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Item 7ICity of Southlake, Texas MEMORANDUM TO: Billy Campbell, City Manager FROM: Sharen Elam, Director of Finance Ext. 1713 SUBJECT: Ordinance No. 847 authorizing the issuance of such bonds and providing for the redemption of the obligations being refunded "CITY OF SOUTHLAKE, TEXAS, TAX AND TAX INCREMENT REVENUE REFUNDING BONDS, SERIES 2003 -A (REINVESTMENT ZONE NUMBER ONE)" Action Requested: Approval of Ordinance No. 847 authorizes the issuance of bonds to refund a portion of Series 2000 -B dated March 1, 2000 outstanding TIF obligations. Background Information: City staff and our financial advisor have continued to monitor the market to ensure that we capitalize on any refunding opportunities. Based on the current market, it would be advantageous for the city to refund the bonds Series 2000 - B, dated March 1, 2000, scheduled to mature on February 15 in each of the years 2011 through 2018. The refunding will result in the City saving approximately $2.3 million in debt service payments and further provide present value savings of approximately $700,000. The certificates are issued and approved by adoption of an ordinance. Approval of Ordinance No. 847 will set in motion the legal requirements to obtain the proceeds to refund the bonds. After approval, the legal documents must be reviewed by the Texas Attorney General's Office. The City would redeem the outstanding bonds in mid May. Financial Considerations: The certificates of obligation will be issued with a dedicated pledge of accumulated tax increment reinvestment zone revenues, and a backup pledge of the Citv's ad valorem tax rate. Citizen Input/ Board Review: Public Hearing is scheduled for April 15, 2003. Legal Review: Ed Esquivel with the law firm Fulbright and Jaworski serves as the City's bond counsel, and as such has prepared the Ordinance. Alternatives: None Billy Campbell, City Manager March 14, 2011 Page 2 Supporting Documents: Ordinance No. 847 Staff Recommendation: Approval of Ordinance No. 847 ORDINANCE NO. 847 AN ORDINANCE authorizing the issuance of "CITY OF SOUTHLAKE, TEXAS, TAX AND TAX INCREMENT REVENUE REFUNDING BONDS, SERIES 2003 -A (REINVESTMENT ZONE NUMBER ONE) "; specifying the terms and features of said bonds; providing for the payment of said bonds by the levy of an ad valorem tax upon all taxable property within the City and a lien on and pledge of the certain tax increment revenues; and resolving other matters incident and relating to the issuance, payment, security, sale and delivery of said Bonds, including the approval and execution of a Paying Agent /Registrar Agreement and a Special Escrow Agreement and the approval and distribution of an Official Statement; and providing an effective date. WHEREAS, the City Council of the City of Southlake, Texas (the "City ") has heretofore issued, sold, and delivered, and there is currently outstanding, obligations totaling in Maturity Amount of $16,140,000 ( the "Refunded Obligations ") more particularly described as follows: City of Southlake, Texas, Tax and Tax Increment Revenue Certificates of Obligation, Series 2000 -B (Reinvestment Zone Number One) ", dated March 1, 2000, scheduled to mature on February 15 in each of the years 2011 through 2018; and WHEREAS, pursuant to the provisions of V.T.C.A., Government Code, Chapter 1207, as amended, the City Council is authorized to issue refunding bonds and deposit the proceeds of sale directly with any place of payment for the Refunded Obligations, or other authorized depository, and such deposit, when made in accordance with said statute, and ordinances authorizing the issuance of the Refunded Obligations, shall constitute the making of firm banking and financial arrangements for their discharge and final payment; and WHEREAS, the City Council hereby finds and refunding bonds should be issued at this time to refund refunding will result in the City saving approximately $ on such indebtedness and further provide present $ ; now, therefore, determines that general obligation the Refunded Obligations, and such in debt service payments value savings of approximately BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: SECTION 1: Authorization, Designation, Principal Amount, Purpose Refunding bonds of the City shall be and are hereby authorized to be issued in the aggregate principal amount of $ , to be designated and bear the title "CITY OF SOUTHLAKE, TEXAS, TAX AND TAX INCREMENT REVENUE REFUNDING BONDS, SERIES 2003 (REINVESTMENT ZONE NUMBER ONE)" (hereinafter referred to as the "Certificates "), for the purpose of refunding certain outstanding obligations of the City (identified in the preamble hereof and referred to as the "Refunded Obligations ") and to pay costs of issuance, in accordance with authority conferred by and in conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Government Code, Chapter 1207. SECTION 2: Fully Registered Obligations - Authorized Denominations - Stated Maturities -Date. The Bonds are issuable in fully registered form only; shall be dated April 15, 2003 (the "Issue Date ") and shall be in denominations of $5,000 or any integral multiple thereof (within a Stated Maturity) and the Bonds shall become due and payable on February 15 in each SOUTHLAKE TIF REF 2003_ORDINANCE.DOC of the years and in principal amounts (the "Stated Maturities ") and bear interest at the per annum rate(s) in accordance with the following schedule: Year of Principal Interest Stated Maturity Amount Rate (s 2007 $,000 % 2008 1 000 % 2009 7 000 % 2010 7 000 % 2011 7 000 % 2012 7 000 % 2013 7 000 % 2014 7 000 % 2015 7 000 % 2016 7 000 % 2017 7 000 % 2018 7 000 % The Bonds shall bear interest on the unpaid principal amounts from the Issue Date at the rate per annum shown above in this Section (calculated on the basis of a 360 -day year of twelve 30 -day months), and such interest shall be payable on February 15 and August 15 of each year, commencing February 15, 2004. SECTION 3: Terms of Payment - Paying Agent /Registrar. The principal of, premium, if any, and the interest on the Bonds, due and payable by reason of maturity, redemption, or otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter called the "Holders ") appearing on the registration and transfer books 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. The selection and appointment of Wachovia Bank, National Association, Houston, Texas to serve as Paying Agent /Registrar for the Bonds is hereby approved and confirmed. Books and records relating to the registration, payment, transfer and exchange of the Bonds (the "Security Register ") shall at all times be kept and maintained on behalf of the City by the Paying Agent/Registrar, as provided herein and in accordance with the terms and provisions of a "Paying Agent /Registrar Agreement ", substantially in the form attached hereto as Exhibit A, and such reasonable rules and regulations as the Paying Agent /Registrar and the City may prescribe. The Mayor and City Secretary are authorized to execute and deliver such Agreement in connection with the delivery of the Bonds. The City covenants to maintain and provide a Paying Agent /Registrar at all times until the Bonds 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 Bonds, 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 Bonds shall be payable at the Stated Maturities or the redemption thereof only upon presentation and surrender of the Bonds to the Paying SOUTHLAKE TIF REF 2 2003_ORDINANCE.DOC Agent/Registrar at its designated offices in Charlotte, North Carolina (the "Designated Payment /Transfer Office "). Interest on the Bonds shall be paid to the Holders whose name appears in the Security Register at the close of business on the Record Date (the last business 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 Bonds shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the City where the Designated Payment /Transfer Office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day when 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. In the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date ") will be established by the Paying Agent/ Registrar, if and when funds for the payment of such interest have been received from the 