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R96-23 04-22-96RESOLUTION NO. R96-23 RESOLUTION AUTHORIZING PUBLICATION OF NOTICE OF INTENTION TO ISSUE CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B, IN A PRINCIPAL AMOUNT NOT TO EXCEED $9,000,000 FOR THE PURPOSE OF'CONSTRUCTING IMPROVEMENTS, ADDrrlONS AND EXTENSIONS TO THE CITY'S SANITARY SEWER SYSTEM AND AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § WHEREAS, the City Council (the "City Council") of the City of Pearland, Texas (the "City"), is authorized to issue its water and sewer revenue bonds to pay, among other things, certain costs to be incurred for the construction of improvements, additions and extensions to the City's sanitary sewer system (the "System"), and for professional services rendered in connection therewith pursuant to the Constitution and laws of the State of Texas, particularly Articles 1111 to 1118, Vernon's Texas Civil Statutes, as amended; WHEREAS, the City Council has determined that it is in the best interests of the City and otherwise desirable to issue water and sewer revenue bonds in a principal amount not to exceed $9,000,000 styled "City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996B" (the "Bonds"), payable solely from the net revenues of the System, for the construction of improvements, additions and extensions to the System, including particularly construction of a new wastewater treatment plant; WHEREAS, in connection with the Bonds, the City Council intends to publish notice of intent to issue the Bonds (the "Notice") in a newspaper of general circulation in the City; WHEREAS, this City Council has been presented with and has examined the proposed form of Notice and finds that the form and substance thereof are satisfactory, and that the recitals and findings contained therein are true, correct and complete. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. Preamble. The facts and recitations contained in the preamble of this Resolution are hereby found and declared to be true and correct. Section 2. Authorization of Notice. The City Secretary is hereby authorized and directed to execute and deliver the Notice set forth in Exhibit A hereto and to publish such Notice on behalf of the City in both English and Spanish once a week for two (2) consecutive weeks in a newspaper which is of general circulation in the City, the date of the first publication to be at least fifteen (15) days before the date tentatively set in the Notice for the passage of the ordinance authorizing the issuance of the Bonds. Section 3. Authorization of Other Matters Relating Thereto. The Mayor, City Secretary and other officers and agents of the City are hereby authorized and directed to do any and all things necessary or desirable to carry out the provisions of this Resolution. Section 4. Effective Date. This Resolution shall take effect immediately upon passage. Section 5. Public Meeting. It is officially found, determined and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place and subject matter of the public business to be considered at such meeting, including this Resolution, was given all as required by the Texas Government Code, Chapter 551, as amended. PASSED AND APPROVED thinday of April, 1996. Mayor City of Pearland, Texas ATTEST: (SEAL) 0300214.01 049618/1403 2 EXHIBIT A TO RESOLUTION NOTICE OF INTENTION TO ISSUE BONDS NOTICE IS HEREBY GIVEN that the City Council of the City of Pearland, Texas (the "City") will meet at its regular meeting place at City Hall, Pearland, Texas at 7:30 p.m. on the 13th day of May, 1996, which is the time and place tentatively set for the passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of the City's Water and Sewer System Revenue Bonds, Series 1996B payable solely from a pledge of the net revenues of the City's water and sewer system, in the maximum aggregate principal amount of $9,000,000, bearing interest at any rate or rates, not to exceed a maximum interest rate of 15 %, as shall be determined within the discretion of the City Council at the time of issuance and maturing over a period of years not to exceed forty (40) years from the date thereof, for the purpose of evidencing the indebtedness of the City to be incurred for the construction of improvements, additions and extensions to the City's sanitary sewer system, including particularly the construction of a new wastewater treatment plant, and authorizing certain other matters relating thereto. WITNESS MY HAND AND THE OFFICIAL SEAL OF THE CITY, this of April, 1996. day /s/ City Secretary City of Pearland, Texas (SEAL) 0300214.01 049618/1403 CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS SERIES 1996B TRANSCRIPT OF PROCEEDINGS MAYOR, DAY, CALDWELL & KEETON, L.L.P. 700 Louisiana, Suite 1900 Houston, Texas 77002 (713) 225-7000 CITY OF PEARLAND, TEXAS Water and Sewer System Revenue Bonds Series 1996B * * * * * Closing Memorandum 1 I. BOND PROCEEDINGS AND DOCUMENTS Resolution Authorizing Publication of Notice of Intention to Issue Series 1996B Bonds 2 Affidavits of Publication of Notice of Intent 3 Ordinance Authorizing Issuance of the Series 1996B Bonds 4 Special Escrow Deposit Agreement 5 Paying Agent/Registrar Agreement 6 II. CERTIFICATES Signature Identification and No-Litigation Certificate 7 General Certificate 8 No-Arbitrage Certificate and Form 8038G 9 Closing Certificate 10 M. OPINIONS Approving Opinion of Bond Counsel 11 Opinion of Attorney General of Texas with Certificate of Comptroller of Public Accounts 12 Opinion of Counsel to Bond Insurer 13 IV. MISCELLANEOUS Receipt and Cross-Receipt 14 Rating Letters 15 - Specimen Insurance Policy 16 Specimen Bond 17 a a 0302478.01 069623/1620 a a a a 142FL RAUSCHER PIERCE REFSNES, INC. Frank J. Ildcbrando senior Vim I`res.Vent June 11, 1996 Ms. Aria Scott Texas Commerce Bank National Association 600 Travis, Suite 1150 Houston, Texas 77002 Re: $8,870,000 City of Pearland, Texas Watatworics and Sewer System Revenue Bonds, Series 1996-6 Dear Aria: The delivery of the above captioned bonds (the "Bonds") is scheduled for Wednesday, June 19, 1996, 10:00 A.M. at your bank. Mr. Rick Witte of Mayor, Day, Caldwell & Keeton L.L.P., Houston, Texas, Bond Counsel, will handle all legal matters relating to the closing. At to prior to closing, the Texas Water Development Board ("TWDB") will wire $8,674,817 in immediately available funds to: Texas Commerce Bank-Houston ABA Routing Symbol 113000609 Trust Clearing Account 7001109635800 Account of City of Pearland, Texas, Series 1996 Bond Proceeds Account No. 1235300 Attention: Aria Scott The funds are calculated as follows: Principal Amount of the Bonds S8,870,000.00 Less Origination Fee 1g5.1$3,00 Total Amount to be Wired $8,674.817.00 loot t'vnnin • suite 700 • I lowtan.Test, 77002 • (71))!S 1.1170 Mcn,Ocr New YWR Jet:KR tarnante. 'Ht. Ms. Aria Scott Junc 11, 1996 Page 2 Upon receipt of the funds, Texas Commerce Bank will wire S34,226.30 to Financial Security Assurance inc. as premium of the bond guaranty insurance policy to: Bank: Morgan Guaranty Trust Company of New York ABAll: 021000238 Acct. Name: Financial Security Assurance Inc. Account No.: 000-33-345 Re: Policy Number to be assigned at closing. Texas Commerce Bank will also wire the remaining S8,640,590.70 in immediately available funds to the City's depository bank Pearland State Bank, Pearland, Texas, ABA No. 113123573 to be deposited in Account 1743542 Aare: Betty Vaugh/Gracie Losland. The Pearland State Bank will hold in the Construction Escrow Account S8,093,773.70 and release to the City $546,817 to pay cost of issuance and certain engineering fees and expenses. If I may be of further assistance, please do not hesitate to contact me at 713-651-3370. Sincerely, Franc J. Bdthrandu Senior Vice President cc: Gracie Losland, Pearland State Bank Rick Witte, Mayor, Day, Caldwell & Keeton L.L.P. Tim Causey, City of Peariannd Pamela Wild, Rauscher Pierce Refsnes, Inc. Leticia Sanchez, Texas Water Development Board Jose Rodriguez, Texas Water Development Board Lillie Cadlett, Financial Security Assurance, Inc. CERTIFICATE FOR RESOLUTION STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § We, the undersigned officers of the City of Pearland, Texas (the "City"), hereby certify as follows: 1. The City Council of the City convened in a regular meeting on the 22nd day of April, 1996, at the regular meeting place thereof, within the City, and the roll was called of the - duly constituted officers and members of the City Council and the City Secretary, to wit: Tom Reid Mayor Randy K. Weber Council Member Richard Tetens Council Member Jerry Richardson Council Member Kevin Cole Council Member Helen Beckman Council Member Paul Grohman City Manager Yolanda Benitez City Secretary and all of such persons were present, except NONE , thus constituting a quorum. Whereupon, among other business, the following was transacted at such meeting: a written RESOLUTION AUTHORIZING PUBLICATION OF NOTICE OF INTENTION TO ISSUE CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B, IN A PRINCIPAL AMOUNT NOT TO EXCEED $9,000,000 FOR THE PURPOSE OF CONSTRUCTING IMPROVEMENTS, ADDITIONS AND EXTENSIONS TO THE CITY'S SANITARY SEWER SYSTEM AND AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO (the "Resolution") was duly introduced for the consideration of the City Council and read in full. It was then duly moved and seconded that such Resolution be adopted; and, after due discussion, the motion, carrying with it the adoption of the Resolution, prevailed and carried by the following vote: 5— AYES D NOES 2. That a true, full and correct copy of the aforesaid Resolution adopted at the meeting described in the above and foregoing paragraph is attached to and follows this certificate; that the Resolution has been duly recorded in the City Council's minutes of the meeting; that the above and foregoing paragraph is a true, full and correct excerpt from the City Council's minutes of the meeting pertaining to the adoption of the Resolution; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of the City Council as indicated therein; that each of the officers and members of the City Council was duly and sufficiently notified officially and personally, in advance, of the date, hour, place and purpose of the aforesaid meeting, and that the Resolution would be introduced and considered for adoption at the meeting, and each of the officers and members consented, in advance, to the holding of such meeting for such purpose; that the meeting was open to the public as required by law; and that public notice of the date, hour, place and subject of the meeting was given as required by the Open Meetings Law, Chapter 551, Texas Government Code, as amended.SIGNED AND SEALED this(71177" of April, 1996. City ec etary Mayor City of Pearland, Texas City of Pearland, Texas (SEAL) 0300214.01 049617/1617 1. q. RESOLUTION NO. R96-23 RESOLUTION AUTHORIZING PUBLICATION OF NOTICE OF INTENTION TO ISSUE CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B, IN A PRINCIPAL AMOUNT NOT TO EXCEED $9,000,000 FOR THE PURPOSE OF CONSTRUCTING IMPROVEMENTS, ADDITIONS AND EXTENSIONS TO THE CITY'S SANITARY SEWER SYSTEM AND AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § WHEREAS, the City Council (the "City Council") of the City of Pearland, Texas (the "City"), is authorized to issue its water and sewer revenue bonds to pay, among other things, certain costs to be incurred for the construction of improvements, additions and extensions to the City's sanitary sewer system (the "System"), and for professional services rendered in connection therewith pursuant to the Constitution and laws of the State of Texas, particularly Articles 1111 to 1118, Vernon's Texas Civil Statutes, as amended; WHEREAS, the City Council has determined that it is in the best interests of the City and otherwise desirable to issue water and sewer revenue bonds in a principal amount not to exceed $9,000,000 styled "City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996B" (the "Bonds"), payable solely from the net revenues of the System, for the construction of improvements, additions and extensions to the System, including particularly construction of a new wastewater treatment plant; WHEREAS, in connection with the Bonds, the City Council intends to publish notice of intent to issue the Bonds (the "Notice") in a newspaper of general circulation in the City; WHEREAS, this City Council has been presented with and has examined the'proposed form of Notice and finds that the form and substance thereof are satisfactory, and that the recitals and findings contained therein are true, correct and complete. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. Preamble. The facts and recitations contained in the preamble of this Resolution are hereby found and declared to be true and correct. Section 2. Authorization of Notice. The City Secretary is hereby authorized and directed to execute and deliver the Notice set forth in Exhibit A hereto and to publish such Notice on behalf of the City in both English and Spanish once a week for two (2) consecutive weeks in a newspaper which is of general circulation in the City, the date of the first publication to be at least fifteen (15) days before the date tentatively set in the Notice for the passage of the ordinance authorizing the issuance of the Bonds. Section 3. Authorization of Other Matters Relating Thereto. The Mayor, City Secretary and other officers and agents of the City are hereby authorized and directed to do any and all things necessary or desirable to carry out the provisions of this Resolution. Section 4. Effective Date. This Resolution shall take effect immediately upon passage. Section 5. Public Meeting. It is officially found, determined and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place and subject matter of the public business to be considered at such meeting, including this Resolution, was given all as required by the Texas Government Code, Chapter 551, as amended. PASSED AND APPROVED this day of April, 1996. 1/)&? Mayor City of Pearland, Texas ATTEST: AlkL Of, Ci S retary City of Pearland, Texas (SEAL) 0300214.01 049618/1403 2 EXHIBIT A TO RESOLUTION NOTICE OF INTENTION TO ISSUE BONDS NOTICE IS HEREBY GIVEN that the City Council of the City of Pearland, Texas (the "City") will meet at its regular meeting place at City Hall, Pearland, Texas at 7:30 p.m. on the 13th day of May, 1996, which is the time and place tentatively set for the passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of the City's Water and Sewer System Revenue Bonds, Series 1996B payable solely from a pledge of the net revenues of the City's water and sewer system, in the maximum aggregate principal amount of$9,000,000, bearing interest at any rate or rates, not to exceed a maximum interest rate of 15%, as shall be determined within the discretion of the City Council at the time of issuance and maturing over a period of years not to exceed forty (40) years from the date thereof, for the purpose of evidencing the indebtedness of the City to be incurred for the construction of improvements, additions and extensions to the City's sanitary sewer system, including particularly the construction of a new wastewater treatment plant, and authorizing certain other matters relating thereto. WITNESS MY HAND AND THE OFFICIAL SEAL OF THE CITY, this day of April, 1996. /s/ City Secretary City of Pearland, Texas (SEAL) 0300214.01 049618/1403 06/13/96 15: 36 FAX Z.002 • C ER11rTCATE OF NEWSPAPER PUBLISHER THE STATE OF TEXAS 4 6 COUNTIES OF BRAZORIA AND HARRIS Before me, the undersigned authority, oa this day personally appeared Joan CumII1ings, who being by me duly sworn, deposes and says that she is the Publisher of the Peariand Reporter and that said newspaper is generally circulated in the City of Pearland, Texas. Pub•eeS/Frf tor- SUBSCRIBED AND SWORN TO before me this the / -3� of 1996_ 09/0919g 1' No$ry Public, State of Tex= My COrttnia4ina expires: s - ��t Willi .01 oemncas 111 JUN 13 ' 96 16 : 36 PAGE . 002 CERTIFICATE OF NEWSPAPER PUBLISHER THE STATE OF TEXAS § COUNTIES OF pra� `�/ S § 76 Before me, the undersigned authority, on this day personally appeared J O&r, �-�t� h. who being by me duly sworn, deposes and says that he/she is the Publisher of -I a4\() j n-eC� and that said newspaper (i) devotes not less than 25% of its total column lineage to general interest items, (ii) is published at least once each week, (iii) is entered as second-class postal matter in Brazoria and Harris Counties, d (iv) was published regularly and continuously for at least 12 months before , 1996, and Th a-e- 1996, the dates on which the City of Pearland pu shed the attached notice in said newspaper. )' h - a it , Pu 1 her) Fait SUBSCRIBED AND SWORN TO before me this the ZLf day of `( , 1996. No 4b icds,&ie fiFexa .t``: My commission expires 0301818.01 049624/0912 i 1_ : • 8 B REPORTER NEWS, April 24, 1996 '" 'l'`-.'''".: :`' ''' '` `:n�-, r,. ; r 'sx' x _'l1to:1. ,�e,4 a,r;.fr ,, cLAss,. FIEDs $7.50 for 20 Words or Less (100 fc Public Notice Public Notice Public Notice Public Notice I Public Notice •1 NOTICE OF INTENTION TO ISSUE BONDS • NOTICE IS HEREBY GIVEN that the City Council of the City of Pearland, Texas (the "City") will meet at Its regular meeting place at City Hall, 3519 Liberty Drive, Pearland, Texas, at 7:00 p.m. on the 13th day of May, 1996, which is the time and place - tentatively set for the passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of the City's Water and Sewer system Revenue Bonds, Series 1996E payable solely from a pledge of the net revenues of the City's water and sewer system, in the maximum aggregate principal amount of $9,000,000 bearing interest at any rate or rates, not to exceed a maximum Interest rate of 15%, as shall be determined within the discretion of the City Council at the time of issuance and maturing over a period of years not to exceed forty (40) years from the date thereof, for the purpose of evidencing the Indebtedness of the City to be incurred for the construction of improvements, additions and extensions to the City's sanitary sewer system, including particularly the construction of a new wastewater treatment plant, and authorizing certain other matters relating thereto. WITNESS MY HAND AND THE OFFICIAL SEAL OF THE CITY, this 22nd day of April, 1996, • Yol C. Benitez City Secretary l Garage Sale a Real Estate Real Estate Real Estate Estate Sale GREEN TEE Perry I MULTIFAMILY at 2603 Executive. 3 or 4 bdrm/2/2 ERA® Realty America Thelma. Pearland. April 26 detached garage,lg.rooms- _ & 27th from 8:00-4:00. very clean, 2 yr old roof; 5101 W.Broadway, Pearland , ' Furniture, toys, children's priced to sell quickly!!! clothing and miscellaneous Retta Absher 485-4292. JENNIFER WORREL items. RE/MAX Bay Area-Nasa. BROOKSIDE • Great corner HERITAGE PARK VILLAGE- property! 3 lots, cleared. 485.3 295 • Office r 481 Only $21,000. Call Debby, Q Frie Bayboro Park Drive, ERA Realty America, 485- 5 8 3.4 9 6 2 • Voice mail. Frlendawood. Furniture, u ., Clothing, kitchenware, 3295. y> Books, Tapes, Fishing (�.._ 285.445 7 - Pager c Equipment. Saturday, (4• Garage Sales I [= M11 „ 27),8.12. 4 -. April 25, 26 27th. The Manuel witch gameeroom BEDROOM 2 bath home 3 and many withE2 ROOMcar p2 bath ort and shed. This is a great time to bun Thursday, Friday, and TradingPost or sell property! Cal Saturday. 8:00-4:00 at 623 trees. Great condition,wait- Centrally located in the Maggie McFarland ® ERE 5302 Masters Rd. ing for a growing family. heart of Pearland. 54,500. Heather Lane off Sunset in FMB 128 Realty today. 485.3295 0 I I 76,000. Jennifer Worrel, Jennifer Worrel, ERA 583- Friendswood. Pager 617-1123. ., FIeA Market sat 6 Sun. ERA 583-4962. 4962. Fri-Sat, April 6th•27th 10a.m•6 p.m. COME TO THE COUNTRY to 8a.m.-4p.m. No. of Alvin . Outside spaces$7.00 per day City Rd 281-turn at Brazoria 489-4860 OFFICE/WAREHOUSE for this 4 bedroom 2 bath 3 car LARGE HOME In Heritag tax office•follow signs. (Next To Eddie's Country_ sale with business 6000S.F. garage home complete with Park Estates.Almost 250 Manyhousehold items. Ballroom Sign)Thursday thru on busy Hwy 35 on 2 acres. pole barn, workshop and sq. ft. includes both for Sunda 10 a.m.-6 m, Disassembled R.V. Kountry y p' 155,000. Call Celesta at sunroom on 2.25 acres. mail, large kitchen, nice Air. All parts sold. MOVING SALE- Fri.-Sat. 482-9500. S169,000 Jennifer Worrel, den with fireplace. Master GARAGE SALE by COAC an April 26-27th. 8a.m:2p.m. OFFICE/WAREHOUSE for ERA 583-4962. suite includes Great study or sit g room. Adoptive Family Support EVERYTHING must gol sale with business 1200 S.F. NEW LISTING -A 3/2.5/2A nd Group April 27&28 from 9-6 Clothes, Arts & Crafts, on busy Hwy 35 $295,000 with formal dining. affordable too! Edith at 3107 Founders Green Waterbed & Furniture. 806 on three acres. Call Celesta Llnson, RE/MAX a t 482 9500. Excellent condition; Lush Frlendswood•Pearland 996- Pearland off Berry Rose Rd. Beachcomber off .El _ landscaping - $80's. Agent. !•Pearan 9- by Krogers:""" '"r Dorado.Clear Laker . 1711 X28 Call Gynell pager 764-0920. . P 01r13/110 1L:S9 FAI %002 F —REPORTER e,,Eiv%May 1, 199E 1 5 , •1••r•.• .,.,„"_,..P. tea..v,{"•r• y.•i�t Ml!k0.N4,4! r x. nti;...y: i b0 (i «M .<:1.l'k+ • - tik :.re°, ,.r'• fi�r,wi, et 1nnd7J �" ..:`: i•!;;';:ly'....r::..,t.,v. ;� •.,r.<,' "rK ' !"n' :1.:.+i�tw�i r:i...�'.la�` y� ' > 1 t—:.a«nw!1'Nn'S,(�i.t[.r,• N."t: l• OW ,• . aE i,,ai�t mil word . r l .re r t K•r I F r s i �Pub1 Nofi Mt '. . j ,:Publi licit ca P �1j „.:.,,�"",. . Re �' ..ubGc Nabce 1 t w �4 t ri,i ;:Ppb�Io1otic� i a�^"''n;,, , �,1 u;d,�: lg 0-6-fiend/mood city GOgN Friend:/000 Driver iron a plcbae Sr the net e aD,II0 S. Fr1endswoad ' Frindswoed.Tent revenver at ee CRy'a water MANO Y al1LO OFICIAL 1130,on the 10110wisg OM DE Pi. CIUDAD,airs en Be V tel tier. oolong Yettennd,TUC C end sower syrlem,In Mel o am 1pat manlfnun...ar au pma. 1rEiDAY,MAY Cl,t 101!-; CD')Secretary � d amaurrl 01 as � - m P.t Frio i ood.Timer P ,add,0oo CIVOF PEAALADD,Ti7cAi i cantor He 4dirtwir Mewing inbred at airs rate BD rt0.E76-01 NOTIC!OF I TEi�TSN� of rate!,not to snood a • . To establish mutation rualmm 1nGraal rare o1 Sealed bids will be Ounderiea ter Entryway M6�,,n.„ 11%,e andteadstwrldosd reocirea, in duplicate, • *rimy Dieti�tr apwrtrfe IIOTIC le HEA6BY vial r.etm the Qoierenen at vie maned•AARDEN ROAD i peopertfy Ic =atom WATER theCly r mmrdl n/to City Council etthe tnee of WATER PLAHr Ild No, II foot of H,.aforenreu. I dry of frvaztand•TW1(*la Ieatnnc •10 ME*"Deer Eaa-0al N Eta°lilt.of the mold porticos el F.M.di' -Ctgr'1 wL maei Y Ite rear a paned et years not to City Secretary,the Car of Ian eweiiug place it City cu.-red luny(40)i71 s from Paanand,CityNth.)619 - is' th o or r F.M.525 and o1 N 2'Sl any ! Mall,3610 Literty Drive, %bdaletherdol.r0vueMR ,1d Liberty Orire,Peana,td, Moorland,Teus,PI 7;10 pose of eridnncing His a of CM.an and F Y. Tease,775Si until up- 551. Gaon.en du 13th clay lefty, inuAbbaLress of tbs City ld P.Y..1ny 2a hail. a I 13116.when it the Om ace be inaUrred for the oars• whicl+y.e,ny will ye pub I said Man g,ill intern% Owe Imlotisrty set rut the� sfiwbon of Improvements, 0cfy wired sod mad aknd I parade have the right passage of an Ordinance sadttlone and kg fumlching of: ad 6ppenl,mfy I appear and such other soften es tha tJlty's sanitary sower nil to Narita,the subject i may bd deemed ueosaary system,Incladrrtg prdcu• r71RDFN'ROAD NATFR oath oral and Written. toatehoritoa tilt ruauaVaof lute the erldeeualoo A PLANT Iccumenlatfon is aesu ee ahle the City's Water and"sr new wastewater treatment or ',VISE at the City cyetam Revenue Bonds, plant,and aeUuorising oar• 'rcretary'1 0111ce, 410 Sena 1496E peyeb.abalmy Lain other mantra rtllei1B +�"�•- thereto. ;Motor:•Yehlckftl MotorYeh1 ie;-:. This projnci will entail. ,ram witttEG6 MY HAM)AND li 111 uanolru000A of a water THE OFFICi1L SEAL or pint 'sawing 1,100 gars IITFE Gin',Cis and day A water Neil with piano end Aprit,1.7J6. en imam enginq 42.6 oW writ,pc IITFHCI(IN Dr• gallon boiled eh*around liDIM CWITF3C/00i mane tane,cooed 1=16 chlo 1 I mobump, 19 a EXPL _ Ili DA NOTICiA ow elbuilding, Concilio Be la Glade do grading, yard piping, v.n.saa,n'n tid , iUgacel,detldlell Pearland, Tries, (I.a•P 9 "'""M` "' 'Llnrtlad')M n c rssNr in pond,m1U9atlon,aid an VeiN " ether rstatOD c are• ve.�'..�•KN rave.G9 w,r..n" .t aitio r iiWat de jidtaf, PP 0. -a k-a,..,,, ,NZ quo vi 1a plug d. la iwilces,as shown on the ASAP $21,497, S e gtldad,ysly wow Onve. plane described In the SALE PPJL 7y�1�� Prariand,Tapia,a tees 7:00 "pima'cation.complete, TIT6L ' de la nacho,el die 12 de 0140d,nuluyaraGorl*L Ilf. CONTOUR �± y. sir aiaya,tile'rant se la hero 1996• FORD CONTOUR GL , y el loser antariarmente I alitil f alt and ma bean 1/10kICg ip 9..�,..K.r..I....am• ,• *, iinuds airs el paws de ppcuiusul>. Coples or uLy_jµi� renesrearc.rr•I•re'teeb "� t+y une •:degas! o cm* contrdol Documents and j.a.Come see • ^,"^"r T~...WRY""n. Technical C eeMldtl ens rr..de-sew eulwiea qua Perin net*. P 'AIIw,ins::ww lbrnw,...r.,nrw,..,....';r m'.'a:..4., cones par mar-L.id_ and Plana an on life at lea: tor me of Peell.1.1telrlAfA.,.?.•n•er..o re a aiy,de lea bonat de a I tellowing i eelitne for ��.�^.J It..G' °1a^"r•'•..,. CV yr,•.•--- ® resits beylndiag Yar 1 - �!�1A ion,$249, MCi:,il1 nab del swim=de lgtw .-•- y granaje ds la Ciudad,en ' - wed oanadad woo riaA- C1N or Portend,Chty Halt, .a;OVER 350 a;tl Liberty ante, e. FORDS jig,srireaarb on at,000,00D ' I N STOCK! Quo REND ruin,s V5Wi• Pearland, Toas 77331, Z. r- l' peter rater a velores,put MO441'2411 _~- ' I Ito suhiren el ruler eh • terra Pm 1996 MUSTANG COUPE - j.gt• i Inures maalnw de WS Munelou Cuutrertura 33r77J Tit glhoe pomtdmo).ete0 on AeoOoialon,ago wewyn '/{ e'9 •a.,,..•.:ee..r:_.+. - „-kt'� dnlerninado denim la dd- Tauile 230,Houston,Ten! , :c.;., ,,G..hvr,: r— prior,du elCu era.,tLle Mir•(1 (m 0114 trsw i 46.34 I Gadded al tiompo 04 oml• Tlia AIIQeut.d G.osrat 1 ohm y VwdL ration!glee us Caneaetars pI Anna Ina • S Ue,upo yur uu aria nos 2404.Crawl ord,.Houston,_AL r,GL± y TT6L TOeaeTydtif,(11916Sy4a1S ._� I, �.r,�a1 PSO n�.i1 ■ sue MAYA a(0 anoe do ; esa iwha por!',wars de AGC o1 Tesas,. 5050 • ALL NEW 1997 FORD F1 SC S/CAD I i Adeacler la deuda coabai• WcatbsimOr, Guile 100, x a vrei:.,,,,.VIA re,w�,:a.nn.++.r' s' I did,is Coated pin te der1- Houato r.Teius 77056,PIT , arwsa Sean.••wto'•^r+e"'+_'; tir,sdlntarnrrlureourrr Se�� Aso Ava.40lr L 1>l , ,•1_ ® toe,adiclones,s eaten- 4 $ 7�7]7 atones Si t sbttdit 31111. Dodge reports, 51h1 E f tarts de rsna■ do h ; NJW' 1Lt.r16s e� eAr f aphid,u,rluyrraPo aortic, Easleide, Stills 300, ---=-�,, SALE PRICE s 1 1/995,r&L I !smote 0 pfanun lye pasnetrucobe tel a2F Ocas Tum iron,(ny) i katanienio di desaaus,y . A' - i'M 528 tic kI'paas 35 *Alvin.TX 1 aetortrnrelu cbrius purrs Tl+esa dnr�rnrtanla may be . 