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HomeMy WebLinkAboutOrdinances - ORD-10-1496 - 02/01/2010 - ISSUE SERIES 2010A BONDS $2.030 MILLIONORDINANCE NUMBER ORD-10-1496 AN ORDINANCE providing for the issuance of $2,030,000 General Obligation Refunding Bonds, Series 2010A, of the City of McHenry, McHenry County, Illinois, and providing for the levy and collection of a direct annual tax for the payment of the principal of and interest on said bonds. Adopted by the City Council of the City of McHenry, McHenry County, Illinois, on the 1 st day of February, 2010. SECTION TABLE OF CONTENTS HEADING PAGE SECTION 1. DEFINITIONS..............................................................................................................2 SECTION 2. INCORPORATION OF PREAMBLES...............................................................................4 SECTION 3. DETERMINATION TO ISSUE BONDS...........................................................................4 SECTION4. BOND DETAILS............................................................................................................4 SECTION 5. GLOBAL BOOK -ENTRY SYSTEM................................................................................5 SECTION 6. EXECUTION; AUTHENTICATION................................................................................8 SECTION 7. REGISTRATION AND EXCHANGE OR TRANSFER OF BONDS; PERSONS TREATEDAS OWNERS..................................................................................8 SECTION8. FORM OF BOND........................................................................................................10 SECTION 9. SECURITY FOR THE BONDS......................................................................................16 SECTION10. TAX LEVY..............................................................................................................16 SECTION 11. FILING WITH COUNTY CLERK...............................................................................17 SECTION12. SALE OF BONDS.....................................................................................................17 SECTION 13. CREATION OF FUNDS AND APPROPRIATIONS........................................................18 SECTION 14. GENERAL ARBITRAGE COVENANTS......................................................................20 SECTION 15. REGISTERED FORM................................................................................................21 SECTION 16. BANK QUALIFICATION...........................................................................................21 SECTION 17. RIGHTS AND DUTIES OF BOND REGISTRAR AND PAYING AGENT ........................21 -I- SECTION l 8. TAXES PREVIOUSLY LEVIED..................................................................................22 SECTION19. DEFEASANCE..........................................................................................................22 SECTION 20. CONTINUING DISCLOSURE UNDERTAKING...........................................................23 SECTION 21. CALL OF REFUNDED BONDS..................................................................................23 SECTION 22. MUNICIPAL BOND INSURANCE..............................................................................24 SECTION23. SEVERABILITY........................................................................................................24 SECTION 24. SUPERSEDER AND EFFECTIVE DATE......................................................................25 This Table of Contents is for convenience only and is not a part of the Ordinance. ORDINANCE NUMBER ORD-10-1496 AN ORDINANCE providing for the issuance of $2,030,000 General Obligation Refunding Bonds, Series 2010A, of the City of McHenry, McHenry County, Illinois, and providing for the levy and collection of a direct annual tax for the payment of the principal of and interest on said bonds. WHEREAS by virtue of its population and pursuant to the provisions of Section 6 of Article VII of the Constitution of the State of Illinois, the City of McHenry, McHenry County, Illinois (the "City"), is a home rule unit and may exercise any power or perform any function pertaining to its government and affairs including, but not limited to, the power to tax and to incur debt; and WHEREAS pursuant to the provisions of said Section 6, the City has the power to incur debt payable from ad valorem property tax receipts or from any other lawful source and maturing within 40 years from the time it is incurred without prior referendum approval; and WHEREAS the City has heretofore issued the following outstanding and validly subsisting and unpaid general obligations: GENERAL OBLIGATION BONDS (ALTERNATE REVENUE SOURCE), SERIES 2002 Original Principal Amount: $3,900,000. Dated May 1, 2002. Originally Due May 1, 2003-2016. Amount proposed to be refunded: $2,000,000. Refunded Bonds Due May 1 as follows: YEAR AMOUNT ($) RATE (%) 2011 300,000 4.10 2012 300,000 4.15 2013 325,000 4.25 2014 350,000 4.40 2015 350,000 4.50 2016 375,000 4.55 which bonds (the "Refunded Bonds ") shall be called for redemption on their earliest possible call date, at the redemption price of par plus accrued interest; and WHEREAS pursuant to the hereinafter defined Act, the City is authorized to issue general obligation bonds to accomplish the refunding (the "Refunding") of the Refunded Bonds and it is deemed necessary and desirable to provide for the issuance of $2,030,000 principal amount general obligation bonds for such purpose and for the purpose of realizing net debt service savings from the Refunding; and WHEREAS the City Council of the City (the "Council") does hereby determine that it is advisable and in the best interests of the City to borrow $2,030,000 at this time pursuant to the Act for the purpose of paying the costs of the Refunding and, in evidence of such borrowing, issue its full faith and credit bonds in the principal amount of $2,030,000; Now THEREFORE Be It Ordained by the City Council of the City of McHenry, McHenry County, Illinois, in the exercise of its home rule powers, as follows: Section 1. Definitions. In addition to such other words and terms used and defined in this Ordinance, the following words and terms used in this Ordinance shall have the following meanings, unless, in either case, the context or use clearly indicates another or different meaning is intended: "Act" means, collectively, the Illinois Municipal Code, as supplemented and amended, the home rule powers of the City under Section 6 of Article VII of the Illinois Constitution of -2- 1970; and, in the event of conflict between the provisions of said code and home rule powers, the home rule powers shall be deemed to supersede the provisions of said code. "Bond" or "Bonds" means one or more, as applicable, of the $2,030,000 General Obligation Refunding Bonds, Series 2010A, authorized to be issued by this Ordinance. "Bond Fund" means the Bond Fund established and defined in Section 13 of 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 The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois, a bank having trust powers, 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. "Council" means the City Council of the City. "County Clerk" means the County Clerk of The County of McHenry, Illinois. "Ordinance " means this Ordinance, numbered as set forth on the title page hereof, and passed by the Council on the 1 st day of February, 2010. "Paying Agent" means The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois, a bank having trust powers, or a successor thereto or a successor designated as Paying Agent hereunder. "Pledged Taxes " means the taxes levied on the taxable property within the City to pay principal of and interest on the Bonds as made in Section 10 hereof. "Purchaser" means UMB Bank, N.A., Kansas City, Missouri. -3- "Refunded Bonds " mean the bonds of the City described and defined as such in the preambles to this Ordinance. "Refunding" means the refunding of the Refunded Bonds from proceeds of the Bonds and such other lawfully available funds of the City as necessary. "Tax-exempt" means, with respect to the Bonds, the status of interest paid and received thereon as excludable from 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. Section 2. Incorporation of Preambles. The Council hereby finds that all of the recitals contained in the preambles to this Ordinance are true, correct and complete and does incorporate them into this Ordinance by this reference. Section 3. Determination to Issue Bonds. It is necessary and in the best interests of the City to provide for the Refunding to pay all related costs and expenses incidental thereto, and to borrow money and issue the Bonds for such purposes. It is hereby found and determined that such borrowing of money is necessary for the welfare of the government and affairs of the City, is for a proper public purpose or purposes and is in the public interest, and is authorized pursuant to the Act; and these findings and determinations shall be deemed conclusive. Section 4. Bond Details. For the purpose of providing for such costs, there shall be issued and sold the Bonds in the principal amount of $2,030,000. The Bonds shall each be designated "General Obligation Refunding Bond, Series 2010A "; shall be dated the date of issuance thereof (the "Dated Date"), and shall also bear the date of authentication thereof. The Bonds shall be in fully registered form, shall be in denominations of $5,000 each or authorized integral multiples thereof (but no single Bond shall represent installments of principal maturing -4- on more than one date), and shall be numbered 1 and upward. The Bonds shall become due and payable serially (without option of prior redemption) on May 1 of each of the years and in the amounts and bearing interest at the rates per annum as follows: YEAR AMOUNT RATE 2011 $225,000 1.00% 2012 335,000 1.10% 2013 355,000 l .40% 2014 370,000 l .75% 2015 365,000 2.10% 2016 380,000 2.40% Each Bond shall bear interest from the later of its Dated Date as herein provided or from the most recent interest payment date to which interest has been paid or duly provided for, until the principal amount of such Bond is paid or duly provided for, such interest (computed upon the basis of a 360-day year of twelve 30-day months) being payable on May 1 and November 1 of each year, commencing on November 1, 2010. Interest on each Bond shall be paid by check or draft of the Paying Agent, payable upon presentation thereof 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 applicable Record Date (the "Record Date"), and mailed to the registered owner of the Bond as shown in the Bond Registrar or at such other address furnished in writing by such Registered Owner. The Record Date shall be the 15th day of the month next preceding any payment date. The principal due on the Bonds shall be payable in lawful money of the United States of America upon presentation thereof at the principal corporate trust office of the Paying Agent in the City of Chicago, Illinois, or at successor Paying Agent and locality. Section 5. 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 -5- 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, City Treasurer and City Clerk of the City 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 Kel 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 an,y Bond. Upon delivery by DTC to the Bond Registrar of written 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 7 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 -7- 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. Execution; Authentication. The Bonds shall be executed on behalf of the City by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its City Clerk, as they may determine, and shall have impressed or imprinted thereon the corporate seal or facsimile thereof of the City. In case any such 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 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 it 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. Section 7. Registration and Exchange or Transfer of Bonds; Persons Treated as Owners. The City shall cause books (the "Bond Register") 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 in the City of Chicago, Illinois, which is hereby constituted and appointed the registrar of the City for the Bonds. The City is authorized to prepare, and the Bond Registrar or such other agent as the City may designate shall keep custody of, multiple Bond blanks executed by the City for use in the transfer and exchange of Bonds. Any Bond may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in this Ordinance. Upon surrender for transfer or exchange 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 or exchange in form satisfactory to the Bond Registrar and duly executed by the registered owner or an attorney for such owner 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 or, in the case of an exchange, the registered owner, a new fully registered Bond or Bonds of like tenor, of the same maturity, bearing the same interest rate, of authorized denominations, for a like aggregate principal amount. The Bond Registrar shall not be required to transfer or exchange any Bond during the period from the close of business on the Record Date for an interest payment to the opening of business on such interest payment date. 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, that the principal amount of Bonds of each maturity authenticated by the Bond Registrar shall not at any one time exceed the authorized principal amount: of Bonds for such maturity less the amount of such Bonds which have been paid. 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 W 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. Section 8. Form of Bond. The Bonds shall be in substantially the form hereinafter set forth; provided, however, that if the text of the Bonds is to be printed in its entirety on the front side of the Bonds, then the second paragraph on the front side and the legend "See Reverse Side for Additional Provisions" shall be omitted and the text of paragraphs set forth for the reverse side shall be inserted immediately after the first paragraph. -10- [FORM OF BOND - FRONT SIDE] REGISTERED REGISTERED No. $ UNITED STATES OF AMERICA STATE OF ILLINOIS THE COUNTY OF MCHENRY CITY OF MCHENRY GENERAL OBLIGATION REFUNDING BOND, SERIES 2010A See Reverse Side for Additional Provisions. Interest Maturity Rate: Date: May 1, 20_ Registered Owner: CEDE & CO. Principal Amount: Dated Date: February 18, 2010 CUSIP: 581170 Dollars KNOW ALL PERSONS BY THESE PRESENTS that the City of McHenry, McHenry County, Illinois, a municipality, home rule unit, and political subdivision of the State of 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, on the Maturity