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. SECTION 4: Redemption (a) Optional Redemption The Bonds maturing on and after February 15, 2011 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 February 15, 2010, or on any 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 (45) days prior to a redemption date for the Bonds (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 Bonds, 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 Bonds shall be entered in the minutes of the governing body of the City. (c) Selection of Bonds for Redemption If less than all Outstanding Bonds of the same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/ Registrar shall treat such Bonds as representing the number of Bonds Outstanding which is obtained by dividing the principal amount of such Bonds by $5,000 and shall select the Bonds 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 Bonds, 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 Bond to be redeemed in whole or in part at the address of the Holder appearing on the Security Register at the close of business on the business day 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. SOUTHLAKE TIF REF 3 2003_ORDINANCE.DOC All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii) identify the Bonds 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 Bonds, 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, provided moneys sufficient for the payment of such Bond (or 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 and (v) specify that payment of the redemption price for the Bonds, or the principal amount thereof to be redeemed, shall be made at the Designated Payment /Transfer Office of the Paying Agent /Registrar only upon presentation and surrender of the Bonds. If a Bond is subject by its terms to prior redemption and has been called for redemption and notice of redemption has been duly given as hereinabove provided, such Bond (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. SECTION 5: Registration - Transfer - Exchange of Bonds - Predecessor Bonds. The Paying Agent /Registrar shall obtain, record, and maintain in the Security Register the name and address of each and every owner of the Bonds issued under and pursuant to the provisions of this Ordinance, or if appropriate, the nominee thereof. Any Bond may be transferred or exchanged for Bonds of other authorized denominations by the Holder, in person or by his duly authorized agent, upon surrender of such Bond 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 Agent /Registrar. Upon surrender of any Bond (other than the Initial Bond(s) authorized in Section 8 hereof) for transfer at the Designated Payment /Transfer 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 Bonds of authorized denominations and having the same Stated Maturity and of a like aggregate principal amount as the Bond or Bonds surrendered for transfer. At the option of the Holder, Bonds (other than the Initial Bond(s) authorized in Section 8 hereof) may be exchanged for other Bonds of authorized denominations and having the same Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the Bonds surrendered for exchange, upon surrender of the Bonds to be exchanged at the Designated Payment /Transfer Office of the Paying Agent/ Registrar. Whenever any Bonds are surrendered for exchange, the Paying Agent /Registrar shall register and deliver new Bonds to the Holder requesting the exchange. All Bonds issued in any transfer or exchange of Bonds shall be delivered to the Holders at the Designated Payment /Transfer 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 Bonds surrendered in such transfer or exchange. All transfers or exchanges of Bonds 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 SOUTHLAKE TIF REF 4 2003_ORDINANCE.DOC exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined to be "Predecessor Bonds," evidencing all or a portion, as the case may be, of the same obligation to pay evidenced by the new Bond or Bonds registered and delivered in the exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued, registered and delivered in lieu thereof pursuant to the provisions of Section 18 hereof and such new replacement Bond shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond. Neither the City nor the Paying Agent/ Registrar shall be required to issue or transfer to an assignee of a Holder any Bond called for redemption, in whole or in part, within 45 days of the date fixed for the redemption of such Bond; provided, however, such limitation on transferability shall not be applicable to an exchange by the Holder of the unredeemed balance of a Bond called for redemption in part. SECTION 6: Book -Entry Only Transfers and Transactions Notwithstanding the provisions contained in Sections 3, 4 and 5 hereof relating to the payment, and transfer /exchange of the Bonds, the City hereby approves and authorizes the use of "Book -Entry Only" securities clearance, settlement and transfer system provided by The Depository Trust Company (DTC), a limited purpose trust company organized under the laws of the State of New York, in accordance with the operational arrangements referenced in the Blanket Issuer Letter of Representation, by and between the City and DTC (the "Depository Agreement "). Pursuant to the Depository Agreement and the rules of DTC, the Bonds shall be deposited with DTC who shall hold said Bonds for its participants (the "DTC Participants "). While the Bonds are held by DTC under the Depository Agreement, the Holder of the Bonds on the Security Register for all purposes, including payment and notices, shall be Cede & Co., as nominee of DTC, notwithstanding the ownership of each actual purchaser or owner of each Bond (the "Beneficial Owners ") being recorded in the records of DTC and DTC Participants. In the event DTC determines to discontinue serving as securities depository for the Bonds or otherwise ceases to provide book -entry clearance and settlement of securities transactions in general or the City determines that DTC is incapable of properly discharging its duties as securities depository for the Bonds, the City covenants and agrees with the Holders of the Bonds to cause Bonds to be printed in definitive form and provide for the Bond certificates to be issued and delivered to DTC Participants and Beneficial Owners, as the case may be. Thereafter, the Bonds in definitive form shall be assigned, transferred and exchanged on the Security Register maintained by the Paying Agent /Registrar and payment of such Bonds shall be made in accordance with the provisions of Sections 3, 4 and 5 hereof. SECTION 7: Execution - Registration The Bonds 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 Bonds may be manual or facsimile. Bonds bearing the manual or facsimile signatures of individuals who are or were the proper officers of the City on the Issue Date shall be deemed to be duly executed on behalf of the City, notwithstanding that one or more of the individuals executing the same shall cease to be such officer at the time of delivery of the Bonds to the initial purchaser(s) and with respect to Bonds SOUTHLAKE TIF REF 5 2003_ORDINANCE.DOC delivered in subsequent exchanges and transfers, all as authorized and provided in V.T.C.A., Government Code, Chapter 1201. No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or obligatory for any purpose, unless there appears on such Bond either a certificate of registration substantially in the form provided in Section 9C, 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 9D, manually executed by an authorized officer, employee or representative of the Paying Agent /Registrar, and either such certificate duly signed upon any Bond shall be conclusive evidence, and the only evidence, that such Bond has been duly certified, registered and delivered. SECTION 8: Initial Bond(s) The Bonds herein authorized shall be initially issued either (i) as a single fully registered Bond in the total principal amount stated in Section 1 hereof with principal installments to become due and payable as provided in Section 2 hereof and numbered T -1, or (ii) as multiple fully registered Bonds, being one Bond 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 Bond(s)") and, in either case, the Initial