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HomeMy WebLinkAboutOrd 1696 - certificates of obligation 2001 ORDINANCE NO. 2001-1696 ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF WEST UNIVERSITY PLACE, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2001 THE STATE OF TEXAS 9 COUNTY OF HARRIS 9 CITY OF WEST UNIVERSITY PLACE 9 WHEREAS, the City Council of the City of West University Place, Texas (the "City"), authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on September 17, 2001, to adopt an ordinance and take such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable . from City ad valorem taxes and a limited pledge of a subordinate lien on the net revenues of the City's waterworks and sewer system, for the purpose of evidencing the indebtedness of the City for all or any part of the cost of the purchase of all land, facilities, and buildings currently in use as the Southwest Branch YMCA located at 4210 Bellaire Blvd., Houston, Texas, for park and recreational purposes and the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and laws of the State of Texas and of the United States of America, respectively, particularly Chapter 271, Texas Local Government Code, as amended; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; therefore BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF WEST UNIVERSITY PLACE, TEXAS: 1 ~ Recitals~ Definitions. It is hereby found and determined that the matters and facts set out in the preamble to this Ordinance are true and correct~ Throughout this Ordinance the following terms and expressions as used herein shall have the meanings set forth below: "Acts" means Chapter 271 and 331, Texas Local Government Code, as amended, and Chapter 1508, Texas Government Code, as amended.. "Business Day" means any day which is not a Saturday, Sunday, or a day on which the Registrar is authorized by law or executive order to close~ "Certificate" or "Certificates" means the City of West University Place, Texas, Certificates of Obligation, Series 2001, authorized by this Ordinance, unless the context clearly indicates othenvise. "City" means the City of West University Place, Texas. ; ~ "Closing Date" means the date of the initial delivery of and payment for the Certificates. "Code" means the Internal Revenue Code of 1986, as amended. "Comptroller" means the Comptroller of Public Accounts of the State of Texas. "Debt Service Fund" means the debt service fund for payment of the Certificates established by the City in Section 15 of this Ordinance. "Initial Certificate" means the Initial Certificate authorized by Section 5( d). "Interest Payment Date", when used in connection with any Certificate, means August 1, 2002, and each February 1 and August 1 thereafter until maturity or earlier redemption. "Issuance Date", with respect to the Certificates initially delivered to the Underwriter, means the date on which each such Certificate is authenticated by the Registrar and delivered to and paid for by the Underwriter. Certificates delivered on transfer of or in exchange for other Certificates shall bear the same Issuance Date as the Certificate or Certificates in lieu of or in exchange for which the new Certificate is delivered. "MSRB" means the Municipal Securities Rulemaking Board. ''NRMSIR'' means each person whom the SEe or its staffhas determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time.. "Ordinance" as used herein and in the Certificates means this ordinance authorizing the Certificates. "Owner" means any person who shall be the registered owner of any outstanding Certificate.. "Purchase Contract" mans the contract between the City and the Underwriter described in Section 19 of this Ordinance. "Record Date" means, for any Interest Payment Date, the fifteenth day of the month next preceding each Interest Payment Date. "Register" means the books of registration kept by the Registrar, in which are maintained the names and addresses of, and the principal amounts of the Certificates registered to, each Owner~ "Registrar" means Bank One, National Association, and its successors in that capacity. "Rule" means SEe Rule 15c2-12, as amended from time to time. "SEe" means the United States Securities and Exchange Commission. -2- "SID" means th~ Municipal Advisory Council of Texas, which has been designated by the State of Texas as, and determined by the SEe staff to be, a state information depository within the meaning of the Rule. "Underwriter" means Bank of America, N.A. 2.. Authorization~ The Certificates shall be issued, pursuant to the Acts, in fully registered form in the aggregate principal amount of Three Million Three Hundred Twenty-Five Thousand Dollars ($3,325,000), for the purpose of evidencing the indebtedness of the City for all or any part of the cost of the purchase of all land, facilities, and buildings currently in use as the Southwest Branch YMCA located at 4210 Bellaire Blvd., Houston, Texas, for park and recreational purposes and the cost of professional services incurred in connection therewith. 3.. Desi14l1ationll Date, and Interest Payment Dates. The Certificates shall be designated as "CITY OF WEST UNIVERSITY PLACE, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2001" and shall be dated October 1, 2001. The Certificates shall bear interest at the rates set forth in Section 4 of this Ordinance from the later of the Issuance Date or the most recent Interest Payment Date to which such interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, interest payable on August 1, 2002, and semiannually thereafter on February 1 and August 1 of each year until maturity or earlier redemption.. 