1-R00-R515-2277 • (713)331-8111 I otaroa raeMonOdoa. Inaamkid•dtrlwd dirge e above i sa.F 117113 - 9 • Sat 8:30 - 8 Day TEST!GO aAJO MI Moo tl e'r WAJo WIWe 'an CERTIFICATE OF NEWSPAPER PUBLISHER THE STATE OF TEXAS § Harris § COUNTIES OF § Before me, the undersigned authority, on this day personally appeared R n ry • S o c c o , who being by me duly sworn, deposes and says that he/she is the Publisher of Houston Chronicle and that said newspaper (i) devotes not less than 25% of its total _ column lineage to general interest items, (ii) is published at least once each week, (iii) is entered as second-class postal matter in Brazoria and Harris Counties, and (iv) was published regularly and continuously for at least 12 months before April 2 7 , 1996, and , 1996, the dates on which the City of Pearland published the attached notice in said newspaper. 7.1, ,......_,..,L.„\ ,„________As.2:b -_______i Publisher i SUBSCRIBED AND SWORN TO before me this the 16ttilay of May 1996. - . C-77 ri 0,(ji„..1_ • 7',f Notary Publ' , State of Texas . .:NOTICE OF INTENTION TO ISSUE BONDS - NOTICE IS HEREBY GIVEN that the City Council of the City of • Resound,Texas(the'City')will meet at its regular meeting place at City Hall.3519 Liberty Drive,Peartand,Texas,at 7:00 p.m.on the 13th day of May.1996.which is the time and place tentatively set for the passage of an ordinance and such other alction as may be deemed nec- essary /� /e %� r and Sewer System Revenue aBaWs.Series 1996B the pays the saw from pledge of the net 0 .0 (D revenues of the City's water and sewer system.in the maximum ag- gregate My commission expires: principal amount of S9.000,000 bearing interest at any rate or rates,not to exceed a maximum interest rate of 15%.as shall be deter- • mined within the discretion of the City Council at the time of issuance and maturing over a period of years not to exceed forty(40)rears from the date thereof.for the purpose of evidencing the indebtedness of the City to be incurred for the construction of improvements.additions and extensions to the City's sanitary sewer system,including particu- larly the construction of a new wastewater treatment plant, and authorizing certain other matters relating thereto. WITNESS MY HAND AND THE OFFICIAL SEAL OF THE CITY, •fir!` • this 33nd day of April,1996 -- :+ --' l NOTICIA DE INTENCION DE EMITIR CERTIFICADOS t!!'��y.,,, hAZEL M.CLARK S SE DA NOTICIA qua el Concilio de la Ciudad de Peartand,Tries.(La ?• Notary Public, $tote Of Texas 'Ciudad')se va a reunir en el sitio regular de juntas.clue es a Plaza de �1� :+ Notary la Ciudad.3519 Liberty Drive,Pearland,Tees.ales 7:00de a noche.el 1=+; i�� IfCS �2'���00 `1 • die 13 de mays 1996 qua es la Nora r el lugarenterlormente sentado 1 Commission Exp 111 pare el pasafe de una ordenanza y ours attunes qua seven necesarlas , (-• • pare autorizar la emision de los bdisos de irgresda del sistema de ague �t y1'J!�11 y^llJGs y grenade de la Ciudad,Sarle 1996B,siendo repartido sdamente de. �y t i J'�c,-�or.+' u�cantida de ad pr Mpal maximaagregado d del sistema de ell9g r0a00,00 de q la Ciudad,en- .' 59ranai00 ale genera d Ceres a caulguier valor o valores.qua no sublran el valor de tnteres maxima de 15%(quince porciento),rue sera determinedo denim la ; discretion de el Camillo de le Ciudad el tiempo de emisian y madura- • don sabre un tiempo qua no sera max qua cuarenta(40)anos de ese nacho.par la razon de evidencier la deuda contraida de a Ciudad pare la construction de meloramientos,adiciones.r extent/yes del sis- tame tanttana de graale de a Ciudad.induyendo perdculartrame is constr scion de une Manta nueve pare el tratemiento de desague.v autortzando ciertos otros asuntos relacionados , DOT TEST1GO BAJO Mt MANO Y SELLO OFICIAL DE LA CIUDAD.este die 23 de abrtt.1996. • /s/Yolanda C.Benitez/City Secretary Secreteria de la Ciudad • - CERTIFICATE OF NEWSPAPER PUBLISHER - THE STATE OF TEXAS es COUNTIES OF Harris § Before me, the undersigned authority, on this daycbeingby personally appeared _ No u s t o n Chronic 1 e me duly sworn, deposes and says that he/she is Pblisher of column lineage to general interest that items, n is publishednewspaper at1 votes not less than 25% of its total as second-class postal matter in Brazori and Barris Counties, and and continuously for at least 12 months before east once each week, (iii) is entered 1996, the dates on which the City of Pearland published (iv) was published regularly a r i l 2 7 1996, and the attached notice in said newspaper `--/�,-�{ A, i Publisher SUBSCRIBED AND 1996. SCORN TO before me this the 16thday of Ma a.. _ NOTICE OF INTENTION TO ISSUE BONDS Notary Publi S NOTICE IS HEREBY GIVEN that the City Council of the City of bate of Tex pl ace Texas(the"City")wi4 meet at its regular meeting at as City Hall,3519 Liberty Drive,Pearland,Texas.at 7Q0 p.m.on the 13th i day of May,1996,which is the time and place tentatively set for the passage of an ordinance and such other action as mayaybebe deemed nec- essary to authorize the issuance of the City's Water and SewerSystem Revenue Bonds,Series 19968 payable solely from a Wedge of the net ,a revenues of the City's water and sewer system,in the maximum ag- My commissionJ, revenues principal amount or S9,C00,000 bearing interest at any rate or expires: c^�—/�'_✓ ©00 rates,not to exceed a maximum interest rate of 15%,as shall be deter- mined within the discretion of the City Council at the time of issuance and maturing over a period of years not to exceed forty(40)years from the date thereof,for the purpose of evidencing the indebtedness adness of the City to be incurred for the construction of improvements,additions and extensions to the City's sanitary sewer system,including - i lartv the construction of a new wastewater treatment plant,nt. and a 0 authorizing certain other matters relating thereto. WITNESS MY HAND AND THE OFFICIAL SEAL OF TH E CITY, this 22nd day of April.1996. ' �►J'.J-llll J'YIJ I JJJJJJ JJ"-f•✓•"-"I NOTICIA DE INTENCION DE EMITIR CERTIFICADOS \l SE DA NOTICIA qua el Concilio de la Ciudad de Pearland,Teres,(La `) _o'=`'w`n HAZEL M.CLARK l� "Ciudad")se va a reunir en el sill,regular de juntas,:0a de la Plaza de i s z Notary Public,State of Texas 1 la Ciudad,3519 Liberty Drive, hors yd,Teias,alas for t to sentadcel 1 �y , die 13 de mega leer,qua es la bona v el iugarngre anos del rename deague qC. v,Q 1 Para el peseta de une ordenanza y 01ra5 acClones qua wren neceSariai 'Commission Expires 02-10-00 sera autorizar la dad, n de 19 bobas de ingresos del sistema de ague `t1i,y•.. l y granaie de is Ciudad,Series tern•sierfdq re r solamenteCiudad, de,una 1. l prenda de Ingreso9 rate del sistema de aqua v granaie de la Ciudad,en +� . .. .r�y-�-!itel��-r-r�� une cantidad principal maxim,agregado de S9,000.000 sue genera in- teres a caulguier valor o valores,qua no subiran el valor de Interes • - maxim,de 15%(quince porcimto),qua sera determined°dentro la discrecion de at Comilla de la Ciudad el tienxo de envision y madure- cion sobre un damp,due no sera may nue cuarenta(40)anos de esa bathe.por la razon de evidenciar la deuda contraida de la Ciudad pare la construccion de meioramientos,editions,v extensions del sis- tema sanitaria de granaie de,le Ciudad,induvendo particularmente la construction de una Plante reeve pare el fratamiento de desague,v autorizando ciertos afros asuntos relacionados. • DOY TESTIGO BAJO MI MANO Y SELLO OFICIAL DE LA CI V DAD,este din 22 de abril,1996. /s/Yolanda C.Benitez/City Secretary Secretaria de la Ciudad I.. aAP N/ APP CERTIFICATE FOR ORDINANCE STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § We, the undersigned officers of the City of Pearland, Texas (the "City"), hereby certify as follows: 1. The City Council of the City convened in a regular meeting on the 13th day of May, 1996, at the regular meeting place thereof, within the City, and the roll was called of the duly constituted officers and members of the City Council and the City Secretary, to wit: Tom Reid Mayor Randy K. Weber Council Member Richard Tetens Council Member Jerry Richardson Council Member Kevin Cole Council Member Helen Beckman Council Member Paul Grohman City Manager Yolanda Benitez City Secretary and all of such persons were present, thus constituting a quorum. Whereupon, among other business, the following was transacted at such meeting: a written ORDINANCE AUTHORIZING ISSUANCE OF CITY OF PEARLAND, TEXAS, WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B; PRESCRIBING THE TERMS AND CONDITIONS THEREOF; PROVIDING FOR THE PAYMENT THEREOF; MAKING OTHER PROVISIONS REGARDING SUCH BONDS AND MATTERS INCIDENT THERETO; AWARDING THE SALE OF THE BONDS; AUTHORIZING BOND INSURANCE; AUTHORIZING EXECUTION AND DELIVERY OF A PAYING AGENT/REGISTRAR AGREEMENT; AND DECLARING AN EMERGENCY, AS THE TIMELY ISSUANCE OF WATER AND SEWER • SYSTEM REVENUE BONDS BEARS DIRECTLY UPON THE HEALTH, SAFETY, AND WELFARE OF THE CITIZENRY. (the "Ordinance") was duly introduced for the consideration of the City Council and read in full. It was then duly moved and seconded that such Ordinance be adopted; and, after due discussion, the motion, carrying with it the adoption of the Ordinance, prevailed and carried by the following vote: 5- AYES 0 NOES 2. That a true, full and correct copy of the aforesaid Ordinance adopted at the meeting described in the above and foregoing paragraph is attached to and follows this certificate; that the Ordinance has been duly recorded in the City Council's minutes of the meeting; that the above and foregoing paragraph is a true, full and correct excerpt from the City Council's minutes of the meeting pertaining to the adoption of the Ordinance; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of the City Council as indicated therein; that each of the officers and members of the City Council was duly and sufficiently notified officially and personally, in advance, of the date, hour, place and purpose of the aforesaid meeting, and that the Ordinance would be introduced and considered for adoption at the meeting, and each of the officers and members consented, in advance, to the holding of such meeting for such purpose; that the meeting was open to the public as required by law; and that public notice of the date, hour, place and subject of the meeting was given as required by the Open Meetings Law, Chapter 551, Texas Government Code, as amended. SIGNED AND SEALED this 4 / 3_ , 1996. )akvz, /24+111 4-1A-16 City `-r-tary Mayor City of Pearland, Texas City of Pearland, Texas (SEAL) 0306158.01 059613/1525 2 ANDS ��s � OF PEARL REVENUE BONDS, SERIES 199 CI SYSTEM TER ODSEAR 6B WATER QR�INANCE NO. 726 TABLE OF CONTENTS • Page ARTICLE I - FINDINGS AND DETERMINATIONS 1 Section 1.1. Findings and Determinations 1 ARTICLE II - DEFINITIONS AND INTERPRETATIONS 1 Section 2.1. Definitions 1 Section 2.2. Interpretations 4 ARTICLE III - TERMS OF THE SERIES 1996B BONDS 5 Section 3.1. Name, Amount, Purpose, Authorization 5 Section 3.2. Numbers, Date, and Denomination 5 Section 3.3. Interest Payment Dates, Interest Rates, and Maturities 5 Section 3.4. Redemption Prior to Maturity 6 Section 3.5. Manner of Payment, Characteristics, Execution, and Authentication 6 Section 3.6. Ownership 7 Section 3.7. Registration, Transfer, and Exchange 7 Section 3.8. Cancellation 8 Section 3.9. Replacement Bonds 8 ARTICLE IV - FORM OF SERIES 1996B BONDS 9 ARTICLE V - SECURITY AND SOURCE OF PAYMENT FOR THE BONDS 18 Section 5.1. Pledge and Source of Payment 18 Section 5.2. Rates and Charges 18 Section 5.3. Special Funds 18 Section 5.4. Flow of Funds 19 Section 5.5. Interest and Sinking Fund 19 Section 5.6. Reserve Fund 20 Section 5.7. Deficiencies in Funds 21 Section 5.8. Investment of Funds; Transfer of Investment Income 21 Section 5.9. Security for Uninvested Funds • 22 ARTICLE VI - ADDITIONAL BONDS 22 Section 6.1 Additional Bonds 22 Section 6.2. Subordinate Lien Obligations 23 Section 6.3. Special Project Bonds 24 ARTICLE VII - COVENANTS AND PROVISIONS RELATING TO BONDS 24 Section 7.1. Punctual Payment of Bonds 24 Section 7.2. Power to Own and Operate System; Ratemaking Power 24 Section 7.3. Maintenance of System 24 Section 7.4. Sale or Encumbrance of System 24 Section 7.5. Insurance 25 Section 7.6. Accounts, Records and Audits 25 Section 7.7. Competition 25 Section 7.8. Pledge and Encumbrance of Net Revenues 25 Section 7.9. Covenants with Respect to Certain Assumed Water District Bonds 25 Section 7.10. Bondholders Rights and Remedies 26 Section 7.11. Defeasance 26 Section 7.12. Legal Holidays 27 Section 7.13. Unavailability of Authorized Publication 27 Section 7.14. No Recourse Against City Officials 27 Section 7.15. Amendment to Ordinance 27 ARTICLE VIII - CONCERNING THE PAYING AGENT/REGISTRAR 28 Section 8.1. Acceptance 28 Section 8.2. Fiduciary Account 28 Section 8.3. Bonds Presented 28 Section 8.4. Series 1996B Bonds Not Timely Presented 28 Section 8.5. Paying Agent/Registrar May Own Series 1996B Bonds 29 Section 8.6. Successor Paying Agents/Registrars 29 ARTICLE IX - PROVISIONS CONCERNING SALE AND APPLICATION OF PROCEEDS OF SERIES 1996B BONDS 30 Section 9.1. Sale of Series 1996B Bonds 30 Section 9.2. Approval, Registration and Delivery 30 Section 9.3. Application of Proceeds of Series 1996B Bonds 30 Section 9.4. Tax Exemption 31 Section 9.5. Qualified Tax-Exempt Obligations 33 Section 9.6. Bond Insurance 34 Section 9.7. Paying Agent/Registrar Agreement 34 Section 9.8. Related Matters 34 ARTICLE X - CONTINUING DISCLOSURE UNDERTAKING 35 Section 10.1. Annual Reports 35 Section 10.2. Material Event Notices 35 Section 10.3. Limitations, Disclaimers, and Amendments 36 Section 10.4. Definitions 37 ii ARTICLE XI - MISCELLANEOUS 38 Section 11.1. Further Proceeding 38 Section 11.2. Compliance with TWDB Rules and Regulations 38 Section 11.3. Severability 39 Section 11.4. Open Meeting 39 Section 11.5. Declaration of Emergency 39 Section 11.6. Repealer 40 a a S a 111 CITY OF PEARLAND ORDINANCE NO. 726 AN ORDINANCE AUTHORIZING ISSUANCE OF CITY OF PEARLAND, TEXAS, WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B; PRESCRIBING THE TERMS AND CONDITIONS THEREOF; PROVIDING FOR THE PAYMENT THEREOF; MAKING OTHER PROVISIONS REGARDING SUCH BONDS AND MATTERS INCIDENT THERETO; AWARDING THE SALE OF THE BONDS; AUTHORIZING BOND INSURANCE; AUTHORIZING EXECUTION AND DELIVERY OF A PAYING AGENT/REGISTRAR AGREEMENT; AND DECLARING AN EMERGENCY, AS THE TIMELY ISSUANCE OF WATER AND SEWER SYSTEM REVENUE BONDS BEARS DIRECTLY UPON THE HEALTH, SAFETY, AND WELFARE OF THE CITIZENRY. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: ARTICLE I FINDINGS AND DETERMINATIONS Section 1.1. Findings and Determinations. It is hereby officially found and determined that: (a) The City is authorized by Articles 1111-1118, Vernon's Texas Civil Statutes, as amended, to issue revenue bonds payable from the revenues of its water and sewer system for the purpose of constructing repairs, improvements, additions and extensions to the City's waterworks and sanitary sewer system. (b) The City Council now deems it to be in the best interest of the City to issue, sell and deliver the Series 1996B Bonds as hereinafter authorized. ARTICLE II DEFINITIONS AND INTERPRETATIONS Section 2.1. Definitions. In this Ordinance, the following terms shall have the following meanings, unless the context clearly indicates otherwise: "Additional Bonds"shall mean the additional revenue bonds permitted to be issued by the City pursuant to Section 6.1 hereof. "Average Annual Principal and Interest Requirements" shall mean the average annual principal and interest requirements for all Bonds. Upon the issuance of the Series 1996B Bonds and the Series 1996A Bonds, the Average Annual Principal and Interest Requirements are hereby determined to be $779,673.25 and shall be recomputed upon the issuance of each series of Additional Bonds and set forth in each ordinance authorizing the issuance of Additional Bonds. For purposes of calculating the Average Annual Principal and Interest Requirements with respect to any variable rate Additional Bonds, interest on such bonds shall be calculated in accordance with Section 6.1 of this Ordinance. "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees the scheduled payment of principal of and interest on the Series 1996B Bonds when due. "Bond Insurer" shall mean Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof. "Bonds" shall mean any or all of the Series 1996B Bonds, the Series 1996A Bonds and any Additional Bonds from time to time hereafter issued, but only to the extent such Bonds remain Outstanding within the meaning of this Ordinance. "City" shall mean the City of Pearland, Texas, and, where appropriate, the City Council thereof and any successor to the City as owner of the System. "Fiscal Year" shall mean the City's fiscal year, which currently runs from October 1 to September 30, but which may be changed from time to time by the City. "Gross Revenues" shall mean all revenues, income and receipts of every nature derived or received by the City from the operation and ownership of the System; the interest income from the investment or deposit of money in the Revenue Fund, the Reserve Fund and the Renewal and Replacement Fund; and any other revenues hereafter pledged to the payment of all Bonds. Gross Revenues shall not include any of(i) grants from, or payments by, any federal, state or local governmental agency or authority or any other entity or person, the use of which is restricted by law or by the terms of the grant or payment to capital expenditures of the System, (ii) capital assets, debt service funds or debt service reserve funds of water districts or other public or private sewer systems annexed, acquired or otherwise assumed by the City or (iii) any interest earned on items (i) or (ii) above. "Interest Payment Date" shall mean March 1 or September 1 of each year as applicable. "Issuance Date" shall mean, with respect to the Series 1996B Bonds initially delivered to the TWDB, the date on which each such Series 1996B Bond is authenticated 2 by the Paying Agent/Registrar and delivered to and paid for by the TWDB. Series 1996B Bonds delivered on transfer of or exchange for other Series 1996B Bonds shall bear the same Issuance Date as the Series 1996B Bond or Bonds in lieu of or in exchange for which the new Series 1996B Bond is delivered. "Maintenance and Operation Expenses" shall mean the reasonable and necessary expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service (but only such repairs and extensions as, in the judgment of the governing body of the City, are necessary to keep the System in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or conditions which would otherwise impair the Bonds, and all payments (including payments of amounts equal to all or a part of the debt service on bonds issued by other political subdivisions and authorities of the State of Texas) under contracts which are now or hereafter defined as operating expenses by the Legislature of Texas. Depreciation shall never be considered as a Maintenance and Operation Expense. Maintenance and Operation Expenses shall include, without limitation, all payments under contracts for the impoundment, conveyance or treatment of water or otherwise which are now or hereafter defined as operating expenses by the Legislature of Texas and the treatment of such payments as Maintenance and Operation Expenses shall not be affected in any way if, subsequent to the entering into such contracts, the City acquires as a part of the System title to any properties or facilities used to impound, convey or treat water under such contracts, or if the City contracts to acquire title to such properties or facilities as a part of the System upon the final payment of debt service on the bonds issued to finance such properties or facilities. "Net Revenues" shall mean all Gross Revenues remaining after deducting the Maintenance and Operation Expenses. "Ordinance" shall mean this Bond Ordinance and all amendments hereof and supplements hereto. "Outstanding," when used with reference to the Bonds shall mean, as of a "" particular date, all such bonds theretofore delivered except: (a) any such bond canceled by or on behalf of the City at or before said date; (b) any such bond defeased pursuant to the defeasance provisions of the ordinance authorizing its issuance, or otherwise defeased as permitted by applicable law; and (c) any such bond in lieu of or in substitution for which another bond shall have been delivered pursuant to the ordinance authorizing the issuance of such bond. "Owner" or Registered Owner, " when used with respect to any Bond, shall mean the person or entity in whose name such Bond is registered in the Register. Any " reference to a particular percentage or proportion of the Owners of the Bonds of a particular class or series of Bonds shall mean the Owners at a particular time of the 3 specified percentage or proportion in aggregate principal amount of all Bonds or the Bonds of such class or series then Outstanding. "Paying Agent/Registrar" shall mean Texas Commerce Bank National Association, and its successors in that capacity. "Register" shall mean the books of registration kept by the Paying Agent/Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner of Series 1996B Bonds. "Series 1996A Bonds" shall mean the City of Pearland, Texas, Water and Sewer System Revenue Refunding Bonds, Series 1996A, being issued pursuant to an ordinance to be approved by City Council on the date of approval by City Council of this Ordinance. "Series 1996B Bonds" shall mean the City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996B, being sold to the TWDB pursuant to this Ordinance. "Special Project" shall mean, to the extent permitted by law, any water or sewer system property, improvement or facility declared by the City not to be part of the System, for which the costs of acquisition, construction, and installation are paid from proceeds of a financing transaction other than the issuance of bonds payable from ad valorem taxes or revenues of the System and for which all maintenance and operation expenses are payable from sources other than ad valorem taxes or revenues of the System, but only to the extent that and for so long as all or any part of the revenues or proceeds of which are or will be pledged to secure the payment or repayment of such costs of acquisition, construction, and installation under such financing transaction. "Subordinate Lien Obligations" shall mean the obligations permitted to be issued by the City pursuant to Section 6.2 hereof. "System"shall mean all properties, facilities,improvements, equipment, interests, rights and powers constituting the water and sewer system of the City, and all future extensions, replacements, betterments, additions, improvements, enlargements, acquisitions, purchases and repairs to the System, including without limitation, all those heretofore or hereafter acquired as a result of the annexation and dissolution of water districts or the acquisition of the properties or assets of any other public, private or non- profit entities. The System shall not include any Special Project. "TWDB" shall mean the Texas Water Development Board. Section 2.2. Interpretations. 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 4 and headings of the articles and sections of this Ordinance and the Table of Contents 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 lien on and pledge of the Net Revenues to secure the payment of the Bonds. ARTICLE III TERMS OF THE SERIES 1996B BONDS Section 3.1. Name. Amount. Purpose. Authorization. The Series 1996B Bonds, to be known and designated as the "CITY OF PEARLAND, TEXAS, WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B," in the original aggregate principal amount of $8,870,000 shall be issued in fully registered form, without coupons. The Series 1996B Bonds are being issued for the purpose of constructing certain repairs, improvements, additions and extensions to the System, including particularly the construction of a new wastewater treatment plant, and to pay expenses in connection with the issuance of the Series 1996B Bonds, all under and pursuant to the authority of Articles 1111-1118, Vernon's Texas Civil Statutes, as amended, and all other applicable law. Section 3.2. Numbers. Date, and Denomination. The Series 1996B Bonds shall be numbered separately from R-1 upward, shall be dated as of June 1, 1996, and shall be in the denomination of $5,000 principal amount or any integral multiple thereof. Section 3.3. Interest Payment Dates. Interest Rates. and Maturities. The Series 1996B Bonds shall bear interest from the later of the Issuance Date, or the most recent Interest Payment Date to which interest has been paid or duly provided for, at the rate or rates per annum set forth below, calculated on the basis of a 360-day year composed of twelve 30-day months and payable semiannually on March 1 and September 1 of each year, commencing March 1, 1997, until maturity or prior redemption. The Series 1996B Bonds shall mature and become payable on the dates and in the respective principal amounts set forth below, subject to prior redemption as set forth in the FORM OF SERIES 1996B BONDS in Article IV hereof: 5 Maturity Date Principal Interest (September 1) Amount Rate 1997 $ 85,000.00 2.90% 1998 165,000.00 3.20 1999 170,000.00 3.40 2000 175,000.00 3.55 2001 185,000.00 3.70 2002 210,000.00 3.80 2003 420,000.00 3.90 2004 440,000.00 4.00 2005 455,000.00 4.10 2006 475,000.00 4.20 2007 495,000.00 4.30 2008 515,000.00 4.40 2009 540,000.00 4.50 2010 560,000.00 4.60 2011 590,000.00 4.70 2012 615,000.00 4.75 2013 645,000.00 4.80 2014 675,000.00 4.80 2015 710,000.00 4.85 2016 745,000.00 4.85 Section 3.4. Redemption Prior to Maturity. The Series 1996B Bonds are subject to redemption in the manner provided in the FORM OF SERIES 1996B BONDS set forth in Article IV of this Ordinance. Section 3.5. Manner of Payment. Characteristics. Execution, and Authentication. The Paying Agent/Registrar shall be the paying agent for the Series 1996B Bonds. The Series 1996B Bonds shall be payable, shall have the characteristics, shall be signed and executed, shall be sealed, and shall be authenticated, all as provided and in the manner indicated in the FORM OF SERIES 1996B BONDS set forth in Article IV of this Ordinance. The Series 1996B Bonds initially delivered shall also have attached or affixed to each such Series 1996B Bond the registration certificate of the Comptroller of Public Accounts of the State of Texas. If any officer of the City whose manual or facsimile signature shall appear on the Series 1996B Bonds, as provided in the FORM OF SERIES 1996B BONDS, shall cease to be such officer before the authentication of the Series 1996B Bonds or before the delivery of the Series 1996B Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. Any portion of the text of any Bonds may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Bond. The definitive Bonds shall be printed, lithographed, engraved, or typewritten or produced by any combination of these methods, or 6 produced in any other manner, all as determined by the officers executing such Bonds as evidenced by their execution thereof, but the initial Bonds submitted to the Attorney General of Texas may be typewritten, photocopied, or otherwise reproduced. The approving legal opinion of Mayor, Day, Caldwell & Keeton, L.L.P., Houston, Texas, Bond Counsel, may be printed on the back of the Series 1996B Bonds over the certification of the City Secretary of the City which may be executed in facsimile. CUSIP numbers and a statement of insurance, if any, also may be printed on applicable Series 1996B Bonds, but