ORD~ NO' 2568$ A~pRIZI~CO[ I~U~~ ~IC~~TI~ NHS p,ND D 17, 1998 ~T" ~ PO g8~ ~1 1 .n w.. xi u ~ a. M.. dr (]iiT)F:iai hl (]. r ;S F.,tlt1 A4~'i'F2DVLlt_ ~al!'T'F•iCIFiI:L.T.hICs' T'1-i[:: 1:E>SllAhIC:E:: ClF~~ 1:t:~i;R i::(]iJhiTY AY~ID Tf~X ~~tt~{7IC:C1=~A'f'T(]MI I~I(]'T[::f:i C17~7 t:!-c S.G> day tl7e 1.~7~t1.7 clay t:?'f L~E•cen7bea~r, :I."~':•lEf upc.?7.7 rnC?t i.n7-~ n7ade by ,7udgE~a Denr7ar7, rsecondt•>d icy (_rrn7n7:i.s<.zi.c?~ner I_.tztz,, t:he C;ot.t•rEr unanimously approved by a vote of 5-6-0, tc? author:i.zEa tt7E~ 7. 55>LIaYI C'C9 C?'~ N. E?'f"f` C:a U71'ty, ..(CsX a5; 7a% Ga'i7t 7. C':A F?ci'(::l C?ll hl C?tC?5:, f]~y~ri.ca<.~ 1`3 ":J(i 'for t&r',(:,:•:~Fl,(~J(']F], api3r`ov9.n~! a pl.l'rcha~ae ca7.7trac~l., payancl ar]en•t/•reg:i.xtra-r ~il]reen7e7;t: a7~7c1 a7~ offi.ciaJ. staten7e77t, a'itd ciLttha'r.l.;L.lYlt.]. a1.1 atl•7f=r i7~7strt.tn7e77t~s a7'7d prtar_edt.tres •re.l<~~l,t-~d ~lilll l~ i 611 I. i~ilbi I N. i.dY COMMISSIONERS' COURT AGENDA REQUEST PLEASE FURMSH ONE ORIGIlYAL AND FIVE COPIES OF THIS REQUEST AND DOCUMENTS TO BE REVIEWED BY THE COURT. DE BY; Robert A. Denson OFFICE; ETING DATE: December 17. 1998 3JECT: (PLEASE BE SPECIFIC) County Judge TIIvtE PREFERRED: Approve Order authorizing the issuance of Kerr County, Texas Tax Anticipation Notes, Series 1998, approving a purchase contract, paying agentlregistrar agreement and an official statement, and authorizing all other instruments and procedures related thereto. ECUTIVE SESSION REQUESTED: (PLEASE STATE REASON) ME OF PERSON ADDRESSING THE COURT: ~VIATED LENGTH OF PRESENTATION: 'ERSONNEL MATTER -NAME OF EMPLOYEE: Bob Henderson Time for submitting this request for Court to assure that the matter is posted in accordance with Title 5, Chapter 551 and 552, Government Code, is as follows: Meeting scheduled for Mondays: [S REQUEST RECEIVED BY: [S REQUEST RECEIVED ON: Agenda Requests will be screened by the County Judge's Office to determine if adequate information has been pared for the Court's formal consideration and action at time of Court Meetings. Your cooperation will be reciated and contribute towards you request being addressed at the earliest opportunity. See Agenda Request Rules >pted by Commissioners' Court. 5:00 P.M. previous Monday. ~{ 1 1 1 la '. ui n l MFH - S(hJ f;NTONIO iD~512-225-2954 DEC 09'x8 14'•' .uY: r.~ Law Offices r^ McCALL, PARKHURST & NORTON L.L.P. 1225 One Riverwalk Place 700 North St. Mary's San Antonio, Texas 78205 (210) 225-2800 FAX NO. (2l0) 225-2984 TO: Thea Soti~il Fax; (834) 792-2218 FROM: Kathy S. Cooper DATE: 12/9/98 RE: Kerr County, Texas Agenda Language ~~ 1 PAGES, INCLUDYNG COVER SHEET Please Advisc It Tranemis~ion Error Occars. (2l0) 225-28pG The following is the agenda language to he used for the December 17th meeting: ORllER AUTIiO1tIZING THE ISSUANC>; OF KERB CUUNTY,1'EXAS TAX AN7'1CIPATION NOTES, SERIES 1998, APPROVING A PURCHASE CONTRACT, PAYING AGENT/REGISTRAR AGREEMENT AND AN OFFICIAL STATEMENT, AND AUTHQRIZINC A[.L OTHFR INSTRU.'tiIENTS AND PROGEDU1iF,.S RF,LATED THERETO 11 IIII I 41 I I+ A'. I N 4 AI LAW OFFICES MCCALL, PARKHURST a HORTON L.L.P. 717 NORTH HARWOOD NINTH FLOOR DALLAS, TEXAS 75201.6587 TELEPHONE' 214 X549200 F/CSIM ILC 214 754-9250 700 N. ST. MARY'S STREET 1225 ONE RIVERWALK PLACE SAN ANTONIO, TEXAS 78205-3503 TELEPHONE: 210 225-2800 F4CSIM ILE'. 210 225'2984 600 CONGRESS AVENUE 1250 ONE AMERICAN CENTER AUSTIN, TEXAS 78701-3248 TELEPHONE'. 512 4713-3Q05 F4E$IM ILE'. 512 472-0871 December 21, 1998 Honorable County Judge Robert A. Denson Kerr County, Texas 700 Main Street Kerrville, Texas 78028 ~j ~ -- ~~ Re: $2,650,000 KERB COUNTY, TAX ANTICIPATION NOTES, SERIES 1998 Dear Judge Denson: As I mentioned to you last week and the Commissioner's Court meeting, enclosed are execution copies of the General Certificate of the County which needs to be signed by you, the County Clerk and sealed where indicated. Please return all executed copies of the General Certificate to the undersigned at your earliest convenience. Many thanks for your assistance with this matter. Should you have any questions, please do not hesitate to contact me. Sincerely, MCCALL, PARKHURST & HORTON L.L.P. .-~. Thomas K. Spurgeon TKS: si enclosure GENERAL CERTIFICATE THE STATE OF TEXAS COUNTY OF KERR We, the undersigned officers of Ken County, Texas (the "County"), hereby certify as follows: 1. Tluis certificate is executed for and on behalf of the County with reference to the issuance of the proposed Kerr County, Texas Tax Anticipation Notes, Series 1998, dated December 15, 1998, in the principal amount of $2,650,000 (the "Notes"). 2. No litigation of any nature has ever been filed pertaining to, affecting, questioning, or contesting: (a) the order which authorized the County's proposed Notes; (b) the issuance, execution, delivery, payment, security or validity of the proposed Notes; (c) the authority of the Commissioners Court and the off cers ofthe County to issue, execute and deliver the proposed Notes; (d) the validity of the corporate existence of the County, or (e) the current tax rolls of the County; and no litigation is pending pertaining to, affecting, questioning, or contesting the current boundaries of the County. 3. All meetings of the Commissioners Court of the County at which action was taken in preparation for or in connection with the issuance of the proposed Notes occurred at the usual designated meeting place, being the Kdrr County Courthouse. 4. Attached to this certificate and marked Exhibit A is a true, full and correct schedule and statement of the aforesaid proposed Tax Notes, and of all presently outstanding tax indebtedness of the County and attached hereto as Exhibit B is a combined debt service schedule for all outstanding tax bond indebtedness of the County. 5. The currently effective ad valorem tax appraisal roll of the County (the "Tax Roll") is the Tax Roll prepared and approved during the calendar year 1998, being the most recently approved Tax Roll of the County; the taxable property in the County has been appraised, assessed, and valued as required and provided by the Texas Constitution and Property Tax Code (collectively, "Texas law"); the Tax Roll for said year has been submitted to the Commissioners Court of the County as required by Texas law, and has been approved and recorded by said Commissioners Court; and according to the Tax Roll for said year the net aggregate taxable value of taxable property in the County (after deducting the amount of all applicable exemptions required or authorized under Texas law), upon which the annual ad valorem tax of the County has been or will be imposed and levied, is $1,717,337,901. ounty Clerk (SEAL) i SIGNED AND SEALED this the 17th day of December, 1998. .16.111 V,.; Yll L. RM. 4.i. Y~~9. [SIGNATURE PAGE TO GENERAL CERTIFICATE] ,• If IF{I i 41111 IIII I. VnAI. E7G•IIBTT A Tax Anticipation Notes, Series 1998, dated December 15, 1998, to be outstanding in the principal amount of $2,650,000, bearing interest and maturing as set forth in the Order authorizing said Notes. Pubiic Property Finance Contractual Obligations, Series 1993, dated October 15, 1993, outstanding in the principal amount of $85,000, bearing interest at the rates and maturing on February 15 in the respective amounts and on the respective yeazs as follows: 4.125% 85M-99; Limited Tax General Obligation Bonds, Series 1994, dated February 1, 1990, outstanding in the principal amount of $5,425,000, bearing interest at the rates and maturing on February 15 in the respective amounts and on the respective yeazs as follows: 6.250% 265M-99; 280M-00; 300M-O1; 315M-02; 335M-03; 350M-04; 370M-OS 4.750% 390M-06; 4:875% 415M-07; 4.375% ~ 435M-08; 4.250% ?