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0307ORDINANCE NO. ~627 AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, AUTHORIZING THE ISSUANCE OF $2,575,000 PRINCIPAL AMOUNT OF CERTIFICATES OF OB- LIGATION OF SAID CITY TO BE KNOW~ AS "CITY OF SOUTHLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1985"; PROVID- ING THAT SAID CERTIFICATES SHALL BE PAYABLE FROM THE PROCEEDS OF AD VALOREM TAXES AND CERTAIN NET REVENUES OF THE CITY'S COMBINED WATERWORKS AND S~NITARY SEWER SYSTEM; PROVIDING THE FORM, TERMS AND RESOLVING OTHER MATTERS RELATING TO THE ISSUANCE, SALE AND DELIVERY OF SAID CERTIFICATES; ~KING OTHER PROVISIONS PERTAINING TO THE SUBJECT AND PURPOSE OF THIS ORDINANCE; AND DECLARING AN EMERGENCY. WHEREAS, the City Council of the City of South- lake, Texas (the "City"), heretofore determined that it was necessary to construct improvements to the combined water- works and sewer system of the City, to-wit: construction of improvements and extensions to the City's water storage and distribution facilities; and WHEREAS, the City Council, having found that the City did not have available unencumbered funds for the purpose of paying contractual obligations to be incurred in making such improvements, determined that it would be in the best interest of the City and its residents to issue and sell certificates of obligation for such purposes; and WHEREAS, the City Council caused notice of inten- tion to issue certificates of obligation to be published in a newspaper of general circulation in the City once a week for two (2) consecu%ive weeks, the date of the first publi- cation of said notice being at least fourteen (14) days prior to the date set forth in said notice that the City Council tentatively proposed to authorize the issuance of said certificates of obligation; and WHEREAS, no petition of any kind has been filed with the Mayor, the City Secretary, any member of this Council or any other officer of the City protesting the issuance of said certificates of obligation; and WHEREAS, the City Council of the City now desires to issue combination tax and revenue certificates of obli- gation of the City in the principal amount of $2,575,000 for the purpose of securing funds to pay contractual obligations to be incurred in making improvements to the City's con%bined waterworks and sewer system; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: SECTION 1: Authorization, Designation, Princi- pal Amount, Purpose. The certificates of obligation of the City shall be and are hereby authorized to be issued in the aggregate principal amount of TWO ~[ILLION FIVE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($2,575,000), to be designated and bear the title of "CITY OF SOUTHLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1985" (hereinafter referred to as the "Certificates"), for the purpose of paying contractual obligations to be incurred in constructing permanent public improvements to the City's combined waterworks and sanitary sewer system, to-wit: construction of improvements and extensions to the City's water storage and distribution facilities, pursuant to the authority conferred by and in conformity with the Constitu- tion and laws of the State of Texas. SECTION 2: Fully Registered Obligations, - Authorized Denominations, - Stated Maturities, - Interest Rates, - Date. The Certificates are issuable in fully registered form only; both principal of and interest thereon to be payable only to the registered owner thereof; shall be in denominations of $5,000 or any integral multiple thereof and the Certificates shall become due and payable on April 1 in each of the years and in principal amount (the "Stated Maturities") and bear interest on the unpaid principal amounts from the Certificate Date or from the most recent interest payment date to which interest has been paid or -2- duly provided for at the per annum rates while Outstanding in accordance with the following schedule: Year of Principal Interest Stated Maturity Amount Rate 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 75,000 80 000 90 000 100 000 110 000 115 000 100 000 115.000 120~000 135,000 145,000 165,000 265,000 290,000 320,000 350,000 11.10 % 11.10 % 11.10 % 11.10 % 11.10 % 11.10 % 11.10 % 11.10 % 11.10 '% 9.625% 9.10 % 9.25 % 9.40 % 9.50 % 9.60 % 9,10 % The Certificates shall be dated April 1, 1985 (the Ce~ ~.~lca~e Date") SECTION 3: Payment of Certificates - Paying Agent/Reqistrar. The principal of, premium, if any, and the interest on the Certificates shall be payable 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 such payment of principal of and interest on the Certificates shall be without exchange or collection charges to the owner or holder of the Certifi- cates. The Certificates shall bear interest on the principal amounts from the Certificate Date or from the most recent interest payment date to which interest has been paid or duly provided for while Outstanding at the per annum rates shown aboue in Section 2, such interest to be payable on April 1 and October t of each year, commencing April 1, 1986. -3- The selection and appointment of First City National Bank of Austin, Austin, Texas, to serve as Paying Agent/Registrar for the Certificates is hereby approved and confirmed, and the City agrees and covenants to cause to be kept and maintained at the principal office of the Paying Agent/Registrar books and records (the "Security Register") for the registration, payment and transfer of the Certifi- cates, all as provided herein, in accordance with the terms and provisions of a "Paying Agent/Registrar Agreement" and such reasonable rules and regulations as the Paying Agent/Registrar and City may prescribe. The City covenants to maintain and provide a Paying Agent/Registrar at all times while the Certificates are Outstanding and any succes- sor Paying Agent/Registrar shall be a national or state banking institution and shall be a corporation organized and doing business under the laws of the United States of ~erica or of any State, authorized under such laws to exercise trust powers, and subject to supervision or ex- amination by Federal or State authority. 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 registered owner of the Certificates by United Sta~es Mail, first class postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Principal of, premium, if any, and interest on the Certificates, due and payable by reason of maturity, redemp- ticn or otherwise, shall be payable only to the registered owner or hc!der of the Certificates appearing on the "Secu- rity Register" maintained on behalf of the City by the Paying Agent/Registrar as hereinafter provided (hereinafter referred to as the "Bondholder" or "Bondholders") (i) on the "Record Date" (hereinafter defined) for purposes of payment of interest thereon and (ii) on the date of surrender of the Certificates for purposes of receiving payment of principal thereof at the Certificates Stated Maturity, or the redemp- tion thereof, in whole or in part. The City and the Paying Agent/ Registrar, and any agent of either, shall treat the Bondholder as the owner of a Certificate for purposes of receiving payment and all other purposes whatsoever, and~ to the extent permitted by law, neither the City nor the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. Principal of and premium, if any, on the Certifi- cates, shall be payable only upon presentation and surrender -4- of the Certificates to the Paying Agent/ Registrar at its principal office. Interest on the Certificates shall be paid to the Bondholder whcse name appears in the "Security Register" at the close of business on the "Record Date" (the fifteenth day of the month preceding an interest payment date for tke Certificates) and shall be paid (i) by check mailed, first class postage prepaid, by the Paying Agent/Registrar, to the address of the Bondholder appearing in the "Security Register" or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested in writing by the Bondholder at the Bondholder's risk and expense. In the event of a non-payment 