Ord. 1224 2005-07-11 In ProcessORDINANCE NO. 1224
ORDINANCE AUTHORIZING AND ORDERING THE ISSUANCE OF CITY
OF PEARLAND, TEXAS PERMANENT IMPROVEMENT AND REFUNDING
BONDS, SERIES 2005; PRESCRIBING THE TERMS AND FORM THEREOF;
PROVIDING FOR THE PAYMENT OF THE PRINCIPAL THEREOF AND
INTEREST THEREON; AWARDING THE SALE THEREOF; AUTHORIZING
THE PREPARATION AND DISTRIBUTION OF AN OFFICIAL STATEMENT
TO BE USED IN CONNECTION WITH THE SALE OF THE BONDS;
AUTHORIZING THE PURCHASE OF BOND INSURANCE; AUTHORIZING
THE REDEMPTION PRIOR TO MATURITY OF CERTAIN OUTSTANDING
BONDS; AUTHORIZING THE REFUNDING OF CERTAIN OUTSTANDING
OBLIGATIONS, THE EXECUTION AND DELIVERY OF AN ESCROW
AGREEMENT AND THE SUBSCRIPTION FOR AND PURCHASE OF
CERTAIN ESCROWED SECURITIES; MAKING OTHER PROVISIONS
REGARDING SUCH BONDS, INCLUDING USE OF THE PROCEEDS
THEREOF, AND MATTERS INCIDENT THERETO; AND DECLARING AN
EMERGENCY
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND:
ARTICLE I.
FINDINGS AND DETERMINATIONS
Section 1.1.: Findings and Determinations. The City. Council hereby officially finds and
determines that:
(a) The City of Pearland, Texas (the "City"), acting through its City Council, is
authorized by Section 3.07 of its Home Rule Charter and the Constitution and
laws of the State of Texas, particularly Chapters 1331 and 1207 of the Texas
Government Code, as amended, to issue bonds for the purpose of making needed
public improvements and refunding the Refunded Obligations (hereinafter
defined);
(b)
The issuance of the new money portion of the bonds herein authorized was
approved by the voters of the City at an election held for such purpose on
November 6, 2001 (the "Election"), which was called by the City Council
pursuant to Resolution No. R2001-116 adopted August 29, 2001;
(c) The City Council canvassed the returns of the Election and by Ordinance No.
1040, adopted November 12, 2001 declared the results to be in favor of the
issuance of the Bonds;
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(d) The City has previously issued two installments of bonds authorized by
Election, totaling $40,000,000, and has now determined that it is necessary and
advisable to authorize, issue and deliver a third installment of such authorized
bonds in an amount of $21,198,470.40 (which includes the par amount of the new
money portion of the Bonds of $20,505,000, plus a net premium on the new
money portion of the Bonds in the amount of $816,500.40 and less an
underwriters' discount of $123,030.00);
(e) The City, acting through its City Council, has heretofore issued, assumed or
undertaken and there remain outstanding the bonds and other obligations
described in Exhibit G attached hereto (the "Refunded Obligations");
(f) The City desires to refund the Refunded Obligations in advance of their maturities
which will benefit the City by resulting in a net present value debt service savings
to the City of $871,972.04 and by restructuring the annual debt service
requirements of the City thereby creating more level annual debt service
requirements;
(g)
(h)
(i)
The City is authorized by Chapter 1207, Texas Government Code, as amended, to
accomplish such refunding by depositing directly with any place of payment for
the Refunded Obligations proceeds from the sale of the refunding bonds
authorized herein, together with any other legally available funds, which shall be
sufficient to provide for the payment of the Refunded Obligations on their date of
redemption, and such deposit shall constitute the making of firm banking and
financial arrangements for the discharge and final payment of the Refunded
Obligations;
The City desires to enter into an escrow agreement (the "Escrow Agreement")
with Wells Fargo Bank, N.A., Houston, Texas, as escrow agent, as authorized in
Chapter 1207, pursuant to which a portion of the proceeds of the refunding bonds
herein authorized, and other legally available funds of the City, will be deposited
and applied in a manner sufficient to provide for the full and timely payment of
all principal of, premium, if any, and interest on the Refunded Obligations;
Upon the issuance of the refunding bonds herein authorized and the creation of
the escrow referred to above, the Refunded Obligations shall no longer be
regarded as being outstanding, except for the purpose of being paid pursuant to
such Escrow Agreement and the pledges, liens, trusts and all other covenants,
provisions, terms and conditions of the ordinances authorizing the issuance of the
Refunded Obligations shall be, with respect to the Refunded Obligations,
discharged, terminated and defeased; and
(j) The City Council is of the opinion and hereby affirmatively finds that it is in the
best interest of the City to issue bonds in the amounts and for the purposes herein
stated.
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ARTICLE II.
DEFINITIONS AND INTERPRETATIONS
Section 2.1.: Definitions. As used herein, the following terms shall have the meanings
specified, unless the context clearly indicates otherwise:
"Act" shall mean Chapters 1207 and 1331, Texas Government Code, as amended.
"Attorney General" shall mean the Attorney General of the State of Texas.
"Bond" or "Bonds" shall mean any or all of the City of Pearland, Texas Permanent
Improvement and Refunding Bonds, Series 2005, authorized by this Ordinance.
"City" shall mean the City of Pearland, Texas and, where appropriate, its City Council.
"City Council" shall mean the governing body of the City.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas.
"Construction Fund" shall mean the Permanent Improvement and Refunding Bonds,
Series 2005 Construction Fund established by the City and described in section 5.3 of this
Ordinance.
"DTC" shall mean The Depository Trust Company, New York, New York, or any
successor securities depository.
"DTC Participant" shall mean brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations on whose behalf DTC was created to hold securities
to facilitate the clearance and settlement of securities transactions among DTC Participants.
"Debt Service Fund" shall mean the Permanent Improvement and Refunding Bonds,
Series 2005 Debt Service Fund established by the City and described in section 5.2 of this
Ordinance.
"Escrow Agent" shall mean Wells Fargo Bank, N.A., Houston, Texas, and its successors
in that capacity.
"Escrow Agreement" shall mean the agreement between the City and the Escrow Agent
relating to the deposit of funds to pay the Refunded Obligations.
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"Election" shall mean the election held November 6, 2001 which authorized the issuance
of $92,500,000 in bonds for necessary public improvements to City streets and bridges and
$22,500,000 in bonds for necessary public improvements to City drainage projects and facilities.
"Fiscal Year" shall mean the City's then designated fiscal year, which currently is the
twelve-month period beginning on the first day of October of a calendar year and ending on the
last day of September of the next succeeding calendar year and each such period may be
designated with the number of the calendar year in which such period ends.
"Interest Payment Date," when used in connection with any Bond, shall mean March 1,
2006, and each September 1 and March 1 thereafter until maturity or earlier redemption of such
Bond.
"Ordinance" shall mean this Ordinance and all amendments hereof and supplements
hereto.
"Outstanding", when used with reference to the Bonds, shall mean, as of a particular date,
all Bonds theretofore and thereupon delivered pursuant to this Ordinance except: (a) any Bonds
canceled by or on behalf of the City at or before such date;
defeased pursuant to
the defeasance provisions of this Ordinance or otherwise defeased asonds permitted by applicable
law; and (c) any Bonds in lieu of or in substitution for which a replacement Bond shall have been
delivered pursuant to this Ordinance.
"Paying Agent/Registrar" shall mean Wells Fargo Bank, N.A., Houston, Texas, and its
successors in that capacity.
"Record Date" shall mean the close of business on the 15t business day of the calendar
month immediately preceding the applicable Interest Payment Date.
"Refunded Obligations" shall mean those bonds and certificates of obligation described
in Exhibit G attached hereto, which are being refunded and defeased with the proceeds of the
Bonds and other legally available funds of the City, if any.
"Register" shall mean the registration books for the Bonds kept by the Paying
Agent/Registrar in which are maintained the names and addresses of, and the principal amounts
registered to, each Registered Owner of Bonds.
"Registered Owner" shall mean the person or entity in whose name any Bond is
registered in the Register.