Bond(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The Initial Bond(s) shall be the Bonds 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 Bond(s), the Paying Agent/Registrar, pursuant to written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial Bond(s) delivered hereunder and exchange therefor definitive Bonds 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 9: Forms A. Forms Generally The Bonds, 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 Bonds, 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 insurance legends in the event the Bonds, or any maturities thereof, are purchased with insurance and any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City or determined by the officers executing such Bonds as evidenced by their execution. Any portion of the text of any Bonds may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Bond. The definitive Bonds and the Initial Bond(s) shall be printed, lithographed, or engraved, typewritten, photocopied or otherwise reproduced in any other similar manner, all as determined by the officers executing such Bonds as evidenced by their execution. SOUTHLAKE TIF REF g 2003_ORDINANCE.DOC B. Form of Bonds REGISTERED NO. UNITED STATES OF AMERICA STATE OF TEXAS CITY OF SOUTHLAKE, TEXAS, TAX AND TAX INCREMENT REVENUE REFUNDING BOND, SERIES 2003 -A (REINVESTMENT ZONE NUMBER ONE) Issue Date: Interest Rate: Stated Maturity April 15, 2003 % February 15, _ Registered Owner: REGISTERED CUSIP NO: Principal Amount: DOLLARS The City of Southlake (hereinafter referred to as the "City "), a body corporate and municipal corporation in the Counties of Tarrant and Denton, 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 Issue Date at the per annum rate of interest specified above computed on the basis of a 360 -day year of twelve 30 -day months. Principal of this Bond is payable at its Stated Maturity or redemption to the registered owner hereof, upon presentation and surrender, at the Designated Payment /Transfer Office of the Paying Agent /Registrar executing the registration certificate appearing hereon, or its successor; provided, however, while this Bond is registered to Cede & Co., the payment of principal upon a partial redemption of the principal amount hereof may be accomplished without presentation and surrender of this Bond. Accrued interest on the unpaid principal amount hereof is payable on February 15 and August 15 in each year, commencing February 15, 2004 to the registered owner of this Bond (or one or more Predecessor Bonds, 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 last business day of the month next preceding each interest payment date, 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 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 Bond 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 Bond is one of the series specified in its title issued in the aggregate principal amount of $ (herein referred to as the "Bonds ") for the purpose of refunding certain outstanding obligations of the City (identified in the Ordinance hereinafter referenced and referred to as the "Refunded Obligations ") and to pay costs of issuance, under and in strict conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Government SOUTHLAKE TIF REF 7 2003_ORDINANCE.DOC Code, Chapter 1207, and pursuant to an Ordinance adopted by the City Council of the City (herein referred to as the "Ordinance "). The Bonds maturing on and after February 15, 2011 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 February 15, 2010, or on any date thereafter, at the redemption price of par, together with accrued interest to the date of redemption. At least thirty days prior to a redemption date, the City shall cause a written notice of such redemption to be sent by United States Mail, first class postage prepaid, to the registered owners of each Bond to be redeemed at the address shown on the Security Register and subject to the terms and provisions relating thereto contained in the Ordinance. If a Bond (or any portion of its principal sum) shall have been duly called for redemption and notice of such redemption duly given, then upon the redemption date such Bond (or the portion of its principal sum 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 payment by the Paying Agent /Registrar, interest shall cease to accrue and be payable from and after the redemption date on the principal amount redeemed. In the event a portion of the principal amount of a Bond is to be redeemed and the registered owner is someone other than Cede & Co., payment of the redemption price of such principal amount shall be made to the registered owner only upon presentation and surrender of such Bond to the Designated Payment /Transfer Office of the Paying Agent /Registrar, and a new Bond or Bonds of like maturity and interest rate in any authorized denominations provided by the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to the registered owner, without charge. If a Bond is selected for redemption, in whole or in part, the City and the Paying Agent/Registrar shall not be required to transfer such Bond 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 of a Bond redeemed in part. The Bonds 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, together with the Previously Issued Certificates (identified and defined in the Ordinance) and the "City of Southlake, Texas, Tax and Tax Increment Revenue Certificates of Obligation, Series 2003 -A (Reinvestment Zone Number One)" (authorized for issuance concurrently with the Bonds), equally and ratably secured by a lien on and pledge of Pledged Tax Increment Revenues (as defined in the Ordinance). In the Ordinance, the City reserves and retains the right to issue Additional Obligations payable, in whole or in part, from the Pledged Tax Increment Revenues and equally and ratably secured by a parity lien on and pledge of such Pledged Tax Increment Revenues without having to satisfy or comply with any terms or conditions precedent for their issuance other than as may be required by the laws of the State. Reference is hereby made to the Ordinance, a copy of which is on file in the Designated Payment /Transfer Office of the Paying Agent /Registrar, and to all the provisions of which the owner or holder of this Bond 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 Bonds; the nature and extent of the pledge of the Pledged Tax Increment Revenues securing the payment SOUTHLAKE TIF REF 8 2003_ORDINANCE.DOC of the Bonds; the terms and conditions relating to the transfer or exchange of this Bond; 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 pledge of the Pledged Tax Increment Revenues and covenants made in the Ordinance may be discharged at or prior to the maturity of this Bond, and this Bond deemed to be no longer Outstanding thereunder; and for the other terms and provisions contained therein. Capitalized terms used herein have the meanings assigned in the Ordinance. This Bond, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and surrender at the Designated Payment /Transfer 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 Bonds 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 Bond 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. It 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 Bonds 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 Bonds 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 Bonds 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 Bonds as aforestated. In case any provision in this Bond 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 Bond and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. SOUTHLAKE TIF REF 9 2003_ORDINANCE.DOC IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly executed under the official seal of the City as of the Issue Date. CITY OF SOUTHLAKE, TEXAS Mayor COUNTERSIGNED: City Secretary (Seal) C. *Form of Registration Certificate of Comptroller of Public Accounts to appear on Initial Bond(s) only. 