Loading...
HomeMy WebLinkAboutOrdinances - ORD-00-953 - 02/16/2000 - PROVIDE FOR ISSUE $455 000 SSA #1 BONDS SHAMROCK LORDINANCE NO. OQQ- © 0- R,J AN ORDINANCE providing for the issue of $455,000 Special Service Area Number One A Bonds, Series 2000, of the City of McHenry, McHenry County, Illinois, and the levy of a direct annual tax sufficient to pay the principal and interest on said bonds. WHEREAS pursuant to Section 7(6) of Article VII of the Constitution of the State of Illinois (the "Constitution"), and the Special Service Area Tax Law, as amended, the City of McHenry, McHenry County, Illinois (the "City"), is authorized to create special service areas within the City, issue bonds secured by the full faith and credit of such areas for providing special services to such areas, and levy taxes against the property included in such areas to pay the principal of and interest on said bonds; and WHEREAS the City Council of the City (the "Corporate Authorities") by Ordinance No. 0-99-909 adopted on the 19th day of May, 1999, did propose the establishment of Special Service Area Number One A of the City (the "Area") and the issuance of bonds of the Area in an amount not to exceed $800,000 bearing interest at a rate or rates not exceeding 9% and maturing within 20 years from the issuance thereof, and was considered at a public hearing thereon on the 14th day of June, 1999 (the "Hearing"); and WHEREAS proper notice was given of the Hearing and at the Hearing, all interested persons affected by the Area were allowed to file written objections thereto and to be heard orally thereon; and WHEREAS the Hearing was finally adjourned on the 14th day of June, 1999, after the Corporate Authorities heard and determined all protests; and WHEREAS the Corporate Authorities by Ordinance No. 0-99-942, adopted on the 13th day of December, 1999, did establish the Area; and WHEREAS the Area is contiguous and is totally within the corporate limits of the City except for a certain number of parcels outside the corporate limits and located within the County of McHenry, Illinois; and WHEREAS the County of McHenry, Illinois, has consented to the creation of the Area; and WHEREAS the creation of a special service area has not been proposed in the territory comprising the Area during the two (2) years preceding the adoption of this Ordinance; and WHEREAS the Area will benefit specially from the municipal services to be provided, namely, the construction of certain road improvements and a new traffic signal on State Route 31 at Shamrock Lane, all of the special services to be beneficial to the Area (the "Services" or also defined herein as the "Project"), and the Services are unique and in addition to municipal services'provided to the City as a whole; and WHEREAS no petition was filed with the City Clerk within 60 days of the final adjournment of the Hearing objecting to the creation of the Area, the levy or imposition of a tax or the issuance of said bonds, and the Corporate Authorities are authorized to issue said bonds and levy a direct annual tax against all of the taxable property included in the Area sufficient to pay the principal of and interest on said bonds; and WHEREAS the Corporate Authorities have determined and do hereby determine that it is advisable, necessary and in the best interests of the City and the Area to undertake the Services, all of the Services to be in and for the Area and all said Services and Project shall be on existing public property or property to be acquired by the City, or property in which the City will obtain an interest sufficient for the provision of the Services, including public easements; and WHEREAS it has heretofore been and it is hereby estimated that the cost of the Project will be not less than $455,000; and -2- WHEREAS there are insufficient funds on hand and lawfully available to pay the costs of the Project, and such costs are expected to be defrayed by proceeds of bonds of the Area; and WHEREAS it is in the public interest at this time to issue bonds in the amount of $455,000 to pay the costs of the Project and said proceeds shall be used solely and only for construction for which the City is authorized to levy taxes or special assessments or to appropriate the funds of the City; Now, THEREFORE, Be It Ordained by the City Council of the City of McHenry, McHenry County, Illinois, as follows: Section 1. Definitions. The following words and terms used in this ordinance shall have the following meanings unless the context or use clearly indicates another or different meaning is intended. "Area" means Special Service Area Number One A, of the City as more fully defined in the preambles hereto. "Bonds" means the $455,000 Special Service Area Number One A Bonds, Series 2000, authorized to be issued by this Ordinance. "Bond Register" means the books of the City kept by the Bond Registrar to evidence the registration and transfer of the Bonds. "Bond Registrar" means Home State Bank/National Association, Crystal Lake, Illinois, duly authorized to do business as a Bond Registrar with the powers and duties as herein set forth, y or a successor thereto or a successor designated as Bond Registrar hereunder. "City" means the City of McHenry, McHenry County, Illinois. "Code" means the Internal Revenue Code of 1986, as amended. "Corporate Authorities" means the City Council of the City. "County Clerk" means the County Clerk of The County of McHenry, Illinois. -3- "Ordinance" means this Ordinance, passed by the Corporate Authorities on the 16th day of February, 2000. "Paying Agent" means Home State Bank/National Association, Crystal Lake, Illinois, duly authorized to do business as a Paying Agent with its powers and duties as herein set forth or a successor thereto or a successor designated as Paying Agent thereunder. "Project" means the acquisition and construction of the public improvements as more fully defined in the preambles hereto. "Services" means the municipal services to be provided in the Area as more fully defined in the preambles hereto. "Tax -Exempt" means, with respect to the Bonds, the status of interest paid and received thereon as not includible in the gross income of the owners thereof under the Code for federal income tax purposes except to the extent that such interest will be taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations and in computing the "branch profits tax" imposed on certain foreign corporations. Section 2. Incorporation of Preambles. The Corporate Authorities hereby find that all of the recitals contained in the preambles to this Ordinance are full, true and correct and do incorporate them into this Ordinance by this reference. Section 3. Authorization. It is hereby found and determined that by and at the proceedings hereinabove described in the preambles of this Ordinance, the City was authorized to issue bonds up to the amount of $800,000 payable solely and only from ad valorem property taxes levied against all of the taxable property included in the Area, and that it is in the public interest for the City at this time to provide for the issuance of $455,000 of the bonds so authorized for the purpose of paying the costs of the Project. -4= Section 4. Bond Details. In order to raise the sum of $455,000 presently needed for the purpose aforesaid, there be borrowed on behalf of the Area the sum of $455,000 and that bonds of the City, payable solely and only from ad valorem taxes levied against all of the taxable property in the Area, without limit as to rate or amount, be issued in said amount and shall be known as "Special Service Area Number One A Bonds, Series 2000." The Bonds shall be dated February 1, 2000, shall also bear the date of authentication, shall be in fully registered form, shall be in denominations of $5,000 each and authorized integral multiples thereof (but no single Bond shall represent installments of principal maturing on more than one date), shall be numbered 1 and upward, shall become due and payable serially (subject to the right of prior redemption hereinafter stated) on December 1 of each of the years, in the amounts and bearing interest per annum, as follows: RATE OF YEAR AMOUNT INTEREST 2000 $15,000 5.50% 2001 30,000 5.50% 2002 30,000 5.50% 2003 35,000 5.50% 2004 35,000 5.50% 2005 40,000 5.50% 2006 40,000 5.50% 2007 40,000 5.50% 2008 45,000 5.50% 2009 45,000 5.50% 2010 50,000 5.50% •2011 50,000 5.50% ,. The Bonds shall bear interest from their dated date or from the most recent interest payment date to which interest has been paid or duly provided for, until the principal amount of the Bonds is paid, such interest (computed upon the basis of a 360-day year of twelve 30-day months) being payable on June 1 and December 1 of each year, commencing on December 1, 2000. Interest on each Bond shall be paid by check or draft of the Paying Agent, -5- payable upon presentation in lawful money of the United States of America, to the person in whose name such Bond is registered at the close of business on the 15th day of the month next preceding the interest payment date, mailed to the address of such registered owner as it appears on such registration books or at such other address furnished in writing by such registered owner to the Bond Registrar. The principal of the Bonds shall be payable in lawful money of the United States of America at the principal corporate trust office of the Paying Agent in Crystal Lake, Illinois, or at a successor Paying Agent and address. The seal of the City shall be affixed to or printed on each of the Bonds, and the Bonds shall be signed by the manual or facsimile signature of the Mayor of the City and attested by the manual or facsimile signature of the City Clerk of the City, as they shall determine. In case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. All Bonds shall have thereon a certificate of authentication substantially in the form hereinafter set forth duly executed by the Bond Registrar as authenticating agent of the City for this issue and showing the date of authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Ordinance unless and until such certificate of authentication shall have been duly executed by the Bond Registrar by manual signature, and such certificate of authentication upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Ordinance. The certificate of authentication on any Bond shall be deemed to have been executed by the