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HomeMy WebLinkAboutOrdinance No. 99-1109ORIGINAL ORDINANCE NO. ��- D ORDINANCE AUTHORIZING THE ISSUANCE OF $995,000 CITY OF THE COLONY, TEXAS LIMITED TAX NOTES SERIES 1999 Adopted on April 19, 1999 TABLE OF CONTENTS Page Recitals...................................................................... 1 ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. Definitions......................................................... 1 Section 1.02. Other Definitions.................................................... 2 Section 1.03. Findings........................................................... 2 Section 1.04. Table of Contents, Titles and Headings ................................... 3 Section 1.05. Interpretation....................................................... 3 ARTICLE II SECURITY FOR THE NOTES; APPROPRIATION Section 2.01. Tax Levy for Payment of the Notes ...................................... 3 ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE NOTES Section 3.01. Authorization.......................................................3 Section 3.02. Date, Denomination, Maturity, Numbers and Interest ........................ 4 Section 3.03. Medium, Method and Place of Payment .................................. 4 Section 3.04. Execution and Initial Registration ....................................... 5 Section 3.05. Ownership......................................................... 6 Section 3.06. Registration, Transfer and Exchange ..................................... 6 Section 3.07. Cancellation and Authentication ........................................ 7 Section 3.08. Temporary Notes .................................................... 8 Section 3.09. Replacement Notes .................................................. 8 ARTICLE IV REDEMPTION OF NOTES BEFORE MATURITY Section 4.01. Limitation on Redemption ............................................. 9 Section 4.02. Redemption of Notes Prior to Maturity ............................ 10 Section 4.03. Partial Redemption ......................................... 10 Section 4.04. Notice of Redemption to Owners ................................ 10 Section 4.05. Payment Upon Redemption ................................... 10 Section 4.06. Effect of Redemption ....................................... 11 C:vgklients\colony�twmtes99\docsbrcbn ARTICLE V PAYING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paying Agent/Registrar ............................ 11 Section 5.02. Qualifications...................................................... 12 Section 5.03. Maintaining Paying Agent/Registrar..................................... 12 Section 5.04. Termination....................................................... 12 Section 5.05. Notice of Change to Owners .......................................... 12 Section 5.06. Agreement to Perform Duties and Functions .............................. 12 Section 5.07. Delivery of Records to Successor ...................................... 12 ARTICLE VI FORM OF THE NOTES Section 6.01. Form Generally .................................................... 13 Section 6.02. Form of Notes ..................................................... 13 Section 6.03. CUSIP Registration ................................................. 18 Section 6.04. Legal Opinion ................................................... 18 ARTICLE VII SALE OF THE NOTES; CONTROL AND DELIVERY OF THE NOTES Section 7.01. Sale of Notes ...................................................... 18 Section 7.02. Control and Delivery of Notes ......................................... 19 ARTICLE VIII CREATION OF FUNDS AND ACCOUNTS; DEPOSIT OF PROCEEDS; INVESTMENTS Section 8.01. Creation of Funds .................................................. 19 Section 8.02. Interest and Sinking Fund ............................................ 19 Section 8.03. Security of Funds ................................................... 19 Section 8.04. Deposit of Proceeds ................................................. 20 Section 8.05. Investments.......................................................20 Section 8.06. Investment Income .................................................. 20 C:V&hents\colony�W=tw"\do"\or&n �11� ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of the Notes ................................................ 20 Section 9.02. Other Representations and Covenants ................................... 20 Section 9.03. Federal Tax Matters ................................................. 21 ARTICLE X DEFAULT AND REMEDIES Section 10.01. Events of Default .................................................. 22 Section 10.02. Remedies for Default ............................................... 22 Section 10.03. Remedies Not Exclusive ............................................ 23 ARTICLE XI DEFEASANCE AND REFUNDING Section 11.01. Defeasance and Refunding ........................................... 23 EXECUTION C.VgWi nb\colony\taimotes99\docs\ordm 111) ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF THE COLONY, TEXAS AUTHORIZING THE ISSUANCE AND SALE OF CITY OF THE COLONY, TEXAS, LIMITED TAX NOTES, SERIES 1999; PRESCRIBING THE FORM OF SAID NOTES; LEVYING AN AD VALOREM TAX TO PAY SAID NOTES; AWARDING THE SALE THEREOF; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT WHEREAS, the City Council (the "City Council") of the City of The Colony, Texas (the "City") hereby finds and determines that it is necessary, useful and appropriate for the City's public purposes to authorize and provide for the issuance and sale of notes of the City for the purposes hereinafter provided, as authorized by Tex. Rev. Civ. Stat. Ann. art. 717w; WHEREAS, It is officially found, determined, and declared that the meeting at which this Ordinance has been adopted was open to the public and public notice of the time, place and subject matter of the public business to be considered and acted upon at said meeting, including this Ordinance, was given, all as required by the applicable provisions of Tex. Gov't Code Ann. ch. 551; Now, Therefore BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF THE COLONY: ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise, in this Ordinance the following terms shall have the meanings specified below: "Closing Date" means the date of the initial delivery of and payment for the Notes. "Code" means the Internal Revenue Code of 1986, as amended, including applicable regulations, published rulings and court decisions relating thereto. "Designated Payment/Transfer Office" means (i) with respectto the initial Paying Agent/Registrar named herein, its corporate trust office in New York, New York, and (ii) with respect to any successor Paying Agent/Registrar, the office of such successor designated and located as may be agreed upon bythe City and such successor. "Event of Default" means any Event of Default as defined in Section 10.01 of this Ordinance. "Initial Note" means the Note described in Section 3.04(d) and 6.02(d). C:* Wmts\colony\tamwtes"\docalordin "Interest Payment Date" means the date or dates upon which interest on the Notes is scheduled to be paid until maturity of the Notes, such dates being February 15 and August 15, commencing