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HomeMy WebLinkAboutO-714-7-86ORDINANCE NO. 714-7-86 AN ORDINANCE authorizing the issuance of "CITY OF ALLEN, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1986"; specifying the terms and features of said Bonds; pledging the net revenues of the City's combined Waterworks and Sanitary Sewer System to the payment of the principal of and interest on said Bonds; enacting provisions incident and related to the issuance, payment, security and delivery of said Bonds, including the approval and distribution of an Official Statement pertaining thereto; and providing an effective date. WHEREAS, pursuant to elections held within the City of Allen on June 30, 1979, and June 22, 1985, revenue bonds pay- able from and secured by a pledge of the net revenues of the City's Waterworks and Sanitary Sewer System were approved and authorized to be issued by the City Council, a summary of the amount or revenue bonds voted, the respective purposes for which the same can be issued, amounts heretofore issued and amounts remaining'to be issued being as follows: AND WHEREAS, this Council hereby finds and determines that revenue bonds in the total principal amount of $2,030,000 should be issued and sold at this time for the purpose of mak- ing permanent public improvements, to wit: $2,008,000 for constructing improvements and extensions to the City's Waterworks System; and $22,000 for constructing improvements and extensions to the City's Sanitary Sewer System; and WHEREAS, this Council further finds and determines that the revenue bonds authorized herein can be issued on a parity with the City's outstanding and unpaid revenue bonds payable from and secured by a first lien on and pledge of the net reve- nues of the City's combined Waterworks and Sanitary Sewer System (hereinafter referred to and defined as "previously issued bonds") in that (i) the City is not now in default as to AMOUNTS AMOUNT DATE AMOUNT HERETOFORE BEING UNISSUED AUTHORIZED AUTHORIZED PURPOSE ISSUED ISSUED BALANCE 6/30/79 700,000 Sewer Imp. 318,000 22,000 360,000 & Ext. 6/22/85 3,840,000 Water Imp. 1,580,000 2,008,000 252,000 & Ext. 6/22/85 900,000 Sewer Imp. 0 0 900,000 & Ext. AND WHEREAS, this Council hereby finds and determines that revenue bonds in the total principal amount of $2,030,000 should be issued and sold at this time for the purpose of mak- ing permanent public improvements, to wit: $2,008,000 for constructing improvements and extensions to the City's Waterworks System; and $22,000 for constructing improvements and extensions to the City's Sanitary Sewer System; and WHEREAS, this Council further finds and determines that the revenue bonds authorized herein can be issued on a parity with the City's outstanding and unpaid revenue bonds payable from and secured by a first lien on and pledge of the net reve- nues of the City's combined Waterworks and Sanitary Sewer System (hereinafter referred to and defined as "previously issued bonds") in that (i) the City is not now in default as to ORDINANCE NO. 714-7-86 any covenant; condition or obligation prescribed in the ordi- nances authorizing the issuance of the previously issued bonds, (ii) each of the special Funds created for the payment and security of the previously issued bonds contains the amount of money now required to be on deposit therein, (iii) the City can obtain a report of an accountant showing the net earnings of the City's Waterworks and Sewer System for the 12 months' peri- od next preceding the adoption of this ordinance are equal to at least 1-1/4 times the average annual principal and interest requirement of all bonds to be secured by a first lien on and pledge of the net revenues of said System after giving effect to the issuance of the bonds herein authorized, (iv) the bonds herein authorized shall mature on June 1 in each year and (v) this ordinance shall provide for deposits to be made in the special Funds created for the payment and security of the pre- viously issued bonds and additional bonds issued on a parity therewith of amounts sufficient to pay the principal of and interest on the bonds herein authorized and to accumulate and maintain a reserve equal to not less than the average annual requirement for the payment of principal of and interest on all bonds to be secured by a first lien on and pledge of the net revenues of said.System after giving effect to the issuance of the bonds herein authorized to be issued and the additional reserve amount required shall be accumulated within five years and one month from the date of the adoption of this ordinance; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ALLEN, TEXAS: SECTION 1: Authorization - Designation - Principal Amount - Purpose. Revenue bonds of the City shall be and are hereby authorized to be issued in the aggregate principal amount of $2,030,000 to be designated and bear the title "City of Allen, Texas, Waterworks and Sewer System Revenue Bonds, Series 1986" (hereinafter referred to as the "Bonds"), for the purpose of making permanent public improvements, to wit: $2,008,000 for constructing improvements and extensions to the City's Waterworks System; and $22,000 for constructing improve- ments and extensions to the City's Sanitary Sewer System; in conformity with the Constitution and laws of the State of Texas, including Article 1111, et seq., V.A.T.C.S; and in ac- cordance with authority conferred at the aforesaid elections. SECTION 2: Fully Registered Obligations - Bond Date - Authorized Denominations - Stated Maturities - Interest Rates. The Bonds shall be issued as fully registered obligations only, shall be dated August 1, 1986 (the "Bond Date"), shall be in denominations of $5,000 or any integral multiple thereof (with- in a Stated Maturity), and shall become due and payable on -2- ORDIANCE NO. 714-7-86 June 1 in each of the years and in principal amounts (the "Stated Maturities") and bear interest at the rate(s) per annum in accordance with the following schedule: Year of Stated Maturit Principal Amount Interest Rate(s) 1987 $ 40,000 10.50 1988 45,000 10.50 1989 50,000 10.50 1990 55,000 10.50 1991 60,000 10.50 1992 65,000 10.50 1993 70,000 10.50 1994 75,000 9.75 1995 80,000 8.00 1996 85,000 8.00 1997 95,000 8.10 1998 105,000 8.20 1999 110,000 8.25 2000 120,000 8.30 2001 130,000 8.35 2002 140,000 8.40 2003 155,000 8.25 2004 170,000 8.25 2005 180,000 8.25 2006 200,000 8.25 The Bonds shall bear interest on the unpaid principal amounts from the Bond Date at the rate(s) per annum shown above in this Section (calculated on the basis of a 360 -day year of twelve 30 -day months). Interest on the Bonds shall be payable on June 1 and December 1 in each year, commencing December 1, 1986. 