Bond Registrar if signed by an authorized officer of the Bond Registrar, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds issued hereunder. am Section 5. Registration of Bonds; Persons Treated as Owners. (a) General. The City shall cause books for the registration and for the transfer of the Bonds as provided in this Ordinance to be kept at the principal corporate trust office of the Bond Registrar, which is hereby constituted and appointed the registrar of the City for this issue. The City is authorized to prepare, and the Bond Registrar shall keep custody of, multiple Bond blanks executed by the City for use in the transfer and exchange of Bonds. Upon surrender for transfer of any Bond at the principal corporate trust office of the Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by, the registered owner or his attorney duly authorized in writing, the City shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the transferee or transferees a new fully registered Bond or Bonds of the same maturity of authorized denominations, for a like aggregate principal amount. Any fully registered Bond or Bonds may be exchanged at said office of the Bond Registrar for a like aggregate principal amount of Bond or Bonds of the same maturity of other authorized denominations. The execution by the City of any fully registered Bond shall constitute full and due authorization of such Bond and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such Bond, provided, however, the principal amount of outstanding Bonds of each maturity authenticated by the Bond Registrar shall not exceed the authorized principal amount of Bonds for such maturity less previous retirements. The Bond Registrar shall not be required to transfer or exchange any Bond during the period beginning at the close of business on the 15th day of the month next preceding any interest payment date on such Bond and ending on such interest payment date, nor to transfer or -7- exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bond shall be made only to or upon the order of the registered owner thereof or his legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of Bonds, but the City or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds, except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption. (b) Global Book -Entry System. The Bonds shall be initially issued in the form of a separate single fully registered Bond for each of the maturities of the Bonds as provided in Section 4 hereof, and the ownership of each such Bond shall be registered in the Bond Register in the name of Cede & Co., or any successor thereto ("Cede"), as nominee of The Depository Trust Company, New York, New York, and its successors and assigns ("DTC"). All of the outstanding Bonds shall be registered in the Bond Register in the name of Cede, as nominee of DTC, except as hereinafter provided. The Mayor and City Clerk of the Corporate Authorities are hereby authorized to execute and deliver on behalf of the City such letters to or agreements with DTC and the Bond Registrar as shall be necessary to effectuate such book -entry system (any such letter or agreement being referred to herein as the "Representation Letter"). With respect to the Bonds registered in the Bond Register in the name of Cede, as nominee of DTC, the City and the Bond Registrar shall have no responsibility or obligation to any broker -dealer, bank or other financial institution for which DTC holds Bonds from time to time as securities depository (each such broker -dealer, bank or other financial institution being referred to herein as a "DTC Participant") or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Bond Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a registered owner of a Bond as shown in the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than a registered owner of a Bond as shown in the Bond Register, of any amount with respect to principal of or interest on the Bonds. The City and the Bond Registrar may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment of principal and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Bond Registrar shall pay all principal of and interest on the Bonds only to or upon the order of the respective registered owners of the Bonds, as shown in the Bond Register, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of a Bond as shown in the Bond Register, shall receive a Bond certificate evidencing the obligation of the City to make payments of principal and interest with respect to any Bond. Upon delivery by DTC to the Bond Registrar of written In notice to the effect that DTC has determined to substitute a new nominee in place of Cede, the name "Cede" in this ordinance shall refer to such new nominee of DTC. In the event that (i) the City determines that DTC is incapable of discharging its responsibilities described herein and in the Representation Letter, (ii) the agreement among the City, the Bond Registrar and DTC evidenced by the Representation Letter shall be terminated for any reason or (iii) the City determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City shall notify DTC and DTC Participants of the availability through DTC of Bond certificates and the Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede, as nominee of DTC. At the time, the City may determine that the Bonds shall be registered in the name of and deposited with such other depository operating a global book -entry system, as may be acceptable to the City, or such depository's agent or designee, and if the City does not select such alternate global book -entry system, then the Bonds may be registered in whatever name or names registered owners of Bonds transferring or exchanging Bonds shall designate, in accordance with the provisions of Section 5(a) hereof. Notwithstanding any other provision of this ordinance to the contrary, so long as any Bond is registered in the name of Cede, as nominee of DTC, all payments with respect to principal of and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Representation Letter. Section 6. Redemption. Those of the Bonds due on or after December 1, 2009, are subject to redemption prior to maturity at the option of the City, from any available funds, in whole or in part, on any date on or after December 1, 2008, and if in part, in any order of maturity as selected by the City, and if less than an entire maturity, in integral multiples of $5,000, selected by lot by the Bond Registrar as hereinafter provided, at the redemption price of -10- par plus accrued interest to the date fixed for redemption. With respect to any redemption of Bonds, unless moneys sufficient to pay the redemption price of the Bonds to be redeemed shall have been received by the Paying Agent prior to the giving of the notice of redemption, such notice may, at the option of the City, state that such redemption shall be conditional upon the receipt of such moneys by the Paying Agent on or prior to the date fixed for redemption. If such moneys are not received, such notice shall be of no force and effect, the City shall not redeem such Bonds, and the Bond Registrar shall give notice, in the same manner in which the notice of redemption shall have been given, that such moneys were not so received and that such Bonds will not be redeemed. Section 7. Redemption Procedure. Unless waived by any holder of Bonds to be redeemed, notice of the call for any such redemption shall be given by the Bond Registrar on behalf of the City by mailing the redemption notice by registered or certified mail at least thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption to the registered owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such registered owner to the Bond Registrar. All notices of redemption shall state: (1) the redemption date, (2) the redemption price, (3) if less than all outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed, (4) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, -11- (5) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal corporate trust office of the Bond Registrar, and (6) such other information then required by custom, practice or industry standard. Prior to any redemption date, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. Notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemption of any Bond, there shall be prepared for the registered holder a new Bond or Bonds of the same maturity in the amount of the unpaid principal. If any Bond or portion of Bond called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the redemption date at the rate borne by the Bond or portion of Bond so called for redemption. All Bonds which have been redeemed shall be cancelled and destroyed by the Bond Registrar and shall not be reissued. Section 8. Form of Bond. The Bonds shall be in substantially the following form; provided, however, that if the text of the Bond is to be printed in its entirety on the front side of the Bond, then the second paragraph on the front side of the Bond and the legend "See Reverse Side for Additional Provisions" shall be omitted and paragraphs on the reverse side of the Bond shall be inserted immediately after the first paragraph on the front side: -12- (Form of Bond - Front Side) REGISTERED REGISTERED NO. $ SPECIAL See Reverse Side for Additional Provisions UNITED STATES OF AMERICA STATE OF ILLINOIS COUNTY OF MCHENRY CITY OF MCHENRY SERVICE AREA NUMBER ONE A BOND SERIES 2000 INTEREST MATURITY RATE: �% DATE: December 1, Registered Owner: CEDE & CO. Principal Amount: DATED DATE: February 1, 2000 CUSIP KNOW ALL MEN BY THESE PRESENTS, that the City of McHenry, McHenry County, Illinois (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns as hereinafter provided, solely from the collection of taxes levied against all of the taxable property in that part of the City in the Special Service Area as named above and not otherwise, on the Maturity Date identified above, the Principal Amount identified above and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on such Principal Amount from the date of this Bond or from the most recent interest payment date to which interest has been paid at the Interest Rate per annum set forth above on June 1 and December 1 of each year commencing December 1, 2000, until said Principal Amount is paid, and except as the hereinafter stated provisions for redemption prior to maturity may be and become applicable