"Report" shall mean the verification report prepared by Grant Thornton LLP, Certified
Public Accountants, verifying the accuracy of certain mathematical computations relating to the
Bonds and the refunding of the Refunded Obligations.
"Underwriters" shall mean First Southwest Company, UBS Financial Services Inc.,
Estrada Hinojosa and Company Inc., and Edward D. Jones & Co., L.P.
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Section 2.2.: Int retations. All terms defined herein and all pronouns used in this
Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles
and headings of the articles and sections of this Ordinance have been inserted for convenience of
reference only and are not to be considered a part hereof and shall not in any way modify or
restrict any of the terms or provisions hereof. This Ordinance and all the terms and provisions
hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the
validity of the Bonds and the validity of the levy of ad valorem taxes to pay the principal of and
interest on the Bonds.
ARTICLE III.
TERMS OF THE BONDS
Section 3.1.: Amount. Purpose and Authorization. (a) The Bonds shall be issued in fully
registered form, without coupons, under and pursuant to the authority of the City's Home Rule
Charter and the Act in the total authorized aggregate principal amount of THIRTY SEVEN
MILLION FIFTEEN THOUSAND AND NO/100 DOLLARS ($37,015,000.00) for the purpose
of providing all or part of the funds for the following
purposes: (i) $8,500,000 for acquiring,
constructing and improving City drainage projects and facilities; (ii) $12,005,000 for acquiring,
constructing, repairing and improving City streets and bridges; and (iii) $16,510,000 to refund
the Refunded Obligations. Proceeds of the Bonds also will be used to pay costs of issuance of
the Bonds and other professional services related thereto.
(b) It is hereby found and determined that the refunding of the Refunded Obligations
and the issuance of the Bonds will benefit the City by resulting in a net present value debt service
savings to the City and by restructuring the annual debt service requirements of the City thereby
creating more level annual debt service requirements, and that such benefits are sufficient
consideration for the issuance of the Bonds.
Section 3.2.: Designation, Date and Interest Payment Dates. The Bonds shall be
designated as the "City of Pearland, Texas Permanent Improvement and Refunding Bonds,
Series 2005," and shall be dated July 15, 2005. The Bonds shall bear interest at the rates set
forth in Section 3.3 below, from the later of July 15, 2005 or the most recent Interest Payment
Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day
year of twelve 30-day months, payable on March 1, 2006, and each September 1 and March 1
thereafter until maturity or earlier redemption.
If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for
thirty (30) days thereafter, the Paying Agent/Registrar shall establish a new record date for the
payment of such interest, to be known as a Special Record Date. The Paying Agent/Registrar
shall establish a Special Record Date when funds to make such interest payment are received
from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the
date fixed for payment of such past due interest, and notice of the date of payment and the
Special Record Date shall be sent by United States mail, first class, postage prepaid, not later
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than five (5) days prior to the Special Record Date, to each affected Registered Owner as of the
close of business on the day prior to mailing of such notice.
Section 3.3.: Numbers, Denomination, Interest Rates and Maturities. (a) The Bonds
shall be initially issued bearing the numbers, in the principal amounts and bearing interest at the
rates set forth in the following schedule, and may be transferred and exchanged as set out in this
Ordinance. The Bonds shall mature on March 1 in each of the years and in the amounts set out
in such schedule. Bonds delivered in transfer of or in exchange for other Bonds shall be
numbered in order of their authentication by the Paying Agent/Registrar, shall be in the
denomination of $5,000 or integral multiples thereof and shall mature on the same date and bear
interest at the same rate as the Bond or Bonds in lieu of which they are delivered.
Bond Year of Principal
Number Maturity Amount
Interest
mount Rate
R-1 2009 $425,000 3.250%
R-2 2010 1,635,000
3.500
R-3 2011
1,705,000 3.625
R-4 2012 1,775,000
3.750
R-5 2013
1,845,000 3.875
R-6 2014 1,930,000
4.000
R-7 2015
2,010,000 5.000
R-8 2016 2,115,000
5.000
R-9 2017
865,000 4.000
R-10 018 995,000 4.000
R-11 2019 380,000 4.100
R-12 2020 385,000 4.125
R-13 2021 395,000 4.200
R-14 2022 405,000 4.250
R-15 2023 875,000 4.300
R-16 2024 2,625,000 5.000
R-17 2025 2,760,000 5.000
R-18 2026 2,900,000 5.000
R-19 2027 3,045,000 4.500
R-20 2028 4,010,000 5.000
R-21 2029 3,935,000 5.000
Section 3.4.: Redemption Prior to Maturity. (a) Optional Redemption. The Bonds
maturing on and after March 1, 2016 are subject to redemption prior to maturity, at the option of
the City, in whole or in part, on March 1, 2015 or any date thereafter, at par plus accrued interest
to the date fixed for redemption.
(b) Bonds may be redeemed in part only in integral multiples of $5,000. If a Bond
subject to redemption is in a denomination larger than $5,000, a portion of such Bond may be
redeemed, but only in integral multiples of $5,000. In selecting portions of Bonds for
redemption, each Bond shall be treated as representing that number of Bonds of $5,000
denomination which is obtained by dividing the principal amount of such Bond by $5,000. Upon
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shall be registered in the name of Cede & Co., as nominee of DTC. Upon delivery by DTC to
the Paying Agent/Registrar of written 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 Ordinance with
respect to interest checks being mailed to the Owner at the close of business on the Record Date,
the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the
City and the Paying Agent/Registrar shall have no responsibility or obligation to any 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 Paying
Agent/Registrar shall have no responsibility or obligation with respect to (a) the accuracy of the
records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in
the Bonds, (b) the delivery to any DTC Participant or any other person, other than a Bondholder,
as shown on the Register, of any notice with respect to the Bonds, including any notice of
redemption or (c) the payment to any DTC Participant or any other person, other than a
Bondholder as shown in the Register, of any amount with respect to principal of Bonds,
premium, if any, or interest on the Bonds.
Except as provided in Section 3.10 of this Ordinance, the City and the Paying
Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is
registered in the Register as the absolute owner of such Bond for the purpose of payment of
principal of, premium, if any, and interest on Bonds, for the purpose of giving notices of
redemption and other matters with respect to such Bond, for the purpose of registering transfer
with respect to such Bond, and for all other purposes whatsoever. The Paying Agent/Registrar
shall pay all principal of Bonds, premium, if any, and interest on the Bonds only to or upon the
order of the respective owners, as shown in the Register as provided in this Ordinance, 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, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No
person other than an owner shall receive a Bond evidencing the obligation of the City to make
payments of amounts due pursuant to this Ordinance.
Section 3.10.: Payments and Notices to Cede & Co. Notwithstanding any other
provision of this Ordinance to the contrary, as long as any Bonds are registered in the name of
Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and
interest on the Bonds, and all notices with respect to such Bonds shall be made and given,
respectively, in the manner provided in the representation letter of the City to DTC.
Section 3.11.: Successor Securities Depository; Transfer Outside Book -Entry Only
System. In the event that the City or the Paying Agent/Registrar determines that DTC is
incapable of discharging its responsibilities described herein and in the representation letter of
the City to DTC, and that it is in the best interest of the beneficial owners of the Bonds that they
be able to obtain certificated Bonds, the City or the Paying Agent/Registrar shall (a) 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 of the appointment of such successor securities
depository and transfer one or more separate Bonds to such successor securities depository or (b)
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notify DTC of the availability through DTC of Bonds and transfer one or more separate Bonds to
DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall
no longer be restricted to being registered in the Register 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 Bondholders transferring or exchanging Bonds shall designate, in
accordance with the provisions of this Ordinance.
Section 3.12.: Replacement Bonds. Upon the presentation and surrender to the Paying
Agent/Registrar of a damaged or mutilated Bond, the Paying Agent/Registrar shall authenticate
and deliver in exchange therefor a replacement Bond, of the same maturity, interest rate and
principal amount, bearing a number not contemporaneously outstanding. The City or the Paying
Agent/Registrar may require the Registered Owner of such Bond to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection therewith and any other
expenses connected therewith, including the fees and expenses of the Paying Agent/Registrar
and the City.