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 registered owners or hold- ers of the Bonds (hereinafter called the "Holders") appearing on the registration and transfer books (the "Security Register") maintained by the Paying Agent/Registrar and the payment thereof shall be in any coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, and shall be with- out exchange or collection charges to the Holders. The selection and appointment of MBank Dallas, N.A., Dallas, Texas, to serve as Paying Agent/Registrar for the Bonds is hereby approved and confirmed. The City covenants to main- tain and provide a Paying Agent/Registrar at all times until -3- ORDINANCE NO. 714-7-86 the Bonds are paid and discharged, and any successor Paying Agent/Registrar shall be a bank, trust company, financial in- stitution or other entity duly qualified and legally authorized to serve as 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 Agent/Registrar at its principal office. Interest on the Bonds shall be paid to the Holder whose name appears in the Security Register at the close of business on the Record Date (the 15th day of the month next preceding each interest payment date) and shall be paid by the Paying Agent/Registrar (i) by check sent United States Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, re- quested 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 on which banking institutions in the City where the Paying Agent/ Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. In the event of a non-payment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/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 busi- ness on the last business day next preceding the date of mail- ing of such notice. SECTION 4: Redemption. (a) Optional Redemption. The Bonds having Stated Maturities on and after June 1, 1997, shall be subject to redemption prior to maturity, at the option of the City, in whole or in part in principal amounts of $5,000 or -4- ORDINANCE NO. 714-7-86 any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on June 1, 1996 or on any interest payment date thereafter, at the redemption price of par plus accrued interest to the date of redemption. (b) Exercise of Redemption Option. At least forty- five (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 the 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 select by lot the Bonds to be redeemed. If less than the en- tire principal amount of a Stated Maturity is to be redeemed, and there are multiple Holders of Bonds representing such Stated Maturity,, 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 Bond by $5,000. (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 Bondholder. All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii) identify the Bonds to be re- deemed 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, and (v) specify that payment of the re- demption price for the Bonds, or the principal amount thereof to be redeemed, shall be made at the principal office of the -5- ORDINANCE NO. 714-7-86 Paying Agent/Registrar only upon presentation and surrender thereof by the Bondholder. If a Bond is subject by its terms to prior redemption and has been called for redemption and notice of redemption thereof has been duly given or waived as herein 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 there- for, provided moneys sufficient for the payment of such Bonds (or of the principal amount thereof to be redeemed) at the then applicable redemption price are held for the purpose of such payment by the Paying Agent/Registrar. SECTION 5: Registration - Transfer - Exchange of Bonds - Predecessor Bonds. A Security Register relating to the regis- tration, payment, and transfer or exchange of the Bonds shall at all times be kept and maintained by the City at the princi- pal office of the Paying Agent/Registrar, as provided herein and in accordance with the provisions of an agreement with the Paying Agent/Registrar and such rules and regulations as the Paying Agent/Registrar and the City may prescribe. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each and every owner of the 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 autho- rized 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 satisfac- tory to the Paying Agent/Registrar. Upon surrender for transfer of any Bond at the principal office of the Paying Agent/Registrar, the Paying Agent/ Registrar shall register and deliver, in the name of the desig- nated 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 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 ex- change, upon surrender of the Bonds to be exchanged at the principal 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. ORDINANCE NO. 714-7-86 All Bbrids issued in any transfer or exchange of Bonds shall be delivered to the Holders at the principal office of the Paying Agent/Registrar, or sent by United States Mail, first class postage prepaid to the Holders and, upon the deliv- ery thereof, the same shall be 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 Holders, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payment by the Holders requesting such transfer or exchange of any tax or other gov- ernmental 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 deliv- ered in lieu thereof pursuant to Section 28 hereof and such new replacement Bond shall be deemed to evidence the same obliga- tion 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 redemption of such Bond; provided, how- ever, such limitation on transferability shall not be applica- ble to an exchange by the Holder of an unredeemed balance of a Bond called for redemption in part. SECTION 6: 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 Bond Date shall be deemed to be duly exe- cuted on behalf of the City, notwithstanding that such individ- uals or either of them shall cease to hold such offices at the time of delivery of the Bonds to the initial purchaser(s) and with respect to Bonds delivered in subsequent exchanges and transfers, all as authorized and provided in the Bond Procedures Act of 1981, as amended. -7- ORDINANCE NO. 714-7-86 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 reg- istration substantially in the form provided in Section 8C, manually executed by the Comptroller of Public Accounts of the State of Texas or his duly authorized agent, or a certificate of registration substantially in the form provided in Section 8D, manually executed by an authorized officer, employee or representative of the Paying Agent/Registrar, and either such certificate upon any Bond duly signed shall be conclusive evi- dence, and the only evidence, that such Bond has been duly certified, registered and delivered. SECTION 7: Initial Bond(s). The Bonds herein autho- rized shall be initially issued either (i) as a single fully registered bond in the total principal amount of $2,030,000 with principal installments to become due and payable as pro- vided in Section 2 hereof and numbered T-1, or (ii) as twenty (20) 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 (herein- after 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 reg- istered 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 de- finitive 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 8: Forms. A. Forms Generally. The Bonds, the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of Registration, 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, sub- stitutions, 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 ORDINANCE NO. 714-7-86 Procedures of the American Bankers Association) and such leg- ends and endorsements (including any reproduction of an opinion of counsel) thereon as may, consistently herewith, be estab- lished 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 shall be printed, lithographed, or engraved or produced in any other similar manner, all as deter- mined by the officers executing such Bonds as evidenced by their execution, but the Initial Bond(s) submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise reproduced. B. Form of Definitive Bond. REGISTERED NO. UNITED STATES OF AMERICA STATE OF TEXAS CITY OF ALLEN, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BOND, SERIES 1986 Bond Date: Interest Rate: Stated Maturity: August 1, 1986 Registered Owner: REGISTERED CUSIP NO: Principal Amount: DOLLARS The City of Allen (hereinafter referred to as the "City"), a body corporate and political subdivision in the County of Collin, State of Texas, for value received, hereby