~ 455M-09; 480M-10; SOSM-11; 530M-12 CERTIFICATE FOR ORDER THE STATE OF TEXAS COUNTY OF KERB I, the undersigned County Clerk of Kerr County, Texas (the "County"), hereby certify as follows: 1. The Commissioners Court of the County convened in REGULAR TERM ON THE 17TH DAY OF DECEMBER, 1998, at the County Courthouse, and the roll was called of the duly constituted officers and members of said Commissioners Court, to wit: Robert A. Denson, County Judge Jonathan Letz, Precinct 3 H.A. "Buster" Baldwin, Precinct 1 Bruce Oehler, Precinct 4 T.H. "Butch" Lackey, Precinct 2 and all of said persons were present, except the following absentees: ~~~ thus constituting a quorum. Whereupon, among other business, the following was transacted at said Meeting: a written ORDER AUTHORIZING THE ISSUANCE OF KERR COUNTY, TEXAS TAX ANTICIPATION NOTES, SERIES 1998, APPROVING A PURCHASE CONTRACT, PAYING AGENT/REGISTRAR AGREEMENT AND AN OFFICIAL STATEMENT, AND AUTHORIZING ALL OTHER INSTRUMENTS AND PROCEDURES RELATED THERETO (the "Order") was duly introduced for the consideration of said Commissioners Court. It was then duly moved and seconded that the Order be adopted; and, after due discussion, said motion carrying with it the adoption of the Order, prevailed and carried by the following vote: AYES: '-~ NOES: ~ ABSTENTIONS: C~ 2. A true, full and correct copy of the aforesaid Order adopted at the Meeting described in the above and foregoing paragraph is attached to and follows this Certificate; the Order has been duly recorded in said Commissioners Court's minutes of said Meeting; the above and foregoing paragraph is a true, full and correct excerpt from said Commissioners Court's minutes of said Meeting pertaining to the passage of the Order; the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of said Commissioners Court as indicated therein; each of the officers and members of said Commissioners Court was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the aforesaid Meeting, and the Order would be introduced and considered for passage at said Meeting, and each of said officers and members consented, in advance, to the holding of said Meeting for such purpose, and said Meeting was open to the public and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code. SIGl`'ED AND SEALED the 17th day of December, 1998. County Clerk - - -- nnr-_T_n-_ _ 111111 MI I IMII r~. iYY ORDER AUTHORIZING THE ISSUANCE OF KERB COUNTY, TEXAS TAX ANTICIPATION NOTES, SERIES 1998, APPROVING A PURCHASE CONTRACT, PAYING AGENT/REGISTRAR AGREEMENT AND AN OFFICIAL STATEMENT, AND AUTHORIZING ALL OTHER INSTRUMENTS AND PROCEDURES RELATED THERETO THE STATE OF TEXAS COUNTY OF KERB WHEREAS, Article 717w, Vernon's Texas Civil Statutes ("Article 717w"), authorizes a county, on recommendation of the county auditor of such county, to issue anticipation notes to pay a contractual obligation incurred or to be incurred for (i) the construction of any public work, (ii) the purchase of materials, supplies, equipment, machinery, buildings, lands, and rights-of--way for such county's authorized purposes, and (iii) professional services, including services provided by tax appraisal engineers, engineers, architects, attorneys, mapmakers, auditors, financial advisors, and fiscal agents; and R'HEREAS, the County Auditor of Ken County, Texas (the "County" or the "Issuer") has recommended that the Commissioners Court of the County authorize the issuance of tax anticipation notes to pay contractual obligations incurred or to be incurred for the construction of certain public works in the County and for the purchase of materials, supplies, equipment, machinery, buildings, lands, and rights-of--way for the County's authorized purposes, to wit: the renovation, construction and improvement of, and the acquisition of equipment, materials and supplies and professional services related to remodeling and renovating existing County facilities into courtrooms and offices for use by the County (collectively, the "Project"); and WHEREAS, the Commissioners Court of the County now deems it necessary and advisable to authorize, issue, and deliver said notes; and WHEREAS, the notes hereinafter authorized and designated are to be issued and delivered pursuant to Article 717w, Vernon's Texas Civil Statutes, as amended, and other applicable laws of the State of Texas; and WHEREAS, it is hereby officially found and determined that the meeting at which this Order was adopted was open to the public and public notice of the time, place, and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code. THEREFORE, BE IT ORDERED BY THE COMMISSIONERS COURT OF KERB COUNTY, TEXAS: SECTION 1. AMOUNT AND PURPOSE OF THE NOTES. The notes of Ken County, Texas are hereby authorized to be issued and delivered in the aggregate principal amount of $2,650,000 FOR THE PURPOSE OF PAYING, IN WHOLE OR IN PART, FOR COSTS INCURRED TO PAY CONTRACTUAL OBLIGATIONS INCURRED OR TO BE INCURRED FOR THE CONSTRUCTION OF CERTAIN PUBLIC WORKS IN THE COUNTY AND FOR THE PURCHASE OF MATERIALS, SUPPLIES, EQUIPMENT, MACHINERY, BUILDINGS, LANDS, ANDRIGHTS-OF-WAY FOR THE COUNTY'S AUTHORIZED PURPOSES, TO WIT: THE RENOVATION, CONSTRUCTION AND IIvIPROVEMENT OF, AND THE ACQUISITION OF EQUIPMENT, MATERIALS AND SUPPLIES AND PROFESSIONAL SERVICES RELATED TO REMODELING AND RENOVATING EXISTING COUNTY FACILITIES INTO COURTROOMS AND OFFICES FOR USE BY THE COUNTY (COLLECTIVELY, THE "PROJECT"), AND TO PAY ALL OR A PORTION OF THE PROFESSIONAL FEES IN CONNECTION WITH THE PROJECT AND THE ISSUANCE OF THE NOTES. SECTION 2. DESIGNATION, DATE, DENOMINATION, NUMBERS, AND MATURITIES OF NOTES. Each note issued pursuant to this Order shall be designated: "KERB COUNTY, TEXAS TAX ANTICIPATION NOTES, SERIES 1998," and there shall be issued hereunder one fully registered note, without interest coupons, dated December 15, 1998, in the principal amount stated in Section 1 above, numbered T-1 (the "Initial Note"), with Notes issued in replacement thereof being in denominations of $5,000 or any integral multiple thereof and numbered consecutively from R-1 upward, payable to the respective initial registered owners thereof (with the Initial Note being payable to the initial purchaser designated in Section 17 hereof) or to the registered assignee of any of said Notes (in each case, the "Registered Owner"), and the Notes shall mature and be payable serially on August 15 in each of the years and in the principal amounts, respectively, as set forth in the following schedule: YEAR PRINCIPAL AMOUNT 1999 $315,000 2000 355,000 2001 365,000 2002 380,000 2003 395,000 2004 410,000 2005 430,000 2 11 1111 r 4d 1 YI Y r Yi The term "Notes" as used in this Order shall mean and include collectively the notes issued and delivered pursuant to this Order and all substitute notes exchanged therefor, as well as all other substitute notes and replacement notes issued pursuant hereto, and the term "Note" shall mean any of the Notes. SECTION 3. INTEREST. The Notes shall bear interest from the dates specified in the FORM OF NOTE set forth in this Order to their respective dates of maturity at the following rates per annum: MATURITY DATE (AUGUST IS) INTEREST RATE 1999 3.20% 2000 3.50 2001 3.65 2002 3.75 2003 3.85 2004 3.90 2005 4.00 Said interest shall be payable in the manner provided and on the dates stated in the FORM OF NOTE set forth in this Order. SECTION 4. CHARACTERISTICS OF THE NOTES; APPROVAL OF PAYING AGENT/REGISTRAR. (a) Registration. Transfer, and Exchange; Authentication. The County shall keep or cause to be kept at the designated corporate trust office in San Antonio, Texas of Chase Bank of Texas, National Association (the "Paying Agent/Registraz") books or records for the registration of the transfer and exchange of the Notes (the "Registration Books"), and the County hereby appoints the Paying Agent/Registraz as its registrar and transfer agent to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the County and Paying Agent/Registraz may prescribe; and the Paying Agent/Registraz shall make such registrations, transfers and exchanges as herein provided. Attached hereto as Exhibit A is a copy ofthe Paying Agent/Registraz Agreement between the County and the Paying Agent/Registraz which is hereby approved in substantially final form, and the County Judge and County Clerk ofthe County aze hereby authorized to execute the Paying Agent/Registrar Agreement and approve any changes in the final form thereof. The Paying Agent/Registraz shall obtain and record in the Registration Books the address of the registered owner of each Note to which payments with respect to the Notes shall be mailed, as r ni xa v .. .