hereto. Principal of this Bond is payable in lawful money of the United States of America at the principal corporate trust office of Home State Bank/National Association, Crystal Lake, Illinois, as paying agent (the "Paying Agent"). Payment of the installments of interest shall be made to the Registered Owner hereof as shown on the registration books of the City maintained by Home State Bank/National Association, -13- Crystal Lake, Illinois, as bond registrar (the "Bond Registrar"), at the close of business on the 15th day of the month next preceding the interest payment date and shall be paid by check or draft of the Paying Agent, payable upon presentation in lawful money of the United States of America, mailed to the address of such Registered Owner as it appears on such registration books or at such other address furnished in writing by such Registered Owner to the Bond Registrar. Reference is hereby made to the further provisions of this Bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as if set forth at this place. It is hereby certified and recited that all conditions, acts and things required by law to exist or to be done precedent to and in the issuance of this Bond did exist, have happened, been done and performed in regular and due form and time as required by law; that the indebtedness of the City, including the issue of Bonds of which this is one, does not exceed any limitation imposed by law; and that provision has been made for the collection of a direct annual tax in said Special Service Area sufficient to pay the interest hereon as it falls due and also to pay and discharge the principal hereof at maturity. THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED TAX-EXEMPT OBLIGATION" PURSUANT TO SECTION 265(b)(3) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Bond Registrar. y -14- IN WITNESS WHEREOF the City of McHenry, McHenry County, Illinois, by its City Council, has caused its corporate seal to be imprinted hereon or hereunto affixed, and this Bond to be signed by the manual or duly authorized facsimile signature of the Mayor of the City and attested by the manual or duly authorized facsimile signature of the City Clerk of the City, as they shall determine, all as of the Dated Date identified above. City Clerk [SEAL] Date of Authentication: CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within mentioned ordinance and is one of the Special Service Area Number One A Bonds, Series 2000, of the Special Service Area as named above of the City of McHenry, McHenry County, Illinois. HOME STATE BANK/NATIONAL ASSOCIATION, as Bond Registrar Authorized Officer Mayor Bond Registrar and Paying Agent: Home State Bank/National Association, Crystal Lake, Illinois -15- [Form of Bond - Reverse Side] This bond is one of a series of bonds (the "Bonds") issued by the City for the purpose of acquiring and constructing public improvements in said Special Service Area, pursuant to and in all respects in compliance with Section 7(6) of Article VII of the 1970 Constitution of the State of Illinois (the "Constitution"), the Special Service Area Tax Law, as amended, the Local Government Debt Reform Act, as amended, and in compliance with an ordinance (the "Bond Ordinance") providing for the issue of this series of Bonds duly passed by the City Council of said City, and approved by the Mayor of the City. Bonds of the issue of maturing on and after December 1, 2009, are subject to redemption prior to maturity at the option of the City as a whole, or in part in integral multiples of $5,000 in any order of their maturity as determined by the City (less than all the Bonds of a single maturity to be selected by lot by the Bond Registrar), on December 1, 2008, and on any date thereafter, at the redemption price of par, plus accrued interest to the redemption date. Notice of any such redemption shall be sent by registered or certified mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books of the City maintained by the Bond Registrar or at such other address as is furnished in writing by such registered owner to the Bond Registrar. When so called for redemption, this Bond will cease to bear interest on the specified redemption date, provided funds for redemption are on deposit at the place of payment at that time, and shall not be deemed to be outstanding. y This Bond may be transferred by the registered holder hereof in person or by his attorney duly authorized in writing at the principal corporate trust office of the Bond Registrar in Crystal Lake, Illinois, but only in the manner, subject to the limitations and upon payment of the charges provided in the Bond Ordinance, and upon surrender and cancellation of this Bond. Upon such transfer a new Bond or Bonds of authorized denominations of the same maturity and for the same aggregate principal amount will be issued to the transferee in exchange therefor. -16- The Bonds are issued in fully registered form in the denominations of $5,000 each or authorized integral multiples thereof. This Bond may be exchanged at the principal corporate trust office of the Bond Registrar in Crystal Lake, Illinois, for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations, upon the terms set forth in the Bond Ordinance. The Bond Registrar shall not be required to transfer or exchange any Bond during the period beginning on the 15th day of the month next preceding any interest payment date on such Bond and ending on such interest payment date nor to transfer or exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds. The City, the Bond Registrar, and the Paying Agent may deem and treat the registered holder hereof as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes and neither the City, the Bond Registrar, nor the Paying Agent shall be affected by any notice to the contrary. (ASSIGNMENT) FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto (Name and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature guaranteed: NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. -17- Section 9. Sale of Bonds. The Bonds hereby authorized shall be executed as in this Ordinance provided as soon after the passage hereof as may be, and thereupon be deposited with the Treasurer of the City, and be by said Treasurer delivered to Home State Bank/National Association, Crystal Lake, Illinois, the purchaser thereof (the "Purchaser"), upon receipt of the purchase price therefor, the same being $455,000, plus accrued interest to date of delivery; the contract for the sale of the Bonds heretofore entered into (the "Purchase Contract") is in all respects ratified, approved and confirmed, it being hereby found and determined that the Bonds have been sold at such price and bear interest at such rates that neither the true interest cost (yield) nor the net interest rate received upon such sale exceed the maximum rate otherwise authorized by Illinois law and that the Purchase Contract is in the best interests of the City and that no person holding any office of the City, either by election or appointment, is in any manner financially interested directly in his own name or indirectly in the name of any other person, association, trust or corporation, in the Purchase Contract. The use by the Purchaser of any Preliminary Official Statement and any final Official Statement relating to the Bonds and before the Board at the time of the adoption hereof is hereby ratified, approved and authorized; the execution and delivery of said final Official Statement is hereby authorized; and the officers of the Board are hereby authorized to take any action as may be required on the part of the City to consummate the transactions contemplated by the Purchase Contract, this Ordinance, said Preliminary Official Statement, said final Official Statement and the Bonds. Section 10. Tax Levy. For the purpose of providing the funds required to pay the interest on the Bonds as it falls due and to pay and discharge the principal thereof at maturity, there be and there shall be levied upon all the taxable property within the Area a direct annual tax for each of the years while the Bonds or any of them are outstanding in amounts sufficient for -18- that purpose, and that there be and there is levied upon all of the said taxable property in the Area in addition to all other taxes the following direct annual tax, to -wit (the "Pledged Taxes"): FOR THE YEAR A TAX SUFFICIENT TO PRODUCE THE SUM OF: 1999 $47,954.17 for interest and principal up to and including June 1, 2001 2000 $53,375.00 for interest and principal 2001 $51,725.00 for interest and principal 2002 $54,937.50 for interest and principal 2003 $53,012.50 for interest and principal 2004 $55,950.00 for interest and principal 2005 $53,750.00 for interest and principal 2006 $51,550.00 for interest and principal 2007 $54,212.50 for interest and principal 2008 $51,737.50 for interest and principal 2009 $54,125.00 for interest and principal 2010 $51,375.00 for interest and principal Whenever other funds from any lawful source are made available for the purpose of paying any principal of or interest on the Bonds so as to enable the abatement of the taxes levied herein for the payment of same, the Corporate Authorities shall, by proper proceedings, direct the deposit of such funds into the Bond Fund and further shall direct the abatement- of the Pledged Taxes by the amount so deposited. A certified copy or other notification of any such proceedings abating taxes may then be filed with the County Clerk in a timely manner to effect such abatement. The City covenants and agrees with the purchasers and the holders of the Bonds that so long as any of the Bonds remain outstanding, the City will take no action or fail to take any action which in any way would adversely affect the ability of the City to levy and collect the foregoing tax levy, and that the City and its officers will comply with all present and future applicable laws imposing any duty on the City and its officers in order to assure that the foregoing taxes will be levied, extended and collected as provided herein and deposited in the fund established to pay the principal of and interest on the Bonds. -19- Section 11. Filing of Ordinance. Forthwith as soon as this Ordinance becomes effective, the City Clerk of the City be and is hereby directed to file a copy of this Ordinance with the County Clerk, and it shall be the duty of the County Clerk in and for each