to the Collection Date for the ad valorem taxes to be levied. (2) The amount of Net Revenues of the System, appropriated and to be set aside for the payment of the Debt Service Requirements on the Certificates between the Collection Date for the taxes then to be levied and the Collection Date for the taxes to be levied during the next succeeding calendar year. (3) The amount of Debt Service Requirements to become due and payable on the Certificates between the Collection Date for the taxes then to be levied and the Collection Date for the taxes to be levied during the next succeeding calendar year. (b) The amount of taxes to be levied annually each year to pay the Debt Service Requirements on the Certificates shall be the amount established in paragraph (3) above less the sum total of the amounts established in paragraphs (1) and (2), after taking into consideration delinquencies and costs of collecting such annual taxes. SECTION 12: Pledge of Revenues. The City hereby covenants and agrees that, subject to the prior lien on and pledge of the Net Revenues of the System to the payment and security of Prior Lien Bonds, all the Net Revenues of the System, with the exception of those in excess of the amounts required to be deposited to the Certificate Fund as hereafter provided, are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates and Additional Certificates, if issued, in accordance with the provisions of this Ordinance, and the pledge of Net Revenues of the System herein made for the p�yrRent of the Certificates shall constitute a lien on the Net Revenues of the System in accordance with the terms and provisions hereof and be valid and binding without any physical delivery thereof or further act by the City. -20- • SECTION 13: System Fund. The City hereby covenants and agrees that all revenues derived from the operation of the System shall be accounted for separate and apart from all other funds, accounts and moneys of the City, and all such revenues shall be deposited as collected into an account maintained at an official depository of the City known as the "Waterworks and Sanitary Sewer System Revenue Fund" (hereinafter called the "System Fund"), heretofore created and established in connection with the issuance of the Prior Lien Bonds. All moneys deposited to the credit of the System Fund shall be pledged and appropriated to the extent required for the following purposes and in the order of priority shown, to wit: First: To the payment of operating and maintenance expenses of the System as defined in Section 9(b) hereof or required by statute to be a first charge on and claim against the gross revenues of the System. Second: To the payment of all amounts required to be deposited in the special Funds created and established for the payment, security and benefit of Prior Lien Bonds in accordance with the terms and provisions of the ordinances authorizing the issuance of Prior Lien Bonds. Third: To the payment of the amounts required to be deposited in the special funds and accounts created and established for the payment of the Certificates (the Certificate Fund) and Additional Certificates. Any Net Revenues remaining in the System Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other City purpose now or hereafter permitted by law. I SECTION 14: Deposits to Certificate Fund. The City hereby covenants and agrees to cause to be deposited to the credit of the Certificate Fund prior to each principal and interest payment date for the Certificates from the pledged Net Revenues of the System in the System Fund, after the deduction of all payments required to be made to the special Funds or accounts created for the payment and security of the Prior Lien Bonds, an amount equal to one hundred per centum (100%) of the amount required to fully pay the 'interest and principal then due and payable on the Certificates, such deposits to pay maturing principal and accrued interest on the Certificates to be made in substantially equal monthly installments on or -21- • before the 15th day of each month month next following the date of to the initial purchaser(s). beginning the 15th day of the delivery. of the Certificates The deposits to be made to the credit of the Certificate Fund, as hereinabove provided, shall be made until such time as such Fund contains an amount equal to pay the principal of and interest and premium, if any, on the Certificates to maturity or redemption, as the case may be. Accrued interest and premium, if any, received from the purchaser of the Certificates deposited to the Certificate Fund and ad valorem taxes levied, collected and deposited in the Certificate Fund for and on behalf of the Certificates may be taken into consideration and reduce the amount of the deposits otherwise required to be deposited in the Certificate Fund from the Net Revenues of the System. In addition, any surplus proceeds from the sale of the Certificates not expended for authorized purposes shall be deposited in the Certificate Fund, and such amounts so deposited shall reduce the sums otherwise required to be deposited in said Fund from ad valorem taxes and the Net Revenues of the System. SECTION 15: Security of Funds. That all moneys on deposit in the Funds for which this