promises to pay to the order of the Registered Owner named above (herein referred to as the "Holder"), or the registered assigns thereof, solely from the revenues hereinafter identi- fied, on the Stated Maturity date specified above the Principal Amount stated above (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 Bond Date at the per annum rate of interest specified above calculated on the basis of a 360 -day year of twelve 30 -day months; such interest being pay- able on June 1 and December 1 of each year, commencing December 1, 1986. Principal of this Bond shall be payable to the Holder hereof, upon presentation and surrender, at the principal office of the Paying Agent/Registrar executing the ORDINANCE NO. 714-7-86 registration certificate appearing hereon, or its successor. Interest shall be payable to the Holder of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose name appears on the "Security Register" main- tained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the 15th day of the month next preceding each interest payment date. All payments of princi- pal of, premium, if any, and interest on this Bond 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 interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and ex- pense of, the Holder. This Bond is one of the series specified in its title issued in the aggregate principal amount of $2,030,000 (herein referred to as the "Bonds") for the purpose of making permanent public improvements, to wit: $2,008,000 for constructing im- provements and extensions to the City's Waterworks System; and $22,000 for constructing improvements and extensions to the City's Sanitary Sewer System; under and in strict conformity with the Constitution and laws of the State of Texas, including Article 1111 et seq. V.A.T.C.S., and pursuant to an Ordinance adopted by the governing body of the City (herein referred to as the "Ordinance"). The Bonds maturing on and after June 1, 1997, may be redeemed prior to their Stated Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/ Registrar), on June 1, 1996, or on any interest payment date thereafter, at the redemption price of par, together with accrued interest to the date of redemption, and upon 30 days prior written notice being given by United States Mail, first class postage prepaid, to Holders of the Bonds to be redeemed, and subject to the terms and provisions relating thereto contained in the Ordinance. If this Bond (or any portion of the principal sum hereof) shall have been duly called for redemption and notice of such redemption duly given, then upon such redemption date this Bond (or the portion of the principal sum hereof to be redeemed) shall become due and pay- able, and interest thereon shall cease to accrue from and after the redemption date therefor; provided moneys for the payment of the redemption price and the interest on the principal amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying Agent/Registrar. -10- ORDINANCE NO. 714-7-86 In the event of a partial redemption of the principal amount of this Bond, payment of the redemption price of such principal amount shall be made to the Holder only upon presen- tation and surrender of this Bond to the Paying Agent/Registrar at its principal office and, there shall be issued, without charge therefor, to the Holder hereof, a new Bond or Bonds of like maturity and interest rate in any authorized denominations provided in the Ordinance for the then unredeemed balance of the principal sum hereof. If this Bond is called for redemp- tion, in whole or in part, the City or the Paying Agent/ Registrar shall not be required to transfer this Bond to an assignee of the Holder within 45 days of the redemption date therefor; provided, however, such limitation on transferability shall not be applicable to an exchange by the Holder of the unredeemed balance hereof in the event of its redemption in part. The Bonds are special obligations of the City, and, together with the outstanding Previously Issued Bonds (identi= fied and defined in the Ordinance), are payable solely from and equally and ratably secured by a first lien on and pledge of the Net Revenues. (as defined in the Ordinance) of the City's combined Waterworks and Sanitary Sewer System (the "System"). The Bonds do not constitute a legal or equitable pledge, charge, lien or encumbrance upon any property of the City or the System, except with respect to the Net Revenues. The Holder hereof shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation. Subject to satisfying the terms and conditions pre- scribed therefor, the City has reserved the right to issue additional revenue obligations payable from and equally and ratably secured by a parity lien on and pledge of the Net Revenues of the System, in the same manner and to the same extent as the Bonds. Reference is hereby made to the Ordinance, a copy of which is on file in the principal office of the Paying Agent/ Registrar, and to all of the provisions of which the Holder by the acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the security for the payment of the Bonds; the properties constituting the System; the Net Revenues pledged to the payment of the princi- pal of and interest on the Bonds; the nature and extent and manner of enforcement of the lien and pledge securing the pay- ment of the Bonds; the terms and conditions for the issuance of additional revenue obligations; the terms and conditions relat- ing to the transfer or exchange of this Bond; the conditions upon which the Ordinance may be amended or supplemented with or -11- ORDINANCE NO. 714-7-86 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 liens, pledges, charges and covenants made therein may be discharged at or prior to the maturity or redemption 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 same 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 principal office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly exe- cuted by, the Holder 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, may treat the Holder hereof whose name appears on the Security Register (i) on the Record Date as the owner enti- tled to payment of interest hereon, (ii) on the date of surren- der 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 non-payment of interest on a sched- uled 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 sched- uled 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 cove- nanted that the City is a body corporate and political subdivi- sion duly organized and legally existing under and by virtue of the Constitution and laws of the State of Texas; that the issu- ance of the Bonds is duly authorized by law; that all acts, -12- ORDINANCE NO. 714-7-86 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 provi- sion has been made for the payment of the principal of and interest on the Bonds by a pledge of the Net Revenues of the System as aforestated. In case any provision in this Bond or any application thereof shall be invalid, illegal, or unen- forceable, the validity, legality, and enforceability of the remaining provisions and applications shall not in any way be affected or impaired thereby. The terms and provisions of this Bond and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly executed under the official seal of the City as of the Bond Date. City of Allen, Texas COUNTERSIGNED: Mayor City Secretary (SEAL) C. *Form of Registration Certificate of Comptroller of Public Accounts to Appear on Initial Bond 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, cer- tified 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. -13- ORDINANCE NO. 714-7-86 (SEAL) WITNESS my signature and seal of office this Comptroller of Public Accounts of the State of Texas *NOTE TO PRINTER: Do not print on Definitive Bonds 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 in the name of the Registered Owner shown above under the provisions of the within -mentioned Ordinance; the bond or bonds of the above entitled and designated series originally delivered hav= ing been approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts, as shown by the records of the Paying Agent/Registrar. Registration Date: MBank Dallas, N.A., Dallas, Texas, as Paying Agent/Registrar By Authorized Signature E. Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, as- signs, and transfers unto (Print or typewrite name, address, andzip 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. -14- ORDINANCE NO. 714-7-86 DATED: NOTICE: The signature on this Signature guaranteed: 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 head- ings "Interest Rate ', and "Stated Maturity shall both be completed "as shown below;" Paragraph one shall read as follows: The City of Allen (hereinafter referred to as the "City"), a body corporate and political subdivision in the County of Collin, State of Texas, for value received, hereby promises to pay to the order of the Registered Owner named above (herein referred to as the "Holder"), or the registered assigns thereof, solely from the revenues hereinafter identi- fied, on June 1 in each of the years and in principal amounts and bearing interest at per annum rates 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 Bond Date at the per annum rates of interest specified above calculated on the basis of a 360 -day year of twelve 30 -day months; such interest being payable on June 1 and December 1 of each year, commencing December 1, 1986. Princi- pal of this Bond shall be payable to the Holder hereof, upon presentation and surrender, at the principal office of MBank Dallas, N.A., Dallas, Texas (the "Paying Agent/ Registrar"). Interest shall be payable to the Holder 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 15th day of the month next preceding each interest payment date. All payments of principal of, premium, if any, and interest on this Bond shall be in any coin or currency of -15- ORDINANCE NO. 714-7-86 the United S-tates of America which at the time of payment is legal tender for the payment of public and private debts and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of Holder recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, re- quested by, and at the risk and expense of, the Holder. SECTION 9: Definitions. For all purposes of this Ordinance and in particular for clarity with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of revenues to the payment of the Bonds, the following definitions are provided: "Additional Bonds" - Additional parity revenue bonds issued in accordance with the terms and conditions precribed in Section 19 hereof. "Bonds" - The "City of Allen, Texas, Waterworks and Sewer System Revenue Bonds, Series 1986", dated August 1, 1986, authorized by this Ordinance. "Bonds Similarly Secured" - All bonds issued by the City which are secured by and payable from a first lien on and pledge of the Net Revenues of the System. "City" - The City of Allen located in the County of Collin, Texas. "Fiscal Year" - The twelve month period ending June 30 of each year; provided, however, at such time as all the "City of Allen, Texas, Waterworks and Sewer System Revenue Bonds, Series 1972," dated June 1, 1972, have been fully paid as to principal and interest or refunded, the City Council by ordinance duly passed and adopted may change the fiscal year to another twelve- month period. "Government Obligations" - Direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and United States Treasury obligations such as its State and Local Government Series in book -entry form. "Net Revenues" - The gross revenues of the System, less the expense of operation and maintenance, including all salaries, labor, materials, repairs and extensions necessary to render efficient service; pro- vided, however, that only such repairs and extensions, -16- ORDINANCE NO. 714-7-86 as in ---the judgment of the City Council, reasonably and fairly exercised, are necessary to keep the System in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair obligations payable from Net Revenues shall be deducted in determining "Net Revenues". "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 deemed to be paid by the City in accordance with the provisions of Section 26 hereof by the irrevocable deposit with the Paying Agent/Registrar, or an authorized escrow agent, of money or Government Obligations, or both, in the amount necessary to fully pay the principal of, premium, if any, and interest thereon to maturity or redemption, as the case may be, provided that, if such Bonds are to be redeemed, notice of redemption thereof shall have been duly given pursuant to this Ordinance or irrevocably provided to be given to the satisfac- tion of the Paying Agent/Registrar, or waived; and (3) those Bonds that have been mutilated, destroyed, lost, or stolen and replacement Bonds have been registered and delivered in lieu there- of as provided in Section 30 hereof. "Previously Issued Bonds" - The outstanding and unpaid revenue bonds described as follows: (i) "City of Allen, Texas, Waterworks and Sewer System Revenue Bonds, Series 1972," dated June 1, 1972, and originally issued in the aggre- gate principal amount of $1,500,000; (ii) "City of Allen, Texas, Waterworks and Sewer System Revenue Bonds, Series 1979," dated August 1, 1979, and originally issued in the aggregate principal amount of $1,300,000; -17- ORDINANCE NO. 714-7-86 (iii) "City of Allen, Texas, Waterworks and Sewer System Revenue Bonds, Series 1981," dated June 1, 1981, and originally issued in the aggre- gate principal amount of $500,000; and (iv) "City of Allen, Texas, Waterworks and Sewer System Revenue Bonds, Series 1985," dated September 1, 1985, and originally issued in the aggregate principal amount of $2,800,000. "System" - The City's combined Waterworks and Sanitary Sewer System, including all present and future additions, extensions, replacements and improvements in any wise appertaining thereto, whether situated within or without the limits of said City. SECTION 10: Pledge. That the City hereby covenants and agrees that all of the Net Revenues of the System, with the exception of those in excess of the amounts required to estab= lish and maintain the special funds created for the payment and security of the Bonds Similarly Secured, are hereby irrevocably pledged, for the payment of the Previously Issued Bonds, the Bonds and Additional Bonds, if issued, and the interest there- on, and it is hereby ordained that the Previously Issued Bonds, the Bonds, and Additional Bonds, if issued, and the interest thereon, shall constitute a first lien on the Net Revenues of the System. SECTION 11: Reaffirmation of Special Funds. The City hereby reaffirms its covenant and agreement that all revenues derived from the operation of the System shall be kept separate and apart from all other revenues of the City and the following special funds heretofore created and established are hereby reaffirmed to wit: (a) City of Allen Waterworks and Sewer System Fund (hereinafter called "System Fund") which Fund is and shall continue to be maintained at the City's depository bank. (b) City of Allen Waterworks and Sewer System Revenue Bond Interest and Sinking Fund, hereinafter called "Interest and Sinking