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 Bond 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. WITNESS my signature and seal of office this Comptroller of Public Accounts of the State of Texas (SEAL) *NOTE TO PRINTER: Do not print on definitive Bonds SOUTHLAKE TIF REF 10 2003_ORDINANCE.DOC D. Form of Certificate of Paying Agent /Registrar to appear on Definitive Bonds only. REGISTRATION CERTIFICATE OF PAYING AGENT /REGISTRAR This Bond has been duly issued and registered under the provisions of the within - mentioned Ordinance; the Bond or Bonds 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. The designated offices of the Paying Agent /Registrar located in Charlotte, North Carolina, the "Designated Payment /Transfer Office" for this Bond. WACHOVIA BANK, NATIONAL ASSOCIATION, Houston, Texas, as Paying Agent/Registrar Registration Date: E. Form of Assignment a Authorized Signature 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 Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature guaranteed: NOTICE: The signature on this assignment must correspond with the name of the registered owner as it appears on the face of the within Bond in every particular. F. The Initial Bond(s) shall be in the form set forth in paragraph B of this Section, except that the form of a single fully registered Initial Bond shall be modified as follows: (i) immediately under the name of the Bond the headings "Interest Rate and "Stated Maturity " shall both be omitted; SOUTHLAKE TIF REF 11 2003_ORDINANCE.DOC (ii) paragraph one shall read as follows: Registered Owner: Principal Amount: Dollars The City of Southlake (hereinafter referred to as the "City "), a body corporate and municipal corporation in the Counties of Tarrant and Denton, 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, the Principal Amount hereinabove stated on February 15 in each of the years and in principal installments in accordance with the following schedule: PRINCIPAL INTEREST YEAR INSTALLMENTS RATE (Information to be inserted from schedule in Section 2 hereof). (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 Issue 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. Principal installments of this Bond are payable at its Stated Maturity or on a prepayment date to the registered owner hereof by Wachovia Bank, National Association, Houston, Texas (the "Paying Agent/Registrar "), upon presentation and surrender, at its designated offices in Charlotte, North Carolina (the "Designated Payment /Transfer Office "). Accrued interest on the unpaid principal amount hereof is payable on February 15 and August 15 of each year, commencing February 15, 2004, to the registered owner of this Bond 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 last business 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 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 Bond 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 10: Definitions For purposes of this Ordinance and for clarity with respect to the issuance of the Bonds herein authorized, and the levy of taxes and appropriation of Pledged Tax Increment Revenues therefor, the following words or terms, whenever the same appears herein without qualifying language, are defined to mean as follows: (a) The term "Creation Ordinance" shall mean Ordinance No. 682, adopted by the City Council of the City on September 23, 1997, as amended by Ordinance No. 682 -A adopted by the City Council of the City on December 2, 1997, providing for the creation and establishment of the Zone. (b) The term "Additional Obligations" shall mean obligations hereafter issued which by their terms are payable, in whole or in part, from and secured by a parity lien on and pledge of the Pledged Tax Increment Revenues of the Zone SOUTHLAKE TIF REF 12 2003_ORDINANCE.DOC of equal rank and dignity with the lien and pledge securing the payment of the Previously Issued Certificates, the Series 2003 -A Certificates and the Bonds. (c) The term "Bonds" shall mean the "City of Southlake, Texas, Tax and Tax Increment Revenue Refunding Bonds, Series 2003 -A (Reinvestment Zone Number One)" authorized by this Ordinance. (d) The term "Bond Fund" shall mean the special Fund created and established under the provisions of Section 11 of this Ordinance. (e) The term "Collection 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. (f) The term "Fiscal Year" shall mean the twelve month financial accounting period used by the City which may be any twelve consecutive month period established by the City. (g) The term "Government Securities" shall mean shall mean (i) direct noncallable obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations unconditionally guaranteed or insured by the agency or instrumentality and on the date of their acquisition or purchase by the City are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and on the date of their acquisition or purchase by the City, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. (h) The term "Outstanding" when used in this Ordinance with respect to Bonds means, as of the date of determination, all Bonds theretofore issued and delivered under this Ordinance, except: (1) those Bonds cancelled by the Paying Agent/Registrar or delivered to the Paying Agent/Registrar for cancellation; (2) those Bonds for which payment has been duly provided by the City in accordance with the provisions of Section 19 hereof; and (3) those Bonds that have been mutilated, destroyed, lost, or stolen and replacement Bonds have been registered and delivered in lieu thereof as provided in Section 18 hereof. (i) The term "Participating Taxing Units" shall mean the City and the following taxing units levying property taxes on real property in the Zone that have determined to deposit tax increment to the credit of the Tax Increment Fund SOUTHLAKE TIF REF 13 2003_ORDINANCE.DOC pursuant to V.T.C.A., Tax Code, Section 311.013, to wit: Tarrant County, Texas, Tarrant County Hospital District and Tarrant County Junior College District. (j) The term "Pledged Tax Increment Revenues" shall mean all amounts deposited by all Participating Taxing Units to the credit of the Tax Increment Fund as provided by V.T.C.A., Tax Code, Section 311.013. (k) The term "Previously Issued Certificates" shall mean the outstanding and unpaid certificates of obligation, payable from ad valorem taxes and additionally payable from and secured by a lien on and pledge of the Pledged Tax Increment Revenues, more particularly described as follows: "City of Southlake, Texas, Tax and Tax Increment Revenue Certificates of Obligation, Series 2000E (Reinvestment Zone Number One) ", dated December 1, 2000, and originally issued in the principal amount of $3,630,000, and "City of Southlake, Texas, Tax and Tax Increment Revenue Certificates of Obligation, Series 2000- 6", dated March 1, 2000, and originally issued in the principal amount of $11,925,036. (1) The term "Series 2003 -A Certificates" shall mean the "City of Southlake, Texas, Tax and Tax Increment Revenue Certificates of Obligation, Series 2003 -A (Reinvestment Zone Number One) ", dated April 15, 2003 authorized for issuance concurrently with the Bonds. (m) The term "Tax Increment Fund" shall mean the Tax Increment Fund created and established pursuant to the Creation Ordinance. (n) The term "Zone" shall mean "Reinvestment Zone Number One, City of Southlake, Texas ", heretofore created pursuant to V.T.C.A., Tax Code, Chapter 311 and the Creation Ordinance SECTION 11: Bond Fund For the purpose of paying the interest on and to provide a sinking fund for the payment, redemption and retirement of the Bonds, there shall be and is hereby created a special account or fund on the books and records of the City known as the "SPECIAL SERIES 2003 -A TAX AND TAX INCREMENT REVENUE REFUNDING BOND FUND ", and all moneys deposited to the credit of such Fund shall be shall be kept and maintained in a special banking account at the City's depository bank. Authorized officials of the City are hereby authorized and directed to make withdrawals from said Fund sufficient to pay the principal of and interest on the Bonds as the same become due and payable, and, shall cause to be transferred to the Paying Agent/Registrar from moneys on deposit in the Bond Fund an amount sufficient to pay the amount of principal and /or interest falling due on the Bonds, 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 Bonds. Pending the transfer of funds to the Paying Agent /Registrar, money in the Bond Fund may, at the