If any Bond is lost, apparently destroyed or wrongfully taken, the City,
applicable laws of the State of Texas and ordinances of the City, pursuant to the
and in the absence of notice or
knowledge that such Bond has been acquired by a bona fide purchaser, shall execute, and the
Paying Agent/Registrar shall authenticate and deliver, a replacement Bond of the same maturity,
interest rate and principal amount, bearing a number not contemporaneously outstanding,
provided that the Registered Owner thereof shall have:
(a) furnished to the City and the Paying Agent/Registrar satisfactory evidence of the
ownership of and the circumstances of the loss, destruction or theft of such Bond;
furnished such security or indemnity as ,may be required by the Paying
Agent/Registrar and the City to save and hold them harmless;
(c) paid all expenses and charges in connection therewith, including, but not limited
to, printing costs, legal fees, fees of the Paying Agent/Registrar and any tax or
other governmental charge that may be imposed; and
(d) met any other reasonable requirements of the City and the Paying
Agent/Registrar.
(b)
If, after the delivery of such replacement Bond, a bona fide purchaser of the original
Bond in lieu of which such replacement Bond was issued presents for payment such original
Bond, the City and the Paying Agent/Registrar shall be entitled to recover such replacement
Bond from the person to whom it was delivered or any person taking therefrom, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor
to the extent of any loss, damage, cost or expense incurred by the City or the Paying
Agent/Registrar in connection therewith.
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with this Section shall be valid and effective and shall discharge the liability of the City and the
Paying Agent/Registrar upon such Bond to the extent of the sums paid.
Section 3.8.: Registration, Transfer and Exchange. The Paying Agent/Registrar is
hereby appointed the registrar for the Bonds. So long as any Bond remains Outstanding, the
Paying Agent/Registrar shall keep the Register at its office in Houston, Texas in which, subject
to such reasonable regulations as it may prescribe, the Paying
the registration and transfer of the Bonds in accordance with the terms of this Ordiar nancep.
for
Each Bond shall be transferable only upon the presentation and surrender thereof at the
office of the Paying Agent/Registrar, accompanied by an assignment duly executed by the
Registered Owner or his authorized representative in form satisfactory to the Paying
Agent/Registrar. Upon due presentation of any Bond for transfer, the Paying Agent/Registrar
shall authenticate and deliver in exchange therefor, within seventy-two (72) hours after such
presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in
authorized denominations and of the same maturity and aggregate principal amount and bearing
interest at the same rate as the Bond or Bonds so presented and surrendered.
All Bonds shall be exchangeable upon the presentation and surrender thereof at the office
of the Paying Agent/Registrar for a Bond or Bonds, maturity and interest rate and in any
authorized denomination, in an aggregate principal amount equal to the unpaid principal amount
of the Bond or Bonds presented for exchange. The Paying Agent/Registrar shall be and is
hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions
of this Section. Each Bond delivered by the Paying Agent/Registrar in accordance with this
Section shall be entitled to the benefits and security of this Ordinance to the same extent as the
Bond or Bonds in lieu of which such Bond is delivered.
All Bonds issued in transfer or exchange shall be delivered to the Registered Owners
thereof at the office of the Paying Agent/Registrar or sent by United States mail, first class,
postage prepaid.
The City or the Paying Agent/Registrar may require the Registered Owner of any Bond to
pay a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with the transfer or exchange of such Bond. Any fee or charge of the Paying
Agent/Registrar for such transfer or exchange shall be paid by the City.
The Paying Agent/Registrar shall not be required to transfer or exchange any Bond called
for redemption in whole or in part during the forty-five (45) day period immediately prior to the
date fixed for redemption; provided, however, that this restriction shall not apply to the transfer
or exchange by the Registered Owner of the unredeemed portion of a Bond called for redemption
in part.
Section 3.9.: Book -Entry Only System. The definitive Bonds shall be initially issued in
the form of a separate single fully registered Bond for each of the maturities thereof. Upon
initial issuance, the ownership of each such Bond shall be registered in the name of Cede & Co.,
as nominee of DTC, and except as provided in Section 3.11 hereof, all of the Outstanding Bonds
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If any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or
is about to become due and payable, the City in its discretion may, instead of issuing a
replacement Bond, authorize the Paying Agent/Registrar to pay such Bond.
Each replacement Bond delivered in accordance with this Section shall be entitled to the
benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which
such replacement Bond is delivered.
Section 3.13.: Cancellation. All Bonds paid or redeemed in accordance with this
Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are
authenticated and delivered in accordance herewith, shall be canceled and destroyed upon the
making of proper records regarding such payment or redemption. The Paying Agent/Registrar
shall periodically furnish the City with certificates of destruction of such Bonds.
ARTICLE IV.
FORM OF BONDS
The Bonds, including the Form of Comptroller's Registration Certificate, Form of Paying
Agent/Registrar's Authentication Certificate and Form of Assignment, shall be in substantially
the following forms, with such omissions, insertions and variations as may be necessary or
desirable, and not prohibited by this Ordinance:
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF PEARLAND, TEXAS
PERMANENT IMPROVEMENT AND REFUNDING BONDS, SERIES 2005
NUMBER DENOMINATION
R-
REGISTERED
REGISTERED
INTEREST RATE: DATED DATE: MATURITY DATE: CUSIP:
July 15, 2005 March 1,
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DOLLARS
THE CITY OF PEARLAND, TEXAS, a municipal corporation of the State of Texas (the
"City"), for value received, hereby promises to pay to the Registered Owner identified above or
its registered assigns, on the maturity date specified above (or on earlier redemption as herein
provided), upon presentation and surrender of this Bond at the office of Wells Fargo Bank, N.A.,
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Houston, Texas or its successor (the "Paying Agent/Registrar"), the principal amount identified
above (or so much thereof as shall not have been paid or deemed to have been paid upon prior
redemption) payable in any coin or currency of the United States of America which on the date
of payment of such principal is legal tender for the payment of debts due to the United States of
America, and to pay interest thereon at the rate shown above, calculated on a basis of a 360-day
year composed of twelve 30-day months, from the later of the Dated Date identified above or the
most recent interest payment date to which interest has been paid or duly provided for. Interest
on this Bond is payable on March 1, 2006, and each September 1 and March 1 thereafter until
maturity or earlier redemption of this Bond, by check sent by United States mail, first class,
postage prepaid, by the Paying Agent/Registrar to the Registered Owner of record as of the close
of business on the 15t business day of the calendar month immediately preceding the applicable
interest payment date, as shown on the registration books kept by the Paying Agent/Registrar.
Any accrued interest payable at maturity or earlier redemption shall be paid upon presentation
and surrender of this Bond at the office of the Paying Agent/Registrar.
THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS (the "Bonds")
in the aggregate principal amount of $37,015,000 issued pursuant to an ordinance adopted by the
City Council of the City on July 11, 2005 (the "Ordinance") for the purpose of providing funds
for permanent public improvements in the City and refunding certain outstanding obligations of
the City, under and pursuant to the authority of Chapters 1207 and 1331, Texas Government
Code, as amended, the City's Home Rule Charter, and an election held on November 6, 2001.
Proceeds of the Bonds will also be used to pay costs of issuance of the Bonds and other
professional services related thereto.
THIS BOND shall not be valid or obligatory for any purpose or be entitled to any benefit
under the Ordinance unless this Bond either (i) is registered by the Comptroller of Public
Accounts of the State of Texas by due execution of the registration certificate endorsed hereon or
(ii) is authenticated by the Paying Agent/Registrar by due execution of the authentication
certificate endorsed hereon.
THE CITY RESERVES THE RIGHT, at its option, to redeem, prior to their maturity,
Bonds maturing on and after March 1, 2016, in whole or in part, on March 1, 2015, or any date
thereafter, at par plus accrued interest to the date fixed for redemption.
BONDS MAY BE REDEEMED IN PART only in integral multiples of $5,000. If a
Bond subject to redemption is in a denomination larger than $5,000, a portion of such Bond may
be redeemed, but only in integral multiples of $5,000. In selecting portions of Bonds for
redemption, each Bond shall be treated as representing that number of Bonds of $5,000
denomination which is obtained by dividing the principal amount of such Bond by $5,000. Upon
surrender of any Bond for redemption in part, the Paying Agent/Registrar, in accordance with the
provisions of the Ordinance, shall authenticate and deliver in exchange therefor a Bond or Bonds
of like maturity and interest rate in an aggregate principal amount equal to the unredeemed
portion of the Bond so surrendered.