~ a~ herein provided; but it shall be the duty of each registered owner to notify the Paying AgentlRegistraz in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. To the extent possible and under reasonable circumstances, all transfers ofNotes shall be made within three business days after request and presentation thereof. The County shall have the right to inspect the Registration Books during regulaz business hours of the Paying AgentlRegistraz, but otherwise the Paying Agent/Registraz shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. The Paying Agent/Registraz's standard or customary fees and chazges for making such registration, transfer, exchange and delivery of a substitute Note or Notes shall be paid as provided in the FORM OF NOTE set forth in this Order. Registration of assignments, transfers and exchanges ofNotes shall be made in the manner provided and with the effect stated in the FORM OF NOTE set forth in this Order. Each substitute Note shall bear a letter and/or number to distinguish it from each other Note. Except as provided in (c) below, an authorized representative of the Paying Agent/Registraz shall, before the delivery of any such Note, date and manually sign the Paying Agent/Registrar's Authentication Certificate, and no such Note shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registraz promptly shall cancel all paid Notes and Notes surrendered for transfer and exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the County or any other body or person so as to accomplish the foregoing transfer and exchange of any Note or portion thereof, and the Paying Agent/Registraz shall provide for the printing, execution, and delivery of the substitute Notes in the manner prescribed herein, and said Notes shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Article 717k-6, Vernon's Texas Civil Statutes, and particulazly Section 6 thereof, the duty of transfer and exchange ofNotes as aforesaid is hereby imposed upon the Paying Agent/Registraz, and, upon the execution of said Certificate, the transferred and exchanged Note shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Notes which initially were issued and delivered pursuant to this Order, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) Payment of Notes and Interest. The County hereby further appoints the Paying Agent/Registraz to act as the paying agent for paying the principal of and interest on the Notes, all as provided in this Order. The Paying Agent/ Registrar shall keep proper records of all payments made by the County and the Paying Agent/Registraz with respect to the Notes. (c) In General. The Notes (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Notes to be payable only to the registered owners thereof, (ii) may be transferred and assigned, (iii) maybe exchanged for other Notes, (iv) shall have the chazacteristics, (v) shall be signed, sealed, executed and authenticated, (vi) the principal of and interest on the Notes shall be payable, and (vii) shall be administered and the Paying Agent/Registrar and the County shall have certain duties and responsibilitiestyith respect to the Notes, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF NOTE set forth in this Order. The Initial Note is not required to be, and shall not be, authenticated by the Paying Agentl 4 Registrar, but on each substitute Note issued in exchange for the Initial Note issued under this Order the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF NOTE. In lieu of the executed Paying Agent/Registraz's Authentication Certificate described above, the Initial Note delivered on the closing date (as further described in subparagraph (i) below) shall have attached thereto the Comptroller's Registration Certificate substantially in the form set forth in the FORM OF NOTE below, manually executed by the Comptroller of Public Accounts of the State of Texas or by his duly authorized agent, which certificate shall be evidence that the Initial Note has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the County, and has been registered by the Comptroller. (d) Substitute Pnr~iny, AQent/Registrar. The County covenants with the registered owners of the Notes that at all times while the Notes aze outstanding the County will provide a competent and legally qualified bank, trust company, financial institution, or other entity to act as and perform the services of Paying Agent/Registrar for the Notes under this Order, and that the Paying Agent/Registraz will be one entity and shall be an entity registered with the Securities and Exchange Commission. The County reserves the right to, and may, at its option, change the Paying Agent/Registraz upon not less than 120 days written notice to the Paying Agent/Registraz, to be effective not later than 60 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registraz (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the County covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registraz under this Order. Upon any change in the Paying Agent/Registraz, the previous Paying AgentJRegistraz promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Notes, to the new Paying Agent/Registraz designated and appointed by the County. Upon any change in the Paying Agent/Registraz, the County promptly will cause a written notice thereof to be sent by the new Paying AgentlRegistraz to each registered owner ofthe Notes, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying AgentlRegistraz. By accepting the position and performing as such, each Paying AgentlRegistraz shall be deemed to have agreed to the provisions ofthis Order, and a certified copy of this Order shall be delivered to each Paying Agent/Registraz. (e) Book-Entry Only System for Notes. The Notes issued in exchange for the Notes initially issued to the purchaser specified in Section 17 herein shall be initially issued in the form of a sepazate single fully registered Note for each of the maturities thereof. Upon initial issuance, the ownership of each such Note shall be registered in the name of Cede & Co., as nominee of The Depository Trust Company of New York ("DTC"), and except as provided in subsection (i) hereof, all of the outstanding Notes shall be registered in the name of Cede & Co., as nominee of DTC. With respect to Notes registered in the name of Cede & Co., as nominee of DTC, the County and the Paying Agent/Registraz shall have no responsibility or obligation to any securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC was created ("DTC Participant") to hold securities to facilitate the cleazance and settlement of 5 ~ ~ ~ x~ u; .. ~ ai securities transaction among DTC Participants or to any person on behalf of whom such a DTC Participant holds an interest in the Notes. Without limiting the immediately preceding sentence, the County and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Notes, (ii} the delivery to any DTC Participant or any other person, other than a registered owner of the Notes, as shown on the Registration Books, of any notice with respect to the Notes, or (iii) the payment to any DTC Participant or any other person, other than a registered owner of Notes, as shown in the Registration Books of any amount with respect to principal of or interest on the Notes. Notwithstanding any other provision of this Order to the contrary, the County and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Note is registered in the Registration Books as the absolute owner of such Note for the purpose of payment of principal and interest with respect to such Note, for the purpose of registering transfers with respect to such Note, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Notes only to or upon the Order of the registered owners, as shown in the Registration Books as provided in this Order, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the County's obligations with respect to payment of principal of and interest on the Notes to the extent of the sum or sums so paid. No person other than a registered owner, as shown in the Registration Books, shall receive a Note certificate evidencing the obligation of the County to make payments of principal and interest pursuant to this Order. Upon delivery by DTC to the Paying Agent/Registrar ofwritten notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Order