errors or omissions in the printing of the opinion, the numbers, or the statement of insurance shall have no effect on the validity of the Series 1996B Bonds. Section 3.6. Ownership. The City, the Paying Agent/Registrar and any other person may treat the person in whose name any Series 1996B Bond is registered as the absolute owner of such Series 1996B Bond for the purpose of mailing payment of the principal and premium, if any, thereof, and for the further purpose of making payment of interest thereon, for the purpose of giving notice to the Owners of the Series 1996B Bonds, and for all other purposes, whether or not such Series 1996B Bond is overdue, and neither the City nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Series 1996B Bond in accordance with this section shall be valid and effectual and shall discharge the liability of the City and the Paying Agent/Registrar upon such Series 1996B Bond to the extent of the sums paid. Section 3.7. Registration. Transfer. and Exchange. So long as any Series 1996B Bonds remain Outstanding, the Paying Agent/Registrar shall keep the Register at its principal corporate trust office and a copy thereof at an office in the State of Texas, in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of the Series 1996B Bonds in accordance with the terms of this Ordinance. Each Series 1996B Bond shall be transferable only upon presentation and surrender thereof at the principal corporate trust office of the Paying Agent/Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the Registered Owner or his authorized representative in form satisfactory to the Paying Agent/Registrar. Upon due presentation of any Series 1996B Bond for transfer, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor, within 72 hours after such presentation, a new Series 1996B Bond or Series 1996B Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount or maturity amount, as the case may be, and bearing or accruing interest at the same rate as the Series 1996B Bond or Series 1996B Bonds so presented. Each Series 1996B Bond shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Paying Agent/Registrar for a Series 1996B Bond or Series 1996B Bonds of the same maturity and bearing or accruing interest at the same rate and in any authorized denomination, in an aggregate principal amount or maturity amount, as the 7 case may be, equal to the unpaid principal amount or maturity amount, as the case may be, of the Series 1996B Bond or Series 1996B Bonds presented for exchange. The Paying Agent/Registrar shall be and is hereby authorized to authenticate and deliver exchange Series 1996B Bonds in accordance with the provisions of this Section. Each exchanged or replaced Series 1996B 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 Series 1996B Bond or Series 1996B Bonds in lieu of which such Series 1996B Bond is delivered. The City or the Paying Agent/Registrar may require the Owner of any Series 1996B 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 Series 1996B Bond. Any fee or charge of the Paying Agent/Registrar for such transfer or exchange shall be paid by the City. Section 3.8. Cancellation. All Series 1996B Bonds paid or redeemed in accordance with this Ordinance, and all Series 1996B Bonds in lieu of which exchanged Series 1996B Bonds or replacement Series 1996B 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 Series 1996B Bonds. Section 3.9. Replacement Bonds. Upon the presentation and surrender to the Paying Agent/Registrar of a damaged or mutilated Series 1996B Bond, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Series 1996B Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding. The City or the Paying Agent/Registrar may require the Owner of such Series 1996B 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. If any Series 1996B Bond is destroyed, lost or stolen, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Series 1996B Bond has been acquired by a bona fide purchaser, shall execute and the Paying Agent/Registrar shall authenticate and deliver a replacement Series 1996B Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding, provided that the 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 Series 1996B Bond; (b) Furnished such security or indemnity as may be required by the Paying Agent/Registrar and the City to save them harmless; 8 (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. If, after the delivery of such replacement Series 1996B Bond, a bona fide purchaser of the original Series 1996B Bond in lieu of which such replacement Series 1996B Bond was issued presents for payment such original Series 1996B Bond, the City and the Paying Agent/Registrar shall be entitled to recover such replacement Series 1996B 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. If any such damaged, mutilated, destroyed, lost, or stolen Series 1996B Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Series 1996B Bond, authorize the Paying Agent/Registrar to pay such Series 1996B Bond. Each replacement Series 1996B Bond delivered in accordance with this section shall be entitled to the benefits and security of this Ordinance to the same extent as the Series 1996B Bond or Series 1996B Bonds in lieu of which such replacement Series 1996B Bond is delivered. ARTICLE IV FORM OF SERIES 1996B BONDS The Series 1996B Bonds shall be in substantially the following form, with such omissions, insertions and variations as may be permitted or required pursuant to the terms of this Ordinance: 9 [FORM OF SERIES 1996B BOND] UNITED STATES OF AMERICA STATE OF TEXAS CITY OF PEARLAND, TEXAS, WATER AND SEWER SYSTEM REVENUE BOND, SERIES 1996B NUMBER DENOMINATION R- $ REGISTERED REGISTERED INTEREST RATE: ISSUANCE DATE: MATURITY DATE: CUSIP NO.: June 19, 1996 September 1, Registered Owner: Principal Amount: DOLLARS The CITY OF PEARLAND, TEXAS, a municipal corporation duly incorporated under the laws of the State of Texas (herein the "City"), for value received, hereby promises to pay, to the Registered Owner identified above or registered assigns, solely from certain pledged revenues and funds as hereinafter specified and from no other source, on the Maturity Date specified above, upon presentation and surrender of this bond at the principal corporate trust office of the "Paying Agent/Registrar," initially Texas Commerce Bank National Association, Houston, Texas, 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 the United States of America, the Principal Amount identified above (or so much as shall not have been paid upon prior redemption), and to pay, solely from such pledged revenues and funds, interest thereon at the Interest Rate shown above, calculated on the basis of a 360-day year composed of twelve 30- day months, from the later of the Issuance Date identified above or the most recent interest payment date to which interest has been paid or duly provided for. The date of this bond is June 1, 1996, but interest shall accrue on the principal amount hereof from the Issuance Date. Interest on this bond is payable on each March 1 and September 1, beginning March 1, 1997, until the maturity or redemption date of this bond or until the City's obligation with respect to this bond has been satisfied. Interest on this bond shall be payable by check mailed by the Paying Agent/Registrar to the Registered Owner of record as of the 15th day of the month next preceding the interest payment date as shown on the books of registration kept by the Paying Agent/Registrar. So long as the Texas Water Development Board (herein the "TWDB") is the holder of this bond, payment of the principal and interest on this bond shall be made to the TWDB by wire transfer at no cost to the TWDB. 10 THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS (herein the "Series 1996B Bonds") in the aggregate principal amount of $8,870,000 issued pursuant to an ordinance adopted by the City Council of the City (herein the "Ordinance") for the purpose of constructing certain repairs, improvements, additions and extensions to the City's waterworks and sanitary sewer system, including particularly the construction of a new wastewater treatment plant, under and pursuant to the authority of Articles 1111-1118, Vernon's Texas Civil Statutes, as amended, and all other applicable law. THIS BOND AND ALL OF THE SERIES 1996B BONDS are special obligations of the City that are equally and ratably payable from and secured by a first lien on the "Net Revenues" collected and received by the City from the operation and ownership of the City's water and sewer system as defined and provided in the Ordinance, which Net Revenues are required to be set aside for and pledged to the payment of the Series 1996B Bonds and all additional bonds issued on a parity therewith, in the interest and sinking fund and the reserve fund required to be maintained for the payment of all such bonds, all as more fully described and provided for in the Ordinance. This bond and the series of which it is a part, together with the interest thereon, are payable solely from such Net Revenues and do not constitute an indebtedness or general obligation of the City. THE CITY SHALL HAVE THE OPTION OF CALLING THE SERIES 1996B BONDS MATURING ON AND AFTER September 1, 2006 FOR REDEMPTION PRIOR TO MATURITY on September 1, 2005, or any date thereafter, in whole or in part and if in part, in inverse order of maturity (but if less than all the Series 1996B Bonds of a single maturity are called for redemption, those bonds called shall be selected by lot or other customary random method by the Paying Agent/Registrar), at par plus accrued interest to the date fixed for redemption. SERIES 1996B BONDS MAY BE REDEEMED IN PART only in integral multiples of $5,000 of principal amount or maturity amount, as applicable. If a Series 1996B Bond subject to redemption is in a denomination larger than $5,000, a portion of such Series 1996B Bond may be redeemed, but only in integral multiples of $5,000. In selecting portions of Series 1996B Bonds for redemption, the Paying Agent/Registrar shall treat each Series 1996B Bond as representing that number of Series 1996B Bonds of$5,000 denomination which is obtained by dividing the principal amount (or maturity amount)of such Series 1996B Bond by$5,000. Upon surrender of any Series 1996B Bond for redemption in part, the Paying Agent/Registrar, in accordance with the provisions of the Ordinance, shall authenticate and deliver in exchange therefore a Series 1996B Bond or Series 1996B Bonds of like maturity and interest rate in an aggregate principal amount (or maturity amount) equal to the unredeemed portion of the Series 1996B Bond so surrendered. NOTICE OF ANY SUCH OPTIONAL REDEMPTION identifying the Series 1996B Bonds to be redeemed shall be sent by first-class mail, postage prepaid, to the Registered 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. Notice 11 of redemption shall also be sent by certified mail, return receipt requested, to at least two national information services, and any securities depository institution registered under the Securities Exchange Act of 1934, as amended, acting as securities depository under the Ordinance. Each redemption notice shall contain the complete official name of the Series 1996B Bonds, CUSIP numbers, certificate numbers, the redemption date, the redemption price, the redemption agent's name and address with a contact person's name and telephone number, the date of issuance, the maturity date, and any other information appropriate to identify sufficiently the Series 1996B Bonds being redeemed. 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 Series 1996B 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 Series 1996B 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 by the Paying Agent/Registrar with the funds so provided for such payment. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL WATER AND SEWER SYSTEM REVENUE BONDS, subject to the restrictions contained in the Ordinance, _ which bonds may be secured by a lien on a parity with, or subordinate and inferior to, the lien on the Net Revenues securing this bond and the series of which it is a part. THE PAYING AGENT/REGISTRAR IS NOT REQUIRED TO ACCEPT for transfer or exchange any Series 1996B Bond called for redemption during the fifteen (15) days prior to mailing of any notice of redemption; provided, however, that such limitation shall not apply to the transfer or exchange by the registered owner of a Series 1996B Bond called for redemption in part. THE REGISTERED OWNER HEREOF shall never have the right to demand payment out of any funds raised or to be raised by taxation. REFERENCE IS HEREBY MADE TO THE ORDINANCE, a copy of which is on file in the office of the Paying Agent/Registrar, and to all of the provisions of which the Registered Owner of this bond by the acceptance hereof hereby assents, for definitions of terms; the " description of and the nature and extent of the security for the Series 1996B Bonds; the priority for the application and use of the income and revenues of the System; the Net Revenues pledged to the payment of the principal of and interest on the Series 1996B Bonds; the nature and extent and manner of enforcement of the lien and pledge securing the payment of the Series 1996B Bonds; the terms and conditions for the issuance of additional revenue obligations, including Additional Bonds; the terms and conditions for amending the Ordinance; the terms and conditions relating to the transfer or exchange of this bond; the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon which the liens, pledges, charges and covenants made therein may be discharged at or prior to the maturity of this bond, and deemed to be no longer Outstanding thereunder; and for the other terms and 12 provisions thereof. Capitalized terms used herein, unless otherwise defined, have the same meanings assigned in 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 be done precedent to or in the issuance and delivery of this bond have been performed, existed, and been done in accordance with law; that the Series 1996B Bonds do not exceed any statutory limitation; and that provision has been made for the payment of the principal of and interest on this bond and all of the Series 1996B Bonds by the aforesaid first lien on and pledge of the Net Revenues. 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 or (ii) is authenticated by the Paying Agent/Registrar by due execution of the authentication certificate manually endorsed hereon. Such duly executed certificate of authentication shall be conclusive evidence that this bond was delivered by the Paying Agent/Registrar under the provisions of the Ordinance. IN WITNESS WHEREOF, the City has caused its corporate seal to be impressed or placed in facsimile hereon and has in the Ordinance directed this bond to be signed by the Mayor and countersigned by the City Secretary by their printed facsimile signatures. Mayor (SEAL) City Secretary • 13 a JFORM OF COMPTROLLER'S REGISTRATION CERTIFICATE] The following form of Comptroller's Registration Certificate shall be attached or affixed to each of the Series 1996B Bonds initially delivered. THE STATE OF TEXAS - REGISTER NO. OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this bond and the proceedings for the issuance hereof have been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas and that it is a valid and binding special obligation of the City of Pearland, Texas, payable from the revenues and other funds pledged to its payment by and in the proceedings authorizing the same, and I do further certify that this bond has this day been registered by me. WITNESS MY SIGNATURE AND SEAL OF OFFICE this . Comptroller of Public Accounts [SEAL] of the State of Texas 14 - WORM OF AUTHENTICATION CERTIFICATE] The following form of Authentication Certificate shall appear on each of the Series 1996B Bonds. AUTHENTICATION CERTIFICATE Registration Date: 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 conversion of and 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. TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: Authorized Signature • 15 IFORM OF ASSIGNMENTI The following form of assignment shall appear on each of the Series 1996E Bonds. ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER) (Print or type name, address, and zip code of transferee) the within bond and hereby irrevocably constitutes and appoints attorney to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: Registered Owner NOTICE: The signature must be guaranteed NOTICE: The signature on this assignment by a commercial bank or a member firm of must correspond with the name of the a national securities exchange. Notarized or Registered Owner as it appears on the face witnessed signatures are not acceptable. of the within bond in every particular, without alteration or enlargement or any change whatever. 16 WORM OF STATEMENT OF INSURANCE) The following form of statement of insurance shall appear on each of the Series 1996B Bonds. Financial Security Assurance Inc. ("Financial Security"), New York, New York, has delivered its municipal bond insurance policy with respect to the scheduled payments due of principal of and interest on this Bond to Texas Commerce Bank National Association, or its _ successor, as paying agent for the Bonds (the "Paying Agent"). Said policy is on file and available for inspection at the principal office of the Paying Agent and a copy thereof may be obtained from Financial Security or the Paying Agent. 17 ARTICLE V - SECURITY AND SOURCE OF PAYMENT FOR THE BONDS ., Section 5.1. Pledge and Source of Payment. The City hereby covenants and agrees that Gross Revenues of the System shall, as collected and received by the City, be deposited and paid into the special funds hereinafter established, and shall be applied in the manner hereinafter set forth, in order to provide for the payment of all Maintenance and Operation Expenses and to provide for the payment of principal of, interest on and any redemption premiums on the Bonds and all expenses of paying same; and to provide for the disposition of the remaining Net Revenues. The Bonds shall constitute special obligations of the City that shall be payable solely from and shall be equally and ratably secured by a first lien on the Net Revenues as collected and received by the City from the operation and ownership of the System, which Net Revenues shall, in the manner herein provided, be set aside for and pledged to the payment of the Bonds in the Interest and Sinking Fund and the Reserve Fund as hereinafter provided, and the Bonds shall be, in all respects, on a parity with and of equal dignity with one another. The Owners of the Bonds shall never have the right to demand payment of either the principal of, interest on or any redemption premium on the Bonds out of any funds raised or to be raised by taxation. Section 5.2. Rates and Charges. So long as any Bonds remain Outstanding, the City shall fix, charge and collect rates and charges for the use and services of the System which are calculated to be fully sufficient to produce Net Revenues in each Fiscal Year at least equal to 115% of the principal and interest requirements scheduled to occur in such Fiscal Year on all Bonds then Outstanding plus an amount equal to the sum of all deposits required to be made to the Reserve Fund in such Fiscal Year; but in no event shall Net Revenues ever be less than the _ amount required to establish and maintain the Interest and Sinking Fund and the Reserve Fund as hereinafter provided, and, to the extent that funds for such purpose are not otherwise available, to pay all other outstanding obligations payable from the Net Revenues of the System. The City will not grant or permit any free service from the System, except for public buildings and institutions operated by the City. In addition, the City will not grant or permit _ any free service from the System permitted by the previous sentence if to do so would violate any condition or covenant to which the City is bound in connection with any federal grant agreement or otherwise. Section 5.3. Special Funds. The following special Funds shall be established, maintained and accounted for as hereinafter provided so long as any of the Bonds remain Outstanding: (a) Revenue Fund; ' (b) Interest and Sinking Fund; and 18 (c) Reserve Fund. All of such Funds shall be maintained as separate accounts on the books of the City. The Interest and Sinking Fund and the Reserve Fund shall constitute trust funds which shall be held in trust for the Owners of the Bonds and the proceeds of which shall be pledged to the payment of the Bonds. All of the Funds named above shall be used solely as herein provided so long as any Bonds remain Outstanding. Section 5.4. Flow of Funds. Gross Revenues of the System shall be deposited as collected into the Revenue Fund. Moneys from time to time on deposit to the credit of the Revenue Fund shall be applied in the following manner and in the following order of priority: (a) First, to pay Maintenance and Operation Expenses and to provide by encumbrance for the payment of all obligations incurred by the City for Maintenance and Operation Expenses and to establish and maintain an operating reserve equal to one month's estimated Maintenance and Operation Expenses; (b) Second, to make all deposits into the Interest and Sinking Fund required by any ordinance authorizing the issuance of Bonds; (c) Third, to make all deposits into the Reserve Fund required by any ordinance authorizing the issuance of Bonds; (d) Fourth, to repay any amounts owing to the Bond Insurer pursuant to the Bond Insurance Policy. (e) Fifth, to make all deposits, as may be required by any ordinance of the City authorizing the issuance of certain Subordinate Lien Obligations described in Section 6.2 hereof, in order to provide for the payment of and security for such Subordinate Lien Obligations; and (f) Sixth, for any lawful purpose. Section 5,5. Interest and Sinking Fund. On or before the last business day of each month so long as any Bonds remain Outstanding, alter making all required payments and provision for payment of Maintenance and Operation Expenses, there shall be transferred into the Interest and Sinking Fund from the Revenue Fund the following amounts: (a) Such amounts, in approximately equal monthly installments, as will be sufficient to accumulate the amount required to pay the interest scheduled to become due on the Bonds on the next Interest Payment Date; and 19 (b) Such amounts, in approximately equal monthly installments, as will be sufficient to accumulate the amount required to pay the next maturing principal of the Bonds (i.e., the principal amount payable on the next September 1), including the principal amounts of, and any redemption premiums on, any Bonds payable as a result of the operation or exercise of any mandatory or optional redemption provision contained in any ordinance authorizing the issuance of Bonds. Whenever the total amounts on deposit to the credit of the Interest and Sinking Fund and the Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all Outstanding Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Interest and Sinking Fund or the Reserve Fund, and such Bonds shall not be regarded as being Outstanding except for the purpose of being paid with the moneys on deposit in such Funds. Moneys deposited to the credit of the Interest and Sinking Fund shall be used solely for the purpose of paying principal (at maturity or prior redemption or to purchase Bonds in the open market to be credited against mandatory redemption requirements), interest and redemption premiums on the Bonds, plus all bank charges and other costs and expenses relating to such payment. On or before each date principal becomes due and/or Interest Payment Date on the Bonds, the City shall transfer from the Interest and Sinking Fund to the paying agent for the Bonds an amount equal to the principal of, interest on and any redemption premiums payable on the Bonds on such date, together with an amount equal to all bank charges and other costs and expenses relating to such payment. The paying agent shall totally destroy all paid Bonds and shall provide the City with an appropriate certificate of destruction. Section 5.6. Reserve Fund. On or before the last business day of each month so long as any Bonds remain Outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses and after making all required transfers into the Interest and Sinking Fund, there shall be transferred into the Reserve Fund from the Revenue Fund amounts equal to at least one-sixtieth (1/60th) of the Average Annual Principal and Interest Requirements on the Bonds'unless or until there has been accumulated in the Reserve Fund money and investments in an aggregate amount at least equal to the Average Annual Principal and Interest Requirements on the Bonds; provided that additional deposits into the Reserve Fund sufficient to provide for the increased reserve requirements resulting from the issuance of any Additional Bonds shall be made by not later than 60 months from the date of issuance of such Additional Bonds as required by Section 6.1(d)hereof. Such additional deposits into the Reserve Fund in connection with the issuance of any Additional Bonds shall be made each month in amounts equal to one-sixtieth (1/60th) of the Average Annual Principal and Interest Requirements on the Bonds and such Additional Bonds. After such amount has accumulated in the Reserve Fund and so long thereafter as such fund contains such amount, no further deposits shall be required to be made into the Reserve Fund, and any excess amounts in the Reserve Fund may be transferred to the Revenue Fund. But if and whenever the balance in the Reserve 20 Fund is reduced below such amount, an amount equal to such deficiency shall be deposited into the Reserve Fund on or before the last business day of the next month, unless otherwise agreed by the TWDB. The Reserve Fund shall be used to pay the principal of and interest on the Bonds at any time when there is not sufficient money available in the Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Bonds to mature or be redeemed. Section 5.7. Deficiencies in Funds. If in any month there shall not be deposited into any fund maintained pursuant to this Article the full amounts required hereinabove, amounts equivalent to such deficiency shall be set apart and paid into such Fund or Funds from the first available and unallocated moneys in the Revenue Fund, and such payment shall be in addition to the amounts otherwise required to be paid into such Funds during any succeeding month or months. To the extent necessary, the rates and charges for the System shall be increased to make up for any such deficiencies. Section 5.8. Investment of Funds: Transfer of Investment Income. (a) Money in the Revenue Fund, the Interest and Sinking Fund and the Reserve Fund may, at the option of the City, be invested in, time deposits or certificates of deposit secured in the manner required by law for public funds, or be invested in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, in obligations of any agencies or instrumentalities of the United States of America or as otherwise permitted by state law; provided