February 15, 2000. "Interest and Sinking Fund" means the interest and sinking fund established by Section 8.01(a)(i) of this Ordinance. "Note" means any of the Notes. "Notes" means the City's Notes entitled "City of The Colony, Texas, Limited Tax Notes, Series 1999" authorized to be issued by Section 3.01 of this Ordinance. "Ordinance" means this Ordinance. "Original Issue Date" means the initial date which is designated in Section 3.02(a) of this Ordinance. "Owner" means the person who is the registered owner of a Note or Notes, as shown in the Register. "Paying Agent/Registrar" means The Bank of New York, New York, New York, any successor thereto or an entity which is appointed as and assumes the duties of paying agent/registrar as provided in this Ordinance. "Project Fund" means the fund established in Section 8.01(a)(ii) hereof "Purchaser" means the person, firm or entity purchasing the Notes from the City and which is designated in Section 7.01 of this Ordinance. "Record Date" means the last business day ofthe month next preceding the Interest Payment Date. "Register" means the Register specified in Section 3.06(a) of this Ordinance. "Special Payment Date" means the Special Payment Date prescribed by Section 3.03(b) of this Ordinance. "Unclaimed Payments" means money deposited with the Paying Agent/Registrar for the payment of the principal of or interest on the Notes as the same come due and payable and remaining unclaimed by the Owners of Notes for 90 days after the applicable payment date. Section 1.02. Other Definitions. The terms "City Council" and "City" shall have the respective meanings assigned in the preamble to this Ordinance. C: VgW=ts\co1ony\twwfts99 m\ordm 2 Section 1.03. Findings. The declarations, determinations and findings declared, made and found in the preamble to this Ordinance are hereby adopted, restated and made a part of the operative provisions hereof. Section 1.04. Table of Contents, Titles and Headings. The table of contents, titles and headings of the Articles and Sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Ordinance or any provision hereof or in ascertaining intent, if any question of intent should arise. Section 1.05. Interpretation. (a) Unless the context requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. (b) This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein to. ARTICLE II SECURITY FOR THE NOTES; APPROPRIATION Section 2.01. Tax Levy for Payment of the Notes. (a) The City Council hereby declares and covenants that it will provide and levy a tax legally and fully sufficient for payment of the Notes, 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 obligations of the City. (b) In order to provide for the payment of the debt service requirements on the Notes, being (i) the interest on the Notes and (ii) a sinking fund for their payment at maturity or a sinking fund of two percent per annum (whichever amount is the greater), there is hereby levied for the current year and each succeeding year thereafter, while the Notes or interest thereon remain outstanding and unpaid, a tax within legal limitations on each $100 valuation of taxable property in the City that is sufficient to pay such debt service requirements, full allowance being made for delinquencies and costs of collection. (c) The tax levied by this Section shall be assessed and collected each year and applied to the payment of the debt service requirements on the Notes, and the tax shall not be diverted to any other purpose. C:\lg\ch—\colony\Wmtes9%docs\ordin $995,000, for the purpose of paying contractual obligations incurred or to be incurred for the construction of street improvements and to pay the costs of issuance with respect to the Notes. Section 3.02. Date, Denomination, Maturity. Numbers and Interest. (a) The Notes shall have the Original Issue Date of April 15, 1999, shall be in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof, and shall be numbered separately from one upward or such other designation acceptable to the City and the Paying Agent/Registrar, except the Initial Note, which shall be numbered T-1. (b) The Notes shall mature on August 15 in the years and in the principal amounts and interest rates set forth below, interest on each Note accruing from the Closing Date (which shall be inserted by the Paying Agent/Registrar on the face of each of the Notes) or the most recent Interest Payment Date to which interest has been paid or provided for at the per annum rates of interest, payable semiannually on February 15 and August 15 of each year until the principal amount shall have been paid or provision for such payment shall have been made, commencing February 15, 2000, as follows: Principal Interest Year Amount Rate 2000 $305,000 4.49% 2001 $335,000 4.49% 2002 $355,000 4.49% Section 3.03. Medium, Method and Place of Pavment. (a) The principal of, premium, if any, and interest on the Notes shall be paid in lawful money of the United States of America as provided in this Section. (b) Interest on the Notes shall be payable to the Owners whose names appear in the Register at the close of business on the Record Date; provided, however, that in the event of nonpayment of interest on a scheduled Interest Payment Date, and for 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 (the "Special Payment Date", which shall be at least 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Owner of a Note appearing on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. (c) Interest on the Notes shall be paid by check (dated as of the Interest Payment Date) and sent by the Paying Agent/Registrar to the person entitled to such payment by United States mail, first class postage prepaid, to the address of such person as it appears in the Register or by such other customary banking arrangements acceptable to the Paying Agent/Registrar and the person to whom interest is to be paid; provided, however, that such person shall bear all risk and expenses of such other customary banking arrangements. C:Ug &ents\oolony\tL,motes99\dow\ordm 4 on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. (c) Interest on the Notes shall be paid by check (dated as of the Interest Payment Date) and sent by the Paying Agent/Registrar to the person entitled to such payment by United States mail, first class postage prepaid, to the address of such person as it appears in the Register or by such other customary banking arrangements acceptable to the Paying Agent/Registrar and the person to whom interest is to be paid; provided, however, that such person shall bear all risk and expenses of such other customary banking arrangements. (d) The principal of each Note shall be paid to the person in whose name such Note is registered on the due date thereof upon presentation and surrender of such Note at the Designated Payment/Transfer Office. (e) If a date for the payment of the principal of or interest on the Notes is a Saturday, Sunday, legal holiday, or a day on which banking institutions in the city in which the Designated Payment/Transfer Office 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 a Saturday, Sunday, legal holiday, or day on which such 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. (g) Subject to Title 6, Texas Property