4~ Initial Certificates; Numbers and Denominations" The Certificates shall be initially issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance.. The Certificates shall mature on February 1 in each of the years and in the amounts set out in such schedule. The Initial Certificate shall be numbered 1-1 and all other Certificates shall be numbered in sequence beginning with R-1. Certificates delivered on transfer of or in exchange for other Certificates shall be numbered in order of their authentication by the Registrar, shall be in the denomination of $5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Principal Interest Year Amount Rate 2003 $ 85,000 4.40% 2004 90,000 4.40% 2005 95,000 4.40% 2006 100,000 4.40% 2007 100,000 4.40% 2008 100,000 4.40% 2009 110,000 4..40% 2010 110,000 4.40% 2011 115,000 4.40% 2012 120,000 4.40% -3- 2013 2014 2015 2016 2017 130,000 500,000 525,000 555,000 590,000 4.400/0 4..400/0 4.40% 4..40% 4.40% 5. Execution of Certificates; Seal. (a) The Certificates shall be signed on behalf of the City by the Mayor and countersigned by the City Secretary, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. (b) If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Certificate 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 Registrar's Authentication Certificate substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Registrar. In lieu of the executed Registrarts Authentication Certificate described above, the Initial Certificate delivered at the Closing Date shall have attached hereto the Comptroller's Registration Certificate substantially in the form provided herein, manually executed by the Comptroller, or by his duly authorized agent, which certificate shall be evidence that the Initial Certificate 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.. The Registrar, when it authenticates a Certificate, shall cause the Issuance Date to be stamped, typed or imprinted on such Certificate. Certificates issued on transfer of or in exchange for other Certificates shall bear the same Issuance Date as the Certificate or Certificates presented for transfer or exchange.. (d) On the Closing Date, the Initial Certificate, being a single certificate representing the entire principal amount of the Certificates, payable in stated installments to the Underwriter or its designee, executed by manual or facsimile signature of the Mayor and City Secretary of the City, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts, shall be delivered to the Underwriter or its designee. Upon payment for the Initial Certificate, the Registrar shall cancel the Initial Certificate and deliver Certificates to the Registrar. 6. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent and registrar for the Certificates. The principal of the Certificates shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which on the date of payment is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or -4- earlier redemption, to the Registrar at its principal payment office. The interest on each Certificate shall be payable on eachr Interest Payment Date, by check mailed by the Registrar on or before the Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register, or by such other method, requested by the Owner, acceptable to the Registrar. If the date for payment of the principal of or interest on any Certificate is not a Business Day, then the date for such payment shall be the next succeeding Business Day with the same force and effect as ifmade on the date payment was originally due. 7.. Successor Registrars~ The City covenants that at all times while any Certificates are outstanding it will provide a commercial bank or trust company, organized under the laws of the United States or any state, authorized under such laws to exercise trust powers, and subject to supervision or examination by federal or state authority, to serve as and perform the duties and services of Registrar for the Certificates. The City reserves the right to change the Registrar on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Certificates.. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 8. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be lmown as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City.. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 9. Ownership~ Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Certificate is registered as the absolute owner of such Certificate for the purpose of making and receiving payment of the principal of or interest on such Certificate, and for all other purposes, whether or not such Certificate is overdue, and neither the City nor the Registrar shall be bound by any notice or lmowledge to the contrary. All payments made to the person deemed to be the Owner of any Certificate in accordance with this Section shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with -5- the applicable provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. 