Ordinance makes provision (except any portion thereof as may be at any time properly invested) shall be secured in the manner and to the fullest o extent required by the laws of Texas for the security of public funds, and moneys on deposit in such Funds shall be used only for the purposes permitted by this Ordinance. E SECTION 16: Maintenance of System - Insurance. That the City covenants and agrees that while the Certificates remain Outstanding, it will maintain and operate the System with all possible efficiency and maintain casualty and other insurance on the properties of the System and its operations of a kind and in such amounts customarily carried by municipal corporations in the State of Texas engaged in a similar type business; that it will faithfully and punctually perform all duties with reference to the System required by the Constitution and laws of the State of Texas'. SECTION 17: Rates and Charges. That the City hereby covenants and agrees with the Holders of the Certificates that rates and charges for water and sewer services afforded by the System will be established and maintained that are reasonably expected, on the basis of available information and experience and with due allowance for contingencies, to provide revenues in each Fiscal Year sufficient': -22- 0 SECTION 19: Remedies in Event of Default. That, in addition to all the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City (a) defaults in the payments to be made to the Certificate Fund, or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this Ordinance, the owner or owners of any of the Certificates shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the governing body of the City and other officers of the City to observe and perform any covenant, condition or obligation prescribed in this Ordinance. -23- (a) To pay all operating and maintenance • expenses of the System; (b) To produce Net Revenues sufficient to pay (i) the interest on and principal of the Prior Lien Bonds as the same becomes due and payable and the amounts required to be deposited in the special Funds created and established for the payment and security thereof and (ii) the amounts, if any, required to be deposited in.the special Fund created and established for the payment of the Certificates (the Certificate Fund) and Additional Certificates; and (c) To pay other legally incurred indebtedness payable from the revenues of the System and/or secured by a lien on the System or the revenues thereof. SECTION 18: Records and Accounts - Annual Audit. The City further covenants and agrees that so long as any of the Certificates remain Outstanding, it will keep and maintain separate and complete records and accounts pertaining to the operations of the System in which complete and correct entries shall be made of all transactions relating thereto, as provided by Article 1113, V.A.T.C.S., or other applicable law. The Holders of the Certificates or any duly authorized agent or agents of such Holders shall have the right to inspect the • System and all properties comprising the same. The City further agrees that following the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of Certified Public Accountants. Copies of each annual audit shall be furnished to the Executive Director of the Municipal Advisory Council of Texas at his office in Austin, Texas, and, upon written request, to the original purchaser of the Certificates and any subsequent Holder thereof. 0 SECTION 19: Remedies in Event of Default. That, in addition to all the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City (a) defaults in the payments to be made to the Certificate Fund, or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this Ordinance, the owner or owners of any of the Certificates shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the governing body of the City and other officers of the City to observe and perform any covenant, condition or obligation prescribed in this Ordinance. -23- • No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescense therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient.. The specific remedies herein provided shall be cumulative of all other existing remedies and the specification of such remedies shall not be deemed to be exclusive. SECTION 20: Special Covenants. That the City hereby further covenants as follows: (a) That it has the lawful power to pledge the Net Revenues of the System supporting this issue of Certificates and has lawfully exercised said powers under the Constitution and laws of the State of Texas, including said power existing under Articles 1111 et seq. and 2368a.1. (b) That other than for the payment of the Prior Lien Bonds and the Certificates, the Net Revenues of the System have not in any manner been pledged to the payment of any debt or obligation of the City or of the System. (c) That, as long as any Certificates or any interest thereon remain Outstanding, the City will not sell, lease or encumber the System or any substantial part thereof, provided that this covenant shall not be construed to prohibit the sale of such machinery, or other properties or equipment which has become obsolete or otherwise unsuited to the efficient operation of the System. (d) That to the extent that