with respect to interest checks being mailed to the registered owner at the close of business on the Record Date, the words "Cede & Co." in this Order shall refer to such new nominee of DTC. (fl Successor Securities Depository: Transfers Outside Book-Entry On1~S sty ems. In the event that the County determines that DTC is incapable of discharging its responsibilities described herein and in the representation letter of the County to DTC or that it is in the best interest of the beneficial owners of the Notes that they be able to obtain certificated Notes, the County shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Notes to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Notes and transfer one or more separate Notes to DTC Participants having Notes credited to their DTC accounts. In such event, the Notes shall no longer be restricted to being registered in the Registration Books in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names registered owners transferring or exchanging Notes shall designate, in accordance with the provisions of this Order. (gJ Payments to Cede & Co. Notwithstanding any other provision of this Order to the contrary, so long as any Note is registered in the name of Cede & Co., as nominee for DTC, all payments with respect to principal of and interest on such Note and all notices with respect to such Note shall be made and given, respectively, in the manner provided in the representation letter of the County to DTC. 6 (h) DTC Letter of Representation. The officers of the County are herein authorized for and on behalf of the County and as officers of the County to enter into one or more Letters of Representation with DTC establishing the book-entry only system with respect to the Notes. (i) Deliver~of Initial Note. On the closing date, one Initial Note representing the entire principal amount of the Notes, payable in stated installments to the initial registered owner named in Section 17 of this Order or its designee, executed by manual or facsimile signature of the County Judge and County Clerk of the County, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas, will be delivered to the initial purchaser or its designee. Upon payment for the Initial Note, the Paying Agent/Registraz shall cancel the Initial Note and deliver to the initial registered owner or its designee one registered definitive Note for each year of maturity of the Notes, in the aggregate principal amount of all of the Notes for such maturity. SECTION 5. FORM OF NOTE. The form of the Note and all Notes issued in replacement of any Note, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas (to be attached only to the Initial Note), the form of Paying Agent/Registrar's Certificate to appear on any replacement Note, and the Form of Assignment to appeaz on each of the Notes, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as aze permitted or required by this Order. [The remainder of this page intentionally left blank.] '1 111... Nd IYII. ~ 1 Yi FORM OF NOTE R-_ PRINCIPAL UNITED STATES OF AMERICA AMOUNT KERR COUNTY, TEXAS $ TAX ANTICIPATION NOTE SERIES 1998 INTEREST RATE MATURITY DATE DATE OF SERIES CUSIP NO. December 15, 1998 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS ON THE MATURITYDATE specified above, KERB COUNTY, TEXAS (the "Issuer" or the "County"), being a political subdivision of the State of Texas, hereby promises to pay to the Registered Owner set forth above, or registered assigns (hereinafter called the "Registered Owner") the Principal Amount set forth above, and to pay interest thereon (calculated on the basis of a 360- day year of twelve 30-day months) from December 15, 1998, to the Maturity Date specified above at the Interest Rate per annum specified above, with interest being payable on August 15, 1999 and on each February 15 and August 15 thereafter; except that if this Note is required to be authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such Principal Amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date but on or before the next following interest payment date, in which case such Principal Amount shall beaz interest from such next following interest payment date; provided, however, that if on the date of authentication hereof the interest on the Note or Notes, if any, for which this Note is being exchanged is due but has not been paid, then this Note shall bear interest from the date to which such interest has been paid in full. THE PRINCIPAL OF AND INTEREST ON this Note aze payable at maturity in lawful money ofthe United States ofAmerica, without exchange or collection chazges. The principal ofthis Note shall be paid to the Registered Owner hereof upon presentation and surrender of this Note at maturity at the designated corporate trust office in San Antonio, Texas of Chase Bank of Texas, National Association, which is the "Paying Agent/Registrar" for this Note. The payment of interest on this Note shall be made by the Paying Agent/Registraz to the Registered Owner hereof on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registraz on, and payable solely from, funds of the County required by the order authorizing the issuance of the Notes (the "Order") to be on deposit with the Paying Agent/Registraz for such s ~ e , ea u;.. a ~~ purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registraz by United States mail, first-class postage prepaid, on each such interest payment date, to the Registered Owner hereof, at its address as it appeazed on the last day of the month next preceding such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registraz, as hereinafter described. In addition, interest may be paid by such other method acceptable to the Paying Agent/Registraz, requested by, and at the risk and expense of, the Registered Owner. In the event of a nonpayment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registraz, if and when funds for the payment of such interest have been received from the County. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date" which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each owner of a Note appearing on the books of the Paying Agent/Registraz at the close of business on the last business day next preceding the date of mailing of such notice. The County covenants with the Registered Owner of this Note that on or before each principal payment date and interest payment date for this Note it will make available to the Paying Agent/Registraz, from the "Interest and Sinking Fund" created by the Order, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Notes, when due. IF THE DATE for the payment of the principal of or interest on this Note shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registraz is located aze authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS NOTE is one of a series of Notes dated as of December 15, 1998, authorized in accordance with the Constitution and laws of the State of Texas in the aggregate principal amount of $2,650,000 FOR THE PURPOSE OF PAYING, IN WHOLE OR IN PART, FOR COSTS INCURRED TO PAY CONTRACTUAL OBLIGATIONS INCURRED OR TO BE INCURRED FOR THE CONSTRUCTION OF CERTAIN PUBLIC WORKS IN THE COUNTY AND FOR THE PURCHASE OF MATERIALS, SUPPLIES, EQUIPMENT, MACHINERY, BUILDINGS, LANDS, AND RIGHTS-OF-WAY FOR THE COUNTY'S AUTHORIZED PURPOSES, TO WTT: THE RENOVATION, CONSTRUCTION AND IMPROVEMENT OF, AND THE ACQUISITION OF EQUIPMENT, MATERIALS AND SUPPLIES AND PROFESSIONAL SERVICES RELATED TO REMODELING AND RENOVATING EXISTING COUNTY FACILITIES INTO COURTROOMS AND OFFICES FOR USE BY THE COUNTY (COLLECTIVELY, THE "PROJECT"),AND TO PAY ALL OR A PORTION OF THE PROFESSIONAL FEES IN CONNECTION WITH THE PROJECT AND THE ISSUANCE OF THE NOTES THIS NOTE maybe assigned and shall be transferred only in the Registration Books of the County kept by the Paying Agent/Registraz acting in the capacity of registraz for the Notes, upon the 9 li I~If Xd IM41 . 