of the years 1999 to 2010, inclusive, to ascertain the rate percent required to produce the aggregate tax hereinbefore levied, and extend the same for collection on the tax books against all of the taxable property within the Area in addition to other taxes levied in each of said years in the Area in order to raise the respective amounts levied aforesaid, and such tax shall be computed, extended and collected in the same manner as now or hereafter provided by law for the computation, extension and collection of taxes for general corporate purposes of the City, and when collected, the tax hereby levied shall be placed to the credit of a special fund to be designated and known as "City of McHenry Special Service Area Number One A, Bond and Interest Fund, Series 2000" (the "Bond Fund"), and the Bond Fund is hereby irrevocably pledged to and shall be used only for the purpose of paying the principal of and interest on the Bonds. A certified copy of this Ordinance shall also be filed with the Bond Registrar and the Paying Agent. Section 12. Creation of Funds and Appropriations. The funds derived from such levy in Section 10 be and the same are hereby appropriated and set aside for the sole and only purpose of paying principal'of and interest on the Bonds when and as the same become due, and the funds derived from the sale of the Bonds and other funds of the City as hereinafter noted be and they are hereby appropriated and set aside for paying a part of the cost of the Project, as follows: (a) Accrued interest received by the City upon the sale of the Bonds shall be remitted by the City Treasurer for deposit into the Bond Fund and be used to pay first interest coming due on the Bonds. -20- (b) The City shall then allocate from the Bond proceeds the sum necessary for expenses incurred in the issuance of the Bonds which shall be deposited into an "Expense Fund" to be maintained by the City Treasurer and disbursed for such issuance expenses from time to time in accordance with usual City procedures for the disbursement of funds, which disbursements are hereby expressly authorized. Monies not disbursed from the Expense Fund within 3 months shall be transferred by the City for deposit in the hereinafter described Project Fund. Any deficiencies in the Expense Fund shall be paid by disbursement from the Project Fund. (c) The balance of the principal proceeds derived from the sale of the Bonds shall be deposited in a separate fund hereby created and designated as the "City of McHenry Special Service Area Number One A Bonds, Series 2000, Project Fund" (the "Project Fund"), which the City shall maintain as a separate and segregated account held in trust for the benefit of the property owners, residents, taxpayers and voters of the Area and for the purchasers and holders from time to time of the Bonds. Money in the Project Fund shall be withdrawn from time to time as needed for the payment of the costs of the Project and paying the fees and expenses incidental thereto not paid out of the Expense Fund and said money shall be disbursed by the City from time to time only upon submission to the City Treasurer of the following: (i) If such disbursement is for payment to a supplier, materialman, or contractor for work done in connection with the Project, a certificate executed by the City engineer in charge of the construction of the Project stating the amount of materials supplied or the nature of the work completed, that such materials have been properly accepted or such work approved by him, the amount due and -21- payable thereon, and the amount remaining to be paid in connection with the Project; and (ii) A duplicate copy of the order signed by an officer of the City, stating specifically the purpose for which the order is issued and indicating that the payment for which the order is issued has been approved by the City. Within sixty days after full depletion of the Project Fund or payment of all costs of the Project, as herein referred to, and as heretofore approved by the Corporate Authorities, the City Treasurer shall certify to the Corporate Authorities the fact of such depletion or the City engineer in responsible charge of the Project shall certify to the Corporate Authorities the fact that the work has been completed according to approved plans and specifications and upon approval of such certification by the Corporate Authorities, funds (if any) remaining in the Project Fund shall be credited by the City Treasurer to the Bond Fund; and the Project Fund shall be closed. Funds on deposit in the Project Fund may be invested by the City Treasurer pursuant to any authorization granted to municipal corporations by Illinois statute or court decision. All investments earnings in the Project Fund shall first be reserved and transferred to such other account as and to the extent necessary to pay any "excess arbitrage profits" under the Code to maintain the Tax -Exempt status of the Bonds, and the remainder shall be retained in the Project Fund for costs of the Project. Section 13. Non -Arbitrage and Tax -Exemption. One purpose of this Section is to set forth various facts regarding the Bonds and to establish the expectations of the Corporate Authorities and the City as to future events regarding the Bonds and the use of Bond proceeds. The certifications, covenants and representations contained herein and at the time of the Closing are made on behalf of the City for the benefit of the owners from time to time of the Bonds. In addition to providing the certifications, covenants and representations contained herein, the City -22- hereby covenants that it will not take any action, omit to take any action or permit the taking or omission of any action within its control (including, without limitation, making or permitting any use of the proceeds of the Bonds) if taking, permitting or omitting to take such action would cause any of the Bonds to be an arbitrage bond or a private activity bond within the meaning of the Code or would otherwise cause the interest on the Bonds to be included in the gross income of the recipients thereof for federal income tax purposes. The City acknowledges that, in the event of an examination by the Internal Revenue Service of the exemption from Federal income taxation for interest paid on the Bonds, under present rules, the City is treated as the "taxpayer" in such examination and agrees that it will respond in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination. The Corporate Authorities and the City certify, covenant and represent as follows: 1.1. Definitions. In addition to such other words and terms used and defined in this Ordinance, the following words and terms used in this Section shall have the following meanings unless, in either case, the context or use clearly indicates another or different meaning is intended: "Bond Counsel" means Chapman and Cutler or any other nationally recognized firm of attorneys experienced in the field of municipal bonds whose opinions are generally accepted by purchasers of municipal bonds. "Capital Expenditures" means costs of a type that would be properly chargeable to a capital account under the Code (or would be so chargeable with a proper election) under federal income tax principles if the City were treated as a corporation subject to federal income taxation, taking into account the definition of Placed -in -Service set forth herein. "Closing" means the first date on which the City is receiving the purchase price for the Bonds. "Code" means the Internal Revenue Code of 1986. "Commingled Fund" means any fund or account containing both Gross Proceeds and an amount in excess of $25,000 that are not Gross Proceeds if the amounts in the fund or account are invested and accounted for, collectively, without regard to the source of funds deposited in the fund or account. An open-ended regulated investment company under Section 851 of the Code is not a commingled fund. -23- "Control" means the possession, directly or indirectly through others, of either of the following discretionary and non -ministerial rights or powers over another entity: (a) to approve and to remove without cause a controlling portion of the governing body of a Controlled Entity; or (b) to require the use of funds or assets of a Controlled Entity for any purpose. "Controlled Entity" means any entity or one of a group of entities that is subject to Control by a Controlling Entity or group of Controlling Entities. "Controlled Group" means a group of entities directly or indirectly subject to Control by the same entity or group of entities, including the entity that has the Control of the other entities. "Controlling Entity" means any entity or one of a group of entities directly or indirectly having Control of any entities or group of entities. "Costs of Issuance " means the costs of issuing the Bonds, including underwriters' discount and legal fees. "De minimis Amount of Original Issue Discount or Premium" means (a) any original issue discount or premium that does not exceed two percent of the stated redemption price at maturity of the Bonds plus (b) any original issue premium that is attributable exclusively to reasonable underwriter's compensation. "External Commingled Fund" means a Commingled Fund in which the City and all members of the same Controlled Group as the City own, in the aggregate, not more than ten percent of the beneficial interests. "GIC" means (a) any investment that has specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate and (b) any agreement to supply investments on two or more future dates (e.g., a forward supply contract). "Gross Proceeds" means amounts in the Bond Fund and the Project Fund. "Placed - in -Service" means the date on which, based on all facts and circumstances (a) a facility has reached a degree of completion that would permit its operation at substantially its design level and (b) the facility is, in fact, in operation at such level. "Qualified Administrative Costs of Investments" means (a) reasonable, direct administrative costs (other than carrying costs) such as separately stated brokerage or selling commissions (other than a broker's commission paid on behalf of either the City or the provider of a GIC to the extent such commission exceeds the present value of annual payments equal to 0.05 percent of the weighted average amount reasonably -24- expected to be invested each year of the term