option of the City, be invested in obligations identified in, and in accordance with the provisions of the "Public Funds Investment Act" (V.T.C.A., Government Code, Chapter 2256) relating to the investment of "bond proceeds "; provided that all such 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 Bond Fund shall be credited to, and any losses debited to, the said Bond Fund. All such SOUTHLAKE TIF REF 14 2003_ORDINANCE.DOC investments shall be sold promptly when necessary to prevent any default in connection with the Bonds. SECTION 12: Tax Levy To provide for the payment of the "Debt Service Requirements" on the Bonds being (i) the interest on said Bonds 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 Bonds or any interest thereon shall remain Outstanding, a sufficient tax on each one hundred dollars' valuation of taxable property in said City, within the limitations prescribed by law, 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 Bond 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. Notwithstanding the requirements of this Section 12 for the levy of a sufficient ad valorem tax for the Debt Service Requirements of the Bonds, the amount of ad valorem taxes required to be levied for the payment of Debt Service of the Bonds may be reduced by the sum of (i) the amount of Pledged Tax Increment Revenues then on deposit to the credit of the Tax Increment Fund at the time the City's annual tax rate is levied by the City Council and (ii) the amount of Pledged Tax Increment Revenues budgeted and appropriated for the payment of the Bonds from the tax levy then being made by the Participating Taxing Units. It is the intent of this Section 12 that the Bonds will be paid first from the Pledged Tax Increment Revenues and from ad valorem taxes only to the extent such Pledged Tax Increment Revenues are insufficient for the payment of the Debt Service Requirements. SECTION 13: Pledge of Tax Increment Revenues The City hereby covenants and agrees that the Pledged Tax Increment Revenues, with the exception of those in excess of the amounts required to be deposited to the Bond Fund as hereafter provided, are hereby pledged, equally and ratably, to the payment of the principal of and interest on the Previously Issued Certificates, the Bonds, the Series 2003 -A Certificates and Additional Obligations, if issued, and the pledge of Pledged Tax Increment Revenues for the payment of the Bonds shall constitute a lien on such Pledged Tax Increment Revenues in accordance with the terms and provisions hereof and be valid and binding without further action by the City and without any filing or recording except for the filing of this Ordinance in the records of the City. In accordance with the provisions of the Creation Ordinance, the City represents and warrants to the holders of the Bonds that it has established a Tax Increment Fund for the Zone, which Fund is maintained at a depository bank of the City, and while the Bonds are Outstanding, the City agrees to deposit to the credit of the Tax Increment Fund all Pledged Tax Increment Revenues from the Participating Taxing Units when and as such Revenues are received in accordance with V.A.T.C., Tax Code, Section 311.013. SECTION 14: Deposits to Bond Fund The City hereby covenants and agrees to cause to be deposited to the credit of the Bond Fund prior to each principal and interest payment date for the Bonds from the Pledged Tax Increment Revenues an amount equal to one hundred per centum (100 %) of the amount required to fully pay the interest and principal payments then due and payable on the Bonds, such deposits to pay accrued interest and maturing principal on the SOUTHLAKE TIF REF 15 2003_ORDINANCE.DOC Bonds to be made in substantially equal semiannual installments on or before the tenth day of each February and August of each year, beginning with the February or August first to follow the delivery of the Bonds to the initial purchaser. The semiannual deposits to the Bond Fund, as hereinabove provided, shall be made until such time as such Fund contains an amount equal to the amount to pay in full the principal of and interest on all the Bonds until their maturity or their scheduled redemption date. In addition, the accrued interest received from the sale of the Bonds and any proceeds of sale of the Bonds in excess of the amount required to pay the contractual obligations to be incurred (including change orders to a construction contract) shall be deposited in the Bond Fund, which amounts shall reduce the sums otherwise required to be deposited in said Fund from the Pledged Tax Increment Revenues. SECTION 15: Security of Funds 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 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. SECTION 16: Special Covenants The City hereby further covenants as follows (a) The Zone has been established and created pursuant to Ordinance Number 682, as amended, and the provisions of the Act, and while the Bonds are Outstanding, tax increment revenues collected by the City and by the Participating Tax Units shall be deposited to the credit of the Tax Increment Fund as required by the provisions of the Act and this Ordinance (b) It has the lawful power to pledge the Pledged Tax Increment Revenues to the payment of the Bonds in the manner herein contemplated and has lawfully exercised such power under the Constitution and laws of the State of Texas, including said power existing under Chapter 311, Texas Tax Code, and V.T.C.A., Local Government Code, Sections 271.041, et seq. (c) Other than for the payment of the Previously Issued Certificates, the Series 2003 -A Certificates and the Bonds, the Pledged Tax Increment Revenues have not in any manner been pledged or encumbered to the payment of any debt or obligation of the City or of the Zone. SECTION 17: Issuance of Additional Parity Obligations The City hereby expressly reserves the right to hereafter issue additional obligations payable, in whole or in part, from the Pledged Tax Increment Revenues and, to the extent provided, secured by a lien on and pledge of the Pledged Tax Increment Revenues of equal rank and dignity with the lien and pledge securing the payment of the Previously Issued Certificates, the Series 2003 Certificates and the Bonds. SECTION 18: Mutilated - Destroyed - Lost and Stolen Bonds In case any Bond shall be mutilated, or destroyed, lost or stolen, the Paying Agent /Registrar may execute and deliver a replacement Bond of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Bond, or in lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the City and after (i) the filing by the Holder thereof with the Paying Agent /Registrar of evidence SOUTHLAKE TIF REF 16 2003_ORDINANCE.DOC satisfactory to the Paying Agent /Registrar of the destruction, loss or theft of such Bond, 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 Bond shall be borne by the Holder of the Bond mutilated, or destroyed, lost or stolen. Every replacement Bond 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 Bonds; notwithstanding the enforceability of payment by anyone of the destroyed, lost, or stolen Bonds. 