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/Reg- istrar, 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 (the "Special Payment Date" - 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 Bondholder appearing on the Security Regis- ter at the close of business on the last business day next preceding the date of mailing of such notice. SECTION 4: Redemption. (a) Optional Redemption. The Certificates shall be subject to redemption prior to maturity, at the option of the City, on and after April 1, 1997, as a whole or in part on any interest payment date in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity at random and by lot) at the redemption price of par plus accrued interest to the date of redemption. (b) Exercise of Redemption Option. At least fortyr five (45) days prior to a date set for the redemption of Certificates (unless a shorter notification period shall be satisfactory to the Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of its decision to exer- cise the City's right to redeem Certificates, the principal amount of each Stated Maturity to be redeemed, and the date set for the redemption thereof. Evidence of the decision of -5- 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 Outs%anding Certificates of the same Stated Matur- ity are to be redeemed on a redemption date, the Paying Agent/ Registrar shall select at random and by lot, the Certificates to be redeemed and provided further that if less than the entire principal amount of a Certificate is to be redeemed, the Paying Agent/ Registrar shall treat such Certificate tken subject to redemption as representing the number of Certificates Outstanding which is obtained by dividing the principal amount of such Certificate by $5,000. (d) Notice of Redemption. Not less than thirty (30) days prior to a date of redemption for the Certificates, the Pa~ing Agent/Registrar shall cause a notice of redemption to be mailed, first class postage prepaid, in the name of the City and at the City's expense, to each Bondholder of a Certificate to be redeemed in whc!e or in part at the address of the Bondholder appearing on the "Security Regis- ter'' at the time such notice of redemption is mailed, and an}, notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Bondholder. Ail notices of redemption shall specify (i) 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) the redemption price, (iv) the Certificates, or the portion of the principal amount thereof to be redeemed, shall become due and payable on the redemp- tion 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) the payment of the redemption price for the Certifi- cates, or the principal amount thereof to be redeemed, shall be made at the principal corporate office of the Paying Agent/Registrar only upon presentation and surrender thereof by the Bondholder. 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 herein- above provided, such Certificate (or the principal amount thereof to be redeemed) so called for redemption shall become due and payable, and if moneys sufficient for the -6- payment of such Certificates (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, then on the redemption date designated in such notice, interest on said Certificate (or the principal amount thereof to be redeemed) called for redemption shall cease to accrue and such Certificates shall not be deemed to be Outstanding hereunder. SECTION 5: Execution - Registration. The Certificates shall be executed on behalf of the City by its Mayor under its seal reproduced or impressed thereon and attested b~, its Secretary. The signature of either of said officers on the Certificates may be manual or facsimile. Certificates bearing the manual or facsimile signatures of individuals who were at the time of the passage and adoption cf this Ordinance the proper officers of the City shall bind the City, notwithstanding that such individuals or either of them shall cease to held such offices prior to the delivery of the Certificates to the initial purchaser(s), 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, executed by the Comptroller of Public Accounts cf the State of Texas or his duly authorized agent by manual signature, or a certificate of registration substantially in the form provided in Section SD, executed by the Paying Agent/Registrar by manual signature, and either such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly certified or registered and delivered. SECTION 6: Initial Certificate(s). The Certificates herein authorized shall be issued initially either (i) as a single fully registered certificate in the total principal amount of $2,575,000 with principal install- ments to become due and payable as provided in Section 2 hereof and numbered T-l, or (ii) as sixteen fully registered certificates, being one certificate for each year of maturi- ty in the applicable principal amount and denomination and to be numbered consecutively from T-1 and upward -7- (hereinafter called the "initial Certificate(s)") and, in either case, the Initial Certificates(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The Initial Certificate(s) shall be the Certifi- cates 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 Certificates(s), the Paying Agent/Registrar, pursuant to written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial Certificates(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 Bondholders named at the addresses identified there- for; all pursuant to and in accordance with such written instructions from the initial purchaser(s), or the designee thereof, such other information and documentation as the Paying Agent/Registrar may reasonably require. SECTION 7: Registration - Transfer - Exchange of Certificates - Predecessor Cernificates. The City shall cause to be kept at the principal office of the Paying Agent/Registrar a register (the "Security Register") for the registration and transfer of Certificates, as provided herein and subject to reasonable regulations as may be prescribed by the Paying Agent/Registrar. Any Certificate may, in accordance with its terms and the terms hereof, be transferred or exchanged for Certificates of other au- thorized denominations upon the Security Register by the Bondholder, 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 Bondholder or by his duly authorized agent, in form satis- factory to the Paying Agent/ Registrar. Upon surrender for transfer of any Certificate at the principal office of the Paying Agent/Registrar, the City shall execute and the Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or transferees, one or more new Certificates of authorized denomination and having the same Stated Maturity and of a like aggregate principal amount as the Certificate or Certificates surrendered for transfer. -8- At the option of the Bondholder, Certificates may be exchanged for other Certificates of authorized denomina- tions 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 so surrendered for exchange, the City shall execute, and the Paying Agent/ Registrar shall register and deliver, the Certificates to the Bondholder requesting making the ex- change. Ail Certificates issued upon any transfer or ezchange of Certificates shall be delivered at the principal office of the Paying Agent/Registrar, or sent by registered mail to the Bondholder at his request, risk, and expense and upon the delivery thereof, the same shall be the valid obligations of the City, evidencing the same debt, and entitled to the same benefits under this Ordinance, as the Certificates surrendered upon such transfer or exchange. All transfers or exchanges of Certificates pursu- ant to this Section shall be made without expense or service charge to the Bondholder, except as otherwise herein provid- ed, and except that the Paying Agent/Registrar shall require palrment by the Bondholder 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 debt evidenced by the new Certificate or Certificates registered and delivered in the exchange or transfer therefor. Additionally, the term "Predecessor Certificates" shall include any Certifi- cate registered and delivered pursuant to Section 25 hereof in lieu of a mutilated, lost, destroyed, or stolen Certifi- cate which shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Certificate. Neither the City nor the Paying Agent/Registrar shall be required (1) %o issue, transfer, or exchange any Certificate during a period beginning at the opening of business 30 days before the day of the first mailing of a notice of redemption of Certificates hereunder and ending at -9- the close of business on the day of such mailing or (2) to transfer or exchange any Certificate so selected for redemp- tion in whole or in part where such redemption is scheduled to occur within 30 calendar days. SECTION 8: FORMS. A. Forms Generally. The Certificates, the Registration Certificate of the Comptrol- ler of Public Accounts of the State of Texas, the Certifi- cate of Registration, 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 endorse- ments (including any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City cr determined by the officers executing such Certifi- cates as evidenced by their execution thereof. 