of the GIC; for this purpose, present value is computed using the taxable discount rate used to compute the commission or, if not readily ascertainable, a reasonable taxable discount rate), but not legal and accounting fees, recordkeeping, custody and similar costs; (b) all administrative costs, direct or indirect, incurred by a publicly offered regulated investment company or an External Commingled Fund; or (c) in the case of purpose investments, costs or expenses paid directly to purchase, carry, sell or retire the investment and costs of issuing, carrying, or repaying the Bonds, and any placement agent fee or underwriter's discount. "Qualified Tax Exempt Obligations" means (a) any obligation described in Section 103(a) of the Code, the interest on which is excludable from gross income of the owner thereof for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax imposed by Section 55 of the Code; (b) an interest in a regulated investment company to the extent that at least ninety-five percent of the income to the holder of the interest is interest which is excludable from gross income under Section 103 of the Code of any owner thereof for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax imposed by Section 55 of the Code; and (c) certificates of indebtedness issued by the United States Treasury pursuant to the Demand Deposit State and Local Government Series program described in 31 C.F.R. part 344. "Rebate Fund" means the fund, if any, identified and defined in paragraph 4.1 herein. "Rebate Provisions" means the rebate requirements contained in Section 148(f) of the Code and in the Regulations. "Regulations" means United States Treasury Regulations dealing with the tax- exempt bond provisions of the Code. "Reimbursed Expenditures" means amounts, if any, used from Sale Proceeds and investment earnings thereon to reimburse the City for an expenditure paid prior to Closing. "Sale Proceeds" means amounts actually or constructively received from the sale of the Bonds, including (a) amounts used to pay underwriters' discount or compensation and accrued interest, other than accrued interest for a period not greater than one year before Closing but only if it is to be paid within one year after Closing and (b) amounts derived from the sale of any right that is part of the terms of a Bond or is otherwise associated with a Bond (e.g., a redemption right). "Sale Proceeds Funds" means the funds containing amounts derived by the sale of the Bonds or investment earnings thereon. "Yield" means that discount rate which when used in computing the present value of all payments of principal and interest paid and to be paid on an obligation (using -25- semiannual compounding on the basis of a 360-day year) produces an amount equal to the obligation's purchase price (or in the case of the Bonds, the issue price as established in paragraph 5.1 hereof), including accrued interest. "Yield Reduction Payment" means a rebate payment or any other amount paid to the United States in the same manner as rebate amounts are required to be paid or at such other time or in such manner as the Internal Revenue Service may prescribe that will be treated as a reduction in Yield of an investment under the Regulations. 2.1. Purpose of the Bonds. The Bonds are being issued to finance the Project in a prudent manner consistent with the revenue needs of the City. A breakdown of the sources and uses of funds is set forth in the preceding Section of this Ordinance. At least 75% of the sum of (i) Sale Proceeds plus (ii) investment earnings thereon, less (iii) Costs of Issuance paid from Sale Proceeds or investment earnings thereon, less (iv) Sale Proceeds or investment earnings thereon deposited in a reasonably required reserve or replacement fund, are expected to be used for construction purposes with respect to property owned by a governmental unit or a Section 501(c)(3) organization. 2.2. The Project — Binding Commitment and Timing. The City has incurred or will, within six months of the Closing, incur a substantial binding obligation (not subject to contingencies within the control of the City or any member of the same Controlled Group as the City) to a third party to expend at least five percent of the Sale Proceeds on the Project. It is expected that the work of acquiring and constructing the Project and the expenditure of amounts deposited into the Project Fund will continue to proceed with due diligence through February 1, 2003, at which time it is anticipated that all Sale Proceeds and investment earnings thereon will have been spent. The investment earnings on the Project Fund will be spent to pay costs of the Project and interest on the Bonds not later than the date set forth in the preceding paragraph, the investment earnings on the Bond Fund will be spent to pay interest on the Bonds, or to the extent permitted by law, investment earnings on amounts in the Project Fund and the Bond Fund will be commingled with substantial revenues from the governmental operations of the City, and the earnings are reasonably expected to be spent for governmental purposes within six months of the date earned. No proceeds of the Bonds will be used more than 30 days after the date of issue of the Bonds for the purpose of paying any principal or interest on any issue of bonds, notes, certificates or warrants or on any installment contract or other obligation of the City or for the purpose of replacing any funds of the City used for such purpose. 2.3. Reimbursement. None of the Sale Proceeds or investment earnings thereon will be used for Reimbursed Expenditures paid before 60 days from the date hereof. -26- 2.4. Working Capital. All amounts in the Sale Proceeds Funds will be used, directly or indirectly, to finance Capital Expenditures other than the following: (a) an amount not to exceed five percent of the Sale Proceeds for working capital expenditures directly related to Capital Expenditures financed by the Bonds; (b) payments of interest on the Bonds for a period commencing at Closing and ending on the later of the date three years after Closing or one year after the date on which the Project is Placed -in -Service; (c) Costs of Issuance and Qualified Administrative Costs of Investments; (d) payments of rebate or Yield Reduction Payments made to the United States under the Regulations; and (e) principal of or interest on the Bonds paid from unexpected excess Sale Proceeds and investment earnings thereon. 2.5. Consequences of Contrary Expenditure. The City acknowledges that if amounts in the Sale Proceeds Funds and investment earnings thereon are spent for non - Capital Expenditures other than as permitted by paragraph 2.4 hereof, a like amount of then available funds of the City will be treated as unspent Sale Proceeds. 2.6. Investment of Bond Proceeds. Not more than 50% of the Sale Proceeds and investment earnings thereon are or will be invested in investments (other than Qualified Tax Exempt Obligations) having a Yield that is substantially guaranteed for four years or more. No portion of the Bonds is being issued solely for the purpose of investing a portion of Sale Proceeds or investment earnings thereon at a Yield higher than the Yield on the Bonds. 2.7. No Grants. None of the Sale Proceeds or investment earnings thereon will be used to make grants to any person. 2.8. Hedges. Neither the City nor any member of the same Controlled Group as the City has entered into or expects to enter into any hedge (e.g., an interest rate swap, interest rate cap, futures contract, forward contract or an option) with respect to the Bonds. The City acknowledges that any such hedge could affect the calculation of Bond Yield under the Regulations, and that the Internal Revenue Service could recalculate Bond Yield if the failure account for the hedge fails to clearly reflect the economic substance of the transaction. 3.1. Use of Proceeds. (a) The use of the Sale Proceeds and investment earnings thereon and the funds held under the Ordinance at the time of Closing are described in the preceding Section of this Ordinance. -27- (b) Only the funds and accounts described in said Section will be funded at Closing. There are no other funds or accounts created under this Ordinance. (c) Principal of and interest on the Bonds will be paid from the Bond Fund. (d) Any Costs of Issuance incurred in connection with the Bonds to be paid by the City will be paid from the Project Fund. (e) The costs of the Project will be paid from the Project Fund and no other moneys (except for investment earnings on amounts in the Project Fund) are expected to be deposited therein. 3.2. Purpose of Bond Fund. The Bond Fund will be used primarily to achieve a proper matching of revenues and earnings with principal and interest payments on the Bonds in each bond year. It is expected that the Bond Fund will be depleted at least once a year, except for a reasonable carry over amount not to exceed the greater of (a) the earnings on the investment of moneys in the Bond Fund for the immediately preceding bond year or (b) 1/12th of the principal and interest payments on the Bonds for the immediately preceding bond year. 3.3. No Other Gross Proceeds. (a) Except for the Bond Fund and the Project >i und, and except for investment earnings that have been commingled as described in paragraph 2.2 and any credit enhancement or liquidity device related to the Bonds, after the issuance of the Bonds, neither the City nor any member of the same Controlled Group as the City has or will have any property, including cash or securities that constitutes: (i) Sale Proceeds; (ii) amounts in any fund and account with respect to the Bonds (other than the Rebate Fund); (iii) amounts that have a sufficiently direct nexus to the Bonds or to the governmental purpose of the Bonds to conclude that the amounts would have been used for that governmental purpose if the Bonds were not used or to be used for that governmental purpose (the mere availability or preliminary earmarking of such amounts for a governmental purpose, however, does not itself establish such a sufficient nexus); y (iv) amounts in a debt service fund, redemption fund, reserve fund, replacement fund or any similar fund to the extent reasonably expected to be used directly or indirectly to pay principal of or interest on the Bonds or any amounts for which there is provided, directly or indirectly, a reasonable assurance that the amount will be available to pay principal of or interest on the Bonds or any obligations under any credit enhancement or liquidity device with respect to the Bonds, even if the City encounters financial difficulties; (v) any amounts held pursuant to any agreement (such as an agreement to maintain certain levels of types of assets) made for the benefit of the Bondholders or any credit enhancement provider, including any liquidity device or negative pledge (any amount pledged to pay principal of or interest on an issue held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of Bondholders or a guarantor of the bonds); or (vi) amounts actually or constructively received from the investment and reinvestment of the amounts described in (i) or (ii) above. (b) No compensating balance, liquidity account, negative pledge of property held for investment purposes or similar arrangement exists with respect to, in any way, the Bonds or any credit enhancement or liquidity device related to the Bonds. (c) The term of the Bonds is not longer than is reasonably necessary for the governmental purposes of the Bonds. The average reasonably expected economic life of the Project is at least 20 years. The weighted average maturity of the Bonds does not exceed 120 percent of the average reasonably expected economic life of the Project. 