1 ^1 terms and conditions set forth in the Order. Among other requirements for such assignment and transfer, this Note must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, inform and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Note to the assignee in whose name this Note is to be transferred and registered. The form of Assignment printed on this Note maybe executed by the Registered Owner, or its duly authorized attorney or representative, to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Note or any portion or portions hereof from time to time by the Registered Owner. The County shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration ofthis Note during the period commencing with the close of business on any Record Date and ending with the opening ofbusiness on the next following principal or interest payment date. The Registered Owner of this Note shall be deemed and treated by the County and the Paying Agent/Registrar asthe absolute owner hereof for all purposes, including payment and discharge of liability upon this Note to the extent of such payment, and the County and the Paying Agent/Registrar shall not be affected by any notice to the contrary. INTHEEVENT any Paying Agent/Registrar fortheNotes ischanged bythe County, resigns, or otherwise ceases to act as such, the County has covenanted in the Order that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Notes. IT IS HEREBY certified, recited, and covenanted that this Note has been duly and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Note have been performed, existed, and been done in accordance with law; that this Note is a general obligation of the County, issued on the full faith and credit thereof; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Note, as such interest comes due, and as such principal matures, have been levied and ordered to be levied against all taxable property in the County, and have been pledged for such payment, within the limits prescribed by law. THE COUNTYaIso has reserved the right to amend the Order as provided therein, and under some (but not all) circumstances amendments thereto must be approved by the registered owners of a majority in aggregate principal amount of all outstanding Notes, subject to the restrictions stated in the Order. BY BECOMING the Registered Owner of this Note, the Registered Owner thereby acknowledges all of the terms and provisions of the Order, agrees to be bound by such terms and provisions, acknowledges that the Order is duly recorded and available for inspection in the official minutes and records of the governing body of the County, and agrees that the terms and provisions io u~~, ra .u. ~n~ of this Note and the Order constitute a contract between each Registered Owner hereof and the County. IN WITNESS WHEREOF, the County has caused this Note to be signed with the manual or facsimile signature of the County Judge of the County and countersigned with the manual or facsimile signature of the County Clerk ofthe County, and has caused the official seal of the County to be duly impressed, or placed in facsimile, on this Note. (facsimile signatures facsimile signature~_ County Clerk, Kerr County, Texas County Judge, Ken County, Texas (SEAL) FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS: COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Note has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Note has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this (COMPTROLLER'S SEAL) Comptroller of Public Accounts of the State of Texas 11 FORM OF PAYING AGENT/REGISTRAR'S AUTHENTKATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTKATION CERTIFICATE (To be executed if this Note is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Note has been issued under the provisions ofthe Order described in the text of this Note; and that this Note has been issued in exchange for a Note which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated Authorized Representative By FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersigned Registered Owner of this Note, or duly authorized representative or attorney thereof, hereby sells, assigns and transfers unto / / (Assignee's Social Security or (Please print or typewrite Assignee's name and address, Taxpayer Identification Number) including zip code) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to register the transfer of the within Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. CHASE BANK OF TEXAS, NATIONAL ASSOCIATION Paying Agent/Registrar NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Note in every particular, without alteration or enlargement or any change whatsoever. 12 I 11 IIIY r YI I I 111 ~ Y YI INTTIAL NOTE INSERTIONS The Initial Note shall be in the form set forth above except that: (A) Immediately under the name of the Note, the headings "INTEREST RATE" and "MATURITY DATE" shall be completed with the words "As shown below" and "CUSIP NO. "shall be deleted. (B) The first paragraph shall be deleted and the following shall be inserted: "ONTHERESPECTIVEMATURITYDATESspecified below, KERB COUNTY, TEXAS (the "County"), being a political subdivision of the State of Texas, hereby promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"), the respective Principal Installments specified below, and to pay interest thereon (calculated on the basis of a 360-day year composed of twelve 30-day months) from December 15, 1998 at the respective Interest Rates per annum specified below, payable on August 15, 1999, and semiannually on each February 15 and August 15 thereafter to the respective Maturity Dates specified. The respective Maturity Dates, Principal Installments and Interest Rates for this Note are set forth in the following schedule: August 15, 1999 $315,000 August 15, 2000 355,000 August 15, 2001 365,000 August 15, 2002 380,000 August 15, 2003 395,000 August 15, 2004 410,000 Au st 15 2005 430 000 (C) The Initial Note shall be numbered "T-1." 13 i i __.,.',111 i t_ I~IIIY F11 II 111. 1 Y ~YI SECTION 7. INTEREST AND SINKING FUND; TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the benefit of the Notes, and the Interest and Sinking Fund shall be established and maintained by the County at an official depository bank of the County. The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the County, and shall be used only for paying the interest on and principal of the Notes. All ad valorem taxes levied and collected for and on account of the Notes shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Notes or interest thereon are outstanding and unpaid, the Commissioners Court of the County shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Notes as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of its Notes as such principal matures (but never less than 2% of the original amount of the Notes as a sinking fund each year); and said tax shall be based on the latest approved tax rolls ofthe County, with full allowance being made for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the County for each year while any of the Notes or interest thereon are outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Notes, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. SECTION 8. CONSTRUCTION FUND. There is hereby created and established in the depository bank of the County a fund to be called the "Kerr County, Texas Tax Anticipation Note Construction Fund" (herein called the "Construction Fund"). All proceeds of the Notes shall be deposited in the Construction Fund (other than accrued interest thereon, if any, which shall be deposited into the Interest and Sinking Fund). Money in the Construction Fund shall be subject to disbursements by the County for payment of all costs incurred in carrying out the purpose for which the Notes are issued, including but not limited to cost for construction, engineering, architecture, acquisition of furniture and equipment, financing, financial consultants and legal services related to the Project being financed with proceeds of the Notes and the issuance of the Notes. SECTION 9. INVESTMENTS. Funds on deposit in the Interest and Sinking Fund and the Construction Fund shall be secured by the depository bank of the County in the manner and to the extent required by law to secure other public funds of the County and maybe invested from time to time in any investment authorized in the Public Funds Investment Act, Chapter 2256, Texas Government Code, at the direction of the County Judge or