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. The definitive Certificates shall be printed, !ithographed, or engraved, produced by any combination of these methods, or produced in any other similar manner, all as determined by the officers executing such Certificates as evidenced by their execution thereof, but the Initial Certificate(s) submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise reproduced. B. Form of Certificate. REGISTERED REGISTERED NO .... $ ........ United States of America State of Texas County of Tarrant CITY OF SOUTHLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATE OF OBLIGATION, SERIES 1985 Interest Rate: Stated Maturity: Certificate Date: CUSIP NO: .......................... April 1, 1985 ......... -10- REGISTERED O~}ER: PRINCIPAL AMOUNT: DOLLARS The City of Scuthlake, Texas (hereinafter referred to as the "City"), a body corporate and municipal corpo- ration in the County of Tarrant, State of Texas, for value received, hereby promises to pay to the registered owner specified above, or the registered assigns thereof, on the Maturity Date specified above, the principal amount spec- ified above (or so much thereof as shall not have been paid on prior redemption), and to pay interest on the unpaid principal amount hereof from the Certificate Date specified above, or from the most recent interest payment date to which interest has been paid or duly provided for until such principal sum has become due and payment thereof has been made or duly provided for, 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 April 1 and October 1 of each year commencing April 1, 1986. Principal of this Certificate shall be payable to the registered owner hereof (the "Bondholder"), upon presenta- tion and surrender, at the principal office of the Paying Agent/Registrar executing the registration certificate appearing hereon or a successor thereof. Interest shall be payable to the registered owner of this Certificate (or one or more Predecessor Certificates, as defined in the Ordi- nance 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 fifteenth day of the month next preceding each interest pa!rment date. All payments of principal of, premium, if any, and interest on this Certificate 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 made by the Paying Agent/Reg- istrar by check sent on or prior to the appropriate date of payment by United States Mail, first class postage prepaid, to the registered owner hereof at the address appearing in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by the registered owner hereof at the Bondholder's risk and expense. -11- This Certificate is one of the series specified in its title issued in the aggregate principal amount of $2,57~,000 (herein referred to as the "Certificates") pursuant to an Ordinance adopted by the governing body of the City (herein referred to as the "Ordinance"), for the purpose of paying contractual obligations to be incurred in constructing permanent improvements to the City's combined waterworks and sanitary sewer system, under and in strict conformits~ with the Constitution and laws of the State of Texas. The Certificates of this series are payable from the proceeds of an ad valorem tax levied upon all taxable property' within the City within the limitations prescribed by law and are further payable from and secured by a lien and pledge of certain Net Revenues (the "Net Revenues") derived from the operation of the City's combined waterworks and sanitary sewer system (the "System"), such lien and pledge of ~et Revenues being junior and inferior to the lien on and pledge of such Net Revenues securing payment of certain presently outstanding First Lien Bonds. Reference is hereby made to the Ordinance, copies of which are on file in the principal office of the Paying Agent/Registrar, and to all of the provisions of which the Bondholder by his acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the tax levied and the Ne5 Revenues pledged for the payment of the Certificates; the terms and conditions under which the City may issue additional First Lien Bonds and Additional Parity Obligations secured by a pledge cf the revenues of the System; 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 Bondholder; the rights, duties, and obliga- tions of the City and the Paying Agent/Registrar; the terms and provisions upon which this Certificate may be discharged at or prior to the maturity or redemption thereof, and deemed to be no longer Outstanding thereunder; and for the other terms and provisions thereof. Capitalized terms used herein have the same meanings assigned in the Ordinance. The City has reserved the right, subject to restrictions stated in the ordinances authorizing the issuance of the Outstanding First Lien Bonds, to issue additional revenue obligations payable from and equally secured by a first lien on and pledge of the revenues of the -12- System in the same manner and to the same extent as the First Lien Bonds, and has further reserved the right, subjecn to restrictions stated in the Ordinance, to issue additional revenue obligations payable from and equally secured by a lien on and pledge of the Net Revenues of the System, in the same manner and to the same extent as the Certificates. The Certificates may be redeemed prior to their Stated Maturities, at the option of the City, on and after April 1, 1997, in whole or in part on any interest payment date in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity at random and by lot) at the redemption price of par, together with accrued interest to the date of redemption and upon 30 days prior written notice being given by the Paying Agent/Registrar and subject to the terms and provisions relating thereto con- tained in the Ordinance. If this Certificate be of a denomination in excess of $5,000, portions of the principal sum hereof in installments of $5,000 or any integral multi- ple thereof may be redeemed, and, if less than all of the principal sum hereof is to be redeemed, upon the surrender of this Cernificate to the Paying Agent/Registrar at its principal office there shall be issued to the registered owner hereof, without charge therefor, for the then unre- deemed balance cf the principal s~mm hereof, new Certificates of like series, maturity, and interest rate in any au- thorized dencminanions provided by the Ordinance. If this Certificate (or any portion of the princi- pal sum hereof) shall have been duly called for redemption and notice of such redemption duly given, then upon such redemption date this Certificate (or the portion of the principal sum hereof to be redeemed) shall become due and payable, and, if moneys for the payment of the redemption price and the interest accrued on the principal amount to be redeemed to the date of redemption are held for the purpose of such pa~ent by the Paying Agent/Registrar, interest shall cease to accrue and be payable hereon from and after the redemption date on