4.1. Rebate Fund. The City is hereby authorized to create and establish a special fund to be known as the Rebate Fund (the "Rebate Fund"), which, if created, shall be continuously held, invested, expended and accounted for in accordance with this Ordinance. Moneys in the Rebate Fund shall not be considered moneys held for the benefit of the Bondholders. Except as provided in the Regulations, moneys in the Rebate Fund (including earnings and deposits therein) shall be held in trust for payment to the United States as required by the Rebate Provisions and by the Regulations and as contemplated under the provisions of this Ordinance. 4.2. Compliance with Rebate Provisions. The City covenants to take such actions and make, or cause to be made, all calculations, transfers and payments that may be necessary to comply with the Rebate Provisions applicable to the Bonds. The City will make, or cause to be made, rebate payments with respect to the Bonds in accordance with law. 4.3. Records. The City agrees to keep and retain or cause to be kept and retained until six years after the Bonds are paid in full adequate records with respect to the investment of all Gross Proceeds and amounts in the Rebate Fund. Such records shall include: (a) purchase price; (b) purchase date; (c) type of investment; (d) accrued interest paid; (e) interest rate; (f) principal amount; (g) maturity date; (h) interest payment date; (i) date of liquidation; and 0) receipt upon liquidation. If any investment becomes Gross Proceeds on a date other than the date such investment is purchased, the records required to be kept shall include the fair market value of such investment on the date it becomes Gross Proceeds. If any investment is retained after the date the last Bond is retired, the records required to be kept shall include the fair market value of such investment on the date the last Bond is retired. K!2 Amounts or investments will be segregated whenever necessary to maintain these records. 4.4. Prohibited Payments; Certificates of Deposit and Investment Agreements. In making investments of Gross Proceeds, the City shall take into account prudent investment standards including the date on which moneys to be invested may be needed. The City shall provide that all amounts which constitute Gross Proceeds and any amounts in the Rebate Fund shall be invested at all times to the greatest extent practicable in investments permitted under this Ordinance, and no amounts may be held as cash or be invested in zero Yield investments other than obligations of the United States purchased directly from the United States; provided, however, that in the event moneys cannot be invested, other than as provided in this sentence, due to the denomination, price or availability of investments, such amounts shall be invested in an interest bearing deposit account of a bank with a Yield not less than that paid to the general, public or held uninvested (but uninvested amounts shall be held to the minimum amount necessary). For purposes of determining the purchase price of investments (for either yield restriction or rebate purposes), Gross Proceeds and any amounts in the Rebate Fund that are invested in certificates of deposit or in GICs shall be invested only in accordance with the following provisions: (a) Investments in certificates of deposit of banks or savings and loan associations that have a fixed interest rate, fixed payment schedules and substantial penalties for early withdrawal shall be made only if either (i) the Yield on the certificate of deposit (A) is not less than the Yield on reasonably comparable direct obligations of the United States and (B) is not less than the highest Yield that is published or posted by the provider to be currently available from the provider on reasonably comparable certificates of deposit offered to the public or (ii) the investment is an investment in a GIC and qualifies under paragraph (b) below. (b) Investments in GICs shall be made only if (i) the bid specifications are in writing, include all material terms of the bid and are timely forwarded to potential providers (a term is material if it may directly or indirectly affect the yield on the GIC); (ii) the terms of the bid specifications are commercially reasonable (a term is commercially reasonable if there is a legitimate business purpose for the term other than to reduce the yield on the GIC); (iii) all bidders for the GIC have equal opportunity to bid so that, for example, no bidder is given the opportunity to review others bids (a last look) before bidding; -30- (iv) any agent used to conduct the bidding for the GIC does not bid to provide the GIC; (v) at least three of the providers solicited for bids for the GIC are reasonably competitive providers of investments of the type purchased (i.e., providers that have established industry reputations as competitive providers of the type of investments being purchased); (vi) at least three of the entities that submit a bid do not have a financial interest in the Bonds; (vii) at least one of the entities that provided a bid is a reasonably competitive provider that does not have a financial interest in the Bonds; (viii) the bid specifications include a statement notifying potential providers that submission of a bid is a representation that the potential provider did not consult with any other provider about its bid, that the bid was determined without regard to any other formal or informal agreement that the potential provider has with the City or any other person (whether or not in connection with the Bonds) and that the bid is not being submitted solely as a courtesy to the City or any other person for purposes of satisfying the federal income tax requirements relating to the bidding for the GIC; (ix) the determination of the terms of the GIC takes into account the reasonably expected deposit and drawdown schedule for the amounts to be invested; (x) the highest -yielding GIC for which a qualifying bid is made (determined net of broker's fees) is in fact purchased; and (xi) the obligor on the GIC certifies the administrative costs that it is paying or expects to pay to third parties in connection with the GIC. (c) If a GIC is purchased, the City will retain the following records with its bond documents until three years after the Bonds are redeemed in their entirety: (i) a copy of the GIC; (ii) the receipt or other record of the amount actually paid for the GIC, including a record of any administrative costs paid, and the certification under paragraph (b)(xi) of this section; (iii) for each bid that is submitted, the name of the person and entity submitting the bid, the time and date of the bid, and the bid results; and -31- (iv) the bid solicitation form and, if the terms of the GIC deviated from the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation and stating the purpose for the deviation. Moneys to be rebated to the United States shall be invested to mature on or prior to the anticipated rebate payment date. All investments made with Gross Proceeds or amounts in the Rebate Fund shall be bought and sold at fair market value. The fair market value of an investment is the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction. Except for investments specifically described in this section and United States Treasury obligations that are purchased directly from the United States Treasury, only investments that are traded on an established securities market, within the meaning of regulations promulgated under Section 1273 of the Code, will be purchased with Gross Proceeds. In general, an "established securities market" includes: (i) property that is listed on a national securities exchange, an interdealer quotation system or certain foreign exchanges; (ii) property that is traded on a Commodities Futures Trading Commission designated board of trade or an interbank market; (iii) property that appears on a quotation medium; and (iv) property for which price quotations are readily available from dealers and brokers. A debt instrument is not treated as traded on an established market solely because it is convertible into property which is so traded. An investment of Gross Proceeds in an External Commingled Fund shall be made only to the extent that such investment is made without an intent to reduce the amount to be rebated to the United States Government or to create a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the rebate or Yield restriction requirements not been relevant to the City. An investment of Gross Proceeds shall be made in a Commingled Fund other than an External Commingled Fund only if the investments made by such Commingled Fund satisfy the provisions of this paragraph. The foregoing provisions of this paragraph 4.4 satisfy various safe harbors set forth in the Regulations relating to the valuation of certain types of investments. The safe harbor provisions of this paragraph 4.4 are contained herein for the protection of the City, who has covenanted not to take any action to adversely affect the tax-exempt status of the interest on the Bonds. The City will contact Bond Counsel if it does not wish to comply with the provisions of this paragraph 4.4 and forego the protection provided by the safe harbors provided herein. 