NOTICE OF ANY SUCH REDEMPTION, identifying the Bonds or portions thereof to
be redeemed, shall be sent by United States mail, first class, postage prepaid, to the Registered
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Owners thereof at their addresses as shown on the books of registration kept by the Paying
Agent/Registrar, not less than thirty (30) days before the date fixed for such redemption. By the
date fixed for redemption, due provision shall be made with the Paying Agent/Registrar for the
payment of the redemption price of the Bonds called for redemption. If such notice of
redemption is given, and if due provision for such payment is made, all as provided above, the
Bonds which are to be so redeemed thereby automatically shall be redeemed prior to their
scheduled maturities, they shall not bear interest after the date fixed for redemption, and they
shall not be regarded as being outstanding except for the purpose of being paid with the funds so
provided for such payment.
THIS BOND IS TRANSFERABLE only upon presentation and surrender at the office of
the Paying Agent/Registrar, accompanied by an assignment duly executed by the Registered
Owner or its authorized representative, subject to the terms and conditions of the Ordinance.
THIS BOND IS EXCHANGEABLE at the office of the Paying Agent/Registrar for a
Bond or Bonds of the same maturity and interest rate and in the principal amount of $5,000 or
any integral multiple thereof, subject to the terms and conditions of the Ordinance.
THE PAYING AGENT/REGISTRAR is not required to accept for transfer or exchange
any Bond called for redemption, in whole or in part, during the forty-five (45) day period
immediately prior to the date fixed for redemption; provided, however, that such limitation shall
not apply to the transfer or exchange by the Registered Owner of an unredeemed portion of a
Bond called for redemption in part.
THE CITY OR PAYING AGENT/REGISTRAR may require the Registered Owner of
any Bond to pay a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with the transfer or exchange of a Bond. Any fee or charge of the Paying
Agent/Registrar for a transfer or exchange shall be paid by the City.
THE REGISTERED OWNER of this Bond by acceptance hereof, acknowledges and
agrees to be bound by all the terms and conditions of the Ordinance.
IT IS HEREBY DECLARED AND REPRESENTED that this Bond has been duly and
validly issued and delivered; that all acts, conditions and things required or proper to be
performed, exist and to be done precedent to or in the issuance and delivery of this Bond have
been performed, exist and have been done in accordance with law; that the Bonds do not exceed
any constitutional or statutory limitation; and that annual ad valorem taxes sufficient to provide
for the payment of the interest on and principal of this Bond, as such interest comes due and such
principal matures, have been levied and ordered to be levied, within the limits prescribed by law,
against all taxable property in the City and have been irrevocably pledged for such payment.
REFERENCE IS HEREBY MADE TO THE ORDINANCE, a copy of which is filed
with the Paying Agent/Registrar, for the full provisions thereof, to all of which the Registered
Owners of the Bonds assent by acceptance of the Bonds.
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HOU:2465492.5
IN WITNESS WHEREOF, the City has caused its corporate seal to be impressed or
placed in facsimile hereon and this Bond to be signed by the Mayor and countersigned by the
City Secretary by their manual, lithographed or printed facsimile signatures.
(AUTHENTICATION OR CITY OF PEARLAND, TEXAS
REGISTRATION CERTIFICATE)
(SEAL)
* * *
Mayor
COUNTERSIGNED:
City Secretary
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FORM OF COMPTROLLER'S REGISTRATION CERTIFICATE
The following form of Comptroller's Registration Certificate shall be attached or affixed
to each of the Bonds initially delivered:
OFFICE OF THE COMPTROLLER §
OF PUBLIC ACCOUNTS § REGISTER NO.
THE STATE OF TEXAS §
I hereby certify that this bond has been examined, certified as to validity and approved by
the Attorney General of the State of Texas, and that this bond has been registered by the
Comptroller of Public Accounts of the State of Texas.
WITNESS MY SIGNATURE AND SEAL OF OFFICE this
Comptroller of Public Accounts
(SEAL) of the State of Texas
* * *
15
HOU:2465492.5
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
The following form of authentication certificate shall be printed on the face of each of the
Bonds other than those initially delivered:
AUTHENTICATION CERTIFICATE
This Bond is one of the Bonds described in and delivered pursuant to the within -
mentioned Ordinance; and, except for the Bonds initially delivered, this Bond has been issued in
exchange for or replacement of a Bond, Bonds, or a portion of a Bond or Bonds of an issue
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.
WELLS FARGO BANK, N.A., Houston, Texas
as Paying Agent/Registrar
By
Authorized Signature
Date of Authentication:
* * *
16
HOU:2465492.5
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
The following form of authentication certificate shall be printed on the face of each of the
Bonds other than those initially delivered:
AUTHENTICATION CERTIFICATE
This Bond is one of the Bonds described in and delivered pursuant to the within -
mentioned Ordinance; and, except for the Bonds initially delivered, this Bond has been issued in
exchange for or replacement of a Bond, Bonds, or a portion of a Bond or Bonds of an issue
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.
WELLS FARGO BANK, N.A., Houston, Texas
as Paying Agent/Registrar
By
Authorized Signature
Date of Authentication:
* * *
16
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FORM OF ASSIGNMENT
The following form of assignment shall be printed on the back of each of the Bonds:
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
(Please print or type name, address, and zip code of Transferee)
(Please insert Social Security or Taxpayer Identification Number of Transferee)
the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney trfer
kept for registration thereof, with full power of substitut nto in the preen sesh bond on the books
DATED:
Signature Guaranteed:
NOTICE: Signature must be guaranteed by a
member firm of the New York Stock Exchange
or a commercial bank or trust company.
* * *
Registered Owner
NOTICE: The signature above must
correspond to the name of the Registered
Owner as shown on the face of this bond in
every particular, without any alteration,
enlargement or change whatsoever.
17
HOU:2465492.5
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a policy containing the following provisions, such
policy being on file at Wells Fargo Bank, N.A., Houston, Texas.
The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby
unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described
obligations, the full and complete payment required to be made by or on behalf of the Issuer to Wells Fargo Bank,
N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or
by any advancement of maturity pursuant to a mandatory sinking fund pa
that term is defined below) as such payments shall become due but shall not be so paid(except that in ent) and interest on, the O(igations as
event of
any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration
resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund
payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of
principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole
discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of
any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of
any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be
referred to herein collectively as the "Insured Amounts." "Obligations" shall mean:
S37,015,000
CITY OF PEARLAND, TEXAS
PERMANENT IMPROVEMENT AND REFUNDING BONDS, SERIES 2005
Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by
registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the
Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such
required payment has not been made, the Insurer on the due date of such payment or within one business day after
receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank
Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured
Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other
proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the
assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to
effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to
payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust
National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent
payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the
payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any
prepayment premium which may at any time be payable with respect to any Obligation.
As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the
books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner
shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the
Obligations.
Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street,
Armonk, New York 10504 and such service of process shall be valid and binding.
This policy is non -cancellable for any reason. The premium on this policy is not refundable for any reason
including the payment prior to maturity of the Obligations.
DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its
contractual obligation under this policy or contract or application or certificate or evidence of coverage, the
policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection
arrangement.
* * *
MBIA INSURANCE CORPORATION
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ARTICLE V.
SECURITY FOR THE BONDS
Section 5.1.: Pledge and Levy of Taxes. (a) To provide for the payment of principal of
and interest on the Bonds, there is hereby levied, within the limits prescribed by law, for the
current year and each succeeding year thereafter, while the Bonds or any part of the principal
thereof and the interest thereon remain outstanding and unpaid, an ad valorem tax upon all
taxable property within the City sufficient to pay the interest on the Bonds and to create and
provide a sinking fund of not less than 2% of the principal amount of the Bonds or not less than
the principal payable out of such tax, whichever is greater, with full allowance being made for
tax delinquencies and the costs of tax collection, and such taxes, when collected, shall be applied
to the payment of principal of and interest on the Bonds by deposit to the Debt Service Fund and
to no other purpose.