Fund." This Fund is and shall continue to be main- tained at MBank Dallas, N.A., Dallas, Texas, as Trustee of the pledged revenues, and moneys deposited therein shall be used solely for the purpose of paying the principal of and interest on the Bonds Similarly Secured as the same become due. (c) City of Allen Waterworks and Sewer System Revenue Bond Reserve Fund, hereinafter called "Reserve Fund." This Fund is and shall continue to be maintained at MBank Dallas, -18- ORDINANCE NO. 71407-86 N.A., Dallas, Texas, Trustee, and moneys deposited therein shall be used only for the purpose of paying principal of and interest on Bonds Similarly Secured when there is insufficient money available for such purpose in the Interest and Sinking Fund on an interest and/or principal payment date. SECTION 12: Flow of Funds. The City hereby reaffirms its prior covenant and agrees that all revenues of every nature received from the operation of the System shall be deposited from day to day as collected into the System Fund, and the reasonable and proper expenses of operating and maintaining the System, as set forth in the definition of Net Revenues in Section 9 hereof, shall be paid therefrom upon approval of the City Council. All revenues of the System not actually required to pay expenses and costs incurred as permitted by this Section shall be deposited in the other Funds created for the payment and security of the Bonds Similarly Secured to the extent and in the manner required by the ordinances authorizing the issu- ance of the Previously Issued Bonds and this ordinance. SECTION 13: Interest and Sinking Fund. In addition to the amounts required to be deposited in the Interest and Sinking Fund from the Net Revenues in the System Fund to pay the principal of and interest on the Previously Issued Bonds as the same becomes due, the City hereby agrees to make monthly deposits to said Fund to pay the principal of and interest on the Bonds herein authorized as follows: Beginning on or before September 15, 1986, and on or before the 15th day of each month thereafter to and including November 15, 1986, an amount equal to not less than one-third (1/3) of the installment of interest to become due on the Bonds on December 1, 1986; and on or before December 15, 1986, and on or before the 15th day of each month thereafter, an amount equal to not less than one-sixth (1/6) of the next semiannual installment of interest to become due on the Bonds; and, in addi- tion, beginning on or before September 15, 1986, and on or before the 15th day of each month thereafter to and including May 15, 1987, an amount equal to not less than one -ninth (1/9) of the principal payment to become due on the Bonds on June 1, 1987, and on or before June 15, 1987 and on or before the 15th day of each month there- after, an amount equal to not less than one -twelfth (1/12) of the next annual principal payment to become due on the Bonds. The monthly deposits to the Interest and Sinking Fund for the payment of principal and interest on the Bonds shall continue to be made as hereinabove provided until such time as -19- ORDINANCE NO. 714-7-86 (i) the total amount on deposit in the Interest and Sinking Fund is equal to the amount required to pay all outstanding Bonds Similarly Secured or (ii) the Bonds are no longer outstanding. Accrued interest and premium, if any, received from the purchaser of the Bonds, as well as any proceeds of the Bonds not required to complete the improvements and extensions to the System, shall be deposited in the Interest and Sinking Fund, and may be taken into consideration and reduce the amount of the monthly deposits hereinabove provided which would otherwise be required to be deposited in the Interest and Sinking Fund from the Net Revenues of the System for the Bonds. SECTION 14: Reserve Fund. That the City hereby reaf- firms its prior covenant and agrees that there shall be accumu- lated, and when accumulated, continuously maintained in the Reserve Fund an amount equal to not less than the average prin- cipal and interest requirements for all outstanding Bonds Similarly Secured (calculated on a fiscal year basis as of the date of the bonds of the last series of Bonds Similarly Secured then outstanding).. The amount to be accumulated and maintained in the Reserve Fund by virtue of the issuance of the Bonds is hereby determined to be $ In accordance with the ordinances authorizing the issu- ance of the Previously Issued Bonds, there is currently on deposit in the Reserve Fund the sum of not less than $ Beginning on or before September 15, 1986, and on or before the 15th day of each following month, there shall be deposited in the Reserve Fund an amount equal to not less than $ until the amount of cash and investments in said Fund totals not less than $ When the total amount now required to be deposited in the Reserve Fund has been fully accumulated, said monthly payments to said Fund may be terminated; provided, however, should the amount on deposit in said Fund be reduced below $ , after the same has been accumulated, monthly deposits to the Reserve Fund in the amount of $ shall be resumed and continued to be made on or before the 15th day of each month until the amount required to be deposited therein has been fully restored. Money in the Reserve Fund may be, at the option of the City, invested or reinvested from time to time in direct obli- gations of or obligations, the principal and interest of which are guaranteed by the United States of America or invested in direct obligations of or participation certificates guaranteed by the Federal Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage Association, Federal Home Loan Banks, Banks for Cooperatives, and in certificates of deposit of any -20- ORDINANCE NO. 714-7-86 bank or trust company the deposits of which are fully secured by a pledge of securities of any of the kinds hereinabove spe- cified, such obligations or securities to mature in not more than ten years from the date of such investments or not later than the final maturity of the then outstanding Bonds Similarly Secured, whichever period is shorter. Any obligations in which money is so invested shall be kept in escrow with the custodian of said Fund, and shall be promptly sold and the proceeds of sale applied to the making of payments required to be made from the Reserve Fund whenever such payments are necessary to be made under Section 11 (c). During the time said Fund contains the full amount required to be on deposit, any interest income or increment by reason of such investments shall be transferred to the System Fund. The deposits required to be made into this Fund shall be subordinate to those required to be made into the Interest and Sinking Fund. SECTION 15: Deficiencies in Funds. If in any month the City shall, for any reason, fail to pay into the Interest and Sinking Fund and Reserve Fund the full amounts above stipu- lated, amounts equivalent to such deficiencies shall be set apart and paid into said special Funds from the first available and unallocated 'Net Revenues of the System in the following month or months and such payments shall be in addition to the amounts hereinabove provided to be otherwise paid into said Funds during such month or months. SECTION 16: Excess Revenues. Any revenues in excess of those required to fully establish and maintain the special Funds created for the payment and security of the Bonds Similarly Secured may be used for the redemption of the Bonds Similarly Secured, or may be transferred to the general fund of the City and used for general or special purposes. SECTION 