Code, as amended, Unclaimed Payments remaining unclaimed for three years after the applicable payment or redemption date shall be paid by the Bank to the City, to be used for any lawful purpose. Thereafter, neither the City, the Paying Agent/Registrar, nor any other person shall be liable or responsible to any Owners of such Notes for any further payment of such unclaimed moneys or on account of any such Notes, subject to any applicable escheat, abandoned property, or similar law. Section 3.04. Execution and Initial Registration. (a) The Notes shall be executed on behalf of the City by the Mayor and City Secretary of the City, by their manual or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Notes shall have the same effect as if each of the Notes had been signed manually and in person by each of said officers, and such facsimile seal on the Notes shall have the same effect as if the official seal of the City had been manually impressed upon each of the Notes. (b) In the event that any officer ofthe City whose manual or facsimile signature appears on the Notes ceases to be such officer before the authentication of such Notes or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Note shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar. It shall not be required that the same authorized representative of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the c:Ug\cliws\colony\mwwt«vmaocalorft Notes. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Note delivered on the Closing Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Ordinance, manually executed by the Comptroller of Public Accounts of the State of Texas or by his duly authorized agent, which certificate shall be evidence that the Initial Note has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the City, and has been registered by the Comptroller. (d) On the Closing Date, one Initial Note representing the entire principal amount ofthe Notes, payable in stated installments to the Purchaser or its designee, executed by manual or facsimile signature ofthe Mayor and City Secretary ofthe City, approved bythe Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas, will be delivered to the Purchaser or its designee. Upon payment for the Initial Note, the Paying Agent/Registrar shall cancel the Initial Note and deliver one registered definitive Note for each year of maturity of the Notes, in the aggregate principal amount of all of the Notes for such maturity, registered in the name of the Purchaser. Section 3.05. Ownershii). (a) The City, the Paying Agent/Registrar and any other person may treat the person in whose name any Note is registered as the absolute owner of such Note for the purpose of making and receiving payment of the principal thereof and premium, if any, thereon, for the further purpose of making and receiving payment of the interest thereon (subject to the provisions herein that interest is to be paid to the person in whose name the Note is registered on the Record Date), and for all other purposes, whether or not such Note is overdue, and neither the City nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. (b) All payments made to the person deemed to be the Owner of any Note in accordance with this Section shall be valid and effectual and shall discharge the liability of the City and the Paying Agent/Registrar upon such Note to the extent of the sums paid. Section 3.06. Registration, Transfer and Exchange. (a) So long as any Notes remain outstanding, the City shall cause the Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a register (the "Register") in which, subject to such reasonable regulations as it mayprescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Notes in accordance with this Ordinance. (b) Registration of any Note maybe transferred in the Register only upon the presentation and surrender thereof at the Designated Payment/Transfer Office for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of the Notes, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and the right of such assignee or assignees thereof to have the Note or any portion thereof registered in the name of such assignee or assignees. No transfer of any Note shall be effective until entered in the Register. Upon assignment and transfer of any Note or portion thereof, a new Note or Notes will be issued by the Paying Agent/Registrar in conversion and exchange for such transferred and assigned Note. To the extent possible the Paying Agent/Registrar will issue such new Note or Notes in not more than three business days after receipt ofthe Note to be transferred in proper form and with proper instructions directing such transfer. C:\I&hents\colony\tmwtes99Wocabcdin 6 (c) Any Note may be converted and exchanged only upon the presentation and surrender thereof at the Designated Payment/Transfer Office, together with a written request therefor duly executed by the registered owner or assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantees of signatures satisfactory to the Paying Agent/Registrar, for a Note or Notes of the same maturity and interest rate and in any authorized denomination and in an aggregate principal amount equal to the unpaid principal amount of the Note presented for exchange. To the extent possible, a new Note or Notes shall be delivered by the Paying Agent/Registrar to the registered owner of the Note or Notes in not more than three business days after receipt of the Note to be exchanged in proper form and with proper instructions directing such exchange. (d) Each Note issued in exchange for any Note or portion thereof assigned, transferred or converted shall have the same principal maturity date and bear interest at the same rate as the Note for which it is being exchanged. Each substitute Note shall bear a letter and/or number to distinguish it from each other Note. The Paying Agent/Registrar shall convert and exchange the Notes as provided herein, and each substitute Note delivered in accordance with this Section shall constitute an original contractual obligation of the City and shall be entitled to the benefits and security of this Ordinance to the same extent as the Note or Notes in lieu of which such substitute Note is delivered. (e) The City will pay the Paying Agent/Registrar's reasonable and customary charge for the initial registration or any subsequent transfer, exchange or conversion of Notes, but the Paying Agent/Registrar will require the Owner to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection with the registration, transfer, exchange or conversion of a Note. In addition, the City hereby covenants with the Owners of the Notes that it will (i) pay the reasonable and standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Notes, when due, and (ii) pay the fees and charges ofthe Paying Agent/Registrar for services with respectto the transfer, registration, conversion and exchange of Notes as provided herein. (f) Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Note called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation shall not be applicable to an exchange by the Owner of the uncalled balance of a Note. Section 3.07. Cancellation and Authentication. (a) All Notes paid before scheduled maturity in accordance