4.5. Arbitrage Elections. The Mayor, City Clerk and Treasurer of the City Authorities are hereby authorized to execute one or more elections regarding certain matters with respect to arbitrage. 4.6. Small Issuer Exception. The City is a governmental unit that has the power to impose a tax or to cause another entity to impose a tax of general applicability that, when collected, may be used for the governmental purposes of the City. The power to -32- impose such tax is not contingent on approval by another governmental unit; a tax of general applicability is one that is not limited to a small number of persons. The City is not subject to Control by any other governmental unit or political subdivision. None of the Bonds is or will be a "private activity bond" (as defined in Section 141 of the Code). Ninety-five percent or more of the Sale Proceeds will be used for local governmental activities of the City. Neither the City, any entity that issues tax-exempt bonds on behalf of the City nor any entity subject to Control by the City will issue, during the calendar year 2000, any tax-exempt bonds in an aggregate face amount in excess of $5,000,000. As used herein, (a) "tax-exempt bonds" means obligations of any kind, the interest on which is excludable from gross income of the holders or owners thereof for federal income tax purposes pursuant to Section 103 of the Code but not including "private activity bonds" (as defined in Section 141 of the Code) and (b) "aggregate face amount" means, if an issue has more than a De minimis Amount of Original Issue Discount or Premium, the issue price of the issue and otherwise means the face amount of the issue. As of the date hereof, no tax-exempt bonds or other obligations (other than the Bonds) have been issued by the City, any entity that issues tax-exempt bonds on behalf of the City or any entity subject to Control by the City during the calendar year 2000. The City does not reasonably expect that it, any entity that issues tax-exempt bonds on behalf of the City or any entity subject to Control by the City (including but not limited to the City) will issue any such tax-exempt bonds or other obligations within calendar year 2000. Therefore, subject to compliance with all the terms and provisions hereof, the City is excepted from the required rebate of arbitrage profits on the Bonds under Section 148(f)(4)(D) of the Code and from the terms and provisions of this Ordinance that need only be complied with if the City is subject to the arbitrage rebate requirement. 5.1. Issue Price. For purposes of determining the Yield on the Bonds, the purchase price of the Bonds is equal to the first offering price at which the Purchaser sold at least ten percent of each maturity of the Bonds or is equal to par, plus accrued interest, if the Purchaser does not intend to resell the Bonds. 5.2. Yield Limits. (a) Except as provided in paragraph (b) or (c), all Gross Proceeds shall be invested at market prices and at a Yield (after taking into account any Yield Reduction Payments) not in excess of the Yield on the Bonds plus, for amounts in the Project Fund only, 1/8th of one percent. (b) The following may be invested without Yield restriction: Y (i) amounts invested in Qualified Tax Exempt Obligations (to the extent permitted by the Act and this Ordinance); (ii) amounts in the Rebate Fund; (iii) amounts on deposit in the Bond Fund (except for capitalized interest) that have not been on deposit under the Ordinance for more than 13 months, so long as the Bond Fund continues to qualify as a bona fide debt service fund as described in paragraph 3.2 hereof; X11 (iv) amounts on deposit in the Project Fund prior to the earlier of three years after Closing or the completion (or abandonment) of the Project; (v) amounts in the Bond Fund to be used to pay capitalized interest on the Bonds prior to the earlier of three years after Closing or the payment of all capitalized interest; (vi) all amounts other than Sale Proceeds for the first 30 days after they become Gross Proceeds; and (vii) all amounts derived from the investment of Sale Proceeds and investment earnings thereon for a period of one year from the date received. (c) An amount not to exceed the lesser of $100,000 or five percent of the Sale Proceeds may be invested without regard to Yield restriction. 5.3. Continuing Nature of Yield Limits. Except as provided in paragraph 7.6, once moneys are subject to the Yield limits of paragraph 5.2 hereof, such moneys remain Yield restricted until they cease to be Gross Proceeds. 5.4. Federal Guarantees. Except for investments meeting the requirements of paragraph 5.2(b) hereof, investments of Gross Proceeds shall not be made in (a) investments constituting obligations of or guaranteed, directly or indirectly, by the United States (except obligations of the United States Treasury, obligations guaranteed by the Federal Housing Administration, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, the Student Loan Marketing Association, any guarantee by the Bonneville Power Authority pursuant to the Northwest Power Act (16 U.S.C. 839d) as in effect on the date of enactment of the Tax Reform Act of 1984, or investments in obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank, as amended (e.g., Refcorp Strips)); or (b) federally insured deposits or accounts (as defined in Section 149(b)(4)(B) of the Code). No portion of the payment of principal or interest on the Bonds or any other credit enhancement or liquidity device relating to the foregoing is or will be guaranteed, directly or indirectly (in whole or in part), by the United States (or any agency or instrumentality thereof). No portion of the Gross Proceeds has been or will be used to make loans the payment of principal or interest with respect to which is or will be guaranteed (in whole or in part) by the United States (of any agency or instrumentality thereof). 6.1. Payment and Use Tests. (a) No more than five percent of the Sale Proceeds plus investment earnings thereon will be used, directly or indirectly, in whole or in part, in any activity carried on by any person other than a state or local governmental unit. (b) The payment of more than five percent of the principal of or the interest on the Bonds will not be, directly or indirectly (i) secured by any interest in (A) property used or to be used in any activity carried on by any person other than a state or local -34- governmental unit or (B) payments in respect of such property or (ii) on a present value basis, derived from payments (whether or not to the City or a member of the same Controlled Group as the City) in respect of property, or borrowed money, used or to be used in any activity carried on by any person other than a state or local governmental unit. (c) No more than the lesser of five percent of the Sale Proceeds and investment earnings thereon or $5,000,000 will be used, directly or indirectly, to make or finance loans to any persons. (d) No user of the Project other than a state or local governmental unit will use more than five percent of the Project, in the aggregate, on any basis other than the same basis as the general public; and no person other than a state or local governmental unit will be a user of more than five percent of the Project, in the aggregate, as a result of (i) ownership, (ii) actual or beneficial use pursuant to a lease or a management, service, incentive payment, research or output contract, or (iii) any other similar arrangement, agreement or understanding, whether written or oral. (e) The City has not and will not enter into any arrangement that conveys to any person, other than a state or local government unit, special legal entitlements to any portion of the Project that is available for use by the general public. No person, other than a state or local governmental unit, is receiving or will receive any special economic benefit from use of any portion of the Project that is not available for use by the general public. (f) No more than the lesser of five percent of the proceeds of the Bonds or $5,000,000 have been or will be used to provide professional sports facilities. For purposes of this paragraph, the term "professional sports facilities" (i) means real property or related improvements used for professional sports exhibitions, games or training, regardless of whether the admission of the public or press is allowed or paid and (ii) includes any use of a facility that generates a direct or indirect monetary benefit (other than reimbursement for out-of-pocket expenses) for a person who uses, such facilities for professional sport exhibitions, games or training. 62. U.S. Form 8038-G. The information contained in the Information Return for Tax -Exempt Governmental Obligations, Form 8038-G, is true and complete.. The City will file Form 8038-G (and all other required information repo"rting forms) in a timely manner. 7 1. Termination; Interest of City in Rebate Fund. The terms and provisions set forth in this Section shall terminate at the later of (a) 75 days after the Bonds have been fully paid and retired or (b) the date on which all amounts remaining on deposit in the Rebate Fund, if any, shall have been paid to or upon the order of the United States and any other payments required to satisfy the Rebate Provisions of the Code have been made to the United States. Notwithstanding the foregoing, the provisions of paragraph 4.3 -35- hereof shall not terminate until the sixth anniversary of the date the Bonds are fully paid and retired. 7.2. No Common Plan of Financing. Since a date that is 15 days prior to the date of sale of the Bonds by the City to the Purchaser, neither the City nor any member of the same Controlled Group as the City has sold or delivered any obligations other than the Bonds that are reasonably expected to be paid out of substantially the same source of funds as the Bonds. Neither the City nor any member of the same Controlled Group as the City will sell or deliver within 15 days after the date hereof any obligations other than the Bonds that are reasonably expected to be paid out of substantially the same source of funds as the Bonds. No obligation other than the Bonds were sold on the same date as the Bonds, are being issued on the date of the Closing and were or are being offered pursuant to a single offering document. 