17: Security for Funds. All moneys deposited in the special Funds for which this ordinance makes provision (except any portions 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 18: Payment of Bonds. While any of the Bonds are Outstanding, the City's Director of Finance shall cause to be transferred to the Paying Agent therefor, from funds on deposit in the Interest and Sinking Fund, and, if necessary, in the Reserve Fund, amounts sufficient to fully pay and discharge promptly as each installment of interest and principal of the Bonds as it accrues or matures or comes due by reason of re- demption prior to maturity; such transfer of funds to be made -21- ORDINANCE NO. 714 - 7-86 in such manner as will cause immediately available funds to be deposited with the Paying Agent for the Bonds at the close of the business day next preceding the date of payment for the Bonds. SECTION 19: Issuance of Additional Bonds. In addition to the right to issue bonds of inferior lien as authorized by the laws of this State, the City reserves the right to here- after issued additional parity bonds which shall be payable from and secured by a first lien on and pledge of the Net Revenues of the System in the same manner and to the same ex- tent as the Previously Issued Bonds and the Bonds, and the Previously Issued Bonds, the Bonds and Additional Bonds shall in all respects be of equal dignity. The Additional Bonds may be issued in one or more installments, provided, however, that none shall be issued unless and until the following conditions have been met: (a) The City is not then in default as to any cove= nant, condition or obligation prescribed by an ordinance autho- rizing the issuance of the then outstanding Bonds Similarly Secured. (b) That each of the Funds created for the payment and security of the Bonds Similarly Secured contains the amount of money then required to be on deposit therein. (c) The net earnings of the System for (1) the City's completed Fiscal Year next preceding the adoption of the ordi- nance authorizing the issuance of the proposed Additional Bonds or (2) the twelve (12) months next preceding the adoption of such ordinance are equal to at least one and one-fourth (1-1/4) times the average annual principal and interest requirements of all the bonds to be secured by a first lien on and pledge of the Net Revenues of the System after giving effect to the issu- ance of the proposed Additional Bonds, as such net earnings are shown by a report of a Certified Public Accountant or Licensed Public Accountant. The term "net earnings" as used in this Section 19 shall mean the gross revenues after deducting the expense of operation and maintenance, but not deducting depre- ciation or expenditures which, under standard accounting prac- tice, should be charged to capital expenditures. (d) The Additional Bonds are made to mature on June 1 in each of the years in which they are scheduled to mature. (e) The ordinance authorizing the issuance of the Additional Bonds provides for the accumulation in the Interest and Sinking Fund of amounts sufficient to pay the principal of and interest on such Additional Bonds as same mature. -22- ORDINANCE NO. 714-7-86 (f) The ordinance authorizing the issuance of the Additional Bonds provides that the amount to be accumulated and maintained in the Reserve Fund shall be an amount equal to not less than the average annual requirement for the payment of principal and interest on all bonds to be secured by a first lien on and pledge of the Net Revenues of the System after giving effect to the issuance of the proposed Additional Bonds, and provides that any additional Reserve Fund amount which may thus be required shall be accumulated within not more than five years and one month from the date of the passage of the ordi- nance authorizing the issuance of the proposed Additional Bonds. Bonds Similarly Secured may be refunded (pursuant to any law then available) upon such terms and conditions as the gov- erning body of the City may deem to the best interest of the City and its inhabitants, and, if less than all such outstand- ing revenue bonds are refunded, the proposed refunding bonds shall be considered as Additional Bonds under the provisions of this Section and the report required in subdivision (c) shall give effect to the issuance of the proposed refunding bonds (and shall not give effect to the bonds being refunded follow- ing their cancellation or provisions being made for their payment). SECTION 20. Maintenance and Operation - Insurance. The City shall maintain the System in good condition and operate the same in an efficient manner and at reasonable cost. So long as any of the Bonds are Outstanding, the City agrees to maintain insurance for the benefit of the Holder or Holders of the Bonds on the System of a kind and in an amount which usual- ly would be carried by municipal corporations of the State of Texas engaged in a similar type of business. Nothing in this Section shall be construed as requiring the City to expend any funds which are derived from sources other than the operation of the System but nothing herein shall be construed as prevent- ing the City from doing so. SECTION 21. Records and Accounts. The City hereby covenants and agrees that so long as any of the Bonds or any interest thereon remain Outstanding and unpaid, it will keep and maintain a proper and complete system of records and ac- counts pertaining to the operation of the System (separate and apart from all other records and accounts) in which complete and correct entries shall be made of all transactions relating to said System, as provided in Article 1113, V.A.T.C.S., and that the Holder or Holders of any of such Bonds or any duly authorized agent or agents of such Holders shall have the right at all reasonable times to inspect all such records, accounts and data relating thereto, and to inspect the System and all properties comprising same. The City further agrees that as -23- ORDINANCE NO. 714-7-86 soon as possible following the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of Certified Public Accountants or Licensed Public Accountants. Each such audit, in addition to whatever other matters may be thought proper by the Accountant, shall particularly include the following: (a) A detailed statement of the income and expendi- tures of the System for such Fiscal Year; (b) A balance sheet as of the end of such Fiscal Year; (c) The Accountant's comments regarding the manner in which the City has carried out the requirements of this ordi- nance and his recommendations for any changes or improvements in the operation, records and accounts of the System; (d) A list of the insurance policies in force at the end of the Fiscal Year on the System properties, setting out as to each policy the amount thereof, the risk covered, the name of the insurer, and the policy's expiration date; (e) A list of the securities which have been on de- posit as security for the money in the Interest and Sinking Fund throughout the Fiscal Year, a list of the securities, if any, in which the Reserve Fund has been invested, and a state- ment of the manner in which money in the System Fund has been secured in such Fiscal Year; (f) The number of properties connected with the System. Expenses incurred in making the audits above referenced to are to be regarded as maintenance and operating expenses and paid as such. Copies of the aforesaid annual audit shall be immediately furnished to the Executive Director of the Municipal Advisory Council of Texas at his office in Austin, Texas, to the original purchaser of the Bonds, and, upon