10. Registration, Transfer, and Exchange. So long as any Certificates remain outstanding, the Registrar shall keep the Register at its principal payment office. Subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Certificates in accordance with the terms of this Ordinance. The Issuance Date of each Certificate originally delivered to and paid for by Underwriter shall be recorded in the Register. Each Certificate shall be transferable only upon the presentation and surrender thereof at the principal payment office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Certificate in proper form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three Business Days after such presentation, a new Certificate or Certificates, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount, Issuance Date and bearing interest at the same rate as the Certificate or Certificates so presented. All Certificates shall be exchangeable upon presentation and surrender at the principal payment office of the Registrar, for a Certificate or Certificates of like maturity, Issuance Date and interest rate and in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section~ Each Certificate delivered in accordance with this Section shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City~ 11. Mutilated, Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, Issuance Date, interest rate, and principal amount, bearing a number not contemporaneously outstanding. If any Certificate is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or lrnowledge that such Certificate has been acquired by a bona fide purchaser, shall authorize and the Registrar shall authenticate and deliver a replacement Certificate of like maturity, Issuance Date, interest rate and principal amount, bearing a number not contemporaneously outstanding~ The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the -6- Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Certifipate, before any replacement Certificate is issued, to: (1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Certificate; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Registrar shall be entitled to recover such replacement Certificate 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 Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate, authorize the Registrar to pay such Certificate.. Each replacement Certificate delivered in accordance with this Section shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered~ 12. Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment The Registrar shall furnish the City with appropriate certificates of destruction of such Certificates~ 13 ~ Optional Redemption. The Certificates are subject to optional redemption as set forth in the Form of Certificates in this Ordinance. Principal amounts may be redeemed only in integral mu1tiples of $5,OOOft If a Certificate subject to redemption is in a denomination larger than $5,000, a portion of such Certificate may be redeemed, but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 10 hereof, shall authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity, Issuance Date and interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered. -7- Notice of any red. emption identifying the Certificates to be redeemed in whole or in part shall be given by the Registrar at least thirty days prior to the date fixed for redemption by sending written notice by first class mail to the Owner of each Certificate to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, the redemption price, the place at which Certificates are to be surrendered for payment and, if less than all Certificates outstanding of a particular maturity are to be redeemed, the numbers of the Certificates or portions thereof of such mahzrity to be redeemed. 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. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Certificates or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Certificates have been called for redemption in whole or in part and due provision has been made to redeem same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 14. Forms. The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller, which shall be attached or affixed to the Certificates initially issued, shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: (a) Form of Certificates.. UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF HARRIS REGISTERED NUMBER REGISTERED DENOMINATION $ CITY OF WEST UNIVERSITY PLACE, TEXAS CERTIFICATE OF OBLIGATION SERIES 2001 INTEREST RATE: MATURITY DATE: February 1, 20_ ISSUANCE DATE: October 23, 2001 CUSIP: REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS -8- The City of We~t University Place, Texas (the "City") promises to pay to the registered owner identified above, or registered assigns, on the maturity date specified above, upon presentation and surrender of this Certificate at the principal payment office of Bank One, National Association (the "Registrar"), the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30 day months, from the later of the Issuance Date, or the most recent interest payment date to which interest has been paid or duly provided for. The date of this Certificate is October 1, 2001, but interest shall accrue on the principal amount hereof from the Issuance Date. Interest on this Certificate is payable by check on August 1 and February 1, begilUling on August 1,2002, mailed to the registered owner of record as of the fifteenth day of the month next preceding each interest payment date. THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $3,325,000 (the "Certificates"), issued in accordance with the Constitution and laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended, for the purpose of evidencing the indebtedness of the City for all or any part of the cost of the purchase of all land, facilities, and buildings currently in use as the Southwest Branch YMCA located at 4210 Bellaire Blvd., Houston, Texas, for park and recreational purposes and the cost of professional services incurred in connection therewith, pursuant to an ordinance duly adopted by the City Council of the City (the "Ordinance"), which Ordinance is of record in the official minutes of the City Council~ ON ANY DATE, the Certificates are subject to optional redemption, in whole or in part (and if in part, in inverse order of maturity in the aggregate principal amount determined by the City, but in no event less than the aggregate amount of$5,OOO or a larger integral multiple of$5,OOO), prior to their scheduled maturity dates