(b) The City hereby declares its purpose and intent to provide and levy a tax legally
sufficient to pay the principal of and interest on the Bonds, it having been determined that the
existing and available taxing authority of the City for such purpose is adequate to permit a
legally sufficient tax. As long as any Bonds remain outstanding, all moneys on deposit in, or
credited to, the Debt Service Fund shall be secured by a pledge of security, as provided by law
for cities in the State of Texas.
(c) The City hereby appropriates from current funds on hand and legally available
therefor, funds sufficient, when added to the accrued interest received from the sale of the Bonds,
to pay the interest on the Bonds payable on March 1, 2006.
Section 5.2.: Debt Service Fund. The Permanent Improvement and Refunding Bonds,
Series 2005 Debt Service Fund (the "Debt Service Fund") is hereby created as a special fund
solely for the benefit of the Bonds. The City shall establish and maintain such fund at an official
City depository and shall keep such fund separate and apart from all other funds and accounts of
the City. Any amount on deposit in the Debt Service Fund shall be maintained by the City in
trust for the Registered Owners of the Bonds. Such amount, plus any other amounts deposited
by the City into such fund and any and all investment earnings on amounts on deposit in such
fund, shall be used only to pay the principal of, premium, if any, and interest on the Bonds.
Section 5.3.: Construction Fund. The Permanent Improvement and Refunding Bonds,
Series 2005 Construction Fund (the "Construction Fund") is hereby created as a special fund of
the City. Money on deposit in the Construction Fund shall be used only for the purposes set
forth in Section 3.1 of this Ordinance. Money on deposit in the Construction Fund may, at the
option of the City, be invested as permitted by Texas law, provided that all such deposits and
investments shall be made in such manner that the money required to be expended from the
Construction Fund will be available at the proper time or times.
All interest and income derived from such deposits and investments shall remain in the
Construction Fund, except that, to the extent required by law, such interest and income may be
applied to make such payments to the United States of America as shall be required to assure that
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HOU:2465492.5
interest on the Bonds is exempt from federal income taxation. Upon the completion of the
purposes set forth in Section 3.1 of this Ordinance, any surplus funds on deposit in the
Construction Fund shall be transferred into the Debt Service Fund.
Section 5.4.: Further Proceedings. After the Bonds to be initially issued have been
executed, it shall be the duty of the Mayor to deliver the Bonds to be initially issued and all
pertinent records and proceedings to the Attorney General for examination and approval. After
the Bonds to be initially issued shall have been approved by the Attorney General, they shall be
delivered to the Comptroller for registration. Upon registration of the Bonds to be initially
issued, the Comptroller (or a deputy lawfully designated in writing to act for the Comptroller)
shall manually sign the Comptroller's registration certificate prescribed herein to be affixed or
attached to the Bonds to be initially issued, and the seal of said Comptroller shall be impressed,
or placed in facsimile, thereon.
ARTICLE VI.
CONCERNING THE PAYING AGENT/REGISTRAR
Section 6.1.: Acceptance. Wells Fargo Bank, N.A., Houston, Texas, is hereby appointed
as the initial Paying Agent/Registrar for the Bonds pursuant to the terms and provisions of the
Paying Agent/Registrar Agreement by and between the City and the Paying Agent/Registrar.
The Paying Agent/Registrar Agreement shall be substantially in the form attached hereto as
Exhibit A, the terms and provisions of which are hereby approved, and the Mayor is hereby
authorized to execute and deliver such Paying Agent/Registrar Agreement on behalf of the City
in multiple counterparts and the City Secretary is hereby authorized to attest thereto and affix the
City's seal. Such initial Paying Agent/Registrar and any successor Paying Agent/Registrar, by
undertaking the performance of the duties of the Paying Agent/Registrar hereunder, and in
consideration of the payment of any fees pursuant to the terms of any contract between the
Paying Agent/Registrar and the City and/or the deposits of money pursuant to this Ordinance,
shall be deemed to accept and agree to abide by the terms of this Ordinance.
Section 6.2.: Trust Funds. All money transferred to the Paying Agent/Registrar in its
capacity as Paying Agent/Registrar for the Bonds under this Ordinance (except any sums
representing Paying Agent/Registrar's fees) shall be held in trust for the benefit of the City, shall
be the property of the City and shall be disbursed in accordance with this Ordinance.
Section 6.3.: Bonds Presented. Subject to the provisions of Section 6.4, all matured
Bonds presented to the Paying Agent/Registrar for payment shall be paid without the necessity of
further instructions from the City. Such Bonds shall be canceled as provided herein.
Section 6.4.: Unclaimed Funds Held by the Paying Agent/Registrar. Funds held by the
Paying Agent/Registrar that represent principal of and interest on the Bonds remaining
unclaimed by the Registered Owner thereof after the expiration of three years from the date such
funds have become due and payable (a) shall be reported and disposed of by the Paying
Agent/Registrar in accordance with the provisions of Title 6 of the Texas Property Code, as
20
HOU:2465492.5
amended, to the extent such provisions are applicable to such funds, or (b) to the extent such
provisions do not apply to the funds, such funds shall be paid by the Paying Agent/Registrar to
the City upon receipt by the Paying Agent/Registrar of a written request therefor from the City.
The Paying Agent/Registrar shall have no liability to the Registered Owners of the Bonds
by virtue of actions taken in compliance with this Section.
Section 6.5.: Paying Agent/Registrar May Own Bonds. The Paying Agent/Registrar in
its individual or any other capacity, may become the owner or pledgee of Bonds with the same
rights it would have if it were not the Paying Agent/Registrar.
Section 6.6.: Successor Paying Agents/Registrars. The City covenants that at all times
while any Bonds are Outstanding it will provide a legally qualified bank, trust company,
financial institution or other agency to act as Paying Agent/Registrar for the Bonds. The City
reserves the right to change the Paying Agent/Registrar for the Bonds on not less than sixty (60)
days' written notice to the Paying Agent/Registrar, as long as any such notice is effective not less
than 60 days prior to the next succeeding principal or interest payment date on the Bonds.
Promptly upon the appointment of any successor Paying Agent/Registrar, the previous Paying
Agent/Registrar shall deliver the Register or a copy thereof to the new Paying Agent/Registrar,
and the new Paying Agent/Registrar shall notify each Registered Owner, by United States mail,
first class, postage prepaid, of such change and of the address of the new Paying Agent/Registrar.
Each Paying Agent/Registrar hereunder, by acting in that capacity, shall be deemed to have
agreed to the provisions of this Ordinance.
ARTICLE VII.
PROVISIONS CONCERNING SALE AND
APPLICATION OF PROCEEDS OF BONDS
Section 7.1.: Sale of Bonds: Insurance. The sale of the Bonds to the Underwriters at a
price of $38,161,096.45 (representing the par value thereof plus a net premium on the Bonds of
$1,368,186.45 and less an underwriting discount of $222,090.00) plus accrued interest to the date
of delivery of the Bonds, in accordance with the terms of the Bond Purchase Agreement
presented to and hereby approved by the City Council, in substantially the form attached hereto
as Exhibit B which price and terms are hereby found and determined to be the most
advantageous reasonably obtainable by the City. The Mayor, Mayor Pro-Tem and all other
officials, agents and representatives of the City are hereby authorized to do any and all things
necessary or desirable to provide for the issuance and delivery of the Bonds.
The City hereby acknowledges that the sale of the Bonds pursuant to the Bond Purchase
Agreement is contingent upon the issuance of a policy of municipal bond insurance from MBIA
Insurance Corporation insuring the timely payment of principal of and interest on the Bonds.
The terms and conditions of such policy, as set out in Exhibit F hereto, are incorporated herein
for all purposes for so long as such policy remains in effect. The purchase of such a policy and
the payment of the premium therefor is hereby approved and the Mayor and other appropriate
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HOU:2465492.5
City officials are hereby authorized and directed to execute such documents and certificates and
to do any and all things necessary or desirable to obtain such insurance and the printing on the
Bonds of an appropriate legend or statement regarding such insurance is hereby approved.