that all such deposits and investments shall be made in such manner (which may include repurchase agreements for such investments with any national bank for a period of 270 days or less with 103% over-collateralization) that the money required to be expended from any Fund will be available at the proper time or times, and provided further that in no event shall such deposits or investments of moneys in the Reserve Fund mature later than the final maturity date of the Bonds. All such investments shall be valued in terms of current market value no less frequently than the last business day of the City's Fiscal Year, except that any direct obligations of the United States of America - State and Local Government Series shall be continuously valued at their par value or principal face amount. Any obligation in which money is so invested shall be kept and held in an official depository of the City, except as hereinafter provided. For purposes of maximizing investment " returns, money in such funds may be invested, together with money in other funds or with other money of the City, in common investments of the kind described above, or in a common pool of such investments which shall be kept and held at an official depository of the City, which shall not be deemed to be or constitute a commingling of such money or funds provided that safekeeping receipts or certificates of participation clearly evidencing the investment or investment pool in which such money is invested and the share thereof purchased with such money or owned by such fund are held by or on behalf of each such fund. If necessary, such investments shall be promptly sold to prevent any default. (b) All interest and income derived from such deposits and investments shall be credited monthly to the fund from which such investment was made. 21 Fund is reduced below such amount, an amount equal to such deficiency shall be deposited into the Reserve Fund on or before the last business day of the next month, unless otherwise agreed by the TWDB. The Reserve Fund shall be used to pay the principal of and interest on the Bonds at any time when there is not sufficient money available in the Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Bonds to mature or be redeemed. Section 5.7. Deficiencies in Funds. If in any month there shall not be deposited into any fund maintained pursuant to this Article the full amounts required hereinabove, amounts equivalent to such deficiency shall be set apart and paid into such Fund or Funds from the first available and unallocated moneys in the Revenue Fund, and such payment shall be in addition to the amounts otherwise required to be paid into such Funds during any succeeding month or months. To the extent necessary, the rates and charges for the System shall be increased to make up for any such deficiencies. Section 5,8. Investment of Funds; Transfer of Investment Income. (a) Money in the Revenue Fund, the Interest and Sinking Fund and the Reserve Fund • may, at the option of the City, be invested in, time deposits or certificates of deposit secured in the manner required by law for public funds, or be invested in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United • States of America, in obligations of any agencies or instrumentalities of the United States of America or as otherwise permitted by state law; provided that all such deposits and investments shall be made in such manner (which may include repurchase agreements for such investments • with any national bank for a period of 270 days or less with 103% over-collateralization) that the money required to be expended from any Fund will be available at the proper time or times, and provided further that in no event shall such deposits or investments of moneys in the Reserve Fund mature later than the final maturity date of the Bonds. All such investments shall be valued in terms of current market value no less frequently than the last business day of the City's Fiscal Year, except that any direct obligations of the United States of America - State and Local Government Series shall be continuously valued at their par value or principal face amount. Any obligation in which money is so invested shall be kept and held in an official depository of the City, except as hereinafter provided. For purposes of maximizing investment returns, money in such funds may be invested, together with money in other funds or with other money of the City, in common investments of the kind described above, or in a common pool of such investments which shall be kept and held at an official depository of the City, which shall not be deemed to be or constitute a commingling of such money or funds provided that safekeeping receipts or certificates of participation clearly evidencing the investment or investment pool in which such money is invested and the share thereof purchased with such money or owned by such fund are held by or on behalf of each such fund. If necessary, such investments shall be promptly sold to prevent any default. (b) All interest and income derived from such deposits and investments shall be credited monthly to the fund from which such investment was made. 21 Section 5.9. Security for Uninvested Funds. So long as any Bonds remain Outstanding, all uninvested moneys on deposit in, or credited to, the Revenue Fund, the Interest and Sinking Fund and the Reserve Fund shall be secured by the pledge of security as provided by law for cities in the State of Texas. ARTICLE VI ADDITIONAL BONDS Section 6.1 Additional Bonds. The City reserves the right to issue, for any lawful purpose, including the refunding of any previously issued Bonds or any other bonds or obligations of the City issued in connection with the System or payable from Net Revenues, one or more series of Additional Bonds on a parity with the Outstanding Bonds and any Additional Bonds then Outstanding, payable from, and secured by a first lien on, the Net Revenues of the System; provided, however, that no Additional Bonds may be issued unless: (a) All Additional Bonds shall mature only on September 1 and interest thereon shall be payable only on March 1 and September 1; (b) The Interest and Sinking Fund and the Reserve Fund each contains the amount of money then required to be on deposit therein; (c) For either the preceding Fiscal Year or any consecutive 12-month period out of the 15-month period immediately preceding the month in which the bond ordinance authorizing such Additional Bonds is adopted (the "Base Period") either: (1) Net Revenues are certified by the Director of Finance of the City to have been equal to at least (A) one hundred and forty percent (140%) of the Average Annual Principal and Interest Requirements on all Bonds, after giving effect to the issuance of the Additional Bonds to be issued; or (2) Net Revenues, adjusted to give effect to any rate increase or annexation of territory placed into effect or consummated prior to the adoption of the ordinance authorizing the Additional Bonds to the same extent as if such rate increase or annexation had been placed into effect or consummated prior to the commencement of the Base Period, would have been equal to at least the amount required in paragraph (1)above, as certified by an independent consulting engineer or independent firm of consulting engineers; provided, however, that this requirement shall not apply to the issuance of any series of Additional Bonds for refunding purposes that will not have the result of increasing the average annual principal and interest requirements on the Bonds; and 22 (d) Provision is made in the bond ordinance authorizing the Additional Bonds then proposed to be issued for (1) additional payments into the Interest and Sinking Fund sufficient to provide for the payment of the increased principal of and interest on the Bonds resulting from the issuance of such Additional Bonds, and (2) additional payments into the Reserve Fund sufficient to provide for the accumulation therein of the increased reserve requirement resulting from the issuance of such Additional Bonds, by not later than 60 months from the date of issuance of such Additional Bonds. The provisions of this Section 6.1(a) notwithstanding, the City may issue Additional Bonds that bear interest at a variable rate. Such variable rate bonds may mature on dates other than September 1 and interest thereon may be payable on dates other than March 1 or September 1; provided that the issuance of Additional Bonds as variable rate bonds may not cause the total amount of Outstanding Bonds that are variable rate bonds to exceed 20% of the aggregate principal amount of all Outstanding Bonds and Subordinate Lien Obligations at the time of such issuance. For purposes of calculating the funding requirements for the Reserve Fund and for the purposes of calculating compliance with the conditions precedent to the issuance of Additional Bonds pursuant to Section 6.1(c)and the rate covenant set forth in Section 5.2, any Bonds that are variable rate bonds shall be assumed to bear interest at a rate which shall be estimated and certified by the financial advisor to the City as the rate that would be borne by such variable rate bonds if they were at the date of such certification issued as Bonds bearing a fixed rate of interest to their scheduled maturity or maturities. Section 6,2. Subordinate Lien Obligations. The City reserves the right to issue, for any lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on the Net Revenues that are junior and subordinate to the lien on Net Revenues securing payment of the Bonds. Such Subordinate Lien Obligations may be further secured by any other source of payment lawfully available for such purposes. In the event that the City should decide to issue such Subordinate Lien Obligations as variable rate bonds, for purposes of calculating the funding requirements for the reserve fund for such Subordinate Lien Obligations, the variable rate bonds shall be assumed to bear interest at the rate of 10% per annum, and for purposes of calculating compliance with any conditions precedent to the issuance of additional Subordinate Lien Obligations and any rate covenants relating to such Subordinate Lien Obligations, the variable rate bonds shall be assumed to bear interest at the higher of 9% per annum or the highest variable rate over the preceding twenty-four (24) months. Deposits may be made pursuant to Section 5.4(d) of this Ordinance into such funds as may be created and maintained for the payment of and security for Subordinate Lien Obligations described in this Section (including a reserve fund not to exceed the Average Annual Principal and Interest Requirements on such Subordinate Lien Obligations and any provisions for curing deficiencies in such funds), but only to the extent that the aggregate Outstanding principal amount of such Subordinate Lien Obligations does not exceed 50% of the aggregate principal amount of Bonds and Subordinate Lien Obligations Outstanding on the date of such calculation. 23 Section 6.3. Special Project Bonds. The City reserves the right to issue revenue bonds secured by liens on and pledges of revenues and proceeds derived from Special Projects. ARTICLE VII COVENANTS AND PROVISIONS RELATING TO BONDS Section 7.1. Punctual Payment of Bonds. The City covenants that it will punctually pay or cause to be paid the interest on and principal of all Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipulations and provisions contained in this Ordinance and in any other ordinance authorizing the issuance of such Bonds. Section 7.2. Power to Own and Operate System: Ratemaking Power. The City covenants that it has all necessary power and authority to own and operate the System as herein described and provided and that it possesses, and shall exercise, all necessary power and authority to establish, fix, increase, impose and collect rates and charges for the use and services of the System in the amounts required to comply with the covenants and provisions contained herein. Section 7.3. Maintenance of System. So long as any Bonds remain Outstanding, the City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles. In operating and maintaining the System, the City will comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or orders of any governmental, administrative or judicial body promulgating same, noncompliance with which would materially and adversely affect the operation of the System. Section 7.4. Sale or Encumbrance of System. So long as any Bonds remain Outstanding, the City covenants that it will not sell, dispose of or, except as permitted in Article VI, further encumber the System; provided, however, that this provision shall not prevent the City from disposing of any portion of the System which is being replaced or is deemed by the City to be obsolete, worn out, surplus or no longer needed for the proper operation of the System. Net proceeds from any such disposition may be deposited in the Revenue Fund and, notwithstanding any other provision contained herein, shall be used only for System purposes. Any agreement pursuant to which the City contracts with a person, corporation, municipal corporation or political subdivision to operate the System or to lease and/or operate all or part of the System shall not be considered as an encumbrance of the System. 24 Section 7.5. Insurance. The City covenants that it will keep the System insured with insurers of good standing against risks, accidents or casualties against which and to the extent customarily insured against by political subdivisions of the State of Texas operating similar properties, to the extent that such insurance is available. All net proceeds of such insurance shall be applied to repair or replace the insured property that is damaged or destroyed, or shall be deposited in the Revenue Fund, or shall be used to redeem Outstanding Bonds. The cost of all such insurance, together with any additional insurance, shall be a part of the Maintenance and Operation Expenses. Section 7.6. Accounts. Records and Audits. So long as any Bonds remain Outstanding, the City covenants that it will maintain a proper and complete system of records and accounts pertaining to the operation of the System in which full, true and proper entries will be made of all dealings, transactions, business and affairs which in any way affect or pertain to the System or the Gross Revenues or the Net Revenues thereof. The City shall after the close of each Fiscal Year prepare financial statements of the System, and have those financial statements audited by an independent certified public accountant or independent firm of certified public accountants. After the audit, the City shall furnish a copy of these audited financial statements, together with the independent certified public accountant's report thereon, without cost, to the Municipal Advisory Council of Texas, the major municipal rating agencies and any Owners of Bonds who shall request the same. All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses. So long as any Series 1996B Bonds are held by the TWDB, the City shall also provide a copy of each of its audited financial statements to the TWDB's Development Fund Manager. Section 7.7. Competition. To the extent it legally may, the City covenants that it will not grant any franchise or permit for the acquisition, construction or operation of any competing facilities which might be used as a substitute for the System and will prohibit the operation of any such competing facilities to the extent that such competing facilities would impair the City's ability to pay principal of or interest on the Bonds. Section 7.8. Pledge and Encumbrance of Net Revenues. The City covenants that it has the lawful power to create a'lien on and to pledge the Net Revenues to secure the payment of the Bonds, and has lawfully exercised such power under the Constitution and laws of the State of Texas. The City further covenants that, other than to the payment of the Bonds, the Net Revenues are not and will not be made subject to any other lien, pledge or encumbrance to secure the payment of any debt or obligation of the City, unless such lien, pledge or encumbrance is junior and subordinate to the lien and pledge securing payment of the Bonds. Section 7.9. Covenants with Respect to Certain Assumed Water District Bonds. So long as any Bonds remain Outstanding, the City covenants as follows: (a) To the extent it legally may, the City will impose, and strictly enforce, the requirement upon all water districts located within the City's extraterritorial jurisdiction 25 that any bonds issued by such water districts which are secured in whole or in part by pledges of or liens on water or sewer revenues shall provide that all such pledges of and liens on water or sewer revenues shall automatically terminate upon the annexation and dissolution of the district by the City; (b) The City shall use its best efforts to redeem, refund or defease all annexed water district bonds assumed by the City which by their own terms are secured in whole or in part by pledges of or liens on water or sewer revenues which do not terminate upon annexation and dissolution by the City of such water district, or otherwise to provide for the discharge of such pledges or liens on water or sewer revenues; and (c) Pursuant to Section 43.075, Texas Local Government Code (successor to Article 1182c-1, Vernon's Texas Civil Statutes, as amended), the City shall, unless it has theretofore made adequate provision for the payment thereof, annually levy and cause to be collected taxes upon all taxable property of the City sufficient to pay principal of and interest, as they respectively become due and payable, on all assumed bonds, warrants and other obligations that were issued by water districts that have been annexed to, and dissolved by, the City, and which are by their own terms secured in whole or in part by a lien on or pledge of water or sewer revenues which did not terminate upon the annexation and dissolution by the City of such water district. Section 7.10. Bondholders Rights and Remedies. This Ordinance shall constitute a contract between the City and the Owners of the Series 1996B Bonds from time to time Outstanding and this Ordinance shall be and remain irrepealable until the Series 1996B Bonds and the interest thereon shall be fully paid or discharged or provision therefor shall have been made as provided herein. In the event of a default in the payment of the principal of or interest on any of the Series 1996B Bonds or a default in the performance of any duty or covenant provided by law or in this Ordinance, the Owner or Owners of any of the Series 1996B Bonds may pursue all legal remedies afforded by the Constitution and laws of the State of Texas to compel the City to remedy such default and to prevent further default or defaults. Without in any way limiting the generality of the foregoing, it is expressly provided that any Owner of any of the Series 1996B Bonds may at law or in equity, by suit, action, mandamus, or other _ proceedings, enforce and compel performance of all duties required to be performed by the City under this Ordinance, including the making and collection of reasonable and sufficient rates and charges for the use and services of the System, the deposit of the revenues thereof into the special funds herein provided, and the application of such revenues in the manner required in this Ordinance. So long as a Bond Insurer shall not be in default in its payment obligations under its Bond Insurance Policy, it shall exclusively have all the rights granted to the Owners of such Series 1996B Bonds in this Ordinance. Section 7.11. Defeasance. The City may defease the provisions of this Ordinance and discharge its obligation to the Owners of any or all of the Series 1996B Bonds to pay principal, interest and redemption premium, if any, thereon in any manner permitted by law, including by depositing with the Paying Agent/Registrar, or if authorized by Texas law with any national or 26 state bank having trust powers and having combined capital and surplus of at least $50 million or with the State Treasurer of the State of Texas either: (i) cash in an amount equal to the _ principal amount and redemption premium, if any, of such Series 1996B Bonds plus interest thereon to the date of maturity or redemption, or (ii) pursuant to an escrow or trust agreement, cash and/or direct obligations of the United States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, if any, of such Series 1996B Bonds plus interest thereon to the date of maturity or redemption; provided, however, that if any of such Series _ 1996B 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 Series 1996B 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. Payments of principal of and interest on any Series 1996B Bonds made by a Bond Insurer under its Bond Insurance Policy with the City shall not be deemed to have been paid hereunder and such Series 1996B Bonds shall continue to be Outstanding until paid by the City. Section 7.12. Legal Holidays. In any case where the date of maturity of interest on or principal of the Series 1996B Bonds or the date fixed for redemption of any Series 1996B Bonds shall be in the City a legal holiday or a day on which the Paying Agent/Registrar for the Series 1996B Bonds is authorized by law to close, then payment of interest or principal need not be made on such date but may be made on the next succeeding day not in the City a legal holiday or a day on which such Paying Agent Registrar is authorized by law to close with the same force and effect as if 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. Section 7.13. Unavailability of Authorized Publication. If, because of the temporary or permanent suspension of any newspaper, journal or other publication, or, for any reason, publication of notice cannot be made meeting any requirements herein established, any notice required to be published by the provisions of this Ordinance shall be given in such other manner ' and at such time or times as in the judgment of the City or of the Paying Agent/Registrar (or paying agent) for the Series 1996B Bonds shall most effectively approximate such required publication and the giving of such notice in such manner shall for all purposes of this Ordinance be deemed to be in compliance with the requirements for publication thereof. Section 7.14. No Recourse Against City Officials. No recourse shall be had for the payment of principal of or interest on any Series 1996B Bonds or for any claim based thereon or on this Ordinance against any official of the City or any person executing any Series 1996B Bonds. Section 7.15. Amendment to Ordinance. The City may, with the consent of Owners holding a majority in aggregate principal amount of the Bonds then Outstanding affected thereby, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Owners of Outstanding Bonds, no such amendment, addition, or rescission shall 27 (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof, the redemption price therefor, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds required to be held by Owners for consent to any such amendment, addition, or rescission. ARTICLE VIII CONCERNING THE PAYING AGENT/REGISTRAR Section 8.1. Acceptance. Texas Commerce Bank National Association is hereby appointed as the initial Paying Agent/Registrar for the Series 1996B Bonds. 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 fees and/or deposits of money pursuant to this Ordinance, shall be deemed to accept and agree to abide by the terms of this Ordinance. Section 8.2. Fiduciary Account. All money transferred to the Paying Agent/Registrar under this Ordinance (except sums representing Paying Agent/Registrar's fees) shall be held in a fiduciary account for the benefit of the City, shall be the property of the City, and shall be disbursed in accordance with this Ordinance. Section 8.3. Bonds Presented. Subject to the provisions of Section 8.4, all matured Series 1996B Bonds presented to the Paying Agent/Registrar for payment shall be paid without the necessity of further instructions from the City. Such Series 1996B Bonds shall be canceled as provided herein. Section 8.4. Series 1996B Bonds Not Timely Presented. The Paying Agent/Registrar shall remit to the City, upon receipt of the certificate provided for herein, a sum equal to the aggregate face amount of all Series 1996B Bonds which have not been presented for payment prior to the date specified in such certificate. Such certificate shall: (a) Specify the Series 1996B Bonds or portions thereof to which it applies and the amount of each; (b) Specify the date on which the City believes itself to be no longer obligated to pay such Series 1996B Bonds or portions thereof by virtue of the expiration of the applicable statute of limitations under the laws of the State of Texas; and (c) Be signed by the Mayor and attested by the City Secretary. 28 Funds held by the Paying Agent/Registrar that represent principal of and interest on the Series 1996B Bonds remaining unclaimed by any Registered Owner 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 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 Owners of the Series 1996B Bonds by virtue of actions taken in compliance with this Section. Section 8.5. Paying Agent/Registrar May Own Series 1996B Bonds. The Paying Agent/Registrar in its individual or any other capacity, may become the owner or pledgee of Series 1996B Bonds with the same rights it would have if it were not the Paying Agent/Registrar. Section 8.6. Successor Paying Agents/Registrars. The City covenants that all times while any Series 1996B 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 Series 1996B Bonds. If the Paying Agent/Registrar or its successor for any reason no longer acts as Paying Agent/Registrar hereunder, the City covenants that it will appoint a bank in the same city as the Paying Agent/Registrar initially appointed to perform the duties of Paying Agent/Registrar hereunder. Any successor Paying Agent/Registrar shall be either a national or state banking institution and a corporation organized and doing business under the laws of the United States of America or any state, which is authorized under such laws to exercise trust powers and is subject to supervision or examination by federal or state authority. The City reserves the right to change the Paying Agent/Registrar for the Series 1996B 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 sixty (60) days prior to the next succeeding principal or interest payment date on the Series 1996B 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 first-class mail, 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. 