with this Ordinance, and all Notes in lieu of which exchange Notes or replacement Notes are authenticated and delivered in accordance with this Ordinance, shall be canceled and destroyed upon the making of proper records regarding such payment, exchange or replacement. The Paying Agent/Registrar shall periodically furnish the City with certificates of destruction of such Notes. (b) Each substitute Note issued pursuant to the provisions of Sections 3.06 and 3.09 of this Ordinance, in conversion of and exchange for or replacement of any Note or Notes issued under this Ordinance, shall have printed thereon a Paying Agent/Registrar's Authentication Certificate, in the form hereinafter set forth. An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Note, manually sign and date such Certificate, and no such Note shall be deemed to be issued or outstanding unless such Certificate is so executed. No additional ordinances, orders, or resolutions need C:\Ieclimffi\colonyUaamotes99\dm\or&n be passed or adopted by the City Council or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Note or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Notes in the manner prescribed herein, and said Notes shall be of customary type and composition. Pursuant to Article 717k-6, Vernon's Annotated Civil Statutes, as amended, and particularly Section 6 thereof, the duty of conversion and exchange or replacement of Notes as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Notes shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Note which was originally delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (c) Notes issued in conversion and exchange or replacement of any other Note or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Notes to be payable only to the registered owners thereof, (ii) may be transferred and assigned, (iii) may be converted and exchanged for other Notes, (iv) shall have the characteristics, (v) shall be signed and sealed, and (vi) shall be payable as to principal of and interest, all as provided, and in the manner required or indicated, in the Form of Notes set forth in this Ordinance. Section 3.08. Temporary Notes. (a) Following the delivery and registration of the Initial Notes and pending the preparation of definitive Notes, the proper officers of the City may execute and, upon the City's request, the Paying Agent/Registrar shall authenticate and deliver, one ormore temporaryNotes that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Notes in lieu ofwhich they are delivered, without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers ofthe City executing such temporary Notes may determine, as evidenced by their signing of such temporary Notes. (b) Until exchanged for Notes in definitive form, such Notes in temporary form shall be entitled to the benefit and security of this Ordinance. (c) The City, without unreasonable delay, shall prepare, execute and deliver to the Paying Agent/Registrar the Notes in definitive form; thereupon, upon the presentation and surrender of the Note or Notes in temporary form to the Paying Agent/Registrar, the Paying Agent/Registrar shall cancel the Notes in temporary form and authenticate and deliver in exchange therefor a Note or Notes of the same maturity and series, in definitive form, in the authorized denomination, and in the same aggregate principal amount, as the Note or Notes in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.09. Replacement Notes. (a) Upon the presentation and surrender to the Paying Agent/Registrar, at the Designated Payment/Transfer Office, of a mutilated Note, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. The City or the Paying Agent/ Registrar may require the Owner of such Note to pay a sum sufficientto cover anytax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected herewith. C:U&hcn a\colonyktaxmotes99\do"s or&n (b) In the event that any Note -is lost, apparently destroyed or wrongfully taken, the Paying Agent/Registrar, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Note has been acquired by a bona fide purchaser, shall authenticate and deliver a replacement Note of like tenor and principal amount, bearing a number not contemporaneously outstanding, provided that the Owner first: (i) furnishes to the Paying Agent/Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction or theft of such Note; (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar and the City to save them harmless; (iii) pays all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Paying Agent/Registrar and any tax or other governmental charge that is authorized to be imposed; and (iv) satisfies any other reasonable requirements imposed by the City and the Paying Agent/Registrar. (c) If, after the delivery of such replacement Note, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the City and the Paying Agent/Registrar shall be entitled to recover such replacement Note from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Paying Agent/Registrar in connection therewith. (d) In the event that any such mutilated, lost, apparently destroyed or wrongfully taken Note has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Note, may pay such Note. (e) Each replacementNote delivered in accordance with this Section shall constitute an original contractual obligation of the City and shall be entitled to the benefits and security of this Ordinance to the same extent as the Note or Notes in lieu of which such replacement Note is delivered. ARTICLE IV REDEMPTION OF NOTES BEFORE MATURITY Section 4.01. Limitation on Redemption. The Notes shall be subject to redemption before scheduled maturity only as provided in this Article IV. C-\J&ha9s\co1my\twmtes"W ca\or&n Section 4.02. Redemption of Nates Prior to Maturity. The City reserves the option to redeem Notes in whole or in part before their scheduled maturity dates, on any date (such redemption date or dates to be fixed by the City) at a price equal to the principal amount ofthe Notes called for redemption plus accrued interest from the most recent interest payment date on which interest has been paid or duly provided for to the redemption date. The City, at least 45 days before the redemption date (unless a shorter period shall be satisfactory to the Paying Agent/Registrar), shall notify the Paying Agent/Registrar of such redemption date and of the principal amount of Notes to be redeemed. Section 4.03. Partial Redemption. (a) If less than all of the Notes of a maturity are to be redeemed, the City shall determine the amounts thereofto be redeemed and shall directthe Paying Agent/Registrarto call bylot Notes, orportions thereof within such maturity and in such principal amounts, for redemption. (b) A portion of a single Note of a denomination greater than $5,000 may be redeemed, but only in a principal amount equal to $5,000 or any integral multiple thereof. The Paying Agent/Registrar shall treat each $5,000 portion of the Note as though it were a single Note for purposes of selection for redemption. (c) Upon surrender of any Note for redemption in part, the Paying Agent/Registrar, in accordance with Section 3.06 of this Ordinance, shall authenticate and deliver an exchange Note or Notes in an aggregate principal amount equal