the principal amount hereof to be' redeemed. As provided in the Ordinance and subject to certain limitations contained therein, this Certificate is transferable on the Security Register of the City; upon surrender of this Certificate for transfer at the principal -13- office of the Paying Agent/Registrar, 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, and thereupon one or more new fully registered Certificates of the same Stated ~[aturity, of authorized denominations, bearing the same rate of interest, and of the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required (1) to issue, transfer, or exchange any Certificate during a period beginning at the opening of business 30 days before the day of the first mailing of a notice of redemption of Certificates hereunder and ending at the close of business on the day of such mailing or (2) to transfer or exchange any Certificate so selected for redemp- tion in whole or in part when such redemption is scheduled to occur within 30 calendar days. The City and the Paying Agent/Registrar, and any agent of either, may treat the registered owner hereof whose name appears on the Security Register (i) on the Record Date as the owner hereof for purposes of receiving pa~vment of interest hereon, (ii) on the date of surrender of this Cersificate as the owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity or its redemption, in whole or in part, and (iii) on any other date for all other purposes, and neither the City nor the Paying Agent/Registrar, or any such agent of either, shall be affected by notice to the contrary. In the event of a non-pa~ent of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest pa~vment (a "Special Record Date") will be estab- lished 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 sched- uled payment date of the past due interest (the "Special Payment Date" - which shall be 15 days after the Special. Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Bond- 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. It is hereby certified, covenanted, and represen- ted that all acts, conditions, and things required to be performed, exist, and be done precedent to or in the issu- ance of this Certificate in order to render the same a legal, valid, and binding obligation of the City have been performed, exist, and have been done, in regular and due time, form, and manner, as required by law, and that issu- ance of the Certificates does not exceed any constitutional or statutory limitation. In case any provision in this Certificate or any application thereof shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions and applications 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 has caused this Certificate to be duly executed under its official seal. City of Southlake, Texas ATTEST: By Mayor City Secretary (SEAL) Form of Registration Certificate of Comptroller of Public Accounts to be printed on Initial Certifi- cate (s) only. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS THE STATE OF TEXAS REGISTER NO. -15- I HEREBY CERTIFY THAT there is on file and of record in my office a certificate to the effect that the Attorney General of the State of Texas has approved this Certificate, and further that this Certificate has been registered this day by me. WITNESS my signature and seal of office this of the State of Texas (SEAL) Form of Certificate of Paying Agent/Registrar. This Certificate has been duly issued under the provisions of the within-mentioned Ordinance; the Certifi- cate 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 Comptrcller of Public Accounts, as shown by the records of the Paying Agent/Registrar. First City National Bank of Austin, Austin, Texas, as Paying Agent/Registrar Dated: ................... Form of Assignment. 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 -16- attorney to transfer the within Certificate on the books kept for registration thereof, with full power of substi- tution in the premises. DATED: .................. In the presence of: assignment must correspond with the name of the registered owner as it appears on the face of the within Certificate in every particular. F. Form of Initial Certificate(s). The Initial Certificate(s) shall be in the form set forth in paragraph B of this Section, except that: (i) immediately under the name of the Certificate(s) the headings "Interest Rate " and "Stated Maturity" shall both be completed "As Shown Below;" (ii) paragraph one shall read as follows: Registered Owner: Principal A~ount: The City of Southlake, Texas, a body corporate and municipal corporation in the County of Tarrant, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the Registered Owner named above, or the registered assigns thereof, the Principal Amount hereinabove stated on the first day of April in each of the years and in principal installments and bearing interest at per annum rates in accordance with the following schedule: YEAR OF PRINCIPAL INTEREST MATURITY INSTALLMENTS RATE (Information to be inserted from the schedule in Section 2 hereof). (or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the unpaid Principal -17- ~ount hereof from the Certificate Date specified above, or from the most recent interest payment date to which interest has been paid or duly provided for until such principal amounts have beccme due and payment thereof has been made or duly provided for, at the per annum rates of interest spec- ified above computed on the basis of a 360-day year of twelve 30-day months; such interest being payable on April 1 and October 1 of each year while this Certificate is Out- standing, commencing April 1, 1986. Principal of this Certificate shall be payable to the registered owner hereof, upon presentation and surrender, at the principal office of First City National Bank of Austin, Austin, Texas (the "Paying Agent/Registrar"). Interest shall be payable to the registered owner of this Certificate whose name appears on the "Security Register" maintained by the Paying Agent/Reg- istrar at the close of business on the "Record Date," which is the 15th day of the month next preceding each interest payment date. All pa~ents of principal of, premium, if any, and interest on this Certificate shall be in any coin cr currency of the United States of America which at the time of pa)~ent is legal tender for the palrment of public and private debts and shall be made by the Paying Agent/Reg- istrar by check sent en or prior to the appropriate date of pa~ent by United States ~ait, first class postage prepaid, to the registered owner hereof at the address appearing in the Security. Register or by such other method, acceptable to the Paying Agent/Recistrar, requested by the registered cwner hereof at the Bcndho!der's risk and expense. SECTION 9: Definitions. That, for the pur- poses of this ordinance, the following words and terms shall mean and include, and are hereby defined as follows: (a) City - shall mean and refer to the City of Southlake, Texas, and where appropri- ate, the City Council of said City. (b) System - shall mean and refer to the combined waterworks and sanitary sewer system of the City, including all present and future extensions, additions, replacements and improvements thereto, whether situated within or without the limits of the City. (c) Net Revenues - shall mean and include the gross revenues derived from the -18- operation of the System less the reasonable expense of maintenance and operation of the System, including all salaries, labor, materials, interest, repairs and extensions necessary to render efficient service, and every proper item of expense, as required by Article 1113, Revised Civil Statutes of Texas, as amended, after making all payments required by the ordinance authorizing the issuance of the First Lien Bonds. (d) Series 1965 Bonds -shali mean and refer to the outstanding bonds of the City entitled "City of Southlake, Texas, Water- works System Revenue Bonds, Series 1965", dated August 1, 1965, authorized by an ordinance adopted by the City Council of the City on October 28, 1965, as amended