4 29 a ARTICLE IX PROVISIONS CONCERNING SALE AND APPLICATION OF PROCEEDS OF SERIES 1996B BONDS Section 9.1. Sale of Series 1996B Bonds. Sale of the Series 1996B Bonds is hereby awarded to the TWDB at a price of par. It is hereby found and declared that the above price and terms of sale of the Series 1996B Bonds are the most advantageous reasonably obtainable by the City. Section 9.2. Approval. Registration and Delivery. The Mayor and the City Secretary are hereby authorized to have control and custody of the Series 1996B Bonds and all necessary records and proceedings pertaining thereto pending their delivery, and the Mayor of the City, the City Secretary of the City, the City Manager of the City and other officers and employees of the City are hereby authorized, directed and instructed to make such certifications and to execute such instruments (including by printed facsimile signature, the Series 1996B Bonds) as may be necessary to accomplish the delivery of the Series 1996B Bonds and to assure the investigation, examination, and approval thereof by the Attorney General of Texas and the registration of the initial Series 1996B Bonds by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Series 1996B Bonds, the Comptroller of Public Accounts of the State of Texas (or a deputy designated in writing to act for him) shall be requested to sign manually the registration certificate prescribed herein to be attached or affixed to each Series 1996B Bond initially delivered and the seal of the Comptroller of Public Accounts of the State of Texas shall be impressed or printed or lithographed thereon. Delivery of the Series 1996B Bonds is subject to the unqualified approving opinion as to the legality of the Series 1996B Bonds of the Attorney General of Texas and of Mayor, Day, Caldwell & Keeton, L.L.P., Houston, Texas, Bond Counsel. Section 9.3. Application of Proceeds of Series 1996B Bonds. The proceeds from the sale of the Series 1996B Bonds shall be deposited to the Construction Fund established pursuant to Section 11.2(b) of this Ordinance and used only for the purposes set forth in Section 3.1 of this Ordinance and to pay all expenses arising in connection with the issuance of the Series 1996B Bonds. Any proceeds of the Series 1996B Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. Notwithstanding the above and foregoing, immediately following the delivery of the Series 1996B Bonds and prior to the deposit of the proceeds from the sale of such Series 1996B Bonds in the "Special City of Pearland Loan Construction Fund" established at an official depository of the City pursuant to Section 11.2 hereof, such proceeds shall be held in trust and in escrow pursuant to the written escrow agreement described below at an official depository of the City pending written authorization to release said proceeds. A "Special Escrow Deposit Agreement" by and between the City and the official depository, attached hereto as Exhibit D and incorporated herein by reference as a part of this Ordinance for all purposes, is hereby approved as to form and content, and the Mayor and the City Secretary of the City are hereby 30 authorized and directed to execute such Agreement in substantially the same form and content herein approved. Section 9.4. Tax Exemption. The City intends that the interest on the Series 1996B 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 Series 1996B 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 Series 1996B Bonds (including all property the acquisition, construction or improvement of which is to be financed directly or indirectly with the proceeds of the Series 1996B 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 interest on the Series 1996B Bonds to be and remain excludable from the gross income, as defined in Section 61 of the Code, of the owners of the Series 1996B 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 not directly or indirectly take any action or omit to take any action, which action or omission would cause the Series 1996B Bonds to constitute "private activity bonds" within the meaning of Section 141(a) of the Code. (b) Principal of and interest on the Series 1996B Bonds will be paid solely from Net Revenues collected by the City, investment earnings on such collections, and as available, proceeds of the Series 1996B Bonds. (c) Based upon all facts and estimates now known or reasonably expected to be in existence on the date the Series 1996B Bonds are delivered, the City reasonably expects that the proceeds of the Series 1996B Bonds will not be used in a manner that would cause the Series 1996B Bonds or any portion thereof to be an "arbitrage bond" within the meaning of Section 148 of the Code. (d) At all times while the Series 1996B Bonds are outstanding, the City will identify and properly account for all amounts constituting gross proceeds of the Series 1996B Bonds in accordance with the Regulations. The City will monitor the yield on the investments of the proceeds of the Series 1996B 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 Series 1996B Bonds. To the extent necessary to prevent the Series 1996B 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 Series 1996B Bonds to be less than the yield that is materially higher than the yield on the Series 1996B Bonds. 31 (e) The City will not take any action or knowingly omit to take any action, if taken or omitted, would cause the Series 1996B Bonds to be treated as "federally guaranteed" obligations for purposes of Section 149(b) of the Code. (f) The City represents that not more than fifty percent (50%) of the proceeds of the Series 1996B Bonds will be 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 expects that at least eighty-five percent (85%) of the spendable proceeds of the Series 1996B Bonds will be used to carry out the governmental purpose of the Series 1996B Bonds within the three-year period beginning on the date of issue of the Series 1996B Bonds. (g) 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 Series 1996B 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 Series 1996B 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 Series 1996B 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 any 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 Series 1996B Bonds and (iv) timely pay, as required by applicable Regulations, all amounts required to be rebated to the federal 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, interest thereon and any penalty. (h) The City will not directly or 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 Series 1996B Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or a larger loss than would have resulted if such arrangement had been at arm's length and had the yield on the Series 1996B Bonds not been relevant to either Ply- 32 (i) 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 Series 1996B Bonds on such form and in such place as the Secretary may prescribe. (j) The City will not issue or use the Series 1996B Bonds as part of an "abusive arbitrage device" (as defined in Section 1.148-10(a) of the Regulations). Without limiting the foregoing, the Series 1996B 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) increasing the burden on the market for tax-exempt obligations. (k) Proper officers of the City charged with the responsibility for issuing the Series 1996B Bonds are hereby directed to make, execute and deliver certifications as to facts, estimates or circumstances in existence as of the date of issuance of the Series 1996B Bonds and stating whether there are facts, estimates or circumstances that would materially change the City's expectations. On or after the date of issuance of the Series 1996B Bonds, the City will take such actions as are necessary and appropriate to assure the continuous accuracy of the representations contained in such certificates. (1) The covenants and representations made or required by this Section are for the benefit of the Series 1996B Bond holders and any subsequent Series 1996B Bond holder, and may be relied upon by the Series 1996B Bond holders and any subsequent Series 1996B Bond holder 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 cause interest on the Series 1996B Bonds to be includable in gross income for federal income tax purposes under existing law. Notwithstanding any other provision of this Ordinance, the City's representations and obligations under the covenants and provisions of this Section 9.4 shall survive the defeasance and discharge of the Series 1996B Bonds for as long as such matters are relevant to the exclusion of interest on the Series 1996B Bonds from the gross income of the owners for federal income tax purposes. Section 9.5. Qualified Tax-Exempt Obligations. The City hereby designates the Series 1996B Bonds as "qualified tax-exempt obligations" as defined in Section 265(b)(3) of the Code. With respect to such designation, the City represents the following: (a) that during the calendar year 1996, the City (including all entities which issue obligations on behalf of the City), has not designated nor will designate obligations, which when aggregated with the Series 1996B Bonds, will result in more than $10,000,000 of "qualified tax-exempt obligations" being issued and (b) 01 33 that the City has examined its financing needs for the calendar year 1996 and reasonably anticipates that the amount of bonds, leases, loans or other obligations, together with the Series 1996B Bonds and any other tax-exempt obligations heretofore issued by the City (plus those of all entities which issue obligations on behalf of the City) during the calendar year 1996, when the higher of the face amount or the issue price of each such tax-exempt obligation issued for the calendar year 1996 by the City is taken into account, will not exceed $10,000,000. Section 9.6. Bond Insurance. In order to obtain the lowest attainable interest rates on the Series 1996B Bonds, the City shall purchase a Bond Insurance Policy issued by the Bond Insurer for the Series 1996B Bonds. In consideration of the issuance of the Bond Insurance Policy, the agreements and covenants of the City in favor of the Bond Insurer substantially in the form set forth in Exhibit A are hereby approved subject to such insertions, additions, and modifications as shall be necessary to satisfy the conditions set forth in the Commitment of the Bond Insurer, dated May 8, 1996, to issue the Bond Insurance Policy. The Mayor is authorized to execute and the City Secretary is authorized to attest and affix the City's seal to any documents required in connection with the purchase of such policy. Section 9.7. Paying Agent/Registrar Agreement. The registration of and payment of the principal of, premium, if any, and interest on the Bonds when due shall be effectuated pursuant to the terms of a Paying Agent/Registrar Agreement to be entered into by and between the City and the Paying Agent/Registrar, which shall be substantially in the form attached hereto as Exhibit B, the terms and provisions of which are hereby approved, and the Mayor and/or the Mayor Pro Tern are 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. Section 9.8. Related Matters. In order that the City shall satisfy, in a timely manner all of its obligations under the Ordinance, the Mayor, the City Secretary and other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that _ are reasonably necessary to provide for issuance and delivery of the Series 1996B Bonds, including executing by manual or facsimile signature and delivering on behalf of the City all certificates, consents, receipts, requests, notices, investment agreements and other documents a as may be reasonably necessary to satisfy the City's obligations under the Ordinance and to direct the transfer and application of funds of the City consistent with the provisions of such Ordinance. If requested by the Attorney General of Texas or his representatives, the Mayor may authorize such ministerial changes in the written text of this Ordinance as are necessary to obtain the Attorney General's approval and as he determines are consistent with the intent and purposes of this Ordinance, which determination shall be final. a a a 34 ARTICLE X CONTINUING DISCLOSURE UNDERTAKING Section 10,1. Annual Reports. The City shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after 1996, financial information and operating data with respect to the City of the general type 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 and (2) audited, if the City commissions an audit of 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 but if such audited financial statements are unavailable the City will provide such financial statements on an unaudited basis within the above-described six-month period. 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, or may be provided in any other manner consistent with the Rule. Section 10.2. 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 Series 1996B 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 Series 1996B Bonds; 35 G. Modifications to rights of holders of the Series 1996B Bonds; H. Series 1996B Bond calls; I. Defeasances; J. Release, substitution, or sale of property securing repayment of the Series 1996B 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 10.1 of this Ordinance by the time required by such Section. Section 10.3. 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 Series 1996B Bonds within the meaning of the Rule, except that the City in any event will give the notice required by Section 10.2 of any Series 1996B 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 Owners and beneficial owners of the Series 1996B Bonds, and the beneficial owners of the TWDB's bonds if the City is an obligated person with respect to the TWDB's bonds under the Rule, 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 Series 1996B Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY SERIES 1996B 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. • 36 No default by the City in observing or performing its obligations under this Article shall constitute a breach of or default under this 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 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 City, but only if (1) the provisions of this Article, as so amended, would have permitted an underwriter to purchase or sell Series 1996B Bonds in the primary offering of the Series 1996B 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 Owners 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 Series 1996B Bonds consent to such amendment or (b) a person or entity that is unaffiliated with the City (such as nationally recognized bond counsel)determines that such amendment will not materially impair the interests of the Owners and beneficial owners of the Series 1996B 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 10.1 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 prevent an underwriter from lawfully purchasing or selling Series 1996B Bonds in the primary offering of the Series 1996B Bonds. Section 10.4. 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. 37 "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 XI MISCELLANEOUS Section 11.1. Further Proceeding. The Mayor of the City, the City Secretary of the City 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 11.2. Compliance with TWDB Rules and Regulations. In compliance with the rules and regulations of the TWDB, the City agrees and covenants: (a) to keep and maintain full and complete records and accounts pertaining to the construction of the project financed with the proceeds of sale of the Series 1996B Bonds, including the construction fund account created below, in accordance with the standards set forth by the Government Accounting Standard Board; (b) to create and establish at an official depository of the City a "Special City of Pearland Loan Construction Fund (the "Construction Fund") for the receipt and disbursement of the proceeds from the sale of the Series 1996B Bonds (less amounts to pay costs of issuance) and all other funds acquired by the City in connection with the planning and construction of the projects financed, in whole or in part, by the TWDB pursuant to a loan evidenced by the Series 1996B Bonds and all funds deposited to the credit of the Construction Fund shall be disbursed only for the payment of costs and expenses incurred in connection with the planning and building of such projects as approved by the TWDB and as otherwise allowed by the rules; (c) upon completion of the construction of the projects financed, in whole or in part, by the loan evidenced by the Series 1996B Bonds, to provide (i) to the Development Fund Manager of the TWDB a complete set of as-built drawings and (ii) to the TWDB a final accounting of the total costs of the projects. If the projects as finally completed were built at a total cost less than the amount of available funds for building the projects, or if the Development Fund Manager of the TWDB disapproves construction of any portion of such projects as not being in accordance with the plans and specifications, the City agrees to immediately, with filing of the final accounting, return to the TWDB the amount of any such excess and/or the cost determined by the Development Fund Manager of the TWDB relating to the parts of such projects not built in accordance with the plans and specifications, to the nearest multiple of the authorized denominations for the Series 1996B Bonds, upon the surrender and cancellation of a like amount of such Series 1996B Bonds held by the TWDB in inverse order of their Stated 38 Maturities. In determining the amount of available funds for building the project, the City agrees to account for all amounts deposited to the credit of the Construction Fund, including all loan funds extended by the TWDB, all other funds available from the projects as described in the project engineer's or fiscal representative's sufficiency of funds statement and all interest earned by the City on money in the Construction Fund; (d) in addition to the provisions of Section 7.5 hereof, to maintain adequate insurance coverage on the projects financed with the proceeds of the Series 1996B Bonds in amounts adequate to protect the TWDB's interest; (e) maintain current, accurate and complete records and accounts necessary to demonstrate compliance with financial assistance related legal and contractual provisions; (f) to implement any water conservation program required by the TWDB until all financial obligations to the State of Texas have been discharged; (g) to comply with any special conditions specified by the TWDB's environmental determination until all financial obligations to the State of Texas have been discharged; and (h) to abide by the TWDB's rules and relevant state statutes, including the Texas Water Code, Chapters 15, 16 and 17. Section 11.3. 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. Section 11.4. 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 the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended, 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 11.5. Declaration of Emergency. It is hereby officially found and determined that a case of emergency affecting life, health, property and the public peace exists which requires the holding of the meeting at which this Ordinance is passed and further requires that this Ordinance be passed finally and take effect immediately on the date of its introduction, such 39 emergency and urgent public necessity being that the proceeds from the sale of the Series 1996B Bonds are required as soon as possible and without delay for the purposes set forth herein. Section 11.6. Repealer. All ordinances, or parts thereof inconsistent herewith, are hereby repealed to the extent of such inconsistency. PASSED AND APPROVED THIS Igit day of 0 , 1996. Mayor, City of Pearland, Texas ATTEST: g I Cit /. retary, City of P land, Tex (SEAL) Exhibit A Covenants and Agreements with Bond Insurer Exhibit B Paying Agent/Registrar Agreement Exhibit C Description of Annual Financial Information Exhibit D Special Escrow Deposit Agreement 0300881.05 059610/15042 • 40 EXHIBIT A COVENANTS AND AGREEMENTS WITH BOND INSURER The City covenants and agrees with the Bond Insurer as follows: A. The Bond Insurer is a third party beneficiary to this Ordinance. B. No amendment or supplement to this Ordinance may become effective except upon obtaining the prior written consent of the Bond Insurer. C. Copies of any modification or amendment to this Ordinance shall be sent to Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. and Moody's Investors Service, Inc. at least 10 days prior to the effective date thereof. D. The rights granted to the Bond Insurer under this Ordinance to request, consent to or direct any action are rights granted to the Bond Insurer in consideration of its issuance of the Bond Insurance Policy. Any exercise by the Bond Insurer of such rights is merely an exercise of the Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence any position of the Bond Insurer, positive or negative, as to whether Bondholder consent is required in addition to consent of the Bond Insurer. E. Only (1) cash, (2) non-callable direct obligations of the United States of America ("Treasuries") or (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are • not available to any person claiming through the custodian or to whom the custodian may be obligated shall be authorized to be used to affect defeasance of the Bonds unless the Bond Insurer otherwise approves. To accomplish defeasance the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other • accountant as shall be acceptable to the Bond Insurer ("Accountant") verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or redemption date ("Verification"), (ii) an Escrow Deposit Agreement (which shall be • acceptable in form and substance to the Bond Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under this Ordinance; each Verification and Defeasance opinion shall be acceptable in form and • substance, and addressed, to the City, the Paying Agent and the Bond Insurer. In the event a forward purchase agreement will be employed in the refunding, such agreement shall be subject to the approval of the Bond Insurer and shall be accompanied by such • opinions of counsel as may be required by the Bond Insurer. The Bond Insurer shall be provided with final drafts of the above-referenced documentation not less than five business days prior to the funding of the escrow. A-1 F. If, on the business day prior to the related scheduled interest payment date or principal payment date or the date to which Bond maturity has been accelerated ("Payment Date") there is not on deposit with the Paying Agent, after making all transfers and deposits required under this Ordinance, moneys sufficient to pay the principal and interest on the Bonds due on such Payment Date, the Paying Agent shall make a claim under the Bond Insurance Policy and shall give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency and the allocation of such deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Bond Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such Business Day by filling in the form of Notice of Claim and Certificate delivered with the Bond Insurance Policy. In the event the claim to be made is for a mandatory sinking fund redemption installment, upon receipt of the moneys due, the Paying Agent shall authenticate and deliver to affected Bondholders who surrender their Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered. The Paying Agent shall designate any portion of payment of principal on Bonds paid by the Bond Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the Bond Insurer, registered in the name of Financial Security Assurance Inc., in a principal amount equal to the amount of principal paid (without regard to authorized denomination); provided that the Paying Agent's failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the City on any Bond or the subrogation rights of the Bond Insurer. The Paying Agent shall keep a complete and accurate record of all funds deposited by the Bond Insurer into the Policy Payments Account and the allocation of such funds to payment of interest on and principal paid in respect of any Bond. The Bond Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Paying Agent. Upon payment of a claim under the Bond Insurance Policy the Paying Agent shall establish a separate special purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and over which the Paying Agent shall have exclusive control and sole right of withdrawal. The Paying Agent shall receive any amount paid under the Bond Insurance Policy in trust on behalf of Bondholders and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Paying Agent to Bondholders in the same manner as principal and interest payments are to be made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. A-2 Funds held in the Policy Payments Account shall not be invested by the Paying Agent and may not be applied to satisfy any costs, expenses or liabilities of the Paying Agent. Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be remitted to the Bond Insurer. G. The Bond Insurer shall, to the extent it makes any payment of principal or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Bond Insurance Policy. H. The City agrees to pay or reimburse the Bond Insurer any and all charges, fees, costs and expenses which the Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in respect of this Ordinance, (ii) the pursuit of any remedies under this Ordinance or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, this Ordinance whether or not executed or completed, (iv) the violation by the City of any law, rule or regulation, or any judgment, order or decree applicable to it or (v) any litigation or other dispute in connection with this Ordinance or the transactions contemplated thereby, other than amounts resulting from the failure of the Bond Insurer to honor its obligations under the Bond Insurance Policy. The Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this Ordinance. Payments required to be made to the Bond Insurer shall be payable solely from the Trust Estate and shall be paid (i) prior to an event of default, to the extent not paid from the Interest and Sinking Fund, after required deposits to the Reserve Fund (i.e. Fourth in Section 5.4) and (ii) after an event of default, with respect to amounts other than principal and interest on the Bonds, on the same priority as payments for expenses in enforcing this Ordinance. The obligations to the Bond Insurer shall survive discharge or termination of this Ordinance. J. The Bond Insurer shall be entitled to pay principal or interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are defined in the Bond Insurance Policy) and any amounts due on the Bonds as a result of acceleration of the maturity thereof in accordance with this Ordinance, whether or not the Bond Insurer has received a Notice (as defined in the Bond Insurance Policy) of Nonpayment or a claim upon the Bond Insurance Policy. K. The notice address of the Bond Insurer is: Financial Security Assurance Inc., 350 Park Avenue, New York, New York 10022-6022, Attention: Managing Director—Surveillance—Re: Policy No. 21221-N; Telephone: (212) 826-0100; Telecopier: (212) 339-2529. In each case in which notice or other communication refers to an Event of Default then a copy of such notice or other communication shall also be sent to the attention of General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." A-3 L. The Bond Insurer shall be provided with the following information: (i) annual audited financial statements within 120 days after the end of the City's fiscal year and the City's annual budget within 30 days after the approval thereof; (ii) notice of any draw upon the Reserve Fund within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds; (iii) notice of any default within five Business Days after knowledge thereof; (iv) prior notice of the advance refunding or redemption of any of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; (v) notice of the resignation or removal of the Paying Agent and the appointment of, and acceptance of duties by, any successor thereto; (vi) the commencement of any proceeding by or against the City commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (vii) the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds; (viii) a full original transcript of all proceedings relating to the execution of any amendment or supplement to this Ordinance; and (ix) all reports, notices and correspondence to be delivered under the terms of this Ordinance. M. Investments purchased with funds on deposit in the Reserve Fund shall have an average aggregate weighted term to maturity not greater than ten years. 