Date identified above (without option of prior redemption), 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 later of the Dated Date of this Bond identified above or from the most recent interest payment date to which interest has been paid or duly provided for, at the Interest Rate per annum identified above, such interest to be payable on May 1 and November 1 of each year, commencing November 1, 2010, until said Principal Amount is paid or duly provided for. The principal of this Bond is payable in lawful money of the United States of America upon presentation hereof at the principal corporate trust office of The Bank of New York Mellon Trust Company, National Association, in the City of Chicago, Illinois, as paying agent (the "Paying Agent"). Payment of interest shall be made to the Registered Owner hereof -11- as shown on the registration books of the City maintained by The Bank of New York Mellon Trust Company, National Association, in the City of Chicago, Illinois, as bond registrar (the "Bond Registrar "), at the close of business on the applicable Record Date (the "Record Date "). The Record Date shall be the 15th day of the month next preceding any payment date. Interest 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, or as otherwise agreed by the City and Cede & Co., as nominee, or successor, for so long as this Bond is held by The Depository Trust Company, New York, New York, the depository, or nominee, in book -entry only form as provided for same. 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 the Constitution and Laws of the State of Illinois to exist or to be done precedent to and in the issuance of this Bond, including the authorizing Act, have existed and have been properly done, happened and been performed in regular and due form and time as required by law; that the indebtedness of the City, represented by the Bonds, and including all other indebtedness of the City, howsoever evidenced or incurred, does not exceed any constitutional or statutory or other lawful limitation:; and that provision has been made for the collection of a direct annual tax, in addition to all other taxes, on all of the taxable property in the City sufficient to pay the interest hereon as the same falls due and also to pay and discharge the principal hereof at maturity. 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. -12- IN WITNESS WHEREOF the City of McHenry, McHenry County, Illinois, by its City Council, has caused this Bond to be executed by the manual or duly authorized facsimile signature of its Mayor and attested by the manual or duly authorized facsimile signature of its City Clerk and its corporate seal or a facsimile thereof to be impressed or reproduced hereon, all as appearing hereon and as of the Dated Date identified above. ATTEST: City Clerk, City of McHenry McHenry County, Illinois [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 General Obligation Refunding Bonds, Series 2010A, having a Dated Date of February 18, 201.0, of the City of McHenry, McHenry County, Illinois. Mayor, City of McHenry McHenry County, Illinois Bond Registrar and Paying Agent: The Bank of New York Mellon Trust Company, National Association Chicago, Illinois THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, as Bond Registrar Authorized Officer -13- [FORM OF BOND - REVERSE SIDE] This bond is one of a series of bonds (the "Bonds") in the aggregate principal amount of $2,030,000 issued by the City for the purpose of paying the costs of refunding certain outstanding bonds of the City, and of paying expenses incidental thereto, all as described and defined in the ordinance authorizing the Bonds (the "Ordinance "), pursuant to and in all respects in compliance with the applicable provisions of the Illinois Municipal Code, as supplemented and amended, and as further supplemented and, where necessary, superseded, by the powers of the City as a home rule unit under the provisions of Section 6 of Article VII of the Illinois Constitution of 1970 (such code and powers being the "Act"), and with the Ordinance, which has been duly passed by the City Council of the City and approved by the Mayor, in all respects as by law required. Subject to the provisions relating to this Bond remaining in book -entry only form, this Bond may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Ordinance. Upon surrender for transfer or exchange of this Bond at the principal corporate trust office of the Bond Registrar in the City of Chicago, Illinois, duly endorsed by or accompanied by a written instrument or instruments of transfer or exchange in form satisfactory to the Bond Registrar and duly executed by the Registered Owner or an attorney for such owner 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 or, in the case of an exchange, the Registered Owner, a new fully registered Bond or Bonds of like tenor, of the same maturity, bearing the same interest rate, of authorized denominations, fir