it legally may, the City further covenants and agrees that, so long as any of the Certificates, or any interest thereon, are Outstanding, no franchise shall be granted for the installation or operation of any competing waterworks and sanitary sewer systems other than those owned by the City, and the operation of any such systems by anyone other than the City is hereby prohibited. SECTION 21: Issuance of Prior Lien Bonds and Additional Certificates. The City hereby expressly reserves the right to hereafter issue •Prior Lien Bonds, without limitation as to principal amount but subject to any terms, conditions or restrictions applicable thereto under .law or otherwise, and, also resexvgs the right to issue Additional Certificates on a parity with the Certificates insofar as the lien on and pledge of the Net Revenues of the. System is concerned. 1WXM SECTION 22: Application of Prior Lien Bonds Covenants and Agreements. That it is the intention of this governing body and accordingly hereby recognized and stipulated that the provisions, agreements and covenants contained herein bearing upon the management and operations of the System, and the administering and application of revenues derived from the operation thereof, shall to the extent possible be harmonized with like provisions, agreements and covenants contained in the ordinances authorizing the issuance of the Prior Lien Bonds, and, to the extent of any irreconciable conflict between the provisions contained herein and in the ordinances authorizing the issuance of the Prior Lien Bonds, the provisions, agreements and covenants contained therein shall prevail to the extent of such conflict and be applicable to this Ordinance but in all respects subject to the priority of rights and benefits, if any, conferred thereby to the holders of the Prior Lien Bonds. SECTION 23: Mutilated - Destroyed - Lost and Stolen Certificates. In case any Certificate shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar, subject to City approval and in its discretion, may execute and deliver a replacement Certificate of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated • Certificate, or in lieu of and in substitution for such destroyed, lost or stolen Certificate, only upon (i) the filing by the Holder thereof with the Paying Agent/Registrar of evidence satisfactory to the Paying Agent/Registrar of the destruction, loss or theft of such Certificate, and of the authenticity of the ownership thereof and (ii) the furnishing to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the City and the Paying Agent/Registrar harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Certificate shall be borne by the Holder of the Certificate mutilated, or destroyed, lost or stolen. • Every replacement Certificate issued pursuant to this Section shall be a valid and binding obligation, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Certificates; notwithstanding the enforceability of payment by anyone of the destroyed, lost, or stolen Certificates. The provisions of this Section are exclusive and shall Preclude (to the extent lawful) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost or stolen Ce{tificates. -25- L SECTION 24: Satisfaction of Obligation of City. If the City shall pay or cause to be paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on the Certificates, at the times and in the manner stipulated in this Ordinance, then the pledge of taxes levied under this Ordinance and the lien on and pledge of the Net Revenues created by this Ordinance and all covenants, agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and be discharged and satisfied. Certificates or any principal amount(s) thereof shall be deemed to have been paid within the meaning and with the effect expressed above in this Section when (i) money sufficient to pay in full such Certificates or the principal amount(s) thereof at maturity or to the redemption date therefor, together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Securities shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an authorized escrow agent, which Government Securities have been certified by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money, together with any moneys deposited therewith, if any, to pay when due the principal of and interest on such Certificates, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable to the Paying Agent/ Registrar have been made) the redemption date thereof. The City covenants that no deposit of moneys or Government Securities will be made under this Section and no use made of any such deposit which would cause the Certificates to be treated as "arbitrage bonds" within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended, or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow agent, and all income from Government Securities held in trust by the Paying Agent/Registrar, or an authorized escrow agent, pursuant to this Section which is not required for the payment of the Certificates, or any principal amount(s) thereof, or interest thereon with respect to which such moneys have been so deposited shall be remitted to the City or deposited as directed. by the City. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Certificates and remaining unclaimed for a period ,of four (4) years after the Stated -26- 0 Maturity, or applicable redemption date, of the Certificates such moneys were deposited and are held in trust to pay shall upon the request of the City be remitted to the City against a written receipt therefor. SECTION 25: Ordinance a Contract -Amendments. This Ordinance shall constitute a contract with the Holders from time to time, be binding on the City, and shall not be amended or repealed by the City so long as any Certificate remains Outstanding except as permitted in this Section. The City may, without the consent of or notice to any Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the consent of Holders holding a majority in aggregate principal amount of the Certificates then Outstanding affected thereby, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of Outstanding Certificates, no such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Certificates, reduce the principal amount thereof, the redemption price therefor, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Certificates, (2) give any preference to any Certificate over any other Certificate, or (3) reduce the aggregate principal amount of Certificates required to be held by Holders for consent to any such amendment, addition, or rescission. SECTION 26: Covenants Regarding Tax -Exemption of Interest on the Certificates. That the City hereby certifies and covenants that the proceeds of the Certificates are needed at this time to finance the costs of capital improvements planned by the City; based on current facts, estimates and circumstances, it is reasonably expected final disbursement of the Ceftificate proceeds will occur within three years from the date of the receipt thereof by the City; it is not reasonably expected the proceeds of the Certificates or moneys deposited in the Certificate Fund created for the payment of the Certificates will be used or invested in a manner that would cause the Certificates to be "arbitrage bonds" within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended (the "Code"), or any regulations or published rulings pertaining thereto; and save and except for the Certificate Fund created herein, no other funds or accounts have been established or pledged for the payment of the Certificates. In addition, ,the City shall take no action or fail to take any action, ' wHich action or failure to act may -27- r -IL p render the interest on any of such Certificates subject to federal income taxation, particularly pursuant to Section 103(b) of the Code, nor shall the City take any action or fail to take any action, which action or failure to act, would have the effect of causing the income derived by the City from the System to become subject to federal income taxation in the hands of the City, whether or not provision shall have been made for the payment of such Certificates. Furthermore, unless and until the City shall receive an opinion of Messrs. Fulbright & Jaworski, Attorneys, Dallas, Texas, to the effect that failure to comply with any of the following provisions will not adversely affect the tax-exempt status of interest on the Certificates, the City hereby covenants and agrees to and with the Holders as follows: (a) None of the gross proceeds of the Certificates will be used directly or indirectly (i) to make or finance loans to any person or (ii) in any trade or business carried on by any person (other than use as a member of the general public). For purposes of the foregoing, the term "person" does not include a governmental unit other than the United States or any agency or instrumentality thereof and the term "trade or business" includes any activity carried on by a person other than a natural person. (b) The City will make no use of the proceeds of the Certificates or the facilities financed with the proceeds of the Certificates which would result in the interest on the Certificates being includable in the gross income, as defined in section 61 of the Code, of the Holders. (c) At least 5% of the net proceeds of the Certificates will be spent within 30 days after the date of delivery of the Certificates to carry out the governmental purpose of the issue and all of the net proceeds of the Certificates will be spent within 3 years after the date of delivery of the Certificates. For purposes of the foregoing covenant, the term "net proceeds" means the proceeds of the Certificates reduced by issuance costs. (d) On or before the 15th day of the second calendar month after the close of the calendar quarter in which the Certificates are delivered, the City will submit- to the Secretary of the Treasury or his designee, a statement which sets forth the name and address of the City, the date of issue of the Certificates, the amount of net proceeds of the Certificates, the stated interest rate, term, and face amount of each obligation which i -s part of the Certificates, and the cost of issuance. -28- • (e) Except to the extent permitted under Sections 1.103-13 and 1.103-14 of the Income Tax Regulations promulgated under section 103 of the Code as in effect on the date of delivery of the Certificates as modified by the provisions of this Ordinance, no portion of the proceeds of the Certificates are