at the option of the City, with funds furnished by the City, upon written notice of the exercise of the option to redeem delivered to the Registrar by the City no later than the 45th day prior to the date of redemption. The unpaid principal of the Certificates may be so redeemed at a redemption price equal to the principal amount to be redeemed (the "Prepaid Principal") plus accrued interest to the date of redemption (the "Redemption Date"), plus the "Make-Whole Amount" (hereinafter defined), if any.. A "Make-Whole Amount" is due if the "Treasury Rate" (hereinafter defined) less the "Closing Spread" (hereinafter defined) is less than 4~40% per annum (the "Base Interest Rate"). Subject to the limitations set forth in Chapter 1204, Government Code, as amended, the "Make- Whole Amount" shall equal (i) the sum of the amounts calculated by discounting the "Original Scheduled Payments" (hereinafter defined) from their respective scheduled due dates to the Redemption Date, in accordance with accepted financial practice at a discount factor equal to the Treasury Rate plus the Closing Spread, less (ii) the Prepaid Principal; however, the Make-Whole Amount shall in no event be less than zero and nothing herein shall be construed or operate to require the City to pay a Make-Whole Amount except in connection with the City's exercise of the right of redemption granted above or to pay an amount greater than is permitted by applicable law.. -9- For purposes of determining the Make-Whole Amount, the following terms shall have the following meanings: The "Treasury Rate" is the yield on the Treasury Constant Maturity Series with maturity equal to the remaining weighted average life to maturity of the Remaining Scheduled Principal Installment Payments (calculated as of the Redemption Date in accordance with accepted financial practice and rounded to the nearest quarter-year), as reported in Federal Reserve Statistical Release H.15 (519) - Selected Interest Rates, in the "This Week" column of the issue which, as of the fifth business day before the Redemption Date, has been most recently published. If no maturity exactly corresponding to such remaining weighted average life to maturity appears in Release H.. 15, the Treasury Rate will be determined by linear interpolation between the yields reported in Release H.15. If for any reason Release H.15 is no longer published, the Registrar shall select a comparable publication to determine the Treasury Rate~ The "Original Scheduled Payments" are (i) each payment of principal of the Prepaid Principal as originally scheduled prior to exercise of the option of redemption; and (ii) each scheduled payment of interest on the Prepaid Principal that would be due if no payment of the Prepaid Principal were made prior to its original scheduled maturity dates.. The "Closing Spread" is the difference between the Base Interest Rate and the Treasury Rate with such Treasury Rate being calculated as of the date of Closing. NOTICE OF ANY REDEMPTION shall be given by the Registrar at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the registered owners of each Certificate to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Certificates or portions thereof have been called for redemption, and due provision has been made to redeem the same, the amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS CERTIFICATE is transferable only upon presentation and surrender at the principal payment office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE CERTIFICATES are exchangeable at the principal payment office of the Registrar, for Certificates in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate is either (i) registered by the Comptroller of -10- Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Certificates and will cause notice of any change of registrar to be mailed to each registered owner.. IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Certificate have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes, within the limits prescribed by law, sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the City, and have been pledged irrevocably for such payment. IT IS FURTHER certified, recited and represented that the revenues, to be derived from the operation of the City's waterworks and sewer system, after the payment of all operation and maintenance expenses thereof (the ''Net Revenues"), in an amount not to exceed $10,000, are pledged to the payment of the principal of and interest on the Certificates to the extent that taxes may ever be insufficient or unavailable for said purpose; provided, however, that such pledge is junior and subordinate in all respects to the pledge of the Net Revenues to the payment of all outstanding obligations of the City and any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of the Net Revenues to the payment of the Certificates.. The City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of its waterworks and sewer system, secured by a pledge of the Net Revenues that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of the Net Revenues securing the Certificates. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor and countersigned with the manual or facsimile signature of the City Secretary, and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. -11- (AUTHENTICATION CER TIFICA TE) (SEAL) CITY OF WEST UNIVERSITY PLACE~ TEXAS Mayor City Secretary (b) Form of Registration Certificate of Comotroller. COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Certificate has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this (SEAL) (c) Comptroller of Public Accounts of the State of Texas Form of Rero.strarts Authentication Certificate~ AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate~ Bank One, National Association By Authorized Signature Date of Authentication (d) Form of Assignment.. ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name~ address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) -12- the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said Certificate on the books kept for registration thereof, with full power of substitution in the premises~ DATED: Signature Guaranteed: Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown on the face of this Certificate in every particular, without any alteration, enlargement or change whatsoever" NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. (e) The Initial Certificate shall be in the form set forth in paragraphs (a), (b) and (d) of this Section, except for the following alterations: (i) immediately under the name of the Certificate, the headings UINTEREST RATEU and UMATURITY DATEn shall both be completed with the words flAs Shown Belowu and the word "CUSIP" deleted; (ii) in the first paragraph of the Certificate, the words lion the maturity date specified above" and Uat the rate shown abovell shall be deleted and the following shall be inserted at the end of the first sentence "....., with such principal to be paid in installments on February 1 in each of the years and in the principal amounts identified in the following schedule and with such installments bearing interest at the per annwn rates set forth in the following schedule: [Information to be inserted from schedule in Section 4] (iii) the Initial Certificate shall be nwnbered I-I. 15.. Legal Opinion; Cusip Nwnbers~ The approving opinion of Vinson & Elkins L.L.P., Houston, Texas, and CUSIP Nwnbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such nwnbers shall have no effect on the validity of the Certificates. 16. Debt Service Fund; Tax Levy" There is hereby established a separate fund of the City to be known as the City of West University Place, Texas, Certificates of Obligation, Series 2001 Debt Service Fund (the UDebt Service FundU), which shall be kept separate and apart from all other -13- funds of the City. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authoriz~d by this Ordinance shall be deposited, as collected, in the Debt Service Fund~ While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually assessed and collected in due time, form and manner, and at the same time as other City taxes are assessed, levied and collected, in each year, a continuing direct annual ad valorem tax, within the limits prescribed by law, upon all taxable property in the City, sufficient to pay the current interest on the Certificates as the same becomes due and to provide and maintain a sinking fund of not less than two percent of the principal amount of the Certificates or the amount required to pay each installment ofprincipal of the Certificates as the same matures, whichever is greater, full allowance being made for delinquencies and costs of collection, and said taxes are hereby irrevocably pledged to the payment of the interest on and principal of the Certificates and to no other purpose. To pay the debt service coming due on the Certificates prior to receipt of the taxes levied to pay such debt service, there is hereby appropriated from current funds on hand, which are hereby certified to be on hand and available for such purpose, an amount sufficient to pay such debt service, and such amount shall be used for no other purpose. 17. Pledge of Revenues. The revenues to be derived from the operation of the City's waterworks and sewer system, after the payment of all operation and maintenance expenses thereof (the "Net RevenuesU), in an amount not to exceed $10,000, are hereby pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes mentioned in Section 16 of this Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of all outstanding obligations of the City and any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of the Net Revenues to the payment of the Certificates. The City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues, secured by a pledge of the Net Revenues that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of the Net Revenues securing the Certificates.. 18. Further Proceedings. After the Certificates to be initially issued have been executed, it shall be the duty of the Mayor and other appropriate officials and agents of the City to deliver the Certificates to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas, for examination and approval. After the Certificates to be initially issued have been approved by the Attorney General, they shall be delivered to the Comptroller for registration. Upon registration of the Certificates to be initially issued, the Comptroller (or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. 19. Sale; Purchase Contract The Certificates are hereby sold and shall be delivered to the Underwriter at a price of$3,325,000, in accordance with the terms of the Purchase Contract of even -14- date herewith, presented to and hereby approved by the City Council, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City.. The Mayor and other appropriate officials of the City are hereby authorized and directed to execute the Purchase Contract on behalf of the City, and the Mayor and all other officers, agents and representatives of the City are hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Certificates. 