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 Bonds. SECTION 19: 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 Bonds, at the times and in the manner stipulated in this Ordinance, then the pledge of taxes levied under this Ordinance and the Pledged Tax Increment Revenues of the Zone (to the extent such pledge of Pledged Tax Increment Revenues shall not have been discharged or terminated by prior payment of principal of or interest on the Bonds) and all covenants, agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and be discharged and satisfied. Bonds 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 Bonds or the principal amount(s) thereof at maturity or 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 Bonds, 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 Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, 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 Bonds, 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 Bonds and remaining unclaimed for a period of three (3) years after the Stated Maturity, or applicable redemption date, of the Bonds 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. Notwithstanding the above and foregoing, any remittance of SOUTHLAKE TIF REF 17 2003_ORDINANCE.DOC funds from the Paying Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of the State of Texas. SECTION 20: 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 Bond 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 Bonds then Outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of Outstanding Bonds, 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 Bonds, reduce the principal amount thereof, the redemption price, 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 Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds required to be held by Holders for consent to any such amendment, addition, or rescission. SECTION 21: Covenants to Maintain Tax - Exempt Status (a) Definitions When used in this Section, the following terms have the following meanings: "Closing Date" means the date on which the Bonds are first authenticated and delivered to the initial purchasers against payment therefor. "Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any, effective on or before the Closing Date. "Computation Date" has the meaning set forth in Section 1.148 -1(b) of the Regulations. "Gross Proceeds" means any proceeds as defined in Section 1.148 -1(b) of the Regulations, and any replacement proceeds as defined in Section 1.148 -1(c) of the Regulations, of the Bonds. "Investment" has the meaning set forth in Section 1.148 -1(b) of the Regulations. "Nonpurpose Investment" means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and which is not acquired to carry out the governmental purposes of the Bonds. "Rebate Amount" has the meaning set forth in Section 1.148 -1(b) of the Regulations. Regulations" means any proposed, temporary, or final Income Tax Regulations issued pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation designed to supplement, amend or replace the specific Regulation referenced. "Yield" of (1) any Investment has the meaning set forth in Section 1.148 -5 of the Regulations and (2) the Bonds has the meaning set forth in Section 1.148 -4 of the Regulations. SOUTHLAKE TIF REF 18 2003_ORDINANCE.DOC (b) Not to Cause Interest to Become Taxable The City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any Bond to become includable in the gross income, as defined in section 61 of the Code, of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the City receives a written opinion of counsel nationally recognized in the field of municipal bond law to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any Bond, the City shall comply with each of the specific covenants in this Section. (c) No Private Use or Private Payments Except as permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of Bonds: (1) exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Bonds (including property financed with Gross Proceeds of the Refunded Obligations), and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (2) not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Bonds or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds (including property financed with Gross Proceeds of the Refunded Obligations), other than taxes of general application within the City or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Private Loan Except to the extent permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the Bonds to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt for federal income tax purposes; (2) capacity in or service from such property is committed to such person or entity under a take -or -pay, output or similar contract or arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any property acquired, constructed or improved with such Gross Proceeds are otherwise transferred in a transaction which is the economic equivalent of a loan. (e) Not to Invest at Higher Yield Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the final Stated Maturity of the Bonds directly or indirectly invest Gross Proceeds in any Investment (or use Gross Proceeds to replace money so invested), if as a result of such investment the SOUTHLAKE TIF REF 19 2003_ORDINANCE.DOC Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of the Bonds. (f) Not Federally Guaranteed Except to the extent permitted by section 149(b) of the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the Bonds to be federally guaranteed within the meaning of section 149(b) of the Code and the Regulations and rulings thereunder. (g) Information Report The City shall timely file the information required by section 149(e) of the Code with the Secretary of the Treasury on Form 8038 -G or such other form and in such place as the Secretary may prescribe. (h) Rebate of Arbitrage Profits Except to the extent otherwise provided in section 148(f) of the Code and the Regulations and rulings thereunder: (1) The City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last Outstanding Bond is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the Bonds with other money of the City, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. (2) Not less frequently than each Computation Date, the City shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Regulations and rulings thereunder. The City shall maintain such calculations with its official transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date. (3) As additional consideration for the purchase of the Bonds by the Purchasers and the loan of the money represented thereby and in order to induce such purchase by measures designed to insure the excludability of the interest thereon from the gross income of the owners thereof for federal income tax purposes, the City shall pay to the United States out of the Bond Fund or its general fund, as permitted by applicable Texas statute, regulation or opinion of the Attorney General of the State of Texas, the amount that when added to the future value of previous rebate payments made for the Bonds equals (i) in the case of a Final Computation Date as defined in Section 1.148- 3(e)(2) of the Regulations, one hundred percent (100 %) of the Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent (90 %) of the Rebate Amount on such date. In all cases, the rebate payments shall be made at the times, in the installments, to the place and in the manner as is or may be required by section 148(f) of the Code and the Regulations and rulings thereunder, and shall be accompanied by Form 8038 -T or such other forms and information as is or may be required by Section 148(f) of the Code and the Regulations and rulings thereunder. (4) The City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and SOUTHLAKE TIF REF 20 2003_ORDINANCE.DOC (3), and if an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed under Section 1.148 -3(h) of the Regulations. (i) Not to Divert Arbitrage Profits Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that reduces the amount required to be paid to the United States pursuant to Subsection (h) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yield of the Bonds not been relevant to either party. (j) Elections The City hereby directs and authorizes the Mayor, City Secretary, City Manager and Director of Finance, individually or jointly, to make elections permitted or required pursuant to the provisions of the Code or the Regulations, as they deem necessary or appropriate in connection with the Bonds, in the Certificate as to Tax Exemption or similar or other appropriate certificate, form or document. (k) Bonds Not Hedge Bonds (1) At the time the original bonds refunded by the Bonds were issued, the City reasonably expected to spend at least 85% of the spendable proceeds of such bonds within three years after such bonds were issued and (2) not more than 50% of the proceeds of the original bonds refunded by the Bonds were invested in Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years or more. (1) Qualified Advance Refunding The Bonds are issued exclusively to refund the Refunded Obligations, and the Bonds will be issued more than 90 days before the redemption of the Refunded Obligations. The City represents as follows: (1) The Bonds are the first advance refunding of the Refunded Obligations, within the meaning of section 149(d)(3) of the Code. (2) The