0300881.05 059610/1508 • • A-4 NGRE AEG AGE 6 r�SgF.R STAB • B+1 • 1 EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with Section 10 of this Ordinance are as specified below. 1. The City's audited financial statements for the most recently concluded fiscal year and, to the extent that such statements are not completed and available, unaudited financial statements for such fiscal year. 2. The financial information and operating data set out in Appendix A and Appendix C and paragraphs (6), (8), (10), (12) and (13) of the section entitled "FISCAL INFORMATION" of the City's Application to the Texas Water Development Board. 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. • 0300881.05 059620/1530 a i r C-1 E1103311 AGgE� • CRONV DEPO51"t 5pEC�D T Z^om'r Eg 5 S 1 p$ a a • • • • D-1 • SPECIAL ESCROW DEPOSIT AGREEMENT THIS SPECIAL ESCROW DEPOSIT AGREEMENT, dated as of May 13, 1996, made by and between the City of Pearland, Texas, a home rule city of the State of Texas in Brazoria and Harris Counties, Texas (the "City"), acting by and through the Mayor and City Secretary of the City and Pearland State Bank, Pearland, Texas (the "Bank"), a banking association organized and existing under the laws of the State of Texas. WITNESSETH : WHEREAS, pursuant to an ordinance finally adopted on May 13, 1996, the City Council of the City authorized the issuance of $8,870,000 City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996B, dated June 1, 1996 (the "Bonds") for the purpose of constructing repairs, improvements, additions and extensions to the City's waterworks and sanitary sewer system (the "Project"); WHEREAS, such ordinance also confirmed the sale of the Bonds to the Texas Water Development Board (the "Board"); and WHEREAS, a condition to the purchase of the Bonds by the Board is the deposit of the proceeds of sale (less amounts to pay costs of issuance) in escrow subject to being withdrawn only with the approval of the Development Fund Manager of the Board or an authorized representative; provided, however, that such funds may be transferred to different investments if the City and the Bank consent to such transfer; NOW, THEREFORE, the City and the Bank hereby mutually agree as follows: SECTION 1: Upon the delivery of the Bonds described above, proceeds of sale (less amounts to pay costs of issuance) shall be deposited to the credit of the Construction Fund (as defined in the ordinance authorizing the issuance of the Bonds) to be maintained by the Bank on behalf of the City and the Board, and such amount shall be held in escrow by the Bank in accordance with the terms of this Agreement. SECTION 2: The Bank shall not honor any disbursement from the Construction Fund unless and until it has been supplied with the written approval and consent of the Development Fund Manager of the Board (or an authorized representative thereof) to the release from escrow of such funds, or portion thereof, as the Board shall indicate in such release; provided, however, that no written approval and consent by the Development Fund Manager shall be required if the disbursement only involves transferring funds from one investment to another. Notice reflecting the type of investments purchased for the Construction Fund shall be sent to the Development Fund Manager. SECTION 3: Upon (i) completion of construction of the Project, (ii) full and final payment for the Project, and (iii) acceptance of the Project by the City and the Board, the City and the Board shall conduct a final accounting to determine whether any funds remain in the Construction Fund. If funds remain in the Construction Fund, the City and the Board shall determine whether such funds shall be deposited in the Interest and Sinking Fund for the redemption of Bonds on the next optional redemption date or for additional authorized Projects. SECTION 4: The Bank shall be authorized to accept and rely upon the certifications and documents furnished to the Bank by the City and shall not be liable for the payment of any funds in reliance in good faith upon such certificates or other evidence or approval as herein recited. SECTION 5: The Bank shall have no liability except as expressly set forth herein and, if a controversy arises, either party hereto may introduce the dispute into a court of proper jurisdiction for adjudication thereof and the Bank shall not be liable for any costs and expenses in connection therewith, including reasonable attorney's fees. SECTION 6: All cash deposited to the credit of the Construction Fund in excess of the amount insured by the Federal Deposit Insurance Corporation and remaining uninvested under the terms of this Agreement shall be continuously secured by a valid pledge of direct obligations of the United States of America having an aggregate market value, exclusive of accrued interest, at all times, at least equal to such excess and uninvested cash on deposit in said Fund. SECTION 7: While funds are held in the Construction Fund, the Bank, at the direction of the City, is authorized to invest such funds in direct obligations of the United States of America or any other authorized investments for political subdivisions of the State of Texas. SECTION 8: An account statement of the Construction Fund will be provided by the City to the Development Fund Manager on a monthly basis. SECTION 9: This Agreement may be amended from time to time, as necessary, with the consent of the City Council and the Board, but no amendment shall increase the liabilities or responsibilities or diminish the rights of the Bank without its prior written consent. 2 IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their duly authorized officers and their corporate seals to be hereunto affixed and attested as of the date first above written. • EXECUTED as of the date first written above. CITY OF PEARLAND, TEXAS • By: ey,,�, fa.4t Mayor ATTEST: By: a i • i Secretary (CITY SEAL) PEARLAND STATE BANK Pearland, Texas G7 By: Title: ATTEST: By: Title: (SEAL) 0305515.01 059613/1527 a 3 _ _ PAYING AGENT/REGISTRAR AGREEMENT • THIS PAYING AGENT/REGISTRAR AGREEMENT dated as of May 13, 1996 (together with any amendments or supplements hereto, the "Agreement") is entered into by and between the CITY OF PEARLAND, TEXAS (the "Issuer"), and TEXAS COMMERCE BANK • NATIONAL ASSOCIATION,HOUSTON,TEXAS, as paying agent/registrar(together with any successor in such capacity, the "Bank"). WITNESSETH: WHEREAS, the Issuer has duly authorized and provided for the issuance of its City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996B (the "Bonds") in the aggregate principal amount of$8,870,000 to be issued as fully registered bonds; WHEREAS, all things necessary to make the Bonds the valid obligations of the Issuer, in accordance with their terms, will be done upon the issuance and delivery thereof; WHEREAS, the Issuer and the Bank wish to provide the terms under which the Bank will act as Paying Agent to pay the principal of, redemption premium, if any, and interest on the Bonds, in accordance with the terms thereof, and under which the Bank will act as Registrar for the Bonds; and WHEREAS, the Issuer and the Bank have duly authorized the execution and delivery of this Agreement; and all things necessary to make this Agreement the valid agreement of the parties, in accordance with its terms, have been done. - NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to act as Paying Agent with respect to the Bonds, to pay to the Registered Owners of the Bonds, in accordance with the terms and provisions of this Agreement and the ordinance authorizing the issuance of the Bonds (the "Ordinance"), the principal of, redemption premium, if any, and interest on all or any of the Bonds. The Issuer hereby appoints the Bank as Registrar with respect to the Bonds. The Bank hereby accepts its appointment, and agrees to act as Paying Agent and Registrar with respect to the Bonds. Section 1.02. Compensation. In consideration of the deposits of funds required to be made with the Bank by the Issuer pursuant to the provisions of the Ordinance, the Bank shall be paid a fee of$600 annually and as per the attached Fee Schedule and agrees to abide by and accept the terms hereof and of the Ordinance relating to the duties of the Paying Agent/Registrar. ARTICLE TWO • DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Bank" means Texas Commerce Bank National Association, Houston, Texas, a commercial bank which is a national bank duly organized and existing under the laws of the United States of America. "Bond" or "Bonds" means any one or all of the "City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996B" authorized by the Ordinance. "Issuer" means the City of Pearland, Texas. • "Ordinance" means the ordinance of the Issuer approved by its City Council on May 13, 1996, pursuant to which the Bonds are issued. "Paying Agent" means the Bank when it is performing the function of paying agent. "Person" means any individual,corporation,partnership,joint venture, associations,joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government or any entity whatsoever. "Registrar" means the Bank when it is performing the function of registrar. "Registered Owner" means the Person in whose name any Bond is registered in the books of registration maintained by the Bank under this Agreement. All other capitalized terms shall have the meanings assigned to them in the Ordinance. 0 2 i ARTICLE THREE DUTIES OF THE BANK Section 3.01. Initial Delivery of the Bonds. The Bonds will be initially registered and delivered by the Bank to the purchaser designated by the Issuer as set forth in the Ordinance. If such purchaser delivers a written request to the Bank not later than five business days prior to the date of initial delivery, the Bank will, on the date of initial delivery, exchange the Bonds initially delivered for Bonds of authorized denominations, registered in accordance with the instructions in such request and the Ordinance. Section 3.02. Duties of Paying Agent. As Paying Agent, the Bank shall, provided adequate funds have been provided to it for such purpose by or on behalf of the Issuer, timely pay on behalf of the Issuer the principal of and interest on each Bond in accordance with the provisions of the Ordinance. If the issue is to be Depository Trust Company (DTC) eligible, the Paying Agent will comply with all eligibility requirements as outlined and agreed upon in the eligibility questionnaire. Section 3.03. Duties of Registrar. The Bank shall provide for the proper registration of the Bonds and the timely exchange, replacement and registration of transfer of the Bonds in accordance with the provisions of the Ordinance. Any changes to Registered Owners for such exchange, replacement and registration shall be made by the Bank only in accordance with the Ordinance. The Bank will maintain the books of registration in accordance with the Bank's general practices and procedures in effect from time to time; provided, however, that the Bank agrees to comply with the terms of Tex. Rev. Civ. Stat. Ann. art. 715b, § 4, as amended, and more specifically agrees also to maintain books of registration for the Bonds at the City Secretary's office in City of Pearland, Texas, which books of registration may be a copy of the register which shall be kept current by the Bank. Section 3.04. Unauthenticated Bonds. The Issuer shall provide an adequate inventory of unauthenticated Bonds to facilitate transfers. The Bank covenants that it will maintain such unauthenticated Bonds in safekeeping and will use reasonable care in maintaining such Bonds in safekeeping, which shall be not less than the care it maintains for debt securities of other government entities or corporations for which it serves as registrar, or which it maintains for its own bonds. w 3 Section 3.05. Reports. Upon request of the Issuer, the Bank will provide the Issuer reports which will describe in reasonable detail all transactions pertaining to the Bonds and the books of registration for the period of time specified by the Issuer. The Issuer may also inspect and make copies of the information in the books of registration and such other documents related to the Bonds and in the Bank's possession at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the content of the books of registration to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a subpoena, court order or as otherwise required by law. Upon receipt of a subpoena, court order or other lawful request, the Bank will notify the Issuer immediately so that the Issuer may contest the subpoena, court order or other request if it so chooses. Section 3.06. Canceled Bonds. All Bonds surrendered for payment, redemption, transfer, exchange or replacement, if surrendered to the Bank, shall be promptly canceled by it and, if surrendered to the Issuer, shall be delivered to the Bank and, if not already canceled, shall be promptly canceled by the Bank. The Issuer may at any time deliver to the Bank for cancellation any Bonds previously authenticated and delivered which the Issuer may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly canceled by the Bank. All canceled Bonds held by the Bank shall be destroyed and evidence of such destruction shall be furnished to the Issuer. • Section 3.07. Reliance on Documents. Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank by the Issuer. (b) The Bank shall not be liable to the Issuer for actions taken under this Agreement as long as it acts in good faith and exercises due diligence, reasonableness and care, as prescribed by law, with regard to its duties hereunder. (c) This Agreement is not intended to require the Bank to expend its own funds for performance of any of its duties hereunder. (d) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys. 4 - Section 3.08. Money Held by Bank. Money held by the Bank hereunder shall be held in trust for the benefit of the Registered Owners of the Bonds. The Bank shall be under no obligation to pay interest on any money received by it hereunder. All money deposited with the Bank hereunder shall be secured in the manner and to the ' fullest extent required by law for the security of funds of the Issuer. Any money deposited with the Bank for the payment of the principal of or interest on any Bonds and remaining unclaimed by the Registered Owner after the expiration of three years from the date such funds have become due and payable shall be reported and disposed of by the Bank in accordance with the provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. To the extent such provisions of the Property Code do not apply to the funds, such funds shall be paid by the Bank to the Issuer upon receipt of a written request therefor from the Issuer. The Bank shall have no liability to the Registered Owners of • the Bonds by virtue of actions taken in compliance with the foregoing provision. ARTICLE FOUR MISCELLANEOUS PROVISIONS Section 4.01. May Own Bonds. The Bank, 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 and Registrar for the Bonds. Section 4.02. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereof. Section 4.03. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 4.04. Notices. Any request, demand,authorization, direction, notice, consent, waiver or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed 5 or delivered to the Issuer or the Bank, respectively, at the addresses shown herein, or such other address as may have been given by one party to the other by 15 days' written notice. Section 4.05. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 4.06. Successors and Assigns. All covenants and agreements herein by the Issuer and the Bank shall bind their successors and assigns, whether so expressed or not. This Agreement shall not be assigned by the Bank without the prior written consent of the Issuer. Section 4.07. Severability. If any provision of this Agreement shall be invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. Section 4.08. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim hereunder. Section 4.09. Ordinance Governs Conflicts. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent and Registrar and if any conflict exists between this Agreement and the Ordinance, the Ordinance shall govern. The Bank agrees to be bound by the terms of the Ordinance with respect to the Bonds. Section 4.10. Term and Termination. This Agreement shall be effective from and after its date and may be terminated for any reason by the Issuer or the Bank at any time upon 60 days' written notice; provided, however, that no such termination shall be effective until a successor has been appointed and has accepted the duties of the Bank hereunder. In the event of early termination, regardless of circumstances, the Bank shall deliver to the Issuer or its designee all funds, Bonds and all books and records pertaining to the Bank's role as Paying Agent and Registrar with respect to the Bonds, including, but not limited to, the books of registration. 6 Section 4.11. Governing Law. This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day • and year first above written. CITY OF PEARLAND, TEXAS By: 0,141 4:6/1 • Mayor, City of Pearland, Texas ADDRESS: 3519 Liberty Drive • Pearland, Texas 77581 ATTEST: , 1„,,e„ City' = retary, City of Pearland, Texas (SEAL) TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: . e1ClAik Title: pijigtant. STi elm Prmaident Corporate Trust Offioer ADDRESS: 600 Travis Street • 11th Floor Houston, Texas 77002 ATTEST: By. ce President Title: "Corporate Trust Officer (SEAL) 0303126.01 059613/1529 7 FEE SCHEDULE BOND REGISTRAR, TRANSFER AGENT, AND PAYING AGENT ACCEPTANCE For accepting appointment, execution of documents, attendance at closing, conferring with interested parties and setting up records 500.00 BOND REGISTRAR Annual Administrative Charge 600.00 Account Maintenance For each bondholder account maintained, based upon the number of accounts maintained at the beginning of each billing period, plus all new accounts added 1.00 Annual Minimum 100.00 Bondholder List For each account 0.04 Minimum per List 100.00 Mailing Services Preparation of labels-per account 0.04 Minimum per set of labels 100.00 Inserting enclosures-per enclosure 0.04 Minimum per job 100.00 TRANSFER AGENT ACTIVITY For each bond issue. Includes cancellation of surrendered bond(s), and posting to account 3.00 Replacement of lost bonds 30.00 Cancelled bonds will be retained for one year without charge and then returned to the issuer PAYING AGENT ACTIVITY Interest Payment For each check issued including calculation, check register, replacement of checks, and reconcilement 0.50 Minimum per payable date 100.00 Principal Payment For each bond redeemed at maturity or call 5.00 INCOME TAX REPORTING REQUIREMENTS For preparation of forms required to report income to either state, federal or individuals-per form 2.00 ADDITIONAL FEES AND EXPENSES Bond Calls 250.00 Account Termination Fee(Minimum) 1,000.00 • Audit Confirmations(per issue) 75.00 Out-of-pocket expenses incurred in rendering any service covered by this schedule are in addition to the fees quoted. Expenses for which we are regularly reimbursed include, but are not limited to, .11 counsel fees, travel expenses, publications, printing cost, postage, wire charges, long distance telephone calls, stationery, and forms. Fees quoted are subject to change. • The initial invoice due following closing will include the acceptance fee and a proration of the annual administration fee to the first debt service cycle date. Subsequent annual invoicing will include the administrative fee and transactional charges. w • TEXAS COMMERCE BANK NATIONAL ASSOCIATION SECRETARY'S CERTIFICATE I, Melanie McKittrick, Assistant Secretary of Texas Commerce Bank National Association (the "Bank") hereby certify that on January 10, 1996, at a meeting duly called and convened and at which a quorum was present, the Board of Directors of the Bank adopted the resolutions set forth below, and such resolutions are presently in full force and effect and have not been modified, revoked or rescinded: RESOLVED, that for the purposes of the following resolutions, the following words shall have these meanings ascribed to them: "Bank" shall mean Texas Commerce Bank National Association. "Officer" shall mean the Chairman of the Board, the President, any Vice Chairman, any Executive Vice President, any Managing Director, any Senior Vice President, any Vice President, any Assistant Vice President, any Officer, the General Counsel, the Chief Financial Officer, the Chief Administrative Officer, the Secretary, the Controller and the Cashier of the Bank, and any Chairman, any President, any Vice Chairman, any Executive Vice President, any Managing Director, any Senior Vice President, any Vice President, any Assistant Vice President and any Officer of any region of the Bank. "Senior Officer" shall mean the Chairman of the Board, the President, any Vice Chairman, any Executive Vice President, any Managing Director, any Senior Vice President, any Vice President, the General Counsel, the Chief Financial Officer, the Chief Administrative Officer, the Secretary, the Controller and the Cashier of the Bank, and any Chairman, any President, any Vice Chairman, any Executive Vice President, any Managing Director, any Senior Vice President and any Vice President of any region of the Bank. RESOLVED, that the Officers be, and each of them hereby is, authorized to execute and deliver for and on behalf of the Bank agreements (including, but not limited to, agency agreements, transfer agency agreements, paying agency agreements, exchange agreements, escrow agreements and other similar agreements), indentures, mortgages, deeds, releases, conveyances, assignments, transfers, leases, demands, proofs of debt, claims, discharges, satisfactions, settlements, petitions, affidavits, receipts, instruments or documents, powers of attorney, records, bonds, undertakings, proxies, other agency powers, authentication certificates appearing on bonds and debentures, registration certificates appearing on stock, bond or debentures certificates and such other documents and instruments, other than secretary's certificates or officer's certificates, as may be necessary and appropriate to carry out the fiduciary or agency powers of the Bank. RESOLVED, that the Senior Officers and any Assistant Secretary of the Bank be, and each of them hereby is, authorized to countersign, acknowledge or verify accounts, schedules, requisitions, certifications and declarations, other than secretary's certificates or officer's certificates, in connection with the exercise of the fiduciary or agency powers of the Bank. RESOLVED, that the power and authority conferred to any person pursuant to these resolutions shall include, but not be limited to, the power to execute any other documents and to do and perform such other acts and things as may be necessary or appropriate to consummate the transactions so authorized or to carry out the purposes and intent of such resolutions. EXECUTED effective as of the 19th day of June , 1996, at Houston, Texas. Texas Commerce Bank National Association Y� JC4 B JIB�`tt� _ Q Melanie McKittrick Assistant Secretary • CERTIFICATION AS TO CORPORATE AUTHORITY The undersigned officer of Texas Commerce Bank National Association, a national banking association, serving as Vice President and Trust Officer, under the resolution authorizing the issuance of $8,870, 000 CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B, hereby certifies as follows : The Agreements were executed on behalf of the Texas Commerce Bank National Association by the persons named below whose offices appear set opposite their names, and said persons were at the time of executing the Agreements, and are now, duly elected, qualified, and acting incumbents of their respective offices; and the signature appearing after each of said person' s names is the true and correct specimen of such person' s genuine signature. Name Office Signature 4Yolanda C. Garcia Assistant Vice President , , and Corporte Trust Officer J. Cherise Story Vice President and Corporate Trust Officer The foregoing officers of the Texas Commerce Bank National Association by virtue of the authority delegated to them by the Board of Directors of the Texas Commerce Bank National Association pursuant to resolution, a true and correct copy of which is attached hereto as Exhibit A, are authorized to execute and deliver on behalf of the Texas Commerce Bank National Association such other and further documents as may be necessary or incidental to the acceptance and performance of the trusts set forth in the Agreements to attest any of the foregoing, and to apply the seal of the Texas Commerce Bank National Association thereto. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Texas Commerce Bank National Association this 19th day of June , 1996 . By e �. `�-�.