a like aggregate principal amount. The Bond Registrar shall not be required to transfer or exchange any Bond during the period from the close of business on the Record Date for an interest payment to the opening of business on such interest payment date. -14- The City, the Bond Registrar and the Paying Agent may deem and treat the Registered Owner 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 the City, the Bond Registrar and the Paying Agent shall not 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 as 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 transfer and 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. -15- Section 9. Security for the Bonds. The Bonds are a general obligation of the City, for which the full faith and credit of the City are hereby irrevocably pledged, and are payable from the levy of taxes on all of the taxable property in the City, without limitation as to rate or amount. Section 10. Tax Levy. For the purpose of providing funds required to pay the interest on the Bonds promptly when and as the same falls due, and to pay and discharge the principal thereof at maturity, there is hereby levied upon all of the taxable property within the City, in the years for which any of the Bonds are outstanding, a direct annual tax sufficient for that purpose; and there is hereby levied on all of the taxable property in the City, in addition to all other taxes, the direct annual taxes for the years and in the amounts as follows (the "Pledged Taxes " ): FOR THE YEAR A TAX SUFFICIENT TO PRODUCE THE DOLLAR SUM OF: 2009 $266,092.90 for interest and principal up to and including May 1, 2011 2010 $366,915.00 for interest and principal 2011 $383,230.00 for interest and principal 2012 $393,260.00 for interest and principal 2013 $381,785.00 for interest and principal 2014 $389,120.00 for interest and principal The Pledged Taxes and other moneys (excepting proceeds of the Bonds) on deposit in the Bond Fund shall be applied to pay principal of and interest on the Bonds. Interest or principal coming due at any time when there are insufficient funds on hand from the Pledged Taxes to pay the same shall be paid promptly when due from current funds on hand in advance of the collection of the Pledged Taxes herein levied; and when the Pledged Taxes shall have been collected, reimbursement shall be made to said funds in the amount so advanced. The City covenants and agrees with the purchasers and registered owners 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. The City and its officers will comply with all present and future -16- applicable laws in order to assure that the Pledged Taxes may be levied, extended and collected as provided herein and deposited into the Bond Fund. 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 Council shall, by proper proceedings, direct the deposit of such funds into the; Bond Fund and further shall direct the abatement of the taxes by the amount so deposited. A certified copy or other notification of any such proceedings abating taxes may then be fled with the County Clerk in a timely manner to effect such abatement. Section 11. Filing with County Clerk. Promptly, as soon as this Ordinance becomes effective, a copy hereof, certified by the City Clerk of the City, shall be filed with the County Clerk; and the County Clerk shall in and for each of the years 2009 to 2014, inclusive, ascertain the rate percent required to produce the aggregate tax herein provided to be levied in each of said years; and the County Clerk shall (to the extent said tax has not been abated as provided above) extend the same for collection on the tax books in connection with other taxes levied in said years in and by the City for general corporate purposes of the City; and in said years such annual tax shall be levied and collected by and for and on behalf of the City in like manner as taxes for general corporate purposes for said years are levied and collected, and in addition to and in excess of all other taxes. Section 12. 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 the Purchaser, upon receipt of the purchase price therefor, the same being $2,022,137.61, plus accrued interest, if any, 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 -17- 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 (the "Official Statement") is hereby ratified, approved and authorized; the execution and delivery of the 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, the Official Statement and the Bonds. Section 13. Creation of Funds and Appropriations. A. There is hereby created the "General Obligation Refunding Bonds, Series 2010A, Bond Fund" (the "Bond Fund"), which shall be the fund for the payment of principal of and interest on the Bonds. Accrued interest and premium, if any, received upon delivery of the Bonds shall be deposited into the Bond Fund and be applied to pay first interest coming due on the Bonds. B. The Pledged Taxes shall