Refunded Obligations are being called for redemption, and will be redeemed not later than the earliest date on which such obligations may be redeemed. (3) The initial temporary period under section 148(c) of the Code will end: (i) with respect to the proceeds of the Bonds not later than 30 days after the date of issue of such Bonds; and (ii) with respect to proceeds of the Refunded Obligations on the Closing Date if not ended prior thereto. (4) On and after the date of issue of the Bonds, no proceeds of the Refunded Obligations will be invested in Nonpurpose Investments having a Yield in excess of the Yield on such Refunded Obligations. (5) The Bonds are being issued for the purposes stated in the preamble of this Ordinance. There is a present value savings associated with the refunding. In the issuance of the Bonds the City has neither: (i) overburdened the tax - exempt bond market by issuing more bonds, issuing bonds earlier or allowing bonds to remain outstanding longer than reasonably SOUTHLAKE TIF REF 21 2003_ORDINANCE.DOC necessary to accomplish the governmental purposes for which the Bonds were issued; (ii) employed on "abusive arbitrage device" within the meaning of Section 1.148 -10(a) of the Regulations; nor (iii) employed a "device" to obtain a material financial advantage based on arbitrage, within the meaning of section 149(d)(4) of the Code, apart from savings attributable to lower interest rates and reduced debt service payments in early years. SECTION 22: Sale of Bonds - Official Statement Approval The sale of the Bonds authorized by this Ordinance to RBC Dain Rauscher Inc., A. G. Edwards & Sons, Inc. and Estrada Hinojosa & Company, Inc. (herein referred to as the "Purchasers ") in accordance with the Purchase Contract, dated April 15, 2003, approved and authorized to be executed pursuant to Ordinance No. is hereby ratified, confirmed and approved. Furthermore, the use of the Official Statement by the Purchasers in connection with the public offering and sale of the Bonds is hereby ratified, confirmed and approved in all respects. The final Official Statement, which reflects the terms of sale (together with such changes approved by the Mayor, City Manager, Director of Finance or City Secretary, individually or jointly), shall be and is hereby in all respects approved, and the Purchasers are hereby authorized to use and distribute said final Official Statement, dated April 15, 2003, in the reoffering, sale and delivery of the Bonds to the public. The Mayor and City Secretary are further authorized and directed to manually execute and deliver for and on behalf of the City copies of said Official Statement in final form as may be required by the Purchasers, and such final Official Statement in the form and content manually executed by said officials shall be deemed to be approved by the City Council and constitute the Official Statement authorized for distribution and use by the Purchasers. SECTION 23: Special Escrow Agreement Approval and Execution The "Special Escrow Agreement" (the "Agreement ") by and between the City and JPMorgan Chase Bank, Dallas, Texas (the "Escrow Agent "), attached hereto as Exhibit B and incorporated herein by reference as a part of this Ordinance for all purposes, is hereby approved as to form and content, and such Agreement in substantially the form and substance attached hereto, together with such changes or revisions as may be necessary to accomplish the refunding or benefit the City, is hereby authorized to be executed by the Mayor and City Secretary for and on behalf of the City and as the act and deed of this City Council; and such Agreement as executed by said officials shall be deemed approved by the City Council and constitute the Agreement herein approved. Furthermore, appropriate officials of the City in cooperation with the Escrow Agent are hereby authorized and directed to make the necessary arrangements for the purchase of the Federal Securities referenced in the Agreement and the delivery thereof to the Escrow Agent on the day of delivery of the Bonds to the Purchasers for deposit to the credit of the "SPECIAL 2003 CITY OF SOUTHLAKE, TEXAS, TAX AND REVENUE REFUNDING BOND ESCROW FUND" (the "Escrow Fund "); all as contemplated and provided in V.T.C.A., Government Code, Chapter 1201, as amended, this Ordinance and the Agreement. SECTION 24: Proceeds of Sale Immediately following the delivery of the Bonds, proceeds of sale in the sum of (i) $ shall be deposited to the credit of the Escrow Fund and (ii) the $ shall be deposited to the credit of the Bond Fund. The balance of the proceeds of sale of the Bonds shall be expended to pay costs of issuance and municipal bond insurance premium and any excess amount budgeted for such purpose shall be deposited to the credit of the Bond Fund. SOUTHLAKE TIF REF 22 2003_ORDINANCE.DOC Additionally, on or immediately prior to the date of the delivery of the Bonds to the Underwriters, the Director of Finance shall cause to be transferred in immediately available funds to the Escrow Agent from moneys on deposit in the interest and sinking fund maintained for the payment of the Refunded Obligations the sum of $ to accomplish the refunding. SECTION 25: Redemption of Refunded Obligations The certificates of obligation of that series known as "City of Southlake, Texas, Tax and Tax Increment Revenue Certificates of Obligation, Series 2000 -B (Reinvestment Zone Number One) ", dated March 1, 2000, maturing in the years 2011 through 2018, and aggregating in Maturity Amount $16,140,000 shall be redeemed and the same are hereby called for redemption on February 15, 2006, at the price of the Accreted Value thereof as of the date of redemption. The City Secretary is hereby authorized and directed to file a copy of this Ordinance, together with a suggested form of notice of redemption to be sent to certificateholders, with JPMorgan Chase Bank, Dallas, Texas (successor paying agent /registrar to Chase Bank of Texas, National Association), in accordance with the redemption provisions applicable to such obligations; such suggested form of notice of redemption being attached hereto as Exhibit C and incorporated herein by reference as a part of this Ordinance for all purposes. The redemption of the obligations described above being associated with the refunding of such obligations, the approval, authorization and arrangements herein given and provided for the redemption of such obligations on the redemption dates designated therefor and in the manner provided shall be irrevocable upon the issuance and delivery of the Bonds; and the City Secretary is hereby authorized and directed to make all arrangements necessary to notify the holders of such obligations of the City's decision to redeem such obligations on the dates and in the manner herein provided and in accordance with the ordinances authorizing the issuance of the obligations and this Ordinance. SECTION 26: Control and Custody of Bonds The Mayor of the City shall be and is hereby authorized to take and have charge of all necessary orders and records pending the sale of the Bonds, the investigation by the Attorney General of the State of Texas, including the printing and supply of definitive Bonds, and shall take and have charge and control of the Initial Bond(s) pending the approval thereof by the Attorney General, the registration thereof by the Comptroller of Public Accounts and the delivery thereof to the Purchasers. Furthermore, the Mayor, Mayor Pro Tem, City Secretary, Director of Finance, and City Manager, any one or more of said officials, are hereby authorized and directed to furnish and execute such documents and certifications relating to the City and the issuance of the Bonds, including a certification as to facts, estimates, circumstances and reasonable expectations pertaining to the use and expenditure and investment of the proceeds of the Bonds as may be necessary for the approval of the Attorney General and their registration by the Comptroller of Public Accounts. In addition, such officials, together with the City's financial advisor, bond counsel and the Paying Agent /Registrar, are authorized and directed to make the necessary arrangements for the delivery of the Initial Bond(s) to the Purchasers and the initial exchange thereof for definitive Bonds. SECTION 27: 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. SOUTHLAKE TIF REF 23 2003_ORDINANCE.DOC 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 Bonds. 