�► [SEAL] SIGNATURE IDENTIFICATION AND NO-LITIGATION CERTIFICATE THE STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § We, the undersigned officers of the City of Pearland, Texas (the "City"), certify that we officially signed, by our manual or facsimile signatures, on behalf of the City, the following described certificates of obligation, to wit: CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B, dated June 1, 1996, and aggregating $8,870,000 (the "Bonds"). That the Bonds have been duly and officially executed by the undersigned with their manual or facsimile signatures in the same manner appearing hereon, and the undersigned hereby adopt and ratify their respective signatures in the manner appearing on each of the Bonds, whether in manual or facsimile form, as the case may be, as their own signatures. That on the date of such signing and on the date hereof, we were and are the duly chosen, qualified and acting officers authorized to execute the Bonds, and holding the official titles set forth below opposite such signatures. We further certify that no litigation is pending or, to our knowledge, threatened in any court to restrain or enjoin the issuance or delivery of the Bonds, or the collection or application of the revenues pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity of the Bonds, the ordinance dated May 13, 1996, authorizing the issuance, sale and delivery of the Bonds (the "Ordinance"), or contesting the powers of the City or the authorization of the Bonds or the Ordinance. We further certify that the seal that has been impressed, or placed in facsimile, upon each of the Bonds is the legally adopted, proper and only official seal of the City, such official seal being impressed upon this certificate. We further certify that no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing the Bonds be submitted to a referendum or other election. We further certify that Paul Grohman is the City Manager of the City and that his signature as set forth to is genuine. City Manager, City of Pearland, Texas • We further certify that the information and data contained in the General Certificate dated June 19 , 1996 remain true and correct as of this date. WITNESS OUR HANDS AND THE SEAL OF THE CITY this June 19 , 19961. SIGNATURES n I'I'I'LE OF OFFICE 4.0 Mayor, City of Pearland, Texas City Secretary, City of Pearland, Texas (CITY SEAL) STATE OF TEXAS § COUNTIES OF § BRAZORIA AND HARRIS § Before me, on this day personally appeared the foregoing individuals, known to me to be the persons whose names are subscribed to the foregoing instrument. Given under my hand and seal of office this N) 6.1 1 `f , 1996. Notary Public, State f Texas '� ` " LISP L. ...)NES : ` �'••" Typed or Printed Name: • s:1 NOTARY?MC•STATE Of TEUS M s ., Z`t OA COMMISSION EXPIRES S JJ �a Y<E 44 7,••`4 SEPTEMBER 21. 1299 My Commission xpires: �)-.1) 419 0303608.01 059613/1530 S GENERAL CERTIFICATE STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § We, the undersigned officers of the City of Pearland, Texas (the "City"), do hereby make - and execute this certificate for the benefit of the Attorney General of the State of Texas and all other persons interested in the City's$1,115,000 CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 1996A, dated June 1, 1996 (the "Bonds"), - now in the process of issuance, as follows: (1) The City is a duly incorporated Home Rule City, having more than 5,000 inhabitants, - operating and existing under the Constitution and laws of the State of Texas and the duly adopted Home Rule Charter of the City. The City's Home Rule Charter has not been changed since the approval by the Attorney General of the State of Texas of the City of Pearland, Texas Combination - Tax and Revenue Certificates of Obligation, Series 1995, dated May 1, 1995, which are the last obligations issued by or on behalf of the City. The City has annexed one piece of property since the issuance of such obligations, as shown in Exhibit A hereto. (2) The Bonds are being issued to provide funds (a) to refund the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 1978 (the "Refunded Bonds") and (b) to pay expenses in connection with the issuance of the Bonds. (3) From February 1, 1996, to the date hereof, the following individuals were the duly elected and qualified Mayor and City Council of the City holding the offices opposite their names: Tom Reid Mayor Randy K. Weber Council Member Richard Tetens Council Member Jerry Richardson Council Member Kevin Cole Council Member Helen Beckman Council Member (4) From February 1, 1996, to the date hereof, the following individuals were the duly appointed and qualified officers of the City holding the positions opposite their names: - Administratioq Position - Paul Grohman City Manager Richard Burdine Assistant City Manager Jim Causey Director of Finance - Yolanda Benitez City Secretary Ruby Jo Knight Tax Assessor/Collector Amy McCullough City Attorney - (5) The Bonds were sold at a price equal to $1,117,750.80 (representing the principal amount of the Bonds plus accrued interest) by means of a private placement to Merchants Bank, Houston, Texas. (6) Attached to this certificate as Exhibit B is a true, full and correct debt service schedule for the Bonds and for all presently outstanding obligations of the City which are payable from Net Revenues (as defined below) of the City's water and sewer system (the "System"), including the City's Water and Sewer System Revenue Bonds, Series 1996B (the "Series 1996B Bonds"), which are being issued concurrently with the Bonds. (7) None of the Refunded Bonds have ever been held in or purchased by the account of any of the interest and sinking funds created and maintained for the payment and security of the Refunded Bonds, and none of the Refunded Bonds are currently owned nor have any of the same ever been purchased or held for any account or fund of the City. (8) The following is a true, full and current schedule of System revenues, remaining after the payment of all operation and maintenance expenses thereof("Net Revenues"), for the past three fiscal years: • Fiscal Year Ended September 30 1993, 1994 1995 $741,126 $1,209,965 $1,705,627 (9) Attached to this certificate as Exhibit C is a true, full and current ordinance establishing the utility rates of the System that are currently in effect. (10) Neither the revenues nor the properties of the System are in any way pledged or hypothecated other than the pledge of the Net Revenues of the System to the Bonds and the Series 1996B Bonds now in the process of issuance, the City's Combination Tax and Revenue Certificates of Obligation, Series 1995 and the City's Combination Tax and Revenue Certificates of Obligation, Series 1991. (11) The City is not in default as to any covenant, condition or obligation on any prior bonds or other obligations payable from the Net Revenues of the System. 2 SIGNED AND SEALED this June 19 , 1996. Ci FY OF PEARLAND, TEXAS tA-)4-46-- City etary, City of Pearland, Tex Mayor, City of Pearland, Texas (CITY SEAL) a 0303616.01 059613/1533 r a a a i a a 3 EXHIBIT A P ©trII© dCoC� U OOin �� U\ �p *T�5* 3519 liberty Drive • Peariand, Texas 77581-5416 EXA (713) 485 Q41 1 • fax (713) 485-8764 CERTIFICATION THE STATE OF TEXAS § COUNTIES OF BRAZORIA & HARRIS § a I , Yolanda C. Benitez, City Secretary of the City of Pearland, Texas, hereby certify that the attached constitutes a true and correct copy of �i4 7D 0p duly passed and approved by the City Council at a regular meeting held on the llth day of December, 1995 . Witness my h nd and sea of the City of Pearland, Texas, this aday of 19gc, at Pearland, Texas. • c l�� A.Gl1� 0- Yo n a C. Benitez Ci y ecretary a ( SEAL) w r r ORDINANCE NO . 708 AN ORDINANCE EXTENDING THE CITY LIMITS OF THE CITY OF PEARLAND, TEXAS, TO INCLUDE ALL LAND AREA WITHIN CERTAIN LIMITS AND BOUNDARIES AND ANNEXING TO THE CITY OF PEARLAND ALL OF THE AREA WITHIN SUCH LIMITS AND BOUNDARIES ; APPROVING A SERVICE PLAN FOR ALL OF THE AREA WITHIN SUCH LIMITS AND BOUNDARIES ; CONTAINING OTHER PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING A SAVINGS AND SEVERABILITY CLAUSE. WHEREAS, the City Council of the City of Pearland, Texas , has , following due notice and publication in accordance with the requirements of §43 . 052 , Tex . Local Govt . Code , conducted two (2 ) public hearings regarding the City' s intended annexation of certain territory located contiguous to the City and within the City' s extraterritorial jurisdiction; and EWHEREAS, public hearings were conducted before the City ' Council on October 9, 1995 , at 6 : 00 o' clock p .m. and on October 23 , 1995, at 6 : 00 o' clock p.m. , at the Pearland City Hall , 3519 Liberty Drive, Pearland, Texas ; and WHEREAS , the City of Pearland has, in accordance with .§43 . 051 et seq . , Tex . Local Govt . Code, complied with all procedural requirements regarding the annexation of territory, including the preparation of a plan for extension of municipal services into the area annexed to the City; and WHEREAS, the City intends to fulfill those obligations imposed upon it by State law regarding newly annexed areas , including timely provision of municipal services as required by law; and WHEREAS, the City Council finds and determines that the annexation intended by this Ordinance is in the best interests of the City of Pearland and benefits the health, safety, and welfare of the citiz-ns of said City; now, therefore , BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY- OF PEARLAND, TEXAS : Section 1 . That the boundaries and limits of the City of _ _ Section 2 . The plan for extension of municipal services into the territory annexed to the City of Pearland by the provisions of this Ordinance is set forth in the "City of Pearland, Texas Service Plan for 588 Acres of Land Located Along FM 518 West of the Present City Limit Line" attached hereto as Exhibit "B" and made a part hereof for all purposes . Such Municipal Service Plan is hereby approved . Section 3 . The City Council officially finds , determines, recites and declares that sufficient written notices of the date, hour, place and subject matter of the meetings of the City Council at which this Ordinance was considered were posted at a place convenient to the public at the City Hall of the City for the time required by law preceding said meetings , as required by law; and that said meetings have 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 notices and the contents and posting thereof . Section 4 . If any section or part of this Ordinance be held unconstitutional , illegal or invalid, or the application thereof ineffective or inapplicable as to any territory, such unconstitutionality, illegality, invalidity, or ineffectiveness of such section or part shall in no wise affect , impair or invalidate the remaining portions , the same shall be and remain in full force and effect ; and should this Ordinance for any reason be ineffective as to any part of the area hereby annexed to the City of Pearland, such ineffectiveness of this Ordinance as to any such part or parts of any such areas shall not affect the effectiveness of the Ordinance as to all of the remainder of such area , and the City Council hereby declares it to be its purpose to annex to the City of Pearland every pare of the area described in Exhibit "A" , attached hereto, regardless of whether any other part of such described area is hereby effectively annexed to the City . i a any land or area which is already a part of and included within the . general limits of the City of Pearland, or which is presently part of and included in the limits of any other city, town or village, or which is not within the City of Pearland 's jurisdiction to annex, the same is hereby excluded and excepted from the territory to be annexed as fully as if such excluded and excepted area was specifically described herein. PASSED and APPROVED on first reading this �j4 day of 1 1,-Zd-P---iv-4--eA, , A. D. , 1995 . 1 -------=---/,C-1/Y) 1 -E-.--1 Tom Reid, Mayor . ATTEST: ) (.-11-L/ (-?' Yol d C. Benitez,LCity Se&retary PAS ED and APPROVED on second and final reading this . day of I 6,e4 v'-C� , A. D. , 1995 . _ 1l� C:::_.----- )/ </-1.-j Tom Reid, Mayor ATTEST: tiji2..) (7: , Yo n C. Benitez, ,ity Secr tary APPROVE AS TO FORM: /I/ A:;y Mo es M Cul oug , City Attney `� Exhibit "A" • METES AND BOUNDS DESCRIPTION 588 ACRES 588 acres, more or less, situated in the Section 7 of the H.T. & B. RR Co. Survey, Abstract No. 219; Section 8 of the H.T. & B. RR Co. Survey, Abstract No. 504; Section 9 of the H. T. & B. RR Co. Survey, Abstract No. 234; Section 15 of the H. T. & B. RR Co. Survey. Abstract No. 241; Section • 15 of the H. T. & B. RR Co. Survey, Abstract No. 241; Section 17 of the H. T. & B. RR Co. Survey. Abstract No. 242; Section 19 of the H. T. & B. RR Co. Survey, Abstract No. 243; Section 20 of the H. T. & B. RR Co. Survey, Abstract No. 506; Section 21 of the H. T. & B. RR Co. Survey, Abstract • No. 309; and H. T. & B. RR Co. Survey, Abstract No. 560 of Brazoria County, Texas, said 588 acres, more or less, being more particularly described by metes and bounds as follows: • BEGINNING at the intersection of the north right-of-way line of F.M. 518 (100 foot width) and the west right-of-way line of O'Day road (80 foot width), also being the southeast corner of the Garden Acres Subdivision, unrecorded, and being the same tract of land described in Volume 595, Page 63 • of the Deed Records of Brazoria County, also lying on the City of Pearland city limits line; THENCE WEST,with said north right-of-way line and said city limits line, 1.358 feet.more or less. • to a projected line of the easterly line of that certain 39.2484 acre tract described in Clerk's File No. 94-025671 of said Deed Records, also being a northwesterly corner of said city limits; THENCE SOUTH, passing through the right-of-way of said F.M. 518, with said easterly line of the 39.2484 acre tract and said city limits line, 2,640 feet, more or less, to the southeast corner of said 39.2484 acre tract,said corner being in the north right-of-way line of Daugherty Road(County Road • 91)(60 foot width); THENCE WEST,with the said north right-of-way line of Daugherty Road. and in part with said city limits line, and passing through the right-of-way of Manvel Road (F.M. 1128)(100 foot width). 4,013 feet, more or less, to the southeast corner of that certain 7 1/2 acre tract of land described in Volume 797, Page 488A, said corner also being in the west right-of-way line of said Manvel Road; THENCE NORTH, with said westerly right-of-way line of Manvel Road, 775 feet, more or less, to the northeast corner of a 4.6945 acre tract described in Volume 86288, Page 101,being the southeast corner of West Chester Estates, unrecorded, and the southeast corner of that certain "Tract 2" described in Volume 1700, Page 879; THENCE WEST, with the northerly line of said 4.6945 acre tract, 990 feet, more or less, to the northwest corner of said 4.6945 acre tract, being the southwesterly corner of said West Chester Estates and the southwest corner of that certain "Tract 6" described in Volume 834, Page 392; THENCE NORTH, with the west line of said West Chester Estates, 1,260 feet, more or less, to a point 500 feet south of the centerline of said F.M. 518; THENCE WEST, parallel to said centerline, 1,210 feet, more or less, to the easterly line of that certain 86.8396 acre tract described in Volume 89711, Page 566 and an east line of M.U.D. No. 1; a THENCE NORTH,with said easterly line of the 86.8396 acre tract, and said east line of M.U.D. No. 1, 450 feet, more or less, to the northeast corner of said 86.8396 acre tract, being the northwest corner of that certain 13.30 acre tract described in Volume 89641, Page 611, also being a northeast corner of said M.U.D. No. 1 and lying on said south right-of-way line of F.M. 518; • THENCE WEST, with said south right-of-way line of F.M. 518, 1,059 feet, more or less. to the northeast corner of that certain 1.0 acre tract described in Volume 408, Page 538; -7- Tn-s.Tr c c ENT T'TT_T ..._.t .t_ ___. ,• r • , , .. 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 THENCE NORTH, with the west line of said 1.0 acre tract, 209 feet, more or less, to the northwest corner of said 1.0 acre tract and said south right-of-way line of said F.M. 518; THENCE WEST, with said south right-of-way line of F.M. 518, 451 feet, more or less, to the northwest corner of that certain 38.2906 acre tract recorded in Volume 91968. Page 809. said corner also being the northeast corner of that certain 9.2461 acre tract recorded in Volume 1757, Page 665, and a northwest corner of said M.UD. No. 1; THENCE SOUTH, with the westerly line of said 38.2906 acre tract, and a west line of said M.U.D. No. 1, 671 feet,more or less, to the southeast corner of said 9.2461 acre tract, said corner also being the northeast corner of that certain 10 acre tract as described in Volume 1757, Page 661; THENCE WEST, in part with a northerly line of said 10 acre tract, 670 feet, more or less, to the westerly line of said 10 acre tract; THENCE NORTH, with said westerly line of the 10 acre tract, 65 feet, more or less. to the southeast corner of a 10.305 acre tract described under Clerk's File No. 93-018201; THENCE WEST, with the south line of said 10.305 acre tract, passing through the right-of-way of Chocolate Bayou Road (County Road 89)(width unknown), 710 feet, more or less, to the westerly right-of-way line of said Chocolate Bayou Road; THENCE NORTH, with said westerly right-of-way line of Chocolate Bayou Road. 160 feet, more or less, to the northeast corner of that certain 9.5144 acre tract described under Clerk's File No. 93- 023854, said corner also being the southeast corner of that certain 5 acre tract described in Volume 889, Page 792; THENCE WEST, with the southerly line of said 5 acre tract and the southerly line of that certain tract granted to Rafael R. Viada, et ux, described in Clerk's File No. 92-27920, 822 feet, more or less, to the southwest corner of said Viada Tract, said corner also being the southeast corner of that certain 8.243 acre tract described in Volume 85205, Page 931; THENCE WEST, with the southerly line of said 8.243 acre tract, 745 feet, more or less; THENCE NORTH, crossing said 8.243 acre tract, 550 feet, more or less, to the centerline of said F.M. 518; THENCE NORTH, in part with the westerly line of that certain 1.798 acre tract described in Volume 86242, Page 86, 522 feet, more or less, to the northeast corner of that certain 3.50 acre tract described in Volume 822, Page 662, also being the northwest corner of said 1.798 acre tract; THENCE EAST, in part with the northerly line of said 1 ,798 acre tract and crossing a 15.790 acre tract described in Volume 88553, Page 338, 861 feet, more or less, to the centerline of Cullen ., Boulevard (60 foot wide); THENCE EAST, in part with the southerly line of Lot 15 and Lot 31, as recorded in Volume 1615, Page 35, 1,578 feet,more or less,to the westerly right-of-way line of a 40 foot wide dedicated road; THENCE NORTH, with said westerly right-of-way line of 40 foot wide road, 524 feet,more or less, to the northeast corner of said Lot 31; THENCE EAST, passing through said 40 foot wide road and with the northerly line of that certain tract described in Volume 88625, Page 214, the northerly line of that certain 9.575 acre tract recorded in Volume 1570, Page 289, and the northerly line of that certain 10 acre tract described in Volume 1564, Page 73, 1,703 feet, more or less, to the west line of that certain 238.8852 acre tract THENCE EAST, with the south line of said M.U.D. 16, 606.70 feet, to a point for corner; THENCE SOUTH, with said southerly line, 450.00 feet to a point for corner; THENCE EAST, with the south line of said M.U.D. 16, 1,502.00 feet to a point for corner, said point being located in the east right-of-way line of Max Road (County Road 108); THENCE SOUTH, 80.94 feet along said east right-of-way line to a point for corner; THENCE EAST, in part with the north line of said Lot 32 and the north line of Lot 64 recorded in Volume 2, Page 23, 2,002 feet, more or less, to the east right-of-way line of Roy Road (40 foot width); THENCE SOUTH, along said east right-of-way of Roy Road, 32 feet, more or less; THENCE EAST, in part with the north line of Lot 23 and the north line of Lot 46 recorded in Volume 2, Page 23, 2,000 feet, more or less, to the westerly right-of-way line of Garden Road (County Road 109)(60 foot width); THENCE NORTH, with said westerly right-of-way line of Garden Road, 1,660 feet, more or less; THENCE EAST,passing through said Garden Road and with the northerly line of Section 1 of said • Garden Acres,2,017 feet,more or less,to the aforementioned west right-of-way line of O'Day Road; THENCE SOUTH, with the said west right-of-way line of said O'Day Road, 2,040 feet, more or • less, to the POINT OF BEGINNING, and containing 588 acres, more or less. 1 i t 1 t 1 1 t t t t Exhibit B-1 Debt Service Schedule for the Bonds 14 IATURIRs COUPON INTEREST TOTAL • OATES (Term) APOLINT RATE A)KUNT DEBT SERVICE 3/01/97 274,415.75 274,415.75 9/01/97 115,000.00 2.900 196,011.25 281,011.25 I/01/98 194,778.75 194,778.75 9/01/98 165,000.00 3.200 194,778.75 359,778.75 3/01/99 192,138.75 192,138.75 0/01/99 170,000.00 3.400 192,138.75 362,138.75 3/01/00 189,248.75 189,248.75 9/01/00 175,000.00 .3.550 189,248.75 364,248.75 3/01/01 186,142.50 186,142.50 9/01/01 185,000.00 3.700 186,142.50 371,142.50 3/01/02 182,720.00 182,720.00 9/01/02 210,000.00 3.800 182,720.00 392,720.00 3/01/03 178,730.00 178,730.00 9/01/03 420,000.00 3.900 178,730.00 598,730.00 • 3/01/04 170,540.00 170,540.00 9/01/04 440,000.00 4.000 171,540.00 610,540.00 3/01/05 161,740.00 161,740.00 9/01/05 455,000.00 4.100 161,740.00 616,740.00 3/01/06 152,412.50 152,412.50 9/01/06 475,000.02 4.200 152,412.50 627,412.50 3/01/07 142,437.50 142,437.50 9/01/07 495,000.00' 4.300 142,437.50 637,437.50 3/01/08 131,795.00 131,795.00 9/01/08 515,000.00' 4.400 131,795.00 646,795.00 - 3/01/09 120,465.00 120,465.00 9/01/09 510,000.00' 4.500 120,465.00 660,465.00 3/01/10 108,315.00 108,315.00 9/01/10 560,000.00' 4.600 108,315.00 668,315.00 3/01/11 95,435.00 95,435.00 9/01/11 590,000.00' 4.700 95,435.00 685,435.00 3/01/12 81,570.00 81,570.00 9/01/12 615,000.00' 4.750 81,570.00 696,570.00 3/01/13 66,963.75 66,963.75 9/01/13 645,000.00' 4.800 66,963.75 711,963.75 3/01/14 51,483.75 51,483.75 9/01/14 625,000.00' 4.800 51,483.75 726,483.75 3/01/15 35,283.75 35,283.75 9/01/15 710,000.00' 4.850 35,283.75 745,283.75 3/01/16 18,066.25 18,966_25 9/01/16 745,000.00' 4.850 18,066.25 763,066.25 $8,870,000.00 S5,390,959.50 114,260,959.50 Accrued Interest 0.00 0.00 Total; S8,870,000.00 S5,390,959.50 114,260,959.50 a Exhibit B-2 Combined Debt Service Schedule CITY OF PEARLAND Total W/SS Revenue Debt MATURING PRINCIPAL 10/01 DATES AMOUNT AMOUNT INTEREST TOTAL FY TOTAL 1997 240,000.00 240,000.00 539,198.88 779,198.86 779,198.68 1996 345,000.00 345,000.00 437,522.50 762,522.50 762,522.50 1999 355,000.00 355,000.00 423,692.50 778,692.50 778,692.50 2000 370,000.00 370,000.00 408,847.50 778,847.50 778,847.50 2001 385,000.00 385,000.00 392,885.00 777,885.00 777,865.00 2002 410,000.00 410,000.00 375,440.00 785,840.00 785,840.00 2003 420,000.00 420,000.00 357,460.00 777,440.00 777,460.00 2004 440,000.00 440,000.00 341,080.00 761,060.00 781,080.00 2005 455,000.00 455,000.00 323,490.00 778,480.00 778,480.00 2006 475,000.00 475,000.00 304,825.00 779,825.00 779,825.00 2007 495,000.00 495,000.00 284,875.00 779,875.00 779,875.00 2008 515,000.00 515,000.00 263,590.00 778,590.00 778,590.00 2009 540,000.00 540,000.00 240,430.00 780,930.00 780,930.00 2010 560,000.00 S60,000.00 216,630.00 776,630.00 776,630.00 2011 590,000.00 590,000.00 190,670.00 780,870.00 710,870.00 2012 615,000.00 615,000.00 163,140.00 778,140.00 778,140.00 2013 645,000.00 645,000.00 133,927.50 778,927.50 778,927.50 2014 675,000.00 675,000.00 102,967.50 777,967.50 777,967.50 2015 710,000.00 710,000.03 70,567.50 780,567.50 780,567.50 2016 745,000.00 745,000.00 36,132.50 781,132.50 781,132.50 Totals S9,985,000.00 S9,965,000.00 55,608,461.38 S15,593,461.38 515,593,461.38 Cos x ent Fact Aunt Principal Aat Cost/Proceeds NAM Title NEW964ISII 1,115,000.00 1,115,000.00 1,115,000.00 3.832 yrs Re f tnd i nQ Bonds Se r i K 1996A NE►I96SRf 8,870,000.00 8,870,000.00 4,870,000.00 13.255 yr• 1A1/SS Revenue Bonds Ser. 19944 Total 59,965,000.00 S9,985,000.00 S9,985,000.00 12.203 yrs EXHIBIT C _ eipEA,,( CRQJ of © llsnd v * * 3519 Liberty Drive • Peorlond, Texas 77581-5416 TEXAS (713) 485-2411 • Fax(713) 485-8764 f CERTIFICATION • THE STATE OF TEXAS § COUNTIES OF BRAZORIA & HARRIS § I, Yolanda C. Benitez, City Secretary of the City of Pearland, Texas, hereby certify that the attached constitutes a true and correct copy of Ordinance No. 679, duly passed and approved by the City Council at a regular meeting held on the 26th day of September, 1994, at Pearland, Texas . Witness my hand and seal of the City of Pearland, Texas, this 13th day of May, 1996, at Pearland, Texas . Y/- da C. Beni z City Secretary (SEAL) ORDINANCE NO. 679 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, DETERMINING CHARGES FOR WATER AND SEWER SERVICES FURNISHED BY THE CITY, AS PROVIDED IN CHAPTER 30, ARTICLE II, SECTION 30-38 OF THE CODE OF ORDINANCES; REPEALING PREVIOUS WATER AND SEWER SERVICE RATE SCHEDULES; PROVIDING A SAVINGS CLAUSE, PROVIDING A SEVERABILITY CLAUSE AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Chapter 30, Article II, Section 30-38 of the Code of Ordinances of the City of Pearland,Texas provides that the rates and charges for the consumption of utility services furnished by the City shall be determined by the City Council from time to time, and the same shall be on file in the office of the City Secretary; NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, THAT: Section 1. Definitions. Residential Unit - Any structure or part thereof used to fulfill the housing requirements of one or more persons living together as a single family. Commercial Unit - Any other structure or part thereof used to fulfill the housing requirements of not more than one business establishment or of not more than one establishment of any other kind, but a business unit shall not include any kind of multi-family establishment. Multi-Unit Residence or Business-A building consisting of two or more residential or commercial units. User - Any person, firm or corporation connected to the city water system for the purpose of receiving water service. Section 2. Water Rates. All property upon which any building has been or may hereafter be erected having a connection with any mains or pipes presently existing or which may be hereafter constructed and used in connection with the City water system shall pay the following rates each month for water service furnished by the City: Residential Unit or Commercial Unit Consisting of a Single Unit: Up to and including first 2000 gallons $8.25 $$S4 minimum All over 2000 gallons $1.52 $I ' per 1000 gallons Multi-Unit Residence or Business: Up to and including first 2000 gallons $7.43 $ A minimum per unit All over 2000 gallons $1.37 Oil per 1000 gallon K.wr..w usage The rate of $8.25 shall be the minimum monthly rate for all water users including the users for less than a monthly period. Section 3. Sewer Rates. The following rates or charges for the use and service of the sewage system of the City of Pearland are determined as follows: 1. Commercial and Industrial Users Having City Water Service: The monthly sewer service charge for all Commercial and Industrial Users having City Water Service will be $8-766- $8 89 minimum for 2000 gallons of water usage or less and $-I-tI- $.4. per 1000 gallons for water usage over 2000 gallons. 2. Commercial and_ Industrial Users Not HavingCity Water Service: The monthly sewer service charge for all Commercial and Industrial Users having sewer service but not having City Water Service will be $I--Il- Sikti per 1000 gallons of comparable bill for City Water Service. The City will install, at its expense, a water meter in the private water supply and read the meter monthly to determine the amount of water consumption. $8.63 $819, Monthly Minimum charge. 3. Commercial and Industrial UsersWho Have Waste Water Discharge Split Between the Sanitary Sewer and Other Methods of Discharge: In the event only a portion of the user's waste water is discharged into the Sanitary Sewer, the City Council, upon the user's request, shall estimate what portion of the water usage is discharged into the Sanitary Sewer and his monthly sewer charge will be figured accordingly. $8.63 $ a$g Monthly Minimum Charge. 