to the unredeemed portion of the Note so surrendered. (d) The Paying Agent/Registrar shall promptlynotifythe Cityin writing ofthe principal amount to be redeemed of any Note as to which only a portion thereof is to be redeemed. Section 4.04. Notice of Redemption to Owners. (a) The Paying Agent/Registrar shall give notice of any redemption ofNotes by sending notice by United States mail, first class postage prepaid, not less than 30 days before the date fixed for redemption, to the Owner of each Note (or part thereof) to be redeemed, at the address shown on the Register. (b) The notice shall state the redemption date, the redemption price, the place at which the Notes are to be surrendered for payment, and, if less than all the Notes outstanding are to be redeemed, an identification of the Notes or portions thereof to be redeemed. (c) Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. Section 4.05. Payment Upon Redemption. (a) On or before each redemption date, the Paying Agent/Registrar shall make provision for the payment ofthe Notes to be redeemed on such date by setting aside and holding in trust an amount from C:Vg\chmU\colony\t=otes99\doce\ordm 10 the Interest and Sinking Fund or otherwise received by the Paying Agent/Registrar from the City sufficient to pay the principal of, premium, if any, and accrued interest on such Notes. (b) Upon presentation and surrender of any Note called for redemption at the Designated Payment/Transfer Office on or after the date fixed for redemption, the Paying Agent/Registrar shall pay the principal of, premium, if any, and accrued interest on such Note to the date of redemption from the money set aside for such purpose. Section 4.06. Effect of Redemption. (a) Notice of redemption having been given as provided in Section 4.03 ofthis Ordinance, the Notes or portions thereof called for redemption shall become due and payable on the date fixed for redemption and, unless the City defaults in the payment of the principal thereof, premium, if any, or accrued interest thereon, such Notes or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Notes are presented and surrendered for payment on such date. (b) If any Note or portion thereof called for redemption is not so paid upon presentation and surrender of such Note for redemption, such Note or portion thereof shall continue to bear interest at the rate stated on the Note until paid or until due provision is made for the payment of same. ARTICLE V PAYING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paving Agent/Re ig strar. (a) The City hereby appoints The Bank of New York, New York, New York as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the City and the Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfer and registrations as herein provided. It shall be the duty of the Paying Agent/Registrar to obtain from the Owners and record in the Register the address of such Owner of each Note to which payments with respect to the Notes shall be mailed, as provided herein. The City or its designee shall have the right to inspect the Register during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. (b) The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Notes. The Paying Agent/Registrar shall keep proper records of all payments made by the City and the Paying Agent/Registrar with respect to the Notes, and of all conversions, exchanges and replacements of such Notes, as provided in this Ordinance. (c) The execution and delivery of a Paying Agent/Registrar Agreement, specifying the duties and responsibilities of the City and the Paying Agent/Registrar, is hereby approved with such changes as may be approved by the Mayor of the City, and the Mayor and City Secretary of the City are hereby authorized to execute such agreement. C:M&Ixnts\colonyV=wtes99\docsbrdin 11 Section 5.02. Qualifications. Each Paying Agent/Registrar shall be (i) a commercial bank, trust company, or other entity duly qualified and legally authorized under applicable law, (ii) authorized under such laws to exercise trust powers, (iii) subject to supervision or examination by a federal or state governmental authority, and (iv) a single entity. Section 5.03. Maintaining Paying Agent/Registrar. (a) At all times while any Notes are outstanding, the City will maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. (b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the City will promptly appoint a replacement. Section 5.04. Termination. The City reserves the right to terminate the appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to be terminated a certified copy of a resolution of the City (i) giving notice of the termination of the appointment and of the Paying Agent/Registrar Agreement, stating the effective date of such termination, and (ii) appointing a successor Paying Agent/Registrar. Section 5.05. Notice of Change to Owners. Promptly upon each change in the entity serving as Paying Agent/Registrar, the City will cause notice of the change to be sent to each Owner by United States mail, first class postage prepaid, at the address in the Register, stating the effective date of the change and the name of the replacement Paying Agent/Registrar and the mailing address of its Designated Payment/Transfer Office. Section 5.06. Agreement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar, the Paying Agent/Registrar is deemed to have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed hereby. Section 5.07. Delivery of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent/Registrar, promptly upon the appointment ofthe successor, will deliverthe Register (or a copythereof) and all other pertinent books and records relating to the Notes to the successor Paying Agent/Registrar. c:%'\d nts\cotorw\Wmotes"Wo"\ordm 12 ARTICLE VI FORM OF THE NOTES Section 6.01. Form Generally. (a) The Notes, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the Assignment form to appear on each of the Notes, (i) shall be substantially in the form set forth in this Article, with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required bythis Ordinance, and (ii) may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including any reproduction of an opinion of counsel) thereon as, consistently herewith, may be determined by the City or by the officers executing such Notes, as evidenced by their execution thereof. (b) Any portion of the text of any Notes may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Notes. (c) The Notes shall be printed, lithographed, or engraved, and may be produced by any combination ofthese methods or produced in any other manner, all as determined bythe officers executing such Notes, as evidenced by their execution thereof. Section 6.02. Form of Notes. The form of Notes, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the form of Certificate of the Paying Agent/Registrar and the form of Assignment appearing on the Notes, shall be substantially as follows: (a) [Form of Note] REGISTERED M United States of America State of Texas CITY OF THE COLONY, TEXAS LIMITED TAX NOTE, SERIES 1999 REGISTERED INTEREST RATE: MATURITY DATE: ORIGINAL ISSUE DATE: CLOSING DATE: April 15, 1999 The City of The Colony (the "City") in the County of Denton, State of Texas, for value received, hereby promises to pay to C.