by an ordinance adopted on November 22, 1965. (e) Series 1984 Bonds - shall mean and refer to the outstanding bonds of the City enti- tled "City of Soutk!ake, Texas, Waterworks and Sewer System Revenue Bonds, Series 1984", dated April 1, 1984, authorized by an ordinance adopted by the City Ccuncil of the City on May 2, 1984. (f) First Lien Bonds - shall mean the presently outstanding Series 1965 Bonds and Series 1984 Bonds and additional bonds or other obliga- tions hereafter issued by the City secured by a lien on the revenues of the System on a parity with the lien securing the presently outstanding First Lien Bonds. (g) This Ordinance - shall mean the ordinance passed by the City authorizing the issuance and sale of the Certificates. (h) Series 1985 Certificates, the Certificates - shall mean the City of Southlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1985, dated April 1, 1985, authorized by this Ordinance. -19- (i) System Fund shall mean the special fund created and continued in the Ordi- nances authorizing the issuance of the First Lien Bonds into which all revenues derived from the operation of the Ss~stem are paid. (j) Interest and Sinking Fund - shall mean the special fund or account created in Section 10 of this Ordinance to provide for payment of the principal of and interest on the Certificates. (k) Additional Parity Obligations - shall mean and include any additional bonds or other obligations which the City expressly re- serves the right to issue in Section 17 of this Ordinance. (1) Oblications Similarly Secured - shall mean the Certificates and Additional Parity Obligations. SECTION 10: Fund Designations. That to provide for the payment and security of the Certificates, the following special fund is hereby created and established to wit: City of Southlake Certificates of Obligation Interest and Sinking Fund, Series 1985, hereinafter called "Interest and Sinking Fund". This fund shall be deposited with the Pa!~ing Agent/Registrar, as Trustee of the pledged revenues, and moneys depcsited in this fund shall be used to pay principal of and interest on the Certificates and Additional Parity Obligations when and as the same shall become due and payable. Proper officers of the City are hereby authorized and directed to cause to be transferred to the Paying Agent for the Certificates, from funds on deposit in the Interest and Sinking Fund, amounts sufficient to fully pay and discharge promptly each installment of interest and princi- pal of the Certificates as the same accrues or matures; such transfers of funds to be made in such manner as will cause immediately available funds to be deposited with the Paying Agent for the Certificates at the close of the fifth (5th) business day next preceding each interest and/or principal payment date fcr the Certificates. -20- SECTION !1: That, to provide for the payment of the debt service requirements of the Certificates, being (i) the interest on the Certificates and (ii) a sinking fund for their redemption at maturity or a sinking fund of 2% (which- ever 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 and unpaid, a sufficient tax on each one hundred dollars' valuation of taxable property in the City, adequate to pay such debt service requirements, full allowance being made for 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 Interest and Sinking Fund. The governing body of the City 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 de- termined 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 obligations. The amount of taxes to be provided annually for the payment of the principal of and interest on the certifi- cates herein authorized to be issued shall be determined and acccmp!ished in the fo!lowing manner: (a) The City's annual budget shall reflect (i) the amount of debt service requirements to become due on the Certifi- cates in the next succeeding fiscal year of the City, (ii) the amount on deposit in the Interest and Sinking Fund, as of the date such budget is prepared (after giving effect to any payments required to be made during the remainder of the then current fiscal year) for the payment of the Certificates and (iii) the amount of Net Revenues of the System estimated and budgeted to be available for the payment of such debt service require- ments on the Certificates during the next succeeding fiscal year of the City (based upon the amount of Net Revenues of the System available from the preceding fiscal year of the System). -21- (b) The amount required to be provided in the succeeding fiscal year of the City from ad valorem taxes shall be the amount, if any, the debt service requirements to be paid on the Certificates in the next succeeding fiscal year of the City exceed the sum of (i) the amount shown to be on deposit in the Interest and Sinking Fund at the time the annual budget is prepared, and (ii) the Net Revenues of the System budgeted and shown to be available for the payment of said debt service requirements. (c) Following the final approval of the annual budget of the City, the governing body of the City shall, by ordinance, levy an ad valorem tax at a rate sufficient to produce taxes in the amount determined in paragraph (b) above, to be utilized fcr purposes of paying the principal of and interest on the Certificates in the next succeeding fiscal year of the City. SECTION 12: Pledce of Net Revenues. That the City hereby covenants and agrees that all of the Net Reve- nues, with the exception of thcse in excess of the amounts required to be deposited to the Interest and Sinking Fund as hereafter provided, are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates and Additional Parity Obligations. SECTION 13: System Fund. That the City hereby covenants and agrees that as received all revenues and income of every nature derived from the operation and ownership of the System shall be first deposited in the System Fund, which fund shall be maintained at an official depository of the City, and all moneys deposited therein shall be kept separate and apart from other funds of the City and are pledged and appropriated as follows: FIRST: To the payment of all necessary and reasonable maintenance and operation expenses of the System. -22- SECOND: To the payments and requirements required to be made in the ordinances authorizing the issuance of the First Lien Bonds. THIRD: To the Interest and Sinking Fund, to the extent and in the manner provided in Section 11 hereof; and FOURTH: TO any other proper City purposes now or hereafter permitted by law. That the City hereby agrees and covenants to cause to be deposited in the Interest and Sinking Fund the follow- ing amounts from the pledged Net Revenues in the System Fund for the payment of the Certificates herein authorized to be issued as follows: (i) Beginning on or before the 15th day of September, 1985, and on or before each March 15 and September 15 thereafter during the period of time the Certificates remain outstanding, an amount equal to not less than one-half (%) of the total principal amount to become due on the Certificates cn the next succeeding April 1; (ii) Beginning on or before the 15th day of March, !98~ and cn or before each September 15 and March 15 thereafter during the period of time the Certificates remain outstanding, an amount equal to the full amount of interest due on the Certifi- cates on the interest payment date next succeeding the date of such deposits. The deposits to be made to the Interest and Sinking Fund, as hereinabove provided, shall be made until such time as such fund contains an amount equal to pay the principal of and interest on the Certificates to maturity. Ad valorem taxes levied, collected and deposited in the Interest and Sinking Fund for and on behalf of this series of Certificates may be taken into consideration and reduce the amount of the deposits hereinabove provided, which would otherwise be required to be deposited in the Interest and Sinking Fund from the Net Revenues of the System. SECTION 14: Deficiencies in Funds. That if in any month the City shall, for any reason, fail to pay