Section 7.2.: Avnroval, Registration and Delivery. The Mayor is hereby authorized to
have control and custody of the Bonds and all necessary records and proceedings pertaining
thereto pending their delivery, and the Mayor and other officers and employees of the City are
hereby authorized and directed to make such certifications and to execute such instruments as
may be necessary to accomplish the delivery of the Bonds and to assure the investigation,
examination and approval thereof by the Attorney General and the registration of the initial
Bonds by the Comptroller. Upon registration of the Bonds, the Comptroller (or the
Comptroller's certificates clerk or an assistant certificates clerk lawfully designated in writing to
act for the Comptroller) shall manually sign the Comptroller's Registration Certificates
prescribed herein to be attached or affixed to each Bond initially delivered and the seal of the
Comptroller shall be impressed or printed or lithographed thereon.
Section 7.3.: Offering Documents; Ratings. The City hereby approves the form and
contents of the Preliminary Official Statement, attached hereto as Exhibit C and the final Official
Statement, attached hereto as Exhibit D, dated as of the date hereof, relating to the Bonds, and
any addenda, supplement or amendment thereto, and ratifies and approves the distribution of
such Preliminary Official Statement and Official Statement in the offer and sale of the Bonds and
in the reoffering of the Bonds by the Underwriters, with such changes therein or additions thereto
as the officials executing same may deem advisable, such determination to be conclusively
evidenced by their execution thereof. The Mayor is hereby authorized and directed to execute,
and the City Secretary is hereby authorized and directed to attest, the final Official Statement. It
is further hereby officially found, determined and declared that the statements and
representations contained in the Preliminary Official Statement and final Official Statement are
true and correct in all material respects, to the best knowledge and belief of the City Council, and
that, as of the date thereof, the Preliminary Official Statement was an official statement of the
City with respect to the Bonds that was deemed "final" by an authorized official of the City
except for the omission of no more than the information permitted by subsection (b)(1) of Rule
15c2-12 of the Securities and Exchange Commission.
Further, the City Council hereby ratifies, authorizes and approves the actions of the
Mayor, the City's financial advisor and other consultants in seeking ratings on the Bonds from
Moody's Investors Service, Inc. and Standard & Poor's Ratings Group and such actions are
hereby ratified and confirmed.
Section 7.4.: Application of Proceeds of Bonds. (a) Proceeds from the sale of the Bonds
shall, promptly upon receipt by the City, be applied as follows:
(1) Accrued interest shall be deposited into the Debt Service Fund created in
Section 5.2 of this Ordinance;
(2) A portion of the proceeds shall be applied to pay expenses arising in connection
with the issuance of the Bonds and the refunding of the Refunded Obligations;
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HOU:2465492.5
(3)
The remaining proceeds shall be (i) used to establish an escrow fund to refund the
Refunded Obligations, as more fully provided below and (ii) deposited into the
Construction Fund created in Section 5.3 of this Ordinance.
(b) From the existing debt service fund for the Refunded Obligations there shall be
transferred to the escrow fund established pursuant to the Escrow Agreement the amount of
$505,000.00 and to the Debt Service Fund the amount of $0.00.
Section 7.5.: Tax Exemption. The City intends that the interest on the Bonds shall be
excludable from gross income of the owners thereof for federal income tax purposes pursuant to
Sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended, (the
"Code") and all applicable temporary, proposed and final regulations (the "Regulations") and
procedures promulgated thereunder and applicable to the Bonds. For this purpose, the City
covenants that it will monitor and control the receipt, investment, expenditure and use of all
gross proceeds of the Bonds (including all property, the acquisition, construction or improvement
of which is to be financed directly or indirectly with the proceeds of the Bonds) and take or omit
to take such other and further actions as may be required by Sections 103 and 141 through 150 of
the Code and the Regulations to cause the interest on the Bonds to be and remain excludable
from the gross income, as defined in- Section 61 of the Code, of the owners of the Bonds for
federal income tax purposes. Without limiting the generality of the foregoing, the City shall
comply with each of the following covenants:
(a) The City will use all of the proceeds of the Bonds to: (i) acquire United States
Treasury Securities (the "Escrowed Securities") sufficient to pay the principal of,
premium, if any, and interest on the Refunded Obligations, (ii) provide funds for
the purposes described in Section 3.1; and (iii) to pay the costs of issuing the
Bonds except for amounts, if any, described in the Report (as defined in the
Escrow Agreement) as the rounding amount and the ending cash balance in the
Escrow Fund (as defined in the Escrow Agreement). All of the proceeds of the
Bonds will be used for the purposes set forth above;
The City will not directly or indirectly take any action or omit to take any action,
which action or omission would cause the Bonds or the Refunded Obligations to
constitute "private activity bonds" within the meaning of Section 141(a) of the
Code.
(b)
(c) Principal of and interest on the Bonds will be paid solely from ad valorem taxes
collected by the City, investment earnings on such collections, and as available,
proceeds of the Bonds.
(d) Based upon all facts and estimates now known or reasonably expected to be in
existence on the date the Bonds are delivered, the City reasonably expects that the
proceeds of the Bonds and the Refunded Obligations (to the extent any of such
proceeds remain unexpended) will not be used in a manner that would cause the
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HOU:2465492.5
Bonds or the Refunded Obligations or any portion thereof to be "arbitrage bonds"
within the meaning of Section 148 of the Code.
(e) At all times while the Bonds are outstanding, the City will identify and properly
account for all amounts constituting gross proceeds of the Bonds in accordance
with the Regulations. The City will monitor the yield on the investments of the
proceeds of the Bonds and, to the extent required by the Code and the
Regulations, will restrict the yield on such investments to a yield which is not
materially higher than the yield on the Bonds. To the extent necessary to prevent
the Bonds from constituting "arbitrage bonds," the City will make such payments
as are necessary to cause the yield on all yield restricted nonpurpose investments
allocable to the Bonds to be less than the yield that is materially higher than the
yield on the Bonds.
(f) The City will not take any action or knowingly omit to take any action, if taken or
omitted, would cause the Bonds to be treated as "federally guaranteed"
obligations for purposes of Section 149(b) of the Code.
The City represents that not more than fifty percent (50%) of the proceeds of any
new money portion of the Bonds or any new money issue refunded by, the
Refunded Obligations was invested in nonpurpose investments (as defined in
Section 148(f)(b)(A) of the Code) having a substantially guaranteed yield for four
years or more within the meaning of Section 149(g)(3)(A)(ii) of the Code, and the
City reasonably expected at the time each issue of the Refunded Obligations was
issued that at least eighty-five percent (85%) of the spendable proceeds of the
Bonds or the Refunded Obligations would be used to carry out the governmental
purpose of such Bonds within the corresponding three-year period beginning on
the respective dates of the Bonds or the Refunded Obligations.
(h) The City will take all necessary steps to comply with the requirement that certain
amounts earned by the City on the investment of the gross proceeds of the Bonds,
if any, be rebated to the federal government. Specifically, the City will (i)
maintain records regarding the receipt, investment and expenditure of the gross
proceeds of the Bonds as may be required to calculate such excess arbitrage
profits separately from records of amounts on deposit in the funds and accounts of
the City allocable to other obligations of the City or moneys which do not
represent gross proceeds of any obligations of the City and retain such records for
at least six years after the day on which the last outstanding Bond is discharged,
(ii) account for all gross proceeds under a reasonable, consistently applied method
of accounting, not employed as an artifice or device to avoid, in whole or in part,
the requirements of Section 148 of the Code, including any specified method of
accounting required by applicable Regulations to be used for all or a portion of
the gross proceeds, (iii) calculate, at such times as are required by applicable
Regulations, the amount of excess arbitrage profits, if any, earned from the
investment of the gross proceeds of the Bonds and (iv) timely pay, as required by
applicable Regulations, all amounts required to be rebated to the federal
(g)
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HOU:2465492.5
(1)
(m)
(i)
government. In addition, the City will exercise reasonable diligence to assure that
no errors are made in the calculations required by the preceding sentence and, if
such an error is made, to discover and promptly correct such error within a
reasonable amount of time thereafter, including payment to the federal
government of any delinquent amounts owed to it, including interest thereon and
penalty.