writ- ten request, to any subsequent Holder of the Bonds. Any Holder shall have the right to discuss with the Accountant making the annual audit the contents thereof and to ask for such addi- tional information as he may reasonably require. SECTION 22. Remedy in Event of Default. In addition to all the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City (a) defaults in payments to be made to the Interest and Sinking Fund or Reserve Fund, or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this ordinance, the -24- ORDINANCE NO. 714-7-86 Holder or Holders of any of the Bonds shall be entitled to a writ of mandamus issued by a court of proper jurisdiction com- pelling and requiring the City Council and other officers of the City to observe and perform any covenant, condition or obligation prescribed in the Bond ordinance. No delay or ommission to exercise any right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed ex- pedient. The specific remedies herein provided shall be cumu- lative of all other existing remedies and the specification of such remedies shall not be deemed to be exclusive. SECTION 23. Special Covenants. The City hereby further covenants as follows: (a) That it has the lawful power to pledge the reve- nues supporting this issue of Bonds and has lawfully exercised said power under the Constitution and laws of the State of Texas, including said power existing under Article 1111 et seq., V.A.T.C.S.; that the Previously Issued Bonds and the Bonds shall be ratably secured under said pledge of income in such manner that one bond shall have no preference over any other bond of said issues. (b) That other than for the payment of the Previously Issued Bonds and the Bonds, the Net Revenues of the System have not in any manner been pledged to the payment of any debt or obligation of the City or of the System. (c) That, so long as any of the Bonds, or any inter- est thereon, remain Outstanding, the City will not sell, lease or encumber the System or any substantial part thereof, pro- vided that this shall not be construed to prohibit the sale of such machinery, or other properties or equipment which has become obsolete or otherwise unsuited to the efficient opera- tion of the System; also, with the exception of the Additional Bonds expressly permitted by this ordinance to be issued, it will not encumber the Net Revenues thereof unless such encum- brance is made junior and subordinate to all of the provisions of this ordinance. (d) That no free service of the System shall be al- lowed, and should the City or any of its agencies or instrumen- talities make use of the services and facilities of the System, payment of the reasonable value thereof shall be made by the City out of funds from sources other than the revenues and income of the System. -25- ORDINANCE NO. 714-7-86 (e) -- To the extent that it legally may, the City fur- ther covenants and agrees that, so long as any of the Bonds, or any interest thereon are Outstanding, no franchise shall be granted for the installation or operation of any waterworks or sanitary sewer systems other than those owned by the City, and the operation of any such system by anyone other than the City is hereby prohibited. SECTION 24: Rates and Charges. That, for the benefit of the Holders of the Bonds Similarly Secured and in addition to all provisions and covenants in the laws of the State of Texas and in this ordinance, the City hereby expressly stipu- lates and agrees, while any of the Bonds are Outstanding, to establish and maintain rates and charges for facilities and services afforded by the System that are reasonably expected, on the basis of available information and experience and with due allowance for contingencies, to produce gross revenues in each Fiscal Year sufficient: (1) To pay maintenance and operating ex- penses, depreciation charges and replacement and betterment costs, (2) To produce Net Revenues sufficient to pay the principal of and interest on the Bonds Similarly Secured and the amounts required to be deposited in any reserve or contingency fund cre- ated for the payment and security of the Bonds Similarly Secured, and other obligations or evi- dences of indebtedness issued or incurred that are payable only from and secured solely by a lien on and pledge of the Net Revenues of the System, and (3) To produce Net Revenues equal to at least 1.20 times the debt service due and payable on the outstanding Bonds Similarly Secured. SECTION 25: Special Obligations. The Bonds are special obligations of the City payable from the pledged Net Revenues of the System and the Holders of the Bonds shall never have the right to demand payment thereof out of funds raised or to be raised by taxation. SECTION 26: 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 stipu- lated in this ordinance, then the pledge of the Net Revenues of the System under this ordinance and all other obligations of the City to the Holders shall thereupon cease, terminate, and become void and be discharged and satisfied. -26- ORDINANCE NO. 714-7-86 Bonds -or any principal amount(s) thereof shall be deemed to have been paid within the meaning and with the effect ex- pressed above in this Section when (i) money sufficient to pay in full such Bonds or the principal amount(s) thereof at matu- rity or to the redemption date therefor, together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Obligations shall have been irrevocably deposited in trust with the Paying Agent/ Registrar, or an authorized escrow agent, which Government Obligations 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 rein- vestment, of sufficient money, together with any moneys depos- ited 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 re- demption has been duly given or waived or if irrevocable ar- rangements therefor acceptable to the Paying Agent/Registrar have been made) the redemption date thereof. The City cove- nants that no deposit of moneys or Government Obligations 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 103(c) of the Internal Revenue Code of 1954, as amended, or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow agent, and all income from Government Obligations 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 re- spect 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 four (4) 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. SECTION 27: 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 -27- ORDINANCE NO. 714-7-86 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 written consent of Holders holding a majority in aggregate principal amount of the Bonds Similarly Secured then Outstanding affected thereby, amend, add to, or rescind any of the provisions of this ordinance; pro- vided 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, premi- um, if any, and interest on the Bonds, reduce the principal amount thereof, the redemption price therefor, or the rate of interest thereon, or in any other way modify the terms of pay- ment 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, addi- tion, or rescission. SECTION 28: Mutilated - Destroyed - Lost and Stolen Bonds. If (1) any mutilated Bond is surrendered to the Paying Agent/Registrar, or the City and the Paying Agent/Registrar receive evidence to their satisfaction of the destruction, loss, or theft of any Bond, and (2) there is delivered to the City and the Paying Agent/Registrar such security or indemnity as may be required to save each of them harmless, then, in the absence of notice to the City or the Paying Agent/Registrar that such Bond has been acquired by a bona fide purchaser, the City shall execute and, upon its request, the Paying Agent/ Registrar shall register and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost, or stolen Bond, a new Bond of the same Stated Maturity and of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost, or stolen Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a new Bond, pay such Bond. Upon the issuance of any new Bond under this Section, the City may require payment by the Holder of a sum sufficient to cover any tax or other governmental charge imposed in rela- tion thereto and any other expenses (including the fees and expenses of the Paying Agent/Registrar) connected therewith. Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost, or stolen Bond shall consti- tute a replacement of the prior obligation of the City, whether or not the mutilated, destroyed, lost, or stolen Bond shall be -28- ORDINANCE NO. 714-7-86 at any time enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding 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, de- stroyed, lost, or stolen Bonds. SECTION 29: No -Arbitrage Certification. The City certi- fies that based on facts, estimates, and circumstances expected to exist on the date of the issue of the Bonds it is not rea- sonable to anticipate that the proceeds thereof will be used in a manner which would cause them to be "arbitrage bonds" within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended, or regulations thereunder applicable thereto, and the City covenants not to make any use of the proceeds of the Bonds or investment income therefrom which would cause the Bonds to become "arbitrage bonds" within the meaning of Section 103(c) of such Code. The covenants herein made and the certifications herein authorized are for the benefit of the Holders from time to time and may be relied upon by said Holders and bond counsel for the City. SECTION 30: Sale of the Bonds. That the Bonds autho- rized by this ordinance have been and are hereby sold to Schneider, Bernet, Hickman (the "Purchasers") at the price of $1,000 per $1,000 par value and accrued interest to the date of delivery. Delivery of said Bonds shall be made to said Purchaser(s) as soon as may be after adoption of this Ordinance, upon payment therefor in accordance with the terms of sale. SECTION 31: 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 investiga- tion 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 pending its ap- proval by the Attorney General, the registration thereof by the Comptroller of Public Accounts and the delivery thereof to the Purchaser(s). Furthermore, the Mayor and City Secretary of the City and Director of Finance, any one or more of said officials, are hereby authorized and directed to furnish and execute such documents relating to the City and its financial affairs as may be necessary for the issuance of the Bonds, the approval of the Attorney General and their registration by the Comptroller of Public Accounts and, together with the City's financial advis- =01! ORDINANCE NO. 714-7-86 or, bond counsel and the Paying Agent/Registrar, make the ne- cessary arrangements for the delivery of the Initial Bond to the Purchaser(s) and the initial exchange thereof for defini- tive Bonds. SECTION 32: Qualified Project Bonds. In the event Section 802 of H.R. 3838, passed by the House of Representatives on December 17, 1985, is enacted into law with the effective date provisions contained in subparagraph (3) of paragraph (e), the City hereby designates the Bonds to be "qualified project bonds" in that the Bonds are being issued to finance the costs of constructing improvements and extensions to the City's Waterworks System and the City's Sanitary Sewer System, and no one person or select group of persons will re- ceive or derive any special benefit or use of such facilities other than as a member of the general public; the principal amount of the Bonds, together with all other issues having a common financing purpose issued or to be issued by the City, does not and will not exceed $3,000,000; and the reasonably anticipated amount of "qualified tax exempt obligations" to be issued by the City for the calendar year 1986 will not exceed $10,000,000. SECTION 33: Official Statement. The Official Statement prepared in the initial offering and sale of the Bonds by the City, together with all addendas, supplements and amandments thereto issued on behalf of the City, is hereby approved as to form and content, and the City Council hereby finds that the information and data contained in said Official Statement per- taining to the City and its financial affairs is true and cor- rect in all material respects and no material facts have been omitted therefrom which are necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The use of such Official Statement in the reoffering of the Bonds by the Purchasers is hereby ap- proved and authorized. SECTION 34: 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 as it appears in the Security Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holder, 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 -30- ORDINANCE NO. 714-7-86 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 ac- tion taken in reliance upon such waiver. SECTION 35: 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 de- livered to the Paying Agent/Registrar and, if not already can- celled, 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 can- celled Bonds held by the Paying Agent/Registrar shall be de- stroyed as directed by the City. SECTION 36: Printed Opinion. The Purchaser's(s') obli- gation to accept delivery of the Bonds is subject to its being furnished a final opinion of Fulbright & Jaworski, Dallas, Texas, approving such Bonds as to their validity, said opinion to be dated and delivered as of the date of delivery and pay- ment for such Bonds. Printing of a true and correct reproduc- tion of said opinion on the reverse side of each of said Bonds is hereby approved and authorized. SECTION 37: 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 num- bers on the definitive Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving said Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds. SECTION 38: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be con- strued to confer upon any person other than the City, the Paying Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being intended to be and being for the sole and exclusive bene- fit of the City, the Paying Agent/Registrar and the Holders. SECTION 39: Inconsistent Provisions. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance, are here- by repealed and cancelled and the provisions of this Ordinance shall supercede and control as to the matters contained herein. -31- ORDINANCE NO. 714-7-86 SECTION 40: 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 41: 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 42: Severability. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application thereof to other circumstances shall nevertheless be valid, and this governing body hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 43: Public Meeting. It is officially found, determined, and declared that the meeting at which this Ordinance is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Ordinance, was given, all as required by Article 6252-17, Vernon's Texas Civil Statutes, as amended. SECTION 44. Effective Date: This ordinance shall take effect immediately upon its passage and adoption on the date shown below. PASSED AND ADOPTED, this July 29, 1986. ATTEST: Cit Secreta Y r Y (City Seal) . ,. 2 1 3 4 E CITY OF ALLEN, TEXAS Mayor -32-