into -23- the Interest and Sinking Fund the full amounts above stip- ulated, amounts equivalent to such deficiencies shall be set apart and paid into said fund from the first available and una!located Net Revenues of the System in the following month or months and such payments shall be in addition to the amounts hereinabove provided to be otherwise paid into said fund during such month or months. SECTION 15: Excess Revenues. That any Net Revenues in excess of those required to fully establish and maintain the special fund created for the payment and security of the Certificates may be used for the redemption of Obligations Similarly Secured, or may be transferred to the general fund of the City and used for general or special purposes; provided, however, any transfer of moneys to the general fund of the City shall be approved by the City Council and only upon finding that such transfer of moneys will not impair the ability of the City to make subsequent deposits to the special fund created for the payment and security of the Certificates and the Obligations Similarly Secured. SECTION 16: Security of Funds. That all moneys cn deposit in the special fund 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 extent required by the laws of the State of Texas for the security of public funds, and moneys in such special fund shall be used only for the purposes permitted by this Ordinance. SECTION 17: Issuance of Additional Obligations. That the City reserves the right to issue additional obliga- tions on a parity with the First Lien Bonds when issued in compliance with law and the terms and conditions set forth in the ordinances authorizing the issuance of said bonds. The City further reserves the right hereafter to issue Additional Parity Obligations which shall be payable from and secured by a lien on and pledge of the Net Revenues in the same manner and to the same extent as are the Certifi- cates authorized by this Ordinance, and the Certificates and the Additional Parity Obligations shall in all respects be of equal dignity insofar as the pledge of the Net Revenues is concerned. The Additional Parity Obligations may be issued in one or more installments; provided, however, that none shall be issued unless and until the following con- ditions have been met: -24- (a) The City is not default as to any covenant, condition or obligation prescribed in this Ordinance or in an ordinance authorizing the issuance of then outstanding Obligations Similarly Secured. (b) That the laws of the State of Texas in force at such time provide for the issuance of such Additional Parity Obligations. (c) The ordinance authorizing the issuance of the Additional Parity Obligations provides for deposits to be made to the Interest and Sinking Fund in amounts sufficient to pay the principal of and interest on such Additional Parity Obligations the same mature. Such Additional Parity Obligations, when issued in accordance with the above, may be secured in whole or in part by a pledge of the Net Revenues on a parity with the pledge securinq tkese Certificates and the provisions of this Ordinance relating to the use of Net Revenues shall be applicable to such Additional Parity Obligations as though the same were a part of this original authorization. The right to issue such Additional Parity Obligations shall exist as often as the need therefor shall arise and so long as such Additional Parity Obligations are issued in compli- ance with law and the terms and conditions contained in this Ordinance. SECTION 18: 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 payments to be made to the Interest and Sinking Fund as required by this Ordinance, or (b) defaults in the obser- vance or performance of any other of the covenants, con- ditions or obligations set forth in this Ordinance, the holder or holders of any of the Certificates shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the City Council and other officers of the City to observe and perform any covenant, condition or obligation prescribed in this Ordi- nance. -25- SECTION 19: Refunding Bonds. That the City hereby retains the right to issue refunding bonds to refund all or any part of the Certificates as permitted by and in accordance with any lawful method thereunto appertaining, it being provided, however, that no refunding bonds shall be issued which shall enjoy a lien on the Net Revenues superior to that possessed by the Certificates or refunding bonds that shall be made to mature or bear interest in such manner or at such rates as will impair the security or interfere with the timely payment of principal or interest of the Certificates not refunded. SECTION 20: Records - Accounts - Accounting Reports. That the City hereby covenants and agrees that so long as any of the Certificates or any interest thereon remain outstanding and unpaid, it will keep and maintain a proper and complete system of records and accounts pertain- ing to the operation of the System and its component parts separate and apart from all other records and accounts of the City in accordance with the accepted accounting prac- tices prescribed for municipal corporations, and complete and ccrrect entries shall be made of all transactions relating to said System, as provided by Article 1113, V.A.T.C.S. or other applicable law. The holder or holders of any CertificaTes, or any duly authorized agent or agents of such holders, shall have the right at all reasonable times tc inspect all such records, accounts and data relat- ing thereto and to inspect the System and all properties comprising same. The City further agrees that as soon as possible 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 or Licensed Public Accountants. Each such audit, in addition to what- ever other matters may be thought proper by the Accountant, shall particularly include the following: (a) A detailed statement of the income and expenditures of the System for such fiscal year; (b) A balance sheet as of the end of such fiscal year; (C) The Accountant's comments regarding the manner in which the City has carried out the requirements of this Ordinance and his recommenda- tions for any changes, or improvements in the operation, records and accounts of the System. -26- (d) A list of the insurance policies in force at the end of the fiscal year on the System properties, setting out as to each policy the amount thereof, the risk covered, the name of the insurer and the pclicy's expiration date; (e) A list of securities which have been on deposit as security for the money in the Interest and Sinking Fund throughout the fiscal year, and a statement of the manner in which money in the System Fund has been secured in such fiscal year; (f) The number of properties connected with the System and the total income from the System for the fiscal year. Expenses incurred in making the audits above referred to are to be regarded as maintenance and operating expenses of the System and paid as such. Copies of the aforesaid annual audit shall be furnished, upon written request, to any holder of the Certificates. SECTION 21: Remedies in Event of Default. That in additicn 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 payments to be made to the Interest and Sinking Fund as recuired by this Ordinance, or (b) defaults in the obser- vance or performance of any other of the covenants, condi- tions or obligations set forth in this Ordinance, the holder or holders of any of the Certificates shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the City Council and other officers of the City to observe and perform any covenant, condition or obligation prescribed in this Ordinance. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right or- 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. -27- SECTION 22: Special Covenants. hereby further covenants as follows: That the City (a) That it has the lawful power to pledge the revenues supporting this issue of Certificates and has lawfully exercised said power under the Constitution and laws of the State of Texas, including Articles 1111 et seq., V.A.T.C.S.; that the Certificates issued hereunder, and the Addi- ticnal Parity Obligations, when issued, shall be ratably secured under said pledge of income in such manner that one obligation shall have no preference over any other obligation of said issues. (b) That, other than for the payment of the First Lien Bonds and the Certificates, the revenues of the System have not in any manner been pledged to the pa!rment of any debt or obligation of the City or of the System. (c) That, so long as any of the Certificates or any interest thereon remain outstanding, the City will not sell 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; and, further, with the exception of the additional First Lien Bonds and Additional Parity Obligations expressly permitted by this Ordinance to be issued in Section 17 hereof, it will not encumber the net revenues of the System unless such encumbrance is made junior and subordinate to all of the pro- visions of this Ordinance. (d) That no free service of the System will be allowed, and should the City or any of its agents or instrumentalities make use of the services and facilities of the System, payment of the reasonable value thereof shall be made by the City out of funds from sources other than the revenues and income of the System. -28- (e) 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/or sanitary sewer system other than that owned by the City, and the opera- tion of such system by anyone other than the City is hereby prohibited. SECTION 23: Notices to Holders; Waiver. Wherever this Ordinance provides for notice to Bondholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to the address of each Bondholder as it appears in the Security Register. In any case where notice to Bondholders is given by mail, neither the failure to mail such notice to any particular Bondholders, nor any defect in any notice so mailed, shall affect the sufficiency of such notice with respect to all other Certificates. Where this Ordinance provides for notice in any manner, such notice may be waived in writing by the Bondholder entitled to receive such notice, either before or after the event with respect to which such notice is ~iven, and such waiver shall be the equivalent of such notice. Waivers of notice by Bondholders shall be filed with tke 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 24: Cancellation. Ail 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 delivered to the Paying Agent/Registrar and, if not already 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 %he Paying Agent/Registrar shall be destroyed as directed by the City. -29- SECTIOI~ 25: Mutilated, Destroyed, Lost, and Stolen Certificates. If (1) any mutilated Certificate is surrendered to the Paying Agent/Registrar, or the City and the Paying Agent/Registrar receive evidence to their satisfaction of the destruction, loss, or theft of any Certificate, and (2) there is delivered to the City and the Paying Agent/Registrar such security or indemnity as may be required to save each of them harmless, then, in the absence of notice to the City or the Paying Agent/Registrar that such Certificate has been acquired by a bona fide purchaser, the City shall execute and, upon its request, the Paying Agent/Registrar shall register and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost, or stolen Certificate, a new Certificate of the same Stated Maturity and of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost, or stolen Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a new Certificate, pay such Certificate. Upon the issuance of any new Certificate under this Section, the City may require payment by the Bondholder of a s.~m sufficient tc ccver any tax or other governmental charge impcsed in relation thereto and any other expenses (including the fees and expenses of the Paying Agent/ Registrar) connected therewith. Every new Certificate issued pursuant to this Section in lieu of any mutilated, destroyed, lost, or stolen Certificate shall constitute a replacement of the prior obligation of the City, whether or not the mutilated, destroyed, lost, or stolen Certificate shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Certificates. The procedures set forth in the Paying Agent/Reg- istrar Agreement, shall also be available with respect to mutilated, 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 Certificates. SECTION 26: Sale of the Certificates. The sale of the Certificates to Prudential Bache Securitips. (herein referred to as the "Purchaser" and having all the rights, benefits, and obligations of a Bondholder) at the price of par and accrued interest to the date of delivery plus a premium of $ -0- , is hereby confirmed. Delivery of the Certificates shall be made to the Purchaser as soon as practicable after the adoption of this Ordinance, upon pal,~ent therefor in accordance with the terms of sale. SECTION 27: No-Arbitrage Certification. The City hereby certifies that the proceeds of the Certificates are needed at this time to finance the costs of capital improvements planned by the City; that based on current facts, estimates, and circumstances, it is reasonably expected that final disbursement of the ,proceeds of the Certificates will occur within three years after the date ~f the receipt thereof by the City, that substantial binding obligations to commence such improvements will be incurred within six months after such date, and that the construction or acquisition of improvements will proceed with due dili- gence to completion; that it is not reasonably expected the proceeds of the Certificates or money deposited in the interest and sinking fund created for the pa~ent of the Certificates will be used or invested in a manner that would cause the Certificates to be or become "arbitrage bonds" within the meaning of section 103(c) of the Internal Revenue Code cf 1954, as amended, or any regulations or published rulings pertaining thereto; and that save and except for the Interest and Sinking Fund created herein no other funds or accounts have been established or pledged to the payment of the Certificates. The City shall not take any action or fail to.take any action with respect to the investment of the proceeds of the Certificates or any other funds of the City, including amounts received from the investment of any of the forego- ing, which, based upon the facts, estimates, and circum~ stances known on the date of initial delivery of the Certif- icates, would result in constituting the Certificates "arbitrage bonds" within the meaning of such section 103(c), as amended and in force and effect on the date of such. delivery, and the City shall not take any deliberate action motivated by arbitrage which would have such result. -31- Proper officers of the City charged with the resmonsibi!ity of issuing the Certificates are hereby authorized and directed to make, execute, and deliver certifications as to facts, estimates, and circumstances existence as of the date of the initial delivery of the Certificates and stating whether there are any facts, estimates, or circumstances which would materially change the City's current expectations, and the covenants herein made and certifications herein authorized are for the benefit upon by in of the holders of the Certificates and may be relied the Bondholders and bond counsel for the City. SECTION 28: Mayor to Have Control of Certifi- cates. The Mayor of the City shall be and is hereby author- ized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas, and shall take and have charge and control of the Certificates pending their approval by the Attorney General, the registration thereof by the Comptroller of Public Accounts and the delivery of the Certificates to the purchaser of the Certificates. SECTION 29: Satisfaction of Obliqation of City. If the City shall pay or cause to be paid, or there shall otherwise be paid to the Bondholders, the principal of and interest on the Certificates, at the times and in the manner stipulated in this Ordinance, then the pledge of any taxes, or Net Revenues or other money, securities, and funds pledged