The City will not indirectly pay any amount otherwise payable to the federal
government pursuant to the foregoing requirements to any person other than the
federal government by entering into any investment arrangement with respect to
the gross proceeds of the Bonds that might result in a reduction in the amount
required to be paid to the federal government because such arrangement results in
smaller profit or a larger loss than would have resulted if such arrangement had
been at arm's length and had the yield on the issue not been relevant to either
party.
(j) The City will timely file or cause to be filed with the Secretary of the Treasury of
the United States the information required by Section 149(e) of the Code with
respect to the Bonds on such form and in such place as the Secretary may
prescribe.
(k) The City will not issue or use the Bonds as part of an "abusive arbitrage device"
(as defined in Section 1.148 10(a) of the Regulations). Without limiting the
foregoing, the Bonds are not and will not be a part of a transaction or series of
transactions that attempts to circumvent the provisions of Section 148 of the Code
and the Regulations, by (i) enabling the City to exploit the difference between tax
exempt and taxable interest rates to gain a material financial advantage, or (ii) the burden on the market for tax-exempt obligations. ( )
Proper officers of the City charged with the responsibility for issuing the Bonds
are hereby directed to make, execute and deliver certifications as to facts,
estimates or circumstances in existence as of the Issue Date and stating whether
there are facts, estimates or circumstances that would materially change the City's
expectations. On or after the Issue Date, the City will take such actions as are
necessary and appropriate to assure the continuous accuracy of the representations
contained in such certificates.
The covenants and representations made or required by this Section are for the
benefit of the Bond holders and any subsequent Bond holder, and may be relied
upon by the Bondholder and any subsequent Bondholder and bond counsel to the
City.
In complying with the foregoing covenants, the City may rely upon an unqualified
opinion issued to the City by nationally recognized bond counsel that any action by the City or
reliance upon any interpretation of the Code or Regulations contained in such opinion will not
25
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cause interest on the Bonds to be includable in gross income for federal income tax purposes
under existing law.
Notwithstanding any other provision of this Resolution, the City's representations and
obligations under the covenants and provisions of this Section 7.5 shall survive the defeasance
and discharge of the Bonds for as long as such matters are relevant to the exclusion of interest on
the Bonds from the gross income of the owners for federal income tax purposes.
Section 7.6.: Escrow Agreement. The discharge and defeasance of the Refunded
Obligations shall be effectuated pursuant to the terms and provisions of the Escrow Agreement to
be entered into by and between the City and the Escrow Agent, which shall be substantially in
the form attached hereto as Exhibit H, the terms and provisions of which are hereby approved,
subject to such insertions, additions and modifications as shall be necessary (a) to carry out the
program designed for the City by the City's Financial Advisor,
City's
present value savings and to minimize the City's costs of refunding,to (c) to complymaximize tle with all
applicable laws and regulations relating to the refunding of the Refunded Obligations and (d) to
carry out the other intents and purposes of this Ordinance, and the Mayor is hereby authorized to
execute and deliver such Escrow Agreement on behalf of the City in multiple counterparts and
the City Secretary is hereby authorized to attest thereto and affix the City's seal.
Section 7.7.: Redemption Prior to Maturity of Refunded Obligations. To maximize the
City's present value savings and to minimize the City's costs of refunding, the City hereby
authorizes and directs that certain of the Refunded Obligations shall be called for redemption
prior to maturity in the amounts, at the dates and at the redemption prices set forth in Exhibit G
attached hereto, and the Mayor is hereby authorized and directed to take all necessary and
appropriate action to give or cause to be given a notice of redemption and/or a notice of
defeasance to the holders or paying agent/ registrars, as appropriate, of such bonds, and, if
required, to publish such notices, all in the manner required by the documents authorizing the
issuance of such Refunded Obligations.
Section 7.8.: Purchase of United States Treasury Obligations. To assure the purchase of
the Escrowed Securities referred to in the Escrow Agreement, the Mayor of the City and the City
Manager are hereby authorized to subscribe for, agree to purchase and purchase obligations of
the United States of America, in such amounts and maturities and bearing interest at such rates as
may be provided for in the Report to be attached to the Escrow Agreement, and to execute any
and all subscriptions, purchase agreements, commitments, letters of authorization and other
documents necessary to effectuate the foregoing. Any actions heretofore taken for such purpose
are hereby ratified and approved.
Section 7.9.: Related Matters. In order that the City shall satisfy in a timely manner all
of its obligations under this Ordinance, the Mayor, City Secretary and all other appropriate
officers, agents, representatives and employees of the City are hereby authorized and directed to
take all other actions that are reasonably necessary to provide for the issuance and delivery of the
Bonds, including, without limitation, executing and delivering on behalf of the City all
certificates, consents, receipts, requests, notices, and other documents as may be reasonably
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necessary to satisfy the City's obligations under this Ordinance and to direct the transfer and
application of funds of the City consistent with the provisions of this Ordinance.
ARTICLE VIII.
CONTINUING DISCLOSURE UNDERTAKING
Section 8.1.: Annual Reports. The City shall provide annually to each NRMSIR and any
SID, within six months after the end of each fiscal year, financial information and operating data
with respect to the City of the general type included in the final Official Statement authorized by
Section 7.3 of this Ordinance, being the information described in Exhibit E hereto. Any financial
statements so to be provided shall be (1) prepared in accordance with the accounting
principles
described in Exhibit E hereto and (2) audited, if the City commissions an auditof such
statements and the audit is completed within the period during which they must be provided. If
audited financial statements are not so provided, then the City shall provide audited financial
statements for the applicable fiscal year to each NRMSIR and any SID, when and if audited
financial statements become available.
If the City 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 City otherwise
would be required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may
be set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document, if it is available from the
MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
Section 8.2.: Material Event Notices. The City 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
Bonds, 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 Bonds;
(g) Modifications to rights of holders of the Bonds;
(h) Bond calls;
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(i) Defeasances;
(j) Release, substitution, or sale of property securing repayment of the Bonds; and
(k) Rating changes.
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely
manner, of any failure by the City to provide financial information or operating data in
accordance with Section 8.1 of this Ordinance by the time required by such Section.
Section 8.3.: Limitations, Disclaimers and Amendments. The City shall be obligated to
observe and perform the covenants specified in this Article for so long as, but only for so long as,
the City remains an `obligated person" with respect to the Bonds within the meaning of the Rule,
except that the City in any event will give the notice required by Section 8.2 of any Bond calls
and defeasance that cause the City to be no longer such an `obligated person."
The provisions of this Article are for the sole benefit of the holders and beneficial owners
of the Bonds, and nothing in this Article, express or implied, shall give any benefit or any legal
or equitable right, remedy, or claim hereunder to any other person. The City undertakes to
provide only the financial information, operating data, financial statements, and notices which it
has expressly agreed to provide pursuant to this Article and does not hereby undertake to provide
any other information that may be relevant or material to a complete presentation of the City's
financial results, condition, or prospects or hereby undertake to update any information provided
in accordance with this Article or otherwise, except as expressly provided herein. The City does
not make any representation or warranty concerning such information or its usefulness to a
decision to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY
THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY
COVENANT SPECIFIED IN THIS ARTICLE, BUT EVERY RIGHT AND REMEDY OF
ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH
BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE.
No default by the City in observing or performing its obligations under this Article shall
constitute a breach of or default under the Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Article is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities laws.
The provisions of this Article may be amended by the City from time to time to adapt the
changed circumstances that arise from a change in legal requirements, a change in law, or a
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change in the identity, nature, status, or type of operations of the City, but only if (1) the
provisions of this Article, as so amended, would have permitted an underwriter to purchase or
sell the Bonds in the primary offering of the Bonds in compliance with the Rule, taking into
account any amendments or interpretations of the Rule to the date of such amendment, as well as
such changed circumstances, and (2) either (a) the holders of a majority in aggregate principal
amount (or any greater amount required by any other provision of this Ordinance that authorizes
such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated with the City (such as nationally recognized bond counsel) determines that such
amendment will not materially impair the interests of the holder and beneficial owners of the
Bonds. If the City so amends the provisions of this Article, it shall include with any amended
financial information or operating data next provided in accordance with Section 8.1 an
explanation, in narrative form, of the reasons for the amendment and of the impact of any change
in the type of financial information or operating data so provided. The City may also amend or
repeal the provisions of this Article if the SEC amends or repeals the applicable provisions of the
Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid,
and the City also may amend the provisions of this Article in its discretion in any other manner
or circumstance, but in either case only if and to the extent that the provisions of this sentence
would not have prevented an underwriter from lawfully purchasing or selling Bonds in the
primary offering of the Bonds.