7.3. No Sale of the Project. (a) Other than as provided in the next sentence, neither the Project nor any portion thereof has been, is expected to be, or will be sold or otherwise disposed of, in whole or in part, prior to the earlier of (i) the last date of the reasonably expected economic life to the City of the property (determined on the date of issuance of the Bonds) or (ii) the last maturity date of the Bonds. The City may dispose of personal property in the ordinary course of an established government program prior to the earlier of (i) the last date of the reasonably expected economic life to the City of the property (determined on the date of issuance of the Bonds) or (ii) the last maturity of the Bonds, provided: (A) the weighted average maturity of the Bonds financing the personal property is not greater than 120 percent of the reasonably expected actual use of that property for governmental purposes; (B) the City reasonably expects on the issue date that the fair market value of that property on the date of disposition will be not greater than 25 percent of its cost; (C) the property is no longer suitable for its governmental purposes on the date of disposition; and (D) the City deposits amounts received from the disposition in a commingled fund with substantial tax or other governmental revenues and the City reasonably expects to spend the amounts on governmental programs within six months from the date of the commingling. (b) The City acknowledges that if Bond -financed property is sold or otherwise disposed of in a manner contrary to (a) above, such sale or disposition may constitute a "deliberate action" within the meaning of the Regulations that may require remedial actions to prevent the Bonds from becoming private activity bonds._ The City shall promptly contact Bond Counsel if a sale or other disposition of bond -financed property is considered by the City. 7.4. Bank Qualification. (a) The City hereby designates each of the Bonds as a "qualified tax-exempt obligation" for the purposes and within the meaning of Section 265(b)(3) of the Code. In support of such designation, the City hereby certifies that (i) none of the Bonds will be at anytime a "private activity bond" (as defined in Section 141 of the Code) other than a "qualified 501(c)(3) bond" (as defined in Section 145 of the Code), (ii) as of the date hereof, the City has not issued any tax- exempt obligations of any kind in calendar year 2000 other than the Bonds and the City -36- of McHenry, Illinois Health Facilities Revenue Bonds (NIMED Corporation Projects) Series 2000 (the "Series 2000 Bonds") nor have any tax-exempt obligations of any kind been issued on behalf of the City and (iii) not more than $10,000,000 of obligations of any kind (including the Bonds and the Series 2000 Bonds) issued by or on behalf of the City during calendar year 2000 will be designated for purposes of Section 265(b)(3) of the Code. (b) The City is not subject to Control by any entity, and there are no entities subject to Control by the City. (c) On the date hereof, the City does not reasonably anticipate that for calendar year 1999 it will issue any Section 265 Tax -Exempt Obligations (other than the Bonds and the Series 2000 Bonds), or that any Section 265 Tax -Exempt Obligations will be issued on behalf of it. "Section 265 Tax -Exempt Obligations" are obligations the interest on which is excludable from gross income of the owners thereof under Section 103 of the Code, except for private activity bonds other than qualified 50 1 (c)(3) bonds, both as defined in Section 141 of the Code. The City will not issue or permit the issuance on behalf of it or by any entity subject to Control by the City (which may hereafter come into existence) of Section 265 Tax -Exempt Obligations (including the Bonds and the Series 2000 Bonds) that exceed the aggregate amount of $10,000,000 during calendar year 2000 unless it first obtains an opinion of Bond Counsel to the effect that such issuance will not adversely affect the treatment of the Bonds as "qualified tax-exempt obligations" for the purposes and within the meaning of Section 265(b)(3) of the Code. 7.5. Future Events. The City acknowledges that any changes in facts or expectations from those set forth herein may result in different Yield restrictions or rebate requirements from those set forth herein. Such changes in facts or expectations might include, but are not in any respect whatsoever limited to, moneys or investments being pledged or otherwise set aside for payment of principal of or interest on the Bonds, amounts being derived from the sale of any right that is part of the terms of a Bond or is otherwise associated with a Bond (e.g., a redemption right) or the City entering into any agreement to maintain certain levels of types of assets for the benefit of a holder of a bond or any credit enhancement with respect to the Bonds. The City shall promptly contact Bond Counsel if such changes do occur. Z6. Permitted Changes; Opinion of Bond Counsel. The Yield restrictions contained in paragraph 5.2 or any other restriction or covenant containeB herein need not be observed or may be changed if the City receives an opinion of Bond Counsel to the effect that such nonobservance or change will not result in the loss of any exemption for the purpose of federal income taxation to which interest on the Bonds is otherwise entitled. 7.7. Successors and Assigns. The terms, provisions, covenants and conditions of this Section shall bind and inure to the benefit of the respective successors and assigns of the Corporate Authorities and the City. -37- 7.8. Expectations. The Corporate Authorities have reviewed the facts, estimates and circumstances in existence on the date of issuance of the Bonds. Such facts, estimates and circumstances, together with the expectations of the City as to future events, are set forth in summary form in this Section. Such facts and estimates are true and are not incomplete in any material respect. On the basis of the facts and estimates contained herein, the City has adopted the expectations contained herein. On the basis of such facts, estimates, circumstances and expectations, it is not expected that the Sale Proceeds or any other moneys or property will be used in a manner that will cause the Bonds to be arbitrage bonds within the meaning of the Rebate Provisions and the Regulations. Such expectations are reasonable and there are no other facts, estimates and circumstances that would materially change such expectations. The City also agrees and covenants with the purchasers and holders of the Bonds from time to time outstanding that, to the extent possible under Illinois law, it Will comply with whatever federal tax law is adopted in the future which applies to the Bonds and affects the tax. - exempt status of the Bonds. The Corporate Authorities hereby authorize the officials of the City responsible for issuing the Bonds, the same being the Mayor, City Clerk and Treasurer, to make such further covenants and certifications as may be necessary to assure that the use thereof will not cause the Bonds to be arbitrage bonds and to assure that the interest in the Bonds will be exempt from federal income taxation. In connection therewith, the City and the Corporate Authorities further agree: (a) through their officers, to make such further specific covenants, representations as shall be truthful, and assurances as may be necessary or advisable; (b) to consult with counsel approving the Bonds and to comply with such advice as may be given; (c) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the Bonds; (d) to file such forms, statements, and supporti"ing documents as may be required and in a timely manner; and (e) if deemed necessary or advisable by their officers, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the City in such compliance. Section 14. Registered Form. The City recognizes that Section 149(a) of the Code requires the Bonds to be issued and to remain in fully registered form in order that interest 19 n. thereon is exempt from federal income taxation under laws in force at the time the Bonds are delivered. In this connection, the City agrees that it will not take any action to permit the Bonds to be issued in, or converted into, bearer or coupon form. Section 15. List of Bondholders. The Bond Registrar shall maintain a list of the names and addresses of the holders of all Bonds and upon any transfer shall add the name and address of the new Bondholder and eliminate the name and address of the transferor Bondholder. Section 16. Duties of Bond Registrar. If requested by the Bond Registrar, the Mayor and City Clerk are authorized to execute the Bond Registrar's standard form of agreement between the City and the Bond Registrar with respect to the obligations and duties of the Bond Registrar hereunder which may include the following: (a) to act as bond registrar, authenticating agent, paying agent and transfer agent as provided herein; (b) to maintain a list of Bondholders as set forth herein and to furnish such list to the City upon request, but otherwise to keep such list confidential; (c) to give notice of redemption of Bonds as provided herein; (d) to cancel and/or destroy Bonds which have been paid at maturity of' upon earlier redemption or submitted for exchange or transfer; (e) to furnish the City at least annually a certificate with respect to Bonds cancelled and/or destroyed; and (f) to furnish the City at least annually an audit confirmation of Bonds paid, Bonds outstanding and payments made with respect to interest on the Bonds. Section 17. Severability. If any section, paragraph, clause or provision of this Ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Ordinance. -39- Section 18. Repealer and Effective Date. All ordinances, resolutions and orders, or parts thereof, in conflict herewith, shall be and the same are hereby repealed, and this Ordinance shall immediately be in full force and effect upon its adoption and approval. Adopted February 16, 2000. AYES: 0-0 L/- a (L 6 LA iL Q.1-A f-r- 9.4f V W1 q 0 6, 4VOc Ye i3 A I P- NAYS: WA -le - ABSENT: ILO AJ kF—, Approved February 16, 2000. Recorded in the City Records on February 16, 2000. Attest: Citftlerk 1Y [SEAL] Al�2, Mayor -40-