20~ Federal Income Tax Inclusion. ( a) General Tax Covenant The City intends that the interest on the Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended (the "Code), and applicable Income Tax Regulations (the "Regulations")~ The City covenants and agrees not to take any action, , orlmowingly omit to take any action within its control that, if taken or omitted, respectively, would cause the interest on the Certificates to be includable in gross income, as defined in section 61 of the Code, for federal income tax purposes. In particular, the City covenants and agrees to comply with each requirement of this Section; provided, however, that the City shall not be required to comply with any particular requirement of this Section if the City has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a CounsePs Opinion to the effect that compliance with some other requirement set forth in this Section will satisfy the applicable requirements of the Code and Regulations, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Section. (b) No Private Use or Payment and No Private Loan Financing. The City shall certify, through an authorized officer, employee or agent that based upon all facts and estimates known or reasonably expected to be in existence on the date the Certificates are delivered, that the proceeds of the Certificates will not be used in a manner that would cause the Certificates to be uprivate-activity bondsn within the meaning of section 141 of the Code and the Regulations promulgated thereunder.. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Certificates including interest or other investment income derived from Certificate proceeds, regulate the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Certificates will not be uprivate activity bonds" within the meaning of section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal Guarantee. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Certificates to be "federally guaranteed" within the meaning of section 149(b) of the Code and the applicable Regulations thereunder, except as permitted by section 149(b )(3) of the Code and such Regulations.. (d) No Hedge Bonds.. The City covenants and agrees that it has not and will not take any action, and has not knowingly omitted and will not knowingly omit to take any action, within its -15- control, that, if taken or omitted, respectively, would cause the Certificates to be "hedge bonds" within the meaning of section 149(g) of the Code and the applicable Regulations thereunder. (e) No Arbitrage" The City shall certify, through an authorized officer, employee or agent that based upon all facts and estimates known or reasonably expected to be in existence on the date the Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates to be Uarbitrage bonds" within the meaning of section 148(a) of the Code and the applicable Regulations promulgated thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Certificates including interest or other investment income derived from Certificate proceeds, regulate investments of proceeds of the Certificates, and take such other and further action as may be required so that the Certificates will not be Uarbitrage bondsu within the meaning of section 148(a) of the Code and the applicable Regulations promulgated thereunder. (f) Arbitrage Rebate. If the City does not qualify for an exception to the requirements of section 148(f) of the Code relating to the required rebate to the United States, the City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Certificates (within the meaning of section 148( t)( 6)(B) of the Code), be rebated to the federal govenunent. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such times as are required by applicable Regulations, the amount earned from the investment of the gross proceeds of the Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Certificates or on such other dates as may be permitted under applicable Regulations, all amounts required to be rebated to the federal government~ Further, the City will not indirectly pay any amount othelWise payable to the federal govenunent pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Certificates that might result in a reduction in the amount required to be paid to ..the federal government because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (g) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Certificates are issued, an information statement concerning the Certificates, all under and in accordance with section 149(e) of the Code and the applicable Regulations promulgated thereunder. (h) Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of this Section shall survive the defeasance and discharge of the Certificates. -16- 22. Qualified Tax-Exempt Obligations. The City hereby designates the Certificates as "qualified tax-exempt obligations" for purposes of section 265(b) of the Code. In connection therewith, the City represents (a) that the aggregate amount of tax-exempt obligations issued by the City during calendar year 2001, including the Certificates, which have been designated as "qualified tax-exempt obligations" under section 265(b)(3) of the Code does not exceed $10,000,000, and (b) that the reasonably anticipated amount of tax-exempt obligations which will be issued by the City during calendar year 2001, including the Certificates, will not exceed $10,000,000.. For purposes of this Section, the term "tax-exempt obligation" does not include "private activity bonds" within the meaning of section 141 of the Code, other than "qualified 501 (c)(3) bonds" within the meaning of section 145 of the Code.. In addition, for purposes of this Section, the City includes all entities which are aggregated with the City under the Code. 23. Use of Proceeds.. Proceeds from the sale of the Certificates shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest and any net premium on the Certificates shall be deposited into the Debt Service Fund. (b) All other proceeds of the Certificates shall be used