Section 8.4.: Definitions. As used in this Article, 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.
"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.
ARTICLE IX.
MISCELLANEOUS
Section 9.1.: Defeasance. The City may defease the provisions of this Ordinance and
discharge its obligations to the Registered Owners of any or all of the Bonds to pay the principal
of and interest thereon in any manner permitted by law, including by depositing with the Paying
Agent/Registrar or with the State Treasurer of the State of Texas either:
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(a) cash in an amount equal to the principal amount of such Bonds plus interest
thereon to the date of maturity or redemption; or
pursuant to an escrow or trust agreement, cash and/or (i) direct noncallable
obligations of United States of America, including obligations that are
unconditionally guaranteed by the United States of America; (ii) noncallable
obligations of an agency or instrumentality of the United States, including
obligations that are unconditionally guaranteed or insured by the agency or
instrumentality and that, on the date the governing body of the issuer adopts or
approves the proceedings authorizing the issuance of refunding bonds, are rated as
to investment quality by a nationally recognized investment rating firm not less
than AAA or its equivalent; or (iii) noncallable obligations of a state or an agency
or a county, municipality, or other political subdivision of a state that have been
refunded and that, on the date the governing body of the issuer adopts or approves
the proceedings authorizing the issuance of refunding bonds, are rated as to
investment quality by a nationally recognized investment rating firm not less than
AAA or its equivalent, which, in the case of (i), (ii) or (iii), may be in book -entry
form, and the principal of and interest on which will, when due or redeemable at
the option of the holder, without further investment or reinvestment of either the
principal amount thereof or the interest earnings thereon, provide money in an
amount which, together with other moneys, if any, held in such escrow at the
same time and available for such purpose, shall be sufficient to provide for the
timely payment of the principal of and interest thereon to the date of maturity or
earlier redemption;
provided, however, that if any of the Bonds are to be redeemed prior to their respective dates of
maturity, provision shall have been made for giving notice of redemption as provided in this
Ordinance. Upon such deposit, such Bonds shall no longer be regarded to be Outstanding or
unpaid. Any surplus amounts not required to accomplish such defeasance shall be returned to
the City.
(b)
Section 9.2.: Application of Chapter 1208, Government Code. Chapter 1208,
Government Code, applies to the issuance of the Bonds and the pledge of the taxes granted by
the City under Section 5.1 of this Ordinance, and such pledge is therefore valid, effective and
perfected. If Texas law is amended at any time while the Bonds are outstanding and unpaid such
that the pledge of the taxes granted by the City under Section 5.1 of this Ordinance is to be
subject to the filing requirements of Chapter 9, Business & Commerce Code, then in order to
preserve to the Registered Owners of the Bonds the perfection of the security interest in said
pledge, the City agrees to take such measures as it determines are reasonable and necessary
under Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce
Code and enable a filing to perfect the security interest in said pledge to occur.
Section 9.3.: Ordinance a Contract - Amendments. This Ordinance shall constitute a
contract with the Registered Owners from time to time, be binding on the City, and shall not be
amended or repealed by the City so long as any Bond remains Outstanding except as permitted
in this Section. The City may, without the consent of or notice to any Registered Owners,
from time to time and at any time, amend this Ordinance in any manner not detrimental to the
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interests of the Registered Owners, including the curing of any ambiguity, inconsistency, or
formal defect or omission herein. In addition, the City may, with the consent of Registered
Owners who own in the aggregate 51 % of the principal amount of the Bond then Outstanding,
amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the
consent of all Registered Owners of Outstanding Bonds, no such amendment, addition, or
rescission shall (i) extend the time or times of payment of the principal of and interest on the
Bonds, reduce the principal amount thereof, the redemption price, or the rate of interest
thereon, or in any other way modify the terms of payment of the principal of or interest on the
Bonds, (ii) give any preference to any Bond over any other Bond, or (iii) reduce the aggregate
principal amount of Bonds required to be held by Registered Owners for consent to any such
amendment, addition, or rescission.
Section 9.4.: Legal Holidays. In any case where the date interest accrues and becomes
payable on the Bonds or principal of the Bonds matures or the date fixed for redemption of any
Bonds or a Record Date shall be in the City a Saturday, Sunday, legal holiday or a day on which
banking institutions are authorized by law to close, then payment of interest or principal need not
be made on such date, or the Record Date shall not occur on such date, but payment may be
made or the Record Date shall occur on the next succeeding day which is not in the City a
Saturday, Sunday, legal holiday or a day on which banking institutions are authorized by law to
close with the same force and effect as if (i) made on the date of maturity or the date fixed for
redemption and no interest shall accrue for the period from the date of maturity or redemption to
the date of actual payment or (ii) the Record Date had occurred on the fifteenth day of that
calendar month.
Section 9.5.: No Recourse Against City Officials. No recourse shall be had for the
payment of principal of or interest on any Bonds or for any claim based thereon or on this
Ordinance against any official of the City or any person executing any Bonds.
Section 9.6.: Power to Revise Form of Documents. Notwithstanding any other
provision of this Ordinance, the Mayor is hereby authorized to make or approve such revisions,
additions, deletions, and variations to this Ordinance and in the form of the documents attached
hereto as exhibits as, in the judgment of the Mayor, and in the opinion of Bond Counsel to the
City, may be necessary or convenient to carry out or assist in carrying out the purposes of this
Ordinance, or as may be required for approval of the Bonds by the Attomey General of Texas;
provided, however, that any changes to such documents resulting in substantive amendments to
the terms and conditions of the Bonds or such documents shall be subject to the prior approval of
the City Council.
Section 9.7.: Further Proceedings. The Mayor, City Secretary and other appropriate
officials of the City are hereby authorized and directed to do any and all things necessary and/or
convenient to carry out the terms of this Ordinance.
Section 9.8.: Severability. If any Section, paragraph, clause or provision of this
Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or
unenforceability of such Section, paragraph, clause or provision shall not affect any of the
remaining provisions of this Ordinance.
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Section 9.9.: Open Meeting. It is hereby found, determined and declared that a sufficient
written notice of the date, hour, place and subject of the meeting of the City Council at which
this Ordinance was adopted was posted at a place convenient and readily accessible at all times
to the general public at City Hall for the time required by law preceding this meeting, as required
by the Open Meetings Law, Chapter 551, Texas Government Code, and that this meeting has
been open to the public as required by law at all times during which this Ordinance and the
subject matter thereof has been discussed, considered and formally acted upon. The City
Council further ratifies, approves and confirms such written notice and the contents and posting
thereof.
Section 9.10.: Repealer. All orders, resolutions and ordinances, or parts thereof,
inconsistent herewith are hereby repealed to the extent of such inconsistency.
Section 9.11.: Declaration of Emergency. It is hereby officially found and determined
that a case of emergency and urgent public necessity exists that requires that this Ordinance be
passed finally and take effect immediately on the date of its introduction, such emergency and
urgent public necessity being that the proceeds from the sale of the Bonds are required as soon as
possible and without delay for the purposes set forth herein.
Section 9.12.: Effective Date. This Ordinance shall be in force and effect from and after
its passage on the date shown below.
[Remainder of this page intentionally left blank]
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PASSED AND ADOPTED on first and final reading this JAI" 'I , 2005.
CITY OF PEARLAND, TEXAS
Mayor
ATTEST
(SEAL)
Exhibits:
Exhibit A — Paying Agent/Registrar Agreement
Exhibit B — Bond Purchase Agreement
Exhibit C — Preliminary Official Statement
Exhibit D — Official Statement
Exhibit E — Description of Annual Financial Information
Exhibit F — Insurance Provisions
Exhibit G — Description of Refunded Obligations
Exhibit H — Escrow Agreement
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