reasonably expected to be used, or will be used, directly or indirectly, to acquire, or to replace funds which were used directly or indirectly to acquire, any investment property which can reasonably be expected, at the time of issuance of the Certificates, to produce a yield for the term of issue of the Certificates, which is materially higher, taking into account any discount or premium, than the yield on the Certificates. The term "investment property" means any security, obligation, annuity contract, or investment -type property other than tax-exempt bonds, and the term "yield" means the discount factor which, when used in computing the present worth of all payments of principal and interest to be paid on an obligation, produces an amount equal to the purchase price, which in the case of the Certificates is the initial offering price to the public (exclusive of bond houses and brokers) at which a substantial number are sold. (f) The City reasonably expects that it will incur a binding obligation to spend the lesser of (x) an amount equal to 2-1/2% of that portion of the estimated total project cost financed by the Certificates or (y) $100,000 with respect to . the projects to be financed with the proceeds of the Certificates within six months from the date of delivery of the Certificates, that construction or acquisition of the facilities to be constructed or acquired with the proceeds of the Certificates will proceed promptly and with due diligence to completion, and that all of the spendable proceeds of the Certificates will be expended within three years from the date of delivery of the Certificates. In light of the foregoing expectations, the City may invest the original proceeds of the Certificates without restriction as to yield during the three year period beginning on the date of delivery of the Certifipates, except that: 0 (i) with respect to any proceeds of the Certificates which are used in connection with the acquisition of tangible property, the City covenants that it will not invest such proceeds to produce a yield materially higher than the yield on the Certificates for a period of more than 30 days beginning on the date of delivery of the Certificates, and -29- • (ii) with respect to proceeds of the Certificates which are used for construction, reconstruction or rehabilitation, the City covenants that it will not invest such proceeds to produce a yield materially higher than the yield on the Certificates beyond the first to occur of (A) the substantial completion or abandonment of such construction, reconstruction, or rehabilitation; (B) the expenditure of an amount equal to the proceeds of the Certificates with respect to such reconstruction, or rehabilitation; Ozon, (C) the day which is three years after the earlier of the date of delivery of the Certificates or the date of commencement of such construction, reconstruction or rehabilitation. (g) The City will pay to the United States in installments as hereinafter described the excess (the "Excess" of the aggregate amount earned on all nonpurpose investments (other than investments attributable to the Excess) over the amount which would have been earned if all nonpurpose investments were invested at a rate equal to the yield on the Certificates, plus any income attributable to the Excess. The installments shall be paid by the City to the United States at least once every five years in an amount equal to at least ninety percent of the Excess plus investment earnings thereon as of the date .of payment; and the last installment, which shall be paid within 30 days after the date on which the last obligation of the Certificates is discharged, shall be an amount sufficient to pay the remaining balance of the Excess and Certificates. Theearnings City hereby declon ines nes to ue hmakest he election provided by Section 147(e)(4) of the Internal Revenue Code of 1985, as set forth in section 701 of H.R. 3838 pending in the Ninety -Ninth Congress of the United States, or any similar provision of any legislation which may be enacted into law, with respect to the Certificate Fund, and will maintain the Certificate Fund in a separate account apart from any other fund of the City. In calculating. the aggregate amount earned on all nonpurpose investments, the City shall take into account any gain or loss on the disposition of a nonpurpose investment. The City shall,not be obligated to make the payment to the United States described herein if all of the gross proceeds of the Certificates, other than gross proceeds • held from time to time in the Certificate Fund, are expended -30- • for the governmental purpose for which the Certificates were issued no later than the day which is six months after the date of delivery of the Certificates. The term "gross proceeds" includes original proceeds of the Certificates, amounts received from the investment thereof, and amounts used to pay debt service on the Certificates, and the term "nonpurpose investment" means any investment property acquired with the gross proceeds of the Certificates which is not acquired in order to carry out the governmental purpose of the Certificates. (h) The City further covenants that it will make such use of. the Certificate proceeds and all other