either be deposited into the Bond Fund and used solely and only for paying the principal of and interest on the Bonds or be used to reimburse a fund or account from which advances to the Bond Fund may have been made to pay principal of or interest on the Bonds prior to receipt of Pledged Taxes. Interest income or investment profit earned in the Bond Fund shall be retained in the Bond Fund for payment of the principal of or interest on the Bonds on the interest payment date next after such interest or profit is received or, to the extent lawful and as determined by the Council, transferred to such other fund as may be determined. The City hereby pledges, as equal and ratable security for the Bonds, all present and future proceeds of the Pledged Taxes for the sole benefit of the registered owners of the Bonds, subject to the reserved right of the Council to transfer certain interest income or investment profit earned in the Bond Fund to other funds of the City, as described in the preceding sentence. C. The sum of principal proceeds of the Bonds as is necessary, together with such money in the debt service funds for the Refunded Bonds as may be advisable for the purpose, shall be used to provide for the Refunding, and the payment of such expenses as may be designated; said amount shall be deposited in escrow pursuant to an Escrow Letter Agreement to be entered into between the City and The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois, as escrow agent (the "Escrow Agent"), in substantially the form attached hereto as Exhibit A (the "Escrow Agreement ") and made a part hereof by this reference, or with such changes therein as shall be approved by the officers of the City executing the Escrow Agreement, such execution to constitute evidence of the approval of such changes, for the purpose of paying the principal of and interest on the Refunded Bonds upon redemption thereof. The Board approves the form, terms and provisions of the Escrow Agreement and directs the Mayor and City Clerk to execute, attest, seal and deliver the Escrow Agreement in the name and on behalf of the City. Amounts in the escrow may be used to purchase U.S. Treasury Securities —State and Local Government Series (the "Government Securities ") to provide for the payment of the principal and interest on the Refunded Bonds upon redemption thereof. The Escrow Agent is hereby authorized to act as agent for the City in the purchase of the Government Securities, if any. At the time of the issuance of the Bonds, the costs of issuance of the Bonds may be paid by the Purchaser on behalf of the City from the proceeds of the Bonds. -19- Section 14. General Arbitrage Covenants. The City 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 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 Council hereby authorizes the officials of the City responsible for issuing the Bonds, the same being the Mayor, City Clerk and City Treasurer of the City, 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 on the Bonds will be Tax-exempt. In connection therewith, the City and the Council 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 -20- forms, statements, and supporting 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 15. 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 to be and remain Tax-exempt. 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 16. Bank Qualification. The City further recognizes the provisions of Section 265(b)(3) of the Code which provide that a "qualified tax-exempt obligation" as therein defined may be treated by certain financial institutions as if it were acquired on August 7, 1986, as amended, for certain purposes. The City hereby deemed 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. Section 17. Rights and Duties of Bond Registrar and Paying Agent. If requested by the Bond Registrar or the Paying Agent, or both, any officer of the City is authorized to execute standard forms of agreements between the City and the Bond Registrar or Paying Agent with respect to the obligations and duties of the Bond Registrar or Paying Agent hereunder. In addition to the terms of such agreements and subject to modification thereby, the Bond Registrar and Paying Agent by acceptance of duties hereunder agree: (a) to act as bond registrar, paying agent, authenticating agent, and transfer agent as provided herein; (b) as to the Bond Registrar, to maintain a list of Bondholders as set forth herein and to fijrnish such list to the City upon request, but otherwise to keep such list confidential to the extent permitted by law; -21- (c) as to the Bond Registrar, to cancel and/or destroy Bonds which have been paid at maturity or submitted for exchange or transfer; (d) as to the Bond Registrar, to furnish the City at least annually a certificate with respect to Bonds cancelled and/or destroyed; and (e) 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. The City Clerk of the City is hereby directed