County Treasurer of the County; provided, however, that investments purchased for and held in the Interest and Sinking Fund shall have a final maturity no later than the next principal or interest payment date on which such funds will be needed, and investments purchased for and held in the Construction Fund shall have a final maturity of not later than the date the County reasonably expects the funds from such investments will be required to pay costs ofthe project for which the Notes were issued. Income and profits from such investments shall be deposited in the respective Fund which holds such investments; however, any such income and profits from investments in the Construction Fund may be withdrawn by the County (at the direction of the County Judge or County Treasurer of the County) and deposited in 14 IY IIIY ~ FAI I ~ Illlr 6 A~71 the Interest and Sinking Fund to pay all or a portion of the interest next coming due on the Notes. It is further provided, however, that any interest earnings on note proceeds which aze required to be rebated to the United States of America pursuant to Section 13 hereof in order to prevent the Notes from being azbitrage Notes shall be so rebated and not considered as interest earnings for the purposes of this Section. SECTION 10. DEFEASANCE OF NOTES. (a) Any Note and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Note")within the meaning of this Order, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Note, plus interest thereon to the due date (whether such due date be by reason of maturity or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registraz for such payment (1) lawful money ofthe United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the County with the Paying Agent/Registraz for the payment of its services until all Defeased Notes shall have become due and payable. At such time as a Note shall be deemed to be a Defeased Note hereunder, as aforesaid, such Note and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Order, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any moneys so deposited with the Paying Agent/Registraz may at the written direction of the County also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registraz which is not required for the payment ofthe Notes and interest thereon, with respect to which such money has been so deposited, shall be turned over to the County, or deposited as directed in writing by the County. (c) The term "Government Obligations" as used in this Section, shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, which maybe in book-entry form. (d) Until all Defeased Notes shall have become due and payable, the Paying Agent/Registraz shall perform the services of Paying Agent/Registrarfnr such Defeased Notes the same as if they had not been defeased, and the County shall make proper arrangements to provide and pay for such services as required by this Order. 15 r ~ w n ~ a at SECTION 11. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED NOTES. (a) Replacement Notes. In the event any outstanding Note is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, anew note ofthe same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Note, in replacement for such Note in the manner hereinafter provided. (b) A~nlication for Replacement Notes. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Notes shall be made by the registered owner thereof to the Paying AgentlRegistrar. In every case of loss, theft, or destruction of a Note, the registered owner applying for a replacement note shall furnish to the County and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Note, the registered owner shall furnish to the County and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Note, as the case may be. In every case of damage or mutilation of a Note, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Note so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Note shall have matured, and no default has occurred which is then continuing in the payment of the principal of or interest on the Note, the County may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Note) instead of issuing a replacement Note, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Notes. Prior to the issuance of any replacement note, the Paying Agent/Registrar shall charge the registered owner of such Note with all legal, printing, and other expenses in connection therewith. Every replacement note issued pursuant to the provisions of this Section by virtue of the fact that any Note is lost, stolen, or destroyed shall constitute a contractual obligation ofthe County whether or not the lost, stolen, or destroyed Note shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Order equally and proportionately with any and all other Notes duly issued under this Order. (e) Authority for Issuing Replacement Notes. In accordance with Section 6 of Vernon's Ann. Tex. Civ. St. Art. 717k-6, this Section of this Order shall constitute authority for the issuance of any such replacement note without necessity offizrther action by the governing body ofthe County or any other body or person, and the duty of the replacement of such notes is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Notes in the form and manner and with the effect, as provided in Section 4(a) of this Order for Notes issued in exchange for other Notes. SECTION 12. CUSTODY, APPROVAL, AND REGISTRATION OF NOTES; BOND COUNSEL'S OPINION; BOND INSURANCE; AND CUSIP NUMBERS. The County Judge of the County is hereby authorized to have control of the Notes initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Notes pending their delivery and their investigation, examination, and approval by the Attorney General of the State of Texas, and 16 II IIIY bill Nllrl i•YI their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Notes said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Notes, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Certificate. The approving legal opinion of the County's Bond Counsel (with an appropriate certificate pertaining thereto executed by facsimile signature of the County Clerk of the County), a statement regarding the issuance of a municipal bond insurance policy to secure payment of debt service on the Notes, if any, and the assigned CUSIP numbers may, at the option of the County, be printed on the Notes issued and delivered under this Order, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Notes. SECTION 13. COVENANTS REGARDING TAX-EXEMPTION OF INTEREST ON THE NOTES. The County covenants rtat to take any action or refrain from taking any action which would adversely affect the treatment of the Notes as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the County covenants as follows: (a) to take any action to assure that no more than 10 percent of the proceeds of the Notes or the projects financed therewith (less amounts deposited to a reserve fund, if any) or the projects financed therewith are used for any "private business use," as defined in section 141(b)(6) ofthe Code or, ifmore than 10 percent ofthe proceeds are soused, such amounts, whether or not received by the County, with respect to such private business use, do not, under the terms ofthis Order or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Notes, in contravention of section 141(b)(2) of the Code; (b) to take any action to assure that in the event that the "private business use" described in subsection (a) hereof exceeds 5 percent of the proceeds of the Notes or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used fora "private business use" which is "related" and not "disproportionate," within the meaning of section 141(b)(3) ofthe Code, to the governmental use; (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Notes (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (d) to refrain from taking any action which would otherwise result in the Notes being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (e) to refrain from taking any action that would result in the Notes being "federally guaranteed" within the meaning of section 149(b) of the Code; 17 'O I~ ~~ hY I I IYII ~ i YI (f) to refrain from using any portion of the proceeds of the Notes, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) ofthe Code) which produces a materially higher yield over the term of the Notes, other than investment property acquired with -- (1) proceeds of the Notes invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 30 days or less until such proceeds are needed for the purpose for which the bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Notes; (g) to otherwise restrict the use of the proceeds of the Notes or amounts treated as proceeds of the Notes, as maybe necessary, so that the Notes do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (h) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Notes) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Notes have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established by the County for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the Registered Owners of the Notes. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. For purposes of the foregoing (a) and (b),the County understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Notes. It is the understanding of the County that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In furtherance of such intention, the County hereby authorizes and directs the County Judge of the County to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the County, which maybe permitted by the Code as are consistent with the purpose for the issuance of the Notes. In the event that regulations or rulings are hereafter promulgated which modify, or expand provisions of the Code, as applicable to the Notes, the County will not be required to comply with any covenant contained 18 4 1111' NI I'MI' r. i 1 .1 herein to the extent that such modification or expansion, in the opinion ofnationally-recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Notes under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Notes, the County agrees to comply with the additional requirements to the extent necessary, in the opinion ofnationally-recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Notes under section 103 of the Code. SECTION 14. ALLOCATION OF, AND LIMTTATION ON, EXPENDITURES FOR THE PROJECT. The County covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this Order (the "Project") on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed. The foregoing notwithstanding, the County shall not expend sale proceeds or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are retired, unless the County obtains an opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes hereof, the County shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. SECTION 15. DISPOSITION OF PROJECT. The County covenants that the property constituting the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the County of cash or other compensation, unless the County obtains an opinion of nationally- recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the County shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. SECTION 16. DESIGNATION AS QUALIFIED TAX-EXEMPT OBLIGATIONS. The County hereby designates the Notes as "qualified tax-exempt obligations" as defined in Section 265(b)(3) of the Code. In furtherance of such designation, the County represents, covenants and warrants the following: (a) that during the calendar year in which the Notes are issued, the County (including any subordinate entities) has not designated nor will designate notes or other obligations, which when aggregated with the Notes, will result in more than $10,000,000 of"qualified tax-exempt obligations" being issued; (b) that the County reasonably anticipates that the amount oftax-exempt obligations issued during the calendar year in which the Notes are issued by the County (or any subordinate entities) will not exceed $10,000,000; and (c) that the County will take such action or refrain from such action as necessary, and as more particularly set forth in Section 13 hereof, in order that the Notes will not be considered "private activity bonds" within the meaning of Section 141 of the Code. 19 I:. uIV.. Ad i.Yl~ I d! SECTION 17. SALE OF NOTES. The Notes are hereby sold and shall be delivered to Southwest Securities, Inc. (the "Underwriter"), in accordance with the terms ofthe Purchase Contract in substantially the form attached hereto as Exhibit B which the County Judge of the County is hereby authorized and directed to execute and deliver and the County Clerk of the County is hereby authorized to attest. The County will initially deliver to the Underwriter one Note in the aggregate principal amount of $2,650,000 payable in principal installments on the dates and in the principal amounts shown in Section 2 hereof, and bearing interest at the rates for each respective maturity as shown in Section 3 hereof. It is hereby officially found, determined, and declared that the terms of this sale are the most advantageous reasonably obtainable. The Initial Note shall be registered in the name of Southwest Securities, Inc. SECTION 18. APPROVAL OF OFFICIAL STATEMENT. The County hereby approves the form and content of the Official Statement relating to the Notes and any addenda, supplement, or amendment thereto, and approves the distribution of such Official Statement in the reoffering of the Notes by the Underwriter in final form, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. The distribution and use of the Preliminary Official Statement dated December 15, 1998, prior to the date hereof is hereby ratified and confirmed. The Commissioners Court of the County hereby finds and determines that the Preliminary Official Statement and the Official Statement were and are "deemed final" (as that term is defined in 17 C.F.R. Section 240.15c-12) as of their respective dates. SECTION 19. CONTINUING DISCLOSURE UNDERTAKING. (a) Annual Reports. The County shall provide annually to any SID, within six months after the end of each fiscal year ending in or after 1998, financial information and operating data with respect to the County of the general type included in the final Official Statement authorized by this Order being the information described in Exhibit C hereto. Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit C hereto, or such other accounting principles as the County may be required to employ from time to time pursuant to state law or regulation, and (2) audited, if the County commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the County shall provide unaudited financial statements to any SID within the six month period described above and shall provide audited financial statements for the applicable fiscal year to any SID, when and if the audit report on such statements become available. If the County changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the County otherwise would be required to provide financial information and operating data pursuant to this paragraph (a). The financial information and operating data to be provided pursuant to this paragraph (a) may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR, if required, and any SID or filed with the SEC. 20 L I.I. GA Lpl 1 8i (b) Material Event Notices. The County shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Notes, if such event is material within the meaning of the federal securities laws: A. Principal and interest payment delinquencies; B. Non-payment related defaults; C. Unscheduled draws on debt service reserves reflecting financial difficulties; D. Unscheduled draws on credit enhancements reflecting financial difficulties; E. Substitution of credit or liquidity providers, or their failure to perform; F. Adverse tax opinions or events affecting the tax-exempt status of the Notes; G. Modifications to rights of holders of the Notes; H. Note calls; I. Defeasances; Release, substitution, or sale ofproperty securing repayment oftheNotes; and K. Rating changes. The County shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the County to provide financial information or operating data in accordance with paragraph (a) of this Section by the time required by such paragraph. (c) Limitations, Disclaimers, and Amendments. The County shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the County remains an "obligated person" with respect to the Notes within the meaning of the Rule, except that the County in any event will give notice of any deposit made in accordance with Section 10 of this Order that causes Notes no longer to be outstanding. The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Notes, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The County undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the County's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The County does not make any 21 representation or warranty concerning such information or its usefulness to a decision to invest in or sell Notes at any future date. UNDERNO CIRCUMSTANCES SHALL THE COUNTY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY NOTE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE COUNTY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the County in observing or performing its obligations under this Section shall comprise a breach of or default under the Order for purposes of any other provision of this Order. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the County under federal and state securities laws. The provisions of this Section maybe amended by the County from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the County, but only if (1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Notes in the primary offering of the Notes in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the Holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Order that authorizes such an amendment) of the Outstanding Notes consent to such amendment or (b) a person that is unaffiliated with the County (such as nationally recognized Bond Counsel) determined that such amendment will not materially impair the interest ofthe Holders and beneficial owners of the Notes. The County may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Notes in the primary offering of the Notes. If the County so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with paragraph (a) ofthis Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. (d) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. 22 i r~ ;u. ins "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. SECTION 20. FURTHER PROCEDURES. The County Judge, County Treasurer, County Auditor and County Clerk ofthe County, and all other officers, employees, and agents ofthe County, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the County all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Order, the Notes, and the sale of the Notes. In case any officer whose signature shall appear on any Note shall cease to be such officer before the delivery of such Note, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Furthermore, at any time prior to the delivery of the Notes the County Judge and County Clerk of the County each are hereby individually authorized and directed to approve any changes or corrections to this Order or to any of the instruments authorized and approved by this Order necessary in order to (i) correct any ambiguity or mistake or properly or more completely document the transaction contemplated and approved by this Order, (ii) obtain a rating from any of the national bond rating agencies, (iii) obtain a municipal bond insurance policy to insure the timely payment of principal and interest on the Notes, or (iv) obtain the approval of the Notes by the Texas Attorney General's office. SECTION 21. ORDER A CONTRACT; AMENDMENTS. This Order shall constitute a contract with the Registered Owners of the Notes, binding on the County and its successors and assigns, and shall not be amended or repealed by the County as long as any Note remains outstanding except as permitted in this Section. The County may, without the consent of or notice to any registered owners, amend, change, or modify this Order as may be required (i) by the provisions hereof, (ii) for the purpose of curing any ambiguity, inconsistency, or formal defect or omission herein, or (iii) in connection with any other change which is not to the prejudice of the registered owners. The County may, with the written consent of the registered owners of a majority in aggregate principal amount of the Notes then outstanding affected thereby, amend, change, modify, or rescind any provisions of this Order; provided that without the consent of all of the registered owners affected, no such amendment, change, modification, or rescission shall (i) extend the time or times of payment of the principal of and interest on the Notes, reduce the principal amount thereof or the rate of interest thereon, (ii) give any preference to any Note over any other Note, (ii) extend any waiver of default to subsequent defaults, or (iv) reduce the aggregate principal amount of Notes required for consent to any such amendment, change, modification, or rescission. Whenever the 23 4 'li lil ~ i$I 1 81 County shall desire to make any amendment or addition to or rescission of this Order requiring consent of the registered owners, the County shall cause notice of the amendment, addition, or rescission to be sent by first class mail, postage prepaid, to the registered owners at the respective addresses shown on the Registration Books. Whenever at any time within one year after the date of the giving of such notice, the County shall receive an instrument or instruments in writing executed by the registered owners of a majority in aggregate principal amount of the Notes then outstanding affected by any such amendment, addition, or rescission requiring the consent of the registered owners, which instrument or instruments shall refer to the proposed amendment, addition, or rescission described in such notice and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice, thereupon, but not otherwise, the County may adopt such amendment, addition, or rescission in substantially such form, except as herein provided. No registered owner may thereafter object to the adoption of such amendment, addition, or rescission, or to any of the provisions thereof, and such amendment, addition, or rescission shall be fully effective for all purposes. SECTION 22. APPROPRIATION TO PAY PRINCIPAL AND INTEREST. The Commissioners Court of the County hereby finds that there are sufficient funds available to pay the principal and interest on the Notes coming due on August 15, 1999 and hereby directs the County Treasurer ofthe County to transfer on or before such date available funds to the Interest and Sinking Fund in an amount sufficient to pay the principal and interest coming due on such date. SECTION 23. INCORPORATION OF RECITALS. The County hereby finds that the statements set forth in the recitals of this Order are true and correct, and the County hereby incorporates such recitals as a part of this Order. SECTION24. EFFECTIVE DATE. This Order shall become effective immediately after its passage. (The remainder of this page left blank intentionally.] 24 LL IIII i bl' dl A LI PASSEDANDAPPROVED BYTHE COMMISSIONERSCOURT OFKERR COUNTY, TEXAS ON THE 17th DAY OF DECEMBER 1998. ATTEST: County Clerk, Kerr County, Texas (SEAL) [SIGNATURE PAGE TO NOTE ORDER] is o Ai sic ,. a.ni EXHIBTT A TIIE PAYING AGENT/REGISTRAR AGREEMENT IS OMTTTED AT THIS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN THIS TRANSCRIPT. f IIIY. 41i'~ Yi.l 1. l.nl EXHIBTT B THE PURCHASE CONTRACT IS OMITTED AT THIS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN THIS TRANSCRIPT. li llli. LI" ~AII 6. J.91 EXHIBTT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 19(a) of this Order: Annual Financial Statements and Operating Data The financial information and operating data with respect to the County to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the headings of the Official Statement referred to) below: Appendix C (Financial Statements for the last completed fiscal year which will be unaudited, unless an audit is performed in which event the audited financial statements will be made available.) 2. All quantitative financial information and operating data with respect to the County of the general type included in the Official Statement under Tables 1 through 13. Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in paragraph 1 above. - T--