\lgkhmft\colony\tmwt%99\dm\ordin 13 or registered assigns, on the Maturity Date specified above, the sum of DOLLARS and to pay interest on such principal amount from the later ofthe Closing Date specified above or the most recent interest payment date to which interest has been paid or provided for until payment of such principal amount has been paid or provided for, at the per annum rate of interest specified above, computed on the basis of a 360-dayyear oftwelve 30-daymonths, such interestto be paid semiannually on February 15 and August 15 of each year, commencing February 15, 2000. The principal of this Note shall be payable without exchange or collection charges in lawful money ofthe United States of America upon presentation and surrender of this Note at the corporate trust office in New York, New York (the "Designated Payment/Transfer Office"), of the Paying Agent/Registrar executing the registration certificate appearing hereon, or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office of such successor. Interest on this Note is payable by check dated as of the interest payment date, mailed by the Paying Agent/Registrar to the registered owner at the address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangements acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the person to whom interest is to be paid. For the purpose of the payment of interest on this Note, the registered owner shall be the person in whose name this Note is registered at the close of business on the "Record Date," which shall be the last business day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled interest payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established bythe Paying Agent/Registrar, if and when funds forthe payment of such interest have been received from the City. Notice ofthe Special Record Date and ofthe scheduled payment date of the past due interest (the "Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Owner of a Note appearing on the books of the Paying Agent/Registrar at the close of business on the last business day preceding the date of mailing such notice. If a date for the payment of the principal of or interest on the Notes is a Saturday, Sunday, legal holiday, or a day on which banking institutions in the city in which the Designated Payment/Transfer Office 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 a Saturday, Sunday, legal holiday, or day on which such banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. This Note is one of a series of fully registered notes specified in the title hereof issued in the aggregate principal amount of $995,000 (herein referred to as the "Notes"), issued pursuant to a certain Ordinance of the City Council of the City (the "Ordinance") for the purpose of paying contractual obligations for the construction of street improvements. The Notes and the interest thereon are payable from the levy of a direct and continuing ad valorem tax, within the limit prescribed by law, against all taxable property in the City. C:v&U ts\cotonyUmotesMd \"&n 14 The City has reserved the option to -redeem the Notes before their respective scheduled maturities in whole or in part in integral multiples of $5,000 on any date, at a price equal to the principal amount of the Notes so called for redemption plus accrued interest to the redemption date. If less than all ofthe Notes of a maturity are to be redeemed, the City shall determine the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot Notes, or portions thereof within such maturity or maturities and in such amounts, for redemption. Notice of such redemption or redemptions shall be sent by United States mail, first class postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Notes to be redeemed in whole or in part. Notice having been so given, the Notes or portions thereof designated for redemption shall become due and payable on the redemption date specified in such notice, and from and after such date, notwithstanding that any of the Notes or portions thereof so called for redemption shall not have been surrendered for payment, interest on such Notes or portions thereof shall cease to accrue. As provided in the Ordinance, and subject to certain limitations therein set forth, this Note is transferable upon surrender of this Note for transfer at the Designated Payment/Transfer Office, with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar, and, thereupon, one or more new fully registered Notes ofthe same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neitherthe Citynorthe PaymentAgent/Registrar shall be required to transfer or exchange anyNote called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation shall not be applicable to an exchange by the holder of the uncalled balance of a Note. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Note is registered as the owner hereof forthe purpose of receiving payment as herein provided (except interest shall be paid to the person in whose name this Note is registered on the Record Date or Special Record Date, as applicable) and for all other purposes, whether or not this Note be overdue, and neither the City nor the Paying Agent/Registrar shall be affected by notice to the contrary. IT IS HEREBY CERTIFIED AND RECITED thatthe issuance ofthis Note and the series of which it is a part is duly authorized by law; that all acts, conditions and things required to be done precedent to and in the issuance ofthe Notes have been properly done and performed and have happened in regular and due time, form and manner, as required by law; and that the total indebtedness of the City, including the Notes, does not exceed any constitutional or statutory limitation. C:U&hents\colon3Abx otes99\docs\ordin 15 IN WITNESS WHEREOF, this Note has been dulyexecuted on behalf ofthe City, underits official seal, in accordance with law. City Secretary Mayor City of The Colony, Texas City of The Colony, Texas [SEAL] (b) [Form of Certificate of Paying Agent/Registrar] CERTIFICATE OF PAYING AGENT/REGISTRAR This is one of the Notes referred to in the within mentioned Ordinance. The series of Notes of which this Note is a part was originally issued as one Initial Note which was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated: (c) [Form of Assignment] THE BANK OF NEW YORK as Paying Agent/Registrar LIM ASSIGNMENT Authorized Signatory 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 Note and all rights hereunder and hereby irrevocably constitutes and appoints attorney to transfer the within Note on the books kept for registration hereof, with full power of substitution in the premises. Dated: NOTICE: The signature on this Assignment must correspond with the name of the registered owner as it appears on the face ofthe within Note in every particular and must be guaranteed in a manner acceptable to the Paying Agent/Registrar. Signature Guaranteed By: c:q&he its\cotonyUaxnotes99\dm\orafn 16 Authorized Signatory (d) Initial Note Insertions. (i) The Initial Note shall be in the form set forth in paragraph (a) of this Section, except that: A. immediately under the name of the Note, the headings "INTEREST RATE" and "MATURITY DATE" shall both be completed with the