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 28: Cancellation All Bonds 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 Bonds previously certified or registered and delivered which the City may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled Bonds held by the Paying Agent /Registrar shall be returned to the City. SECTION 29: Bond Counsel's Opinion The Purchasers' obligation to accept delivery of the Bonds is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P., Dallas, Texas, approving the Bonds as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for the Bonds. An executed counterpart of said opinion shall accompany the global Bonds deposited with The Depository Trust Company or a reproduction thereof shall be printed on the definitive Bonds in the event the book entry only system shall be discontinued. SECTION 30: CUSIP Numbers CUSIP numbers may be printed or typed on the definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the definitive Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving the Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds. SECTION 31: 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, and this Ordinance and all its provisions is intended to be and shall be for the sole and exclusive benefit of the City, the Paying Agent/Registrar and the Holders. SECTION 32: 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 33: 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 34: Effect of Headings The Section headings herein are for convenience only and shall not affect the construction hereof. SOUTHLAKE TIF REF 24 2003_ORDINANCE.DOC SECTION 35: 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 36: 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 37: Continuing Disclosure Undertaking (a) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Rule" means SEC Rule 15c2 -12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. (b) Annual Reports. The City shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year (beginning with the fiscal year ending September 30, 2003) financial information and operating data with respect to the City of the general type included in the final Official Statement approved by Section 22 of this Ordinance, being the information described in Exhibit D hereto. Financial statements to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit D hereto and (2) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. If audited financial statements are not available at the time the financial information and operating data must be provided, then the City shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and any SID with the financial information and operating data and will file the annual audit report, when and if the same becomes available. If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. SOUTHLAKE TIF REF 25 2003_ORDINANCE.DOC (c) Material Event Notices. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Non - payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax - exempt status of the Bonds; 7. Modifications to rights of holders of the Bonds; 8. Bond calls; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds; and 11. Rating changes. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (b) of this Section by the time required by such Section. (d) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section while, but only while, the City remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the City in any event will give the notice required by subsection (c) hereof of any Bond calls and defeasance that cause the City to be no longer such an "obligated person." The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the City in observing or performing its obligations under this Section shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. SOUTHLAKE TIF REF 26 2003_ORDINANCE.DOC Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances resulting from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if (1) the provisions of this Section, as so amended, would have permitted underwriters to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (2) either (a) the Holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the Outstanding Bonds consent to such amendment or (b) a Person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Holders and beneficial owners of the Bonds. The provisions of this Section may also be amended from time to time or repealed by the City if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, but only if and to the extent that reservation of the City's right to do so would not prevent underwriters of the initial public offering of the Bonds from lawfully purchasing or selling Bonds in such offering. If the City so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with subsection (b) an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information or operating data so provided. SECTION 38: 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 V.T.C.A., Government Code, Chapter 551, as amended. SECTION 39: Effective Date This Ordinance shall take effect and be in full force from and after its adoption on the date shown below in accordance with V.T.C.A., Government Code, Section 1201.028. PASSED AND ADOPTED, this April 15, 2003. CITY OF SOUTHLAKE, TEXAS Mayor ATTEST: City Secretary (City Seal) SOUTHLAKE TIF REF 27 2003_ORDINANCE.DOC EXHIBIT C NOTICE OF REDEMPTION CITY OF SOUTHLAKE, TEXAS, TAX AND TAX INCREMENT REVENUE CERTIFICATES OF OBLIGATION SERIES 2000 -B (REINVESTMENT ZONE NUMBER ONE) DATED MARCH 1, 2000 NOTICE IS HEREBY GIVEN that all certificates of obligation of the above series maturing on and after February 15, 2011 and aggregating in Maturity Amount $16,140,000 have been called for redemption on February 15, 2006 at the redemption price of the Accreted Value hereof as of the date of redemption, such certificates of obligation being identified as follows: Year of Maturity Maturity Amount 2011 $1,610,000 2012 1,785,000 2013 1,960,000 2014 2,150,000 2015 2,150,000 2016 2,155,000 2017 2,165,000 2018 2,165,000 Accreted Value as of 2 -15 -2006 CUSIP Number ALL SUCH CERTIFICATES shall become due and payable on February 15, 2006, and interest thereon shall cease to accrete and compound from and after said redemption date and payment of the redemption price of said obligations shall be paid to the registered owners of the obligations only upon presentation and surrender of such certificates to JPMorgan Chase Bank, Dallas, Texas (successor paying agent /registrar to Chase Bank of Texas, National Association) at its designated offices at the following addresses: First Class/ Registered /Certified JPMorgan Chase Bank Institutional Trust Services P. O. Box 2320 Dallas, Texas 75221 -2320 Express Delivery /Courier JPMorgan Chase Bank Institutional Trust Services 2001 Bryan Street, 9 1h Floor Dallas, Texas 75201 By Hand Only JPMorgan Chase Bank Room 234 -North Building Institutional Trust Securities Window 55 Water Street Charlotte, North Carolina 10041 THIS NOTICE is issued and given pursuant to the terms and conditions prescribed for the redemption of said certificates and pursuant to an ordinance by the City Council of the City of Southlake, Texas. JPMORGAN CHASE BANK Address: 2001 Bryan Street, 10 Floor Dallas, Texas 75201 SOUTHLAKE TIF REF 2003_ORDINANCE.DOC Exhibit D DESCRIPTION OF ANNUAL FINANCIAL INFORMATION AND OPERATING DATA The following information is referred to in Section 37 of this Ordinance. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the headings of the Official Statement referred to) below: 1. The financial statements of the City appended to the Official Statement as Appendix B, but for the most recently concluded fiscal year. 2. The information in the Official Statement contained in Tables 1 through 6 and 8 through 15. Accounting Principles The accounting principles referred to in such Section are the generally accepted accounting principles as applicable to governmental units as prescribed by The Government Accounting Standards Board. SOUTHLAKE TIF REF 2003_ORDINANCE.DOC