to file a certified copy of this Ordinance with the Bond Registrar and the Paying Agent. Section 18. Taxes Previously Levied. The taxes previously levied to pay principal of and interest on the Refunded Bonds, to the extent such principal and interest is provided for from the proceeds of the Bonds or cash on hand and lawfully available, shall be abated. The filing of a certificate of abatement with the County Clerk shall constitute authority and direction for the County Clerk to make such abatement. Section 19. Defeasance. Any Bond or Bonds which (a) are paid and cancelled, (b) which have matured and for which sufficient sums been deposited with the Paying Agent to pay all principal and interest due thereon, or (c) for which sufficient Defeasance Obligations have been deposited with the Paying Agent or similar institution having trust powers to pay, taking into account investment earnings on such obligations, all principal of and interest on such Bond or Bonds when due at maturity or as called for redemption, pursuant to an irrevocable escrow or trust agreement, shall cease to have any lien on or right to receive or be paid from the Pledged Taxes hereunder and shall no longer have the benefits of any covenant for the registered owners of outstanding Bonds as set forth herein as such relates to lien and security of the outstanding Bonds. All covenants relative to the federal Tax -Exempt status of the interest on Bonds; and -22- payment, registration, transfer, and exchange; are expressly continued for all Bonds whether outstanding Bonds or not. For purposes of this Section, "Defeasance Obligations " means (a) direct and general full faith and credit obligations of the United States Treasury ( "Directs "), (ii) certificates of participation or trust receipts comprised wholly of Directs or (c) other obligations unconditionally guaranteed as to timely payment by the United States Treasury. Section 20. Continuing Disclosure Undertaking. The Mayor or City Treasurer of the City is hereby authorized, empowered and directed to execute and deliver the Continuing Disclosure Undertaking (the "Continuing Disclosure Undertaking") in substantially the same form as now before the Council, or with such changes therein as the individual executing the Continuing Disclosure Undertaking on behalf of the City shall approve, the official's execution thereof to constitute conclusive evidence of the approval of such changes. When the Continuing Disclosure Undertaking is executed and delivered on behalf of the City as herein provided, the Continuing Disclosure Undertaking will be binding on the City and the officers, employees and agents of the City, and the officers, employees and agents of the City are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Continuing Disclosure Undertaking as executed. Notwithstanding any other provision of this Ordinance, the sole remedies for failure to comply with the Continuing Disclosure Undertaking shall be the ability of the beneficial owner of any Bond to seek mandamus or specific performance by court order, to cause the City to comply with its obligations under the Continuing Disclosure Undertaking. Section 21. Call of Refunded Bonds. In accordance with the redemption provisions of the bond ordinance authorizing the Refunded Bonds, the City by the Council does hereby make -23- provision for the payment of and does hereby call (subject only to the delivery of the Bonds) the Refunded Bonds for redemption and payment prior to maturity on May 1, 2010. Section 22. Municipal Bond Insurance. In the event the payment of principal and interest on the Bonds is insured pursuant to a municipal bond insurance policy (the "Municipal Bond Insurance Policy-) issued by a bond insurer (the "Bond Insurer"), and as long as such Municipal Bond Insurance Policy shall be in full force and effect, the City and the Bond Registrar agree to comply with such usual and reasonable provisions regarding presentment and payment of the Bonds, subrogation of the rights of the Bondholders to the Bond Insurer when holding Bonds, amendment hereof, or other terms, as approved by the Mayor on advice of counsel, his approval to constitute full and complete acceptance by the City of such terms and provisions under authority of this section. Section 23. Severability. If any section, paragraph, clause or provision of this Ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this Ordinance. -24- Section 24. Superseder and Effective Date. All ordinances, resolutions and orders, or parts thereof, in conflict herewith, are to the extent of such conflict hereby superseded; and this Ordinance shall be in full force and effect immediately upon its passage and approval. Voting AYE: Gilab, Schaefer, Blake, Wimmer, Peterson, Condon. Voting NAY: None. ABSENT: Santi. ADOPTED: February 1, 2010 Recorded In City Records: February 1, 2010. ATTEST: APPROVED: February 1, 2010 ayor, City of McHenry McHenry County, Illinois -25-