amounts allocated to the Certificates, regulate the investment of such proceeds and other funds and take such other and further action as may be required to insure that (i) no prohibited payment is made or deemed to be made and (ii) the Certificates will not be arbitrage bonds. The term "prohibited payment" means any payment of or agreement to pay, to a party other than the United States, an. amount that is required to be paid to the United States, by entering into a transaction that reduces the amount owed to the United States pursuant to Subsection (g) of this ordinance because such transaction results in a smaller profit or larger loss than would have resulted if the transaction had been at arm's length and had the yield on the Certificates not been relevant to any party to such transaction. -31- (i) At no time during any bond year shall the aggregate amount allocated to the Certificates and invested in nonpurpose obligations with a yield higher than the yield on the Certificates, after excluding the amounts invested for a temporary period as provided in subsection (f) hereof and amounts deposited in the Certificate Fund, exceed 150% of the debt service on the Certificates for such bond year, and the aggregate amount allocated to the Certificates and invested in nonpurpose obligations with a yield higher than the yield on the Certificates shall be promptly and appropriately reduced as the outstanding principal amount of the Certificates is reduced. 1 (j) On each anniversary of the date of delivery of the Certificates (the "Issue Anniversary Date") the City shall cause to be determined the yield and the debt service on the Certificates and the yield on any nonpurpose obligations allocated to the Certificates for the bond year ending on such Issue Anniversary Date. If the aggregate amount of proceeds of the Certificates invested in nonpurpose obligations with a yield higher than the yield on the Certificates, after excluding the amounts invested for a temporary period as provided in Subsection (f) hereof and .amounts deposited in the Certificate Fund, exceeds, 150% of the debt service on the Certificates on any Issud Anniversary Date, the City shall, within 30 days after such Issue Anniversary Date, dispose of nonpurpose obligations in an amount sufficient to reduce the -31- 11 amount invested in nonpurpose obligations with a yield higher than the yield on the Certificates, after excluding the amounts invested for a temporary period as provided in Subsection (f) hereof and amounts deposited in the Certificate Fund, to 150% or less of the debt service on the Certificates; provided that, the City shall not be required to dispose of such nonpurpose obligations if such disposition would result in the realization of a loss for federal income tax purposes that exceeds the sum of the Excess, as defined in Subsection (g) hereof, plus the investment earnings at the time of such sale or disposition if a rebate to the United States pursuant to Subsection (g) of this Ordinance were due at such time. SECTION 27: Sale of the Certificates. The sale of the Certificates to Schneider, Bernet & Hickman, Inc. (herein referred to as the "Purchasers") at the price of /00 % of par and accrued interest to the date of delivery is hereby approved and confirmed. Delivery of the Certificates to the Purchasers shall occur as soon as possible upon payment being made therefor in accordance with the terms of sale. SECTION 28: Qualified Project Obligations. In the event Section 802 of H.R. 3838, passed by the House of Representatives on December 17, 1985, is enacted into law with the effective date provisions contained in subparagraph (3) of paragraph (e), the City hereby designates the Certificates to be "qualified project bonds" in that the Certificates are being issued to finance the costs of making improvements to the Waterworks System owned and operated by the City, to wit: drilling a water well and constructing water storage facilities, which improvements are for the benefit of all water customers of the City and no one customer or select group of customers will receive or derive any special benefit or use of such facilities other than as a member of the general public as a whole; the principal amount of the Certificates, together with all other issues having a common financing purpose issued or to be issued by the City, does not and will not exceed $3,0001,000; and the reasonably anticipated amount of "qualified tax exempt obligations" to be issued by the City for the calendar year 1986 will not exceed $10,000,000. SECTION 29: Control and Custody of Certificates. The Mayor of the City shall be and is hereby authorized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas, including the printing and supply of definitive Certificates, and shall take and have charge and control of the Initial Certificate(s) pending the approval thereof by the Attorney General, the registration hereof by the Comptroller of Public Accounts and the delivery'thereof to the Purchasers. -32- Furthermore, the Mayor, City Secretary and the City Treasurer, any one or more of said officials, are hereby authorized and directed to furnish and execute such documents relating to the City and its financial affairs as may be