under this Ordinance and all covenants, agreements, and other obligations of the City to the Bondholders shall thereupon cease, terminate, and become void and be dis- charged and satisfied, and the Paying Agent/Registrar shall pay over or deliver all money held by it under this Ordi- nance to the City. Certificates or principal amount thereof and interest installments for which money shall have been set aside in full pa)~ent to maturity or the redemption thereof and held in trust by the Paying Agent/Registrar (through. deposit by the City of funds for such pa~vment or redemption or otherwise) shall be deemed to have been paid within the meaning and with the effect expressed above in this Section. All Outstanding Certificates shall be deemed to have been paid, prior to their Stated Maturity, within the meaning and with the effect expressed above in this Section if there shall have been deposited with the Paying Agent/Registrar -32- either money in an amount which shall be sufficient, or Government Securities the principal of and the interest on which when due will provide money which together with the money, if any, deposited with the Paying Agent/Registrar at the same time shall be sufficient, to pay when due the principal of and interest to become due on such Certificates on and prior to the Stated Maturity or (if notice of redemp- tion has been duly given or waived or if irrevocable arrangements therefor acceptable to the Paying Agent/Reg- istrar have been made) the redemption thereof. Neither Government Securities nor money deposited with the Paying Agent/Registrar pursuant to this Section, nor principal or interest payments on any such Government Securities, shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and interest on such Certificates. Any cash received from such principal of and interest on such Government Securities deposited with the Paying Agent/Registrar, if not needed for such purpose, shall, to the extent practicable, be reinvest- ed in Government Securities (which may be non-interest bearing) maturing at times and in amounts sufficient to pay when due the principal of and interest on such Certificates on and prior to the Stated Maturity thereof, and interest earned from such reinvestments shall be paid over to the City as received by the Paying Agent/Registrar, free and clear of any trust, lien, or pledge. Any payment for Government Securities purchased for the purpose of reinvest- ing cash as aforesaid shall be made only against delivery of such Government Securities. The term "Government Securities", as used herein, means direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, which are non-callable prior to the respective Maturities of the Certificates and may be United States Treasury Obligations such as the State and Local Government Series and may be in book-entry form. At such time as all of the Certificates are retired, or provision is made for their payment, money in the Interest and Sinking Fund, if any, shall be transferred to the general fund of the City, provided that any money held by the Paying Agent/Registrar which has been provided for the payment of interest or principal and not so utilized for any reason shall continue to be held by the Paying -33- Agent/Registrar for a period of four calendar years, and if not claimed, the same shall be returned to the general fund of the City. SECTIO~i 30: Printed Opinion. That the Purchas- er's obligation to accept delivery of the Certificates is subject to its being furnished a final opinion of Du~nas, Huguenin, Boothman and Morrow, Attorneys at Law, approving such Certificates as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for such Certificates. Printing of a true and correct copy of said opinion on the reverse side of each of said Certifi- cates, with appropriate certificate pertaining thereto executed by facsimile signature of the City Secretary of the City is hereby approved and authorized. SECTION 31: Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. SECTION 32: Ordinance a Contract; Amendments - Outstandin~ Certificates. The City acknowledges that the covenants and okligaticns of the City herein contained are a material inducement to the purchase of the Certificates. This Ordinance shall constitute a contract with the Holders of the Certificates from time to time, binding on the City and its successcrs and assigns, 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 Bondholders, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Bond- holders, including the curing of any ambiguity, inconsisten- cy, or formal defect or omission herein. In addition, the City may, with the written consent of Bondholders 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 Bondholders of Outstanding Certificates, no such amendment, addition, or rescission' shall (1) extend the time or times of payment of the princi- pal of and interest on the Certificates, reduce the princi- pal 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 or interest on the Certificates, (2) give any preference to any Certificate over -34- any other Certificate, or (3) reduce the aggregate principal amount of Certificates required for consent to any such amendment, addition, or rescission. 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: (1) those Certificates theretofore cancelled by the Paying Agent/Registrar or delivered to the Paying Agent/Registrar for cancellation; (2) those Certificates for which payment has been duly provided by the City by the irrevocable deposit with the Paying Agent/Registrar of money in the amount necessary to fully pay the principal of and interest thereon to maturity or redemption, as the case may be, provided that, if such Certificatess are to be redeemed, notice of redemption thereof shall have been duly given pursuant to this Ordinance or irrevocably provided to be given to tke satisfaction of the Paying Agent/Registrar, or waived; (3) those Certificates which other Certifi- cates have been registered and delivered in lieu of pursuant to this Ordinance; (4) those Certificates that have been mutilated, destroyed, lost, or stolen and replace- ment Certificates have been registered and de- livered in lieu thereof as provided in Section 25 hereof; and (5) those Certificates for which the payment of the principal of, premium, if any, and interest on has been duly provided by the City in accor- dance with the provisions of Section 29 hereof by the deposit in trust of money or Government Secu- rities, or both. SECTION 33: Benefits of Ordinance. Nohhing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other than the City, the, Bondholders and the Paying Agent/Registrar, any right, -35- 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 Bondholders and the Paying Agent/Registrar. SECTION 34: Inconsistent Provisions. Ail ordinances and 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 ordained herein. SECTION 35: 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 36: Severability. If any provision of this Ordinance or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Ordinance and the application of such provision to other persons and circumstances shall nevertheless be valid, and this governing body hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 37: Emergency/Public Meeting. That it is officially found, determined, and declared that an emergency and urgent public necessity exist, because the proceeds from the sale of the Certificates are required as soon as pcssib!e and the City is without money for necessary and urgently needed public improvements; that such emergency and necessity require the holding of the meeting at which this Ordinance is adopted at the time held; that such meeting was open to the public; and that 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. -36- SECTION 38: Effective Date. This Ordinance shall be in force and effect from and after its final passage, and it is so ordained. PASSED AND ADOPTED on t~6~12th day of March, 1985. ..... .'~ /". ~-yor,/C%~y of Sout~k~, Texas City Secretary~ Cit~ of Southlake, Texas (City Seal) -37-