for the purposes described in Section 2 of this Ordinance and for paying the costs of issuance of the Certificates.. Earnings on investments of such proceeds may, at the City's discretion, be used for such purposes or may be transferred to the Debt Service Fund. After completion of the project, any remaining proceeds shall be transferred to the Debt Service Fund. 24. Continuing Disclosure Undertaking. (a) Annual Reports. The City shall provide annually to each NRMSIR and the SIn, within six months after the end of each fiscal year, financial information and operating data with respect to the City of the general type included in the City's Audit Report. The information to be provided shall include the complete financial statements of the City prepared in accordance with the accounting principles the City may be required to employ from time to time pursuant to State law or regulation and shall be audited, if the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the City shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and the SID within such six month period, and audited financial statements when the audit report on such statements becomes available.. If the City changes its fiscal year~ it will notify eachNRMSIRand the SID of the change (and of the date of the new fiscal year end) prior to the next date by which the City othetwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document -17- (including an official statement or other offering document, ifit is available from the MSRB) that theretofore has been proyided to each NRMSIR and the SID or filed with the SEC. (b) Material Event Notices. The City shall notify the SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Certificates, if such event is material within the meaning of the federal securities laws: A. Principal and interest payment delinquencies; B. Non-payment related defaults; c. Unscheduled draws on debt service reserves reflecting financial difficulties; D~ Unscheduled draws on credit enhancements reflecting financial difficulties; E. Substitution of credit or liquidity providers, or their failure to perform; F. Adverse tax opinions or events affecting the tax-exempt status of the Certificates; G. Modifications to rights of holders of the Certificates; H. Certificate calls; I. Defeasances; J ~ Release, substitution, or sale of property securing repayment of the Certificates; and K~ Rating changes. The City shall notify the SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with Section 24(a) of this Order by the time required by such Section. (c) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the City remains an "obligated personl1 with respect to the Certificates within the meaning of the Ru1e, except that the City in any event will give notice of any deposit made in accordance with Texas law that causes Certificates no longer to be outstanding. The provisions of this Section are for the sole benefit of the holders and beneficial owners of the Certificates, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person.. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Certificates at any future date. -18- ( . UNDER NO CIRCUMSTANCES SHALL THE COUNTY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE COUNTY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE~ No default by the City in observing or performing its obligations under this Section shall comprise a breach of or default under this Order for purposes of any other provision of this Order~ Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws~ The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances that arise from a change in legal requirements, change in law, or change in the identity, nature, status or type of operations of the City, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Certificates in the original primary offering in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Certificates consent to such amendment, or (b) any person unaffiliated with the City (such as nationally recognized bond counsel), determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Certificates~ The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEe amends or repeals the applicable provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Certificates in the primary offering of the Certificates. If any such amendment is made, the City will include in its next annual update an explanation in narrative form of the reasons for the amendment and its impact on the type of operating data or financial information being provided.. 25. Related Matters. The Mayor, the City Secretary, the Director of Finance and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary and/or convenient to carry out the terms of this Ordinance.. 26. Registrar~ The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City~ 27~ No Personal Liability.. No recourse shall be had for payment of the principal of or interest on any Certificates or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Certificates. -19- 28. Open Meeting~ It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and that public notice of the time, place and purpose of said meeting was given, all as required by the Texas Open Meetings Act PASSED AND APPROVED this 17th day of September, 2001~ l~ ~ Mayor City of West University Place, Texas ATTEST: City of West University Place, Texas (SEAL) REVIEWED: -J City Attorney City of West University Place, Texas I certify that the above and foregoing ordinance complies with a budget appropriation (Account No.dCt./n/t. ~I ), and that there is or will be enough unencumbered money in that account to meet the obligation when it is due. MfA..! /.'~ /::A (~/c~ ~ Finance Director City of West University Place, Texas -20-