necessary for the issuance of the Certificates, the approval of the Attorney General and the registration by the Comptroller of Public Accounts and, together with the City's financial advisor, bond counsel and the Paying Agent/Registrar, make the necessary arrangements for the delivery, of the Initial Certificate(s) to the Purchasers and the initial exchange thereof for definitive Certificates. SECTION 30: Official Statement. The Official Statement prepared in the initial offering and sale of the Certificates by the City, together with all addendas, supplements and amendments thereto issued on behalf of the City, is hereby approved as to form and content, and the City Council hereby finds that the information and data contained in said Official Statement pertaining to the City and its financial affairs is true and correct in all material respects and no material facts have been omitted therefrom which are necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. SECTION 31: Notices to Holders -Waiver. Wherever this Ordinance provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to the address of each Holder appearing in the Security Register at the close of business on the business day next preceding the mailing of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of such notice with respect to all other Certifi'cates. Where this Ordinance provides for notice in any manner, such notice may be waived in writing by the Holder entitled to receive such notice, either before or after the event with respect to which such notice is given, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 32: Cancellation. All Certificates surrendered for payment, redemption,transfer, exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly cancelled by it and, if surrendered to the City, shall be is delivered to the Paying Agent/Registrar and, if not already -33- 4 cancelled, shall be promptly cancelled by the Paying Agent/Registrar. The City may at any time deliver to the Paying Agent/Registrar for cancellation any Certificates previously certified or registered and delivered which the City may have acquired in any manner whatsoever, and all Certificates so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled Certificates held by the Paying Agent/Registrar shall be returned to the City. SECTION 33: Printed Opinion. The Purchasers' obligation to accept delivery of the Certificates is subject to being furnished a final opinion of Fulbright & Jaworski, Attorneys, Dallas, Texas, approving the Certificates as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for the Certificates. Printing of a true and correct reproduction of said opinion on the reverse side of each of the definitive Certificates is hereby approved and authorized. SECTION 34: CUSIP Numbers. CUSIP numbers may be printed or typed on the definitive Certificates. It is expressly provided, however, that the presence or absence of CUSIP numbers on the definitive Certificates shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving the Certificates as to • legality are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive Certificates. 0 SECTION 35: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other than the City, the Paying Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being intended to be and being for the sole and exclusive benefit of the City, the Paying Agent/Registrar and the Holders. SECTION 36: Inconsistent Provisions. All ordinances, orders 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 37: 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 38: Effect of Headings. The Section headings. herein are for convenieHce' only and shall not affect the construction hereof. -34- SECTION 39: Construction of Terms. If appropriate in the context of this Ordinance, words of the singular number shall be considered to include the plural, words of the plural number shall be considered to include the singular, and words of the masculine, feminine or neuter gender shall be considered to include the other genders. SECTION 40: 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 the City Council hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 41: Public Meeting. It is officially found, determined, and declared that the meeting at which this Ordinance is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Ordinance, was given, all as required by Article 6252-17, Vernon's Texas Civil Statutes, as amended. SECTION 42: Emergennc. That the public importance of this measure and the fact that it is to the best interest of • the City to provide funds for constructing improvements and extensions to the System by the issuance and delivery of the Certificates at the earliest possible date constitute and creates an emergency and an urgent public necessity requiring the suspension of any rules providing for ordinances to be read more than one time or at more than one meeting of the City Council, and such rules and provisions are accordingly suspended, and this ordinance is declared to be an emergency measure, and shall take effect and be in full force immediately from and after its passage on the date shown below. PASSED AND ADOPTED, this April 22, 1986. CITY OF ANNA, TEXAS ATTEST: City'Secyet'a (City Seal) e Mayo' -35-