words "As Shown Below"; B. in the first paragraph: the words "on the Maturity Date specified above" shall be deleted and the following will be inserted: "on August 15 in the years, in the principal installments and bearing interest at the per annum rates set forth in the following schedule: Principal Interest Years Installments Rates (Information to be inserted from Section 3.02(b) hereof.) C. In the second paragraph ofthe Initial Note, "initial" shall be inserted before "Paying Agent/Registrar" in the first sentence, "executing the registration certificate appearing hereon," shall be deleted and an additional sentence shall be added to the paragraph as follows: "The initial Paying Agent/Registrar is The Bank of New York, New York, New York"; D. the Initial Note shall be numbered T-1. (ii) The following Registration Certificate of Comptroller of Public Accounts shall appear on the Initial Note in lieu of the Certificate of Paying Agent/Registrar: REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER § OF PUBLIC ACCOUNTS § REGISTER NO. THE STATE OF TEXAS I HEREBY CERTIFY THAT there is on file and of record in my office a certificate to the effect that the Attorney General of the State of Texas has approved this Note, and that this Note has been registered this day by me. C:\19W U\colony\tLmotes99\daxlordm 1 ARTICLE VII SALE OF THE NOTES,- CONTROL OTES;CONTROL AND DELIVERY OF THE NOTES Section 7.01. Sale of Notes. (a) The Notes are hereby officially sold and awarded to American Bank, Houston, Texas, at a price of par plus accrued interest from the Original Issue Date to the Closing Date. It is officially found, determined and declared that the bid of said Purchaser produces the lowest true interest cost to the City and that the terms of this sale are the most advantageous reasonably obtainable. The Notes shall initially be registered in the name of the Purchaser or its designee. (b) All officers of the City are authorized to take such actions and to execute such documents, certificates and receipts as they may deem necessary and appropriate in order to consummate the delivery of the Notes. (c) The obligation of the Purchaser to accept delivery of the Notes is subject to the Purchaser being furnished with the final, approving opinion of Fisher & Newsom, P.C., Bond Counsel for the City, which opinion shall be dated as of and delivered on the Closing Date. The Mayor is hereby authorized and directed to execute the engagement letter with Fisher & Newsom, P.C., setting forth such firm's duties as Bond Counsel for the City in connection with the issuance of the Notes, and such engagement letter and the terms thereof in the form presented at this meeting is hereby approved and accepted. Section 7.02. Control and Delivery of Notes. (a) The Mayor ofthe City is hereby authorized to have control ofthe Initial Note and all necessary records and proceedings pertaining thereto pending investigation, examination and approval of the Attorney General of the State of Texas, registration by the Comptroller of Public Accounts of the State of Texas, and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Accounts, delivery of the Notes shall be made to the Purchaser under and subject to the general supervision and direction of the Mayor of the City, against receipt by the City of all amounts due to the City under the terms of sale. ARTICLE VIII CREATION OF FUNDS AND ACCOUNTS; DEPOSIT OF PROCEEDS; INVESTMENTS Section 8.01. Creation of Funds. (a) The City hereby establishes the following special funds or accounts: (i) the City of The Colony, Texas, Limited Tax Notes, Series 1999, Interest and Sinking Fund (the "Interest and Sinking Fund"); and C:\lg\cfients\colony\twmotes99\docs\ordm 18 Section 7.02. Control and Delivery of Notes. (a) The Mayor of the City is hereby authorized to have control of the Initial Note and all necessary records and proceedings pertaining thereto pending investigation, examination and approval of the Attorney General ofthe State of Texas, registration by the Comptroller of Public Accounts ofthe State of Texas, and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Accounts, delivery of the Notes shall be made to the Purchaser under and subject to the general supervision and direction ofthe Mayor ofthe City, against receipt by the City of all amounts due to the City under the terms of sale. ARTICLE VIII CREATION OF FUNDS AND ACCOUNTS; DEPOSIT OF PROCEEDS; INVESTMENTS Section 8.01. Creation of Funds. (a) The City hereby establishes the following special funds or accounts: (i) the City of The Colony, Texas, Limited Tax Notes, Series 1999, Interest and Sinking Fund (the "Interest and Sinking Fund"); and (ii) the City of The Colony, Texas, Limited Tax Notes, Series 1999, Project Fund (the "Project Fund"). (b) The Interest and Sinking Fund and Project Fund shall be maintained at an official depository of the City. Section 8.02. Interest and Sinking Fund. (a) The taxes levied under Section 2.01 of this Ordinance shall be deposited to the credit of the Interest and Sinking Fund at such times and in such amounts as necessaryfor the timelypayment ofthe principal of and interest on the Notes. (b) Money on deposit in the Interest and Sinking Fund shall be used to paythe principal of and interest on the Notes as such become due and payable. Section 8.03. Security of Funds. All moneys on deposit in the funds referred to in this Ordinance shall be secured in the manner and to the fullest extent required by the laws of the State of Texas for the security of public funds, and moneys on deposit in such funds shall be used only for the purposes permitted by this Ordinance. c:Ug\&=tS4:o1ony\W=tes9Mocs\ordm 19 Section 8.04. Deposit of Proceeds. (a) Proceeds from the sale ofthe Notes received on the Closing Date shall be deposited to the Project Fund, such moneys to be dedicated and used for the purposes specified in Section 3.01 hereof and for paying the costs of issuance with respect to the Notes. (b) Any proceeds ofthe Notes that are not required for the purposes for which the Notes are issued shall be deposited to the Interest and Sinking Fund. Section 8.05. Investments. (a) Proceeds ofthe Notes and money in the Interest and Sinking Fund, atthe option ofthe City, may be invested in such securities or obligations as permitted under applicable law. (b) Any securities or obligations in which money is so invested shall be kept and held in trust for the benefit of the Owners and shall be sold and the proceeds of sale shall be timely applied to the making of all payments required to be made from the fund from which the investment was made. Section 8.06. Investment Income. Interest and income derived from investment of any fund created by this Ordinance shall be credited to such fund. ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of the Notes. While any ofthe Notes are outstanding and unpaid, there shall be made available to the Paying Agent/Registrar, out of the Interest and Sinking Fund, money sufficient to pay the interest on and the principal of the Notes, as applicable, as will accrue or mature on each applicable Interest Payment Date. Section 9.02. Other Representations and Covenants. (a) The City will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance and in each Note; the City will promptly pay or cause to be paid the principal of, interest on, and premium, if any, with respect to, each Note on the dates and at the places and manner prescribed in such Note; and the City will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance. (b) The City is duly authorized under the laws of the State of Texas to issue the Notes; all action on its part for the creation and issuance of the Notes has been duly and effectively taken; and the Notes in the hands of the Owners thereof are and will be valid and enforceable obligations of the City in accordance with their terms. C:vg\&mtskotony\twmores99\dm\ordm 20 Section 9.03. Federal Tax Matters. (a) The City hereby represents that the proceeds of the Notes are needed at this time for the purposes specified in Section 3.01 hereof (the "Project"); that based on current facts, estimates and circumstances, it is reasonably expected that final disbursement of the proceeds of the Notes will occur within three years after the Closing Date, that substantial binding obligations to commence the Project will be incurred within six months of the Closing Date and that the accomplishment of the projects for which the Notes are hereby issued will proceed with due diligence to completion; that it is not reasonably expected that the proceeds of the Notes or money deposited in the Interest and Sinking Fund will be used or invested in a manner that would cause the Notes to be or become "arbitrage bonds," within the meaning of Section 148 of the Code; and that, except for the Interest and Sinking Fund, no other funds or accounts have been established or pledged to the payment of the Notes. (b) The City will not take any action or fail to take any action with respect to the investment of the proceeds of the Notes or any other funds of the City, including amounts received from the investment of any of the foregoing, if such action or inaction, based upon the facts, estimates, and circumstances known on the Closing Date, would result in constituting the Notes "arbitrage bonds," within the meaning of Section 148 of the Code, and the City will not take any deliberate action motivated by arbitrage that would have such result. (c) The City will not take any action or fail to take any action which action or omission would (i) result in the interest on the Notes being includable in gross income for federal tax purposes; (ii) result in the Notes being treated as "private activity bonds" within the meaning of Section 141(a) of the Code: or (iii) result in the Notes being treated as "federally guaranteed" within the meaning of Section 149(b) of the Code. (d) The City will comply with the provisions of Section 148(f) of the Code (relating to paying certain excess earnings of investment proceeds of the Notes to the United States) and the regulations promulgated thereunder. This covenant includes the maintenance of records regarding investments acquired with the proceeds by or on behalf of the City adequate to calculate the City's rebate liability. (e) It is the understanding ofthe City that the covenants contained herein are intended to assure compliance with the regulations and rulings issued by the Internal Revenue Service. In the event that regulations or rulings are hereafter issued which modify or expand provisions of the Code, as applicable to the Notes, the City will not be required by comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally -recognized bond counsel, will not adversely affect the exclusion from gross income of interest on the Notes under Section 103 of the Code. In the event that regulations or rulings are hereafter issued which impose additional requirements which are applicable to the Notes, the City agrees to complywith the additional requirements to the extent necessary, in the opinion ofnationally-recognized bond counsel, to preserve the exclusion from gross income of interest on the Notes for federal tax purposes under Section 103 of the Code. (f) The Notes are hereby designated "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code. In this regard, neither the City or any of its subordinate entities, if any, reasonably expect to issue in excess of $10,000,000 aggregate amount oftax-exempt obligations otherthan obligations not taken into account pursuant to Section 265(b)(3)(C)(ii) during the calendar year in which C:\lg\clients\colony\twmfts99\dom\ordin 21 the Notes are issued, and the City hereby covenants not to designate more than $10,000,000 aggregate amount of tax-exempt obligations during the calendar year in which the Notes are issued. (g) Proper officers of the City charged with the responsibility of issuing the Notes are hereby directed to make, execute and deliver certifications as to facts, estimates and circumstances in existence as of the Closing Date and stating whether there are any facts, estimates or circumstances that would materially change the City's current expectations. (h) The covenants and representations made or required by this Section are for the benefit of the Owners and may be relied upon by the Owners and Bond Counsel for the City. (i) The covenants set forth in subsections (b), (c), (d) and (e) of this Section shall survive the later of the defeasance or discharge of the Notes. ARTICLE X DEFAULT AND REMEDIES Section 10.01. Events of Default. Each ofthe following occurrences or events for the purpose of this Ordinance is hereby declared to be an 'Event of Default," to -wit: (i) the failure to make payment ofthe principal of or interest on any ofthe Notes when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement or obligation of the City, the failure to perform which materially, adversely affects the rights of the Owners, including but not limited to, their prospect or ability to be repaid in accordance with this Ordinance, and the continuation thereof for a period of 60 days after notice of such default is given by any Owner to the City. Section 10.02. Remedies for Default. (a) Upon the happening of any Event of Default, then and in every case any Owner or an authorized representative thereof, including but not limited to, a trustee or trustees therefor, may proceed against the City for the purpose of protecting and enforcing the rights ofthe Owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Owners hereunder or any combination of such remedies. (b) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Owners of Notes then outstanding. c:\I8\cherts\colony\t®xnotes99\docs\ordin 22 Section 10.03. Remedies Not Exclusive. (a) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Notes or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Notes shall not be available as a remedy under this Ordinance. (b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. ARTICLE XI DEFEASANCE AND REFUNDING Section 11.01. Defeasance and Refunding. The City reserves the right to defease or refund the Notes in any manner authorized by law. (Execution Page Follows) C:\lg\clients\colony\taxnota99\doos\ordm 23 FINALLY PASSED, APPROVED AND EFFECTIVE this ti Z 4ayo r, •ty of TOi Colony, Texas ATTEST: City Secretary, City of The Colony, Texas APPROVED AS TO FORM: City ML4ey, City of The Colony, Texas c:vg\&mts\cotony\twmtes99Wocs\ordm 24