4. Commercial and Industrial Users Who Use the Water That is a Part of Their Product or Production Process and That is Not Discharged into the Sanitary Sewer System: If water is a part of a Commercial or Industrial user's product or is used in his production • process in such a manner that there is no discharge into the Sewer System, then, upon the user's request,the City Council will establish the amount of water used for such purpose and his monthly sewer charge will be figured accordingly. $8.63. $ $g Monthly Minimum Charge. 5. Residential Users Having City Water and Sewer Service: The monthly sewer service charge for all users having City Water will be $8.63 $8, 8g minimum for 2000 gallons of water usage or less and $-1--1-1- 034, per 1000 gallons for • water usage over 2000 gallons. 6. Residential Users Having City Sewer Service but not having City Water Service: If a residential user is connected to the Sanitary Sewer System but not connected to the Water System, then the private system will be metered at City expense and the sewer rate will be $-1--1- $1 14 per 1000 gallons of the comparable bill for City Water Service. $8.63 $80;Monthly Minimum Charge. 7. Multi-Unit Building. Residence or Business: Each unit of a multi-unit,residence or business which is separately metered will be charged • a monthly sewer service charge at the rate of $8.63 $ a9, for 2000 gallons of water usage or less and $1-1-'r $131.4 per 1000 gallons for water usage over 2000 gallons. 8. Multi-Unit Building With Common Water Meter for All Units: • A multi-unit residence or business in which the units are served through a common water meter wilt % .h;llo.l .,4. •h.. _e �•, .�� rri;:rve .- 1 1 1 1 1 1 1 1 1 i 1 1 1 1 1 1 1 1 1 ORDINANCE NO. 679 • Section 4. Repealer. All previously adopted water and sewer rate schedules shall be and are hereby repealed. _ Section 5. Savings. All rights and remedies which have accrued in the-favor of the City under this Ordinance and its amendments thereto shall be and are preserved for the benefit of the City. Section 6. Severability. if any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held invalid or unconstitutional by any Court of competent jurisdiction, such portion shall be deemed a separate, distinct and independent provision and such holding shall not effect the validity of the remaining portions thereof. Section 7. Effective Date. This ordinance shall become effective on the NvvciILULI AR, 1993 OPI billing. ...4e: e._.„.,___ PASSED and APPROVED on First Reading this /,,a_ day of A.D., 1994. C. V. Coppin e , Mayor ATTEST: . -----(----- Pat Jones, Cit ecretary PA SED a d APPROVED on Second and Final Reading this,-.2 G day of � — A.D., 1994. C. . Coppinger, , or ATTEST: — Pat Jones, City retary• ' APPROVED AS TO FORM: / , l a fif ee � t __. o s-M Cullough, City Attorney M y _ NO ARBITRAGE CERTIFICATE City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996B I, the undersigned officer of the City of Pearland, Texas, a political subdivision of the State of Texas located within Galveston and Harris Counties (the "City"), make this certification for the benefit of all persons interested in the exclusion from gross income and certain other treatment for federal income tax purposes of the interest to be paid on the City's Water and Sewer System Revenue Bonds, Series 1996B (the "Bonds") in the aggregate principal amount of $8,870,000, which are being issued and delivered simultaneously with the delivery of this certificate (the "Certificate"). I do hereby certify as follows: 1. General. I am the duly chosen, qualified and acting officer of the City for the office shown below my signature. In such capacity, I am charged, along with others, with responsibility for issuing the Bonds. I am familiar with the facts, estimates and expectations certified herein, and I am duly authorized to execute and deliver this Certificate. I am familiar with the provisions of the ordinance adopted on May 13, 1996, authorizing the issuance of the Bonds (the "Ordinance"), and particularly the provisions thereof relating to the treatment of the Bonds and the interest thereon for federal income tax purposes. I am aware of the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), including Sections 103 and 141 through 150 thereof, and the Treasury Regulations (the "Regulations") promulgated under the Code. This Certificate is being executed and delivered pursuant to the relevant provisions of the Code and Sections 1.148-0 through 1.148-11, 1.149(d)-1, 1.149(g)-1, 1.150-1 and 1.150-2 of the Regulations. Certain terms used herein have the same meanings as given to those terms in the Code and the Regulations. Capitalized terms used in this Certificate (unless otherwise indicated herein) shall have the meanings ascribed to them in the Ordinance. 2. Reasonable Expectation. As an officer of the City responsible for issuing the Bonds, the undersigned hereby certifies, in good faith, that the City's expectations, as of the Issue Date (as defined herein), regarding the amount and use of the gross proceeds of the Bonds and other matters relevant to the treatment of interest on the Bonds for federal income tax purposes are accurately and completely stated herein, that all of such expectations and estimates stated in this Certificate are accurate, and that there are no facts, estimates or circumstances which would indicate that any of the expectations stated herein are not reasonable. 3. Descriptions of Governmental Purpose. The City is issuing the Bonds pursuant to the Ordinance to provide funds which will be used: (a) to construct repairs, improvements, additions and extensions to the City's waterworks and sanitary sewer system (the "Project"); and (b) to pay the costs of issuing the Bonds. 4. Proceeds of the Bonds. The sales proceeds from the sale of the Bonds will be $8,870,000 which represents the principal amount of the Bonds. a 5. Use of Proceeds of the Bonds. The sales proceeds from the sale of the Bonds will be expended and applied by the City as follows: (a) Proceeds of the Bonds in an amount equal to $8,535,733.70 will be used by the City to pay the costs of the Project. (b) Proceeds in the amount of $195,183.00 will be disbursed to the Texas Water Development Board ("TWDB") as an origination fee in connection with the purchase of the Bonds by the TWDB. (c) Proceeds of the Bonds in the amount of approximately $104,817.00 will be disbursed within one year of the date hereof to pay the costs of issuing the Bonds. (d) Proceeds of the Bonds in the amount of$34,266.30 will be disbursed on the date hereof to pay the cost of insuring the Bonds. 6. Pre-Issuance Accrued Interest. Interest begins to accrue on the Bonds on the Issue Date of the Bonds (as defined in paragraph 12 below), June 19, 1996; therefore, there is no pre-issuance accrued interest on the Bonds. 7. Investment Proceeds. The City has estimated the total amount of investment proceeds to be received with respect to the Bonds. Such earnings on the investment of the proceeds of the Bonds described in paragraph 5(a) will be used in addition to the amounts described in paragraph 5(a) to pay the costs of the Project. The total cost of the Project is expected to equal or exceed the sum of the amount described in paragraph 5(a) and the investment earnings on the amount described in paragraph 5(a) which are used to pay costs of the Project. The City will have no investment earnings on the amount described in paragraph 5(b) since such amount will not be received by the City, but will be paid to the TWDB on the date hereof as a cost to the City of issuing the Bonds. Earnings, if any, on the amounts described in paragraphs 5(c) and 5(d) will be used for the purposes described in paragraphs 5(c) and 5(d). 8. Replacement Proceeds. There are no amounts on hand, and there are no amounts expected to be received, other than amounts to be held in the Interest and Sinking Fund (as defined in paragraph 15) for the payment of debt service on the Bonds which have or will have at any time a sufficiently direct nexus to the Bonds or to any governmental purpose of the Bonds to conclude that such amounts would have been used for that governmental purpose if the proceeds of the Bonds were not used or to be used for that governmental purpose. More specifically -- (a) Sinking Funds and Pledged Funds. Other than the Interest and Sinking Fund and the amounts and investments on deposit therein from time to time, there are not now and will not be at any time while the Bonds are outstanding -- 2 (i) any debt service fund, reserve fund, replacement fund, any similar fund or any amount or investment reasonably expected to be used, directly or indirectly (such as, by the generation of income to be used), to pay principal or interest on the Bonds; and (ii) any fund, amount or investment that is directly or indirectly pledged to pay principal or interest on the issue. A pledge includes, but is not limited to, any arrangement, regardless of its form, which provides reasonable assurance that the amount will be available to pay principal or interest, even if the City encounters financial difficulty. A pledge to a guarantor or an agreement to maintain an amount at a particular level or balance for the direct or indirect benefit of bondholder or a guarantor would constitute a pledge for this purpose. (b) No Other Replacement Proceeds. There will be no other replacement proceeds allocable to the Bonds. Based on the reasonable expectations of the City as of the date hereof, the term of the Bonds is not longer than, and the City will not allow the Bonds to remain outstanding longer than, is reasonably necessary for the governmental purposes for which the Bonds are being issued. The weighted average maturity of the Bonds does not exceed 120 percent of the reasonably expected economic life of the capital projects being financed or refinanced by the Bonds, determined in the same manner as provided under Section 147(b) of the Code. In addition, none of the proceeds of the Bonds will be used to finance working capital expenditures. 9. No Overissuance. Based on the expectations set forth in the preceding paragraphs, the amount of the proceeds from the issuance of the Bonds, plus all investment proceeds to be received with respect to the Bonds, does not exceed by any amount, the amount required for the governmental purposes for which the Bonds are being issued. 10. Temporary Period Requirements for the Bonds. (a) Time Test. The City has incurred or will incur within six months of the date hereof substantially binding obligations to one or more unrelated parties (not subject to contingencies within the City's or the third parry's control) to which the City is obligated to expend at least 5 percent of the net sale proceeds of the Bonds. (b) Expenditure Test. The City expects at least 85 percent of the original proceeds of the Bonds will have been expended prior to June 19, 1999 for costs of the Project. All original proceeds of the Bonds will be expended prior to June 19, 1999, will be invested on and after such date until final expenditure at a yield (as defined in paragraph 14) which is not materially higher than the yield on the Bonds, except as set forth in paragraph 17 below. (c) Due Diligence. The City expects that the purchase of the Project will proceed with due diligence to completion and that the proceeds of the Bonds will be expended on the Project with reasonable dispatch. 3 (d) Investment Proceeds. The City expects that all amounts derived from the investment of monies received from the sale of the Bonds and from the reinvestment of such investment proceeds will be expended within three years from the date hereof or within one year after receipt of such investment income, whichever is later. All investment proceeds of the Bonds not expended prior to such date will be invested on and after such date until final • expenditure at a yield which is not materially higher than the yield on the Bonds, except as provided in paragraph 17 below. 11. Flow of Funds. Under the Ordinance, the City is obligated to assess and collect revenues in an amount sufficient to pay debt service on the Bonds. All revenues levied, assessed and collected by the City for or on account of the Bonds will be deposited into the Interest and • Sinking Fund. 12. Issue Price. The Bonds were sold by the City to the TWDB for cash and no other economic consideration. TWDB is not a bond house, broker or similar person or organization acting in the capacity of wholesaler or underwriter. TWDB purchased the Bonds for investment on its own account and not for sale to the general public. The Issue Price of the Bonds is equal to the principal amount of the Bonds and does not exceed the fair market value of the Bonds as of the Sale Date. The term "Sale Date" shall mean the first day on which there was a binding agreement in writing for the issuance of the Bonds by the City on specific terms that were not later modified or adjusted in any material respect. In the case of the Bonds, the Sale Date was May 13, 1996. The term "Issue Date" shall mean the first day on which there is a physical delivery of the written evidence of the Bonds in exchange for the purchase price and such date shall not be earlier than the first day on which interest begins to accrue on the Bonds for federal income tax purposes. In the case of the Bonds, the Issue Date is June 19, 1996. Based on the foregoing and on the Certificate of Financial Advisor attached as Exhibit A and incorporated herein by reference, the Issue Price of the Bonds is $8,870,000. The Bonds were issued with no pre-issuance accrued interest. 13. Other Issues. The City's Water and Sewer System Refunding Bonds, Series 1996A (the "Series 1996A Bonds"), issued on the date hereof, and the Bonds will be treated as a single issue of obligations for federal income tax purposes. Except for the Series 1996A Bonds, there are no other obligations issued by the City or any related party of the City, which (a) were sold at substantially the same time as the Bonds (within 15 days), (b) are payable from the same source of funds as the Bonds and (c) are or will be sold pursuant to the same plan of financing as the Bonds. 14. Yield on the Bonds. For purposes of this Certificate, the term "yield" shall have the meaning ascribed to it in Section 148(h) of the Code and the Regulations in effect thereunder and, when used with respect to the Bonds, shall mean that interest rate which when used as a discount factor to compute the present value as of the Issue Date of all scheduled payments of principal of and interest on the Bonds produces an amount equal to (i) the present value (using the same discount rate) of the Issue Price of the Bonds, plus (ii) pre-issuance accrued interest on the Bonds as of the Issue Date. The yield on the Bonds shall not take into account or reflect 4 any underwriters' discount or cost of issuance of the Bonds. For purposes hereof, yield is and shall be calculated on the basis of a 360-day year with interest compounded semi-annually. The yield on the Bonds is calculated on the basis of the final maturity date because, in the case of the Bonds subject to optional redemption, (i) the City has no present intention to call the Bonds for optional redemption, (ii) no Bond is callable at any time for a price less than par plus accrued interest, and (iii) the Financial Advisor has represented on Exhibit A hereto that the Issue Price of each such callable Bond is not greater than par plus accrued interest. No Bond is subject to mandatory early redemption. The insurance premium paid to insure the Bonds constitutes a qualified guarantee fee; thus the insurance premium in the amount of$34,266.30 will be taken into account with respect to the calculation of the yield on the Bonds. The insurance premium is separately stated from all other fees or charges payable to the City or the insurer. It is reasonably expected that Financial Security Assurance Inc. ("FSA") as guarantor, will not be called upon to make any payment with respect to the Bonds for which FSA will not be reimbursed immediately or upon commercially reasonable repayment terms (during a workout period that is not unreasonably long) for any payment under the FSA guarantee. All payments to FSA for any nonguarantee service performed by the guarantor will be fully and adequately compensated separate and apart form the guarantee fees described above based on a comparison to payments that would be charged for the nonguarantee service is such service was performed by a person other than a • guarantor. Based on a representation of the financial advisor set forth in Exhibit A hereto (a) the insurance premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions (including transactions • in which a guarantor has no involvement other than as a guarantor) and (b) the present value of the debt service savings expected to be realized as a result of such insurance exceeds the present value of the insurance premium discounted at a rate equal to the yield on the Bonds which • results assuming recovery of the insurance premium. As stated in paragraph 13 above, the Series 1996A Bonds and the Bonds (the "Combined Issue") will be treated as a single issue of obligations for federal tax purposes. Thus, the yield on the Combined Issue, calculated in the manner set forth above and based on the information set forth in the Certificate of Financial Advisor, attached hereto as Exhibit A, is 4.614198 percent. 15. The Interest and Sinking Fund. The proceeds from all revenues assessed and collected for and on account of the Bonds and all investment earnings on amounts in the Interest and Sinking Fund will be deposited promptly into the Interest and Sinking Fund. The Interest and Sinking Fund will be used primarily to achieve a proper matching of revenues and debt service on the Bonds within each bond year. All amounts which will be used to pay principal of and interest on the Bonds with 13 months of the date of deposit in the Interest and Sinking Fund and which will be depleted annually, except for a reasonable carryover amount not to • exceed the greater of(i) one year's earnings on the Interest and Sinking Fund or (ii) one-twelfth of the annual debt service on the Bonds, will constitute a bona fide debt service fund component of the Interest and Sinking Fund (the "Bona Fide Portion"). All amounts on deposit in the Interest and Sinking Fund from time to time in excess of the Bona Fide Portion thereof and all amounts in the Interest and Sinking Fund and not spent within 13 months of the date of deposit therein (the "Reserve Portion") shall be treated separately for purposes of this Certificate. The expenditure of money deposited in the Interest and Sinking Fund shall be accounted for on the 5 basis of such method of accounting as properly adopted and consistently applied by the City for tax purposes. Amounts on deposit from time to time in the Bona Fide Portion and in the Reserve Portion are allocable between the Bonds and any other obligations of the City the payment of which may be secured by the Interest and Sinking Fund and shall be allocated under such method as properly adopted and consistently applied by the City for tax purposes. So long as any of the Bonds are outstanding, the portion of the Reserve Portion allocable to the Bonds is not expected to exceed the lesser of(i) ten percent of the Issue Price, (ii) the maximum annual debt service on the Bonds or (iii) 125 percent of the average annual debt service on the Bonds. If, however, the balance of the Reserve Portion should ever exceed the limitation specified in the preceding sentence, such excess shall be invested at a yield not in excess of the yield on the Bonds. 16. No Other Sinking Funds. Other than the Interest and Sinking Fund, there are no other funds or accounts comprised of investment property established by and on behalf of the City (a) which are expected to be used, or expected to generate earnings to be used, to pay debt service on the Bonds, or which are reserved or pledged as collateral for payment of debt service on the Bonds and (b) for which there is reasonable assurance that amounts therein will be available to pay debt service on the Bonds if the City encounters financial difficulties. Use of amounts in the Interest and Sinking Fund are described above. There is no other fund established, or to be created or established, which would be treated as a sinking fund with respect to the Bonds. Use of amounts in the Interest and Sinking Fund are described above. There is no other fund established, or to be created or established, which would be treated as a sinking fund with respect to the Bonds. 17. Minor Portion. The City expects that the gross proceeds of the Bonds, including all proceeds received with respect to the Bonds and all investment proceeds received on such amounts, and all other amounts pledged or anticipated to be used to pay principal of and interest on the Bonds, other than amounts representing a portion of the Bona Fide Portion of the Interest and Sinking Fund, will be expended in accordance with paragraphs 10 and 15 above. To the extent that such amounts remain unexpended or are otherwise on hand following the periods set forth in paragraphs 10 and 15 above exceeds the amount specified in paragraph 15, the City will invest such amounts (other than a minor portion not exceeding the lesser of 5 percent of the proceeds of the Bonds or $100,000 in the aggregate) at a yield not materially higher than the yield on the Bonds. 18. Qualified Tax-Exempt Obligations. Section 265 of the Code permits designation of governmental obligations such as the Bonds as "qualified-tax-exempt obligations." The Bonds have been, or are hereby, designated by the City as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code. The Bonds are not private activity bonds within the meaning of Section 141(a) of the Code. The City (and all entities related to the City) does not reasonably expect to issue, and will not designate, tax-exempt obligations, including the Bonds, in an aggregate amount (based in each case on the higher of the principal amount or the issue price) in excess of$10,000,000 during the calendar year 1996. 19. Identification of Replacement Proceeds. Notwithstanding the expectations of the City as stated above in paragraph 8 above, the City will (at all times while the Bonds are 6 outstanding) identify all replacement proceeds with respect to the Bonds, including any sinking fund created for repayment of the principal or interest on the Bonds or any other amounts held in any fund of the City reasonably expected by the City to be used to pay principal or interest on the Bonds. If the City identifies any replacement proceeds and determines that a temporary period pursuant to Section 1.148-2(e) of the Regulations is not applicable to such replacement proceeds, the City will limit the yield on the investment of such replacement proceeds to the yield on the Bonds until such proceeds are treated as spent in accordance with the Regulations. The City acknowledges that failure to properly identify replacement proceeds and account for the investment and expenditure thereof as required by the Regulations may result in interest on the Bonds being includable in the gross income of the holders of the Bonds. 20. Compliance with Rebate Requirements. The City has covenanted in the Ordinance that it will take all necessary steps to comply with the requirement that rebatable arbitrage earnings on the investment of the gross proceeds of the Bonds, within the meaning of Section 148(f) of the Code, be rebated to the federal government. Specifically, the City will (i) maintain separate records regarding the amount and timing of disbursements of proceeds of the Bonds, (ii) maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds which are part of a reasonably required reserve or replacement fund separately from records of amounts in other funds or accounts maintained for the Bonds, amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (iii) calculate at such times as required by applicable Regulations, the rebatable amount earned from the investment of the gross proceeds of any bonds of the City, (iii) calculate at such times as required by applicable Regulations, the rebatable amount earned from the investment of the gross proceeds of the Bonds which are part of a reasonably required reserve or replacement fund, and (iv) pay, not less often than every fifth anniversary date of the delivery of the Bonds or on such other dates as permitted or required by applicable Regulations, all amounts required to be rebated and all penalties required to be paid to the federal government. The City acknowledges that for purposes of compliance with Section 148 of the Code, gross proceeds of the Bonds must be accounted for on the basis of a reasonable, consistently applied method of accounting, not employed in whole or in part as an artifice or device. The City will employ accountants or other persons with expertise in performing the rebate calculations as necessary to insure compliance with the Code. The City will employ legal counsel as necessary to resolve any interpretive issues involved in complying with the rebate requirements of the Code. Further, 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. In the event that the City fails to comply with the rebate requirements of the Code, the City agrees to take all steps available under the Code to bring the Bonds into compliance with the Code; such steps include paying any penalty, interest, or other amounts which will allow the City to return to compliance with the rebate requirements of the Code. If the City is required to pay rebate or other amounts, such as penalties and interest, to the United States with respect to the Bonds pursuant to Section 148(f) of the Code in order to prevent the Bonds from constituting arbitrage bonds or being otherwise classified or treated such that interest on the Bonds would not be excludable from the gross income of the holders thereof for federal income tax purposes, the City will timely make such 7 payments from available funds of the City and the City reasonably expects that it will have the ability to make such payments from available funds of the City in the event such payments become necessary. The undersigned reasonably expects that the City will fulfill its covenants and representations in this regard. 21. Not a Refunding. No portion of the proceeds of the Bonds are expected to be used to pay any interest on or principal of any issue of governmental obligations other than the Bonds. 22. Not a Reimbursement. Except for certain preliminary expenditures (as defined in Section 1.150-2(0(2) of the Regulations) not exceeding 20 percent of the Issue Price of the Bonds, no portion of the proceeds of the Bonds will be allocated to, or otherwise used to reimburse, any expenditure paid by the City, either actually or constructively, prior to the Issue Date. 23. No Change in Use. The City does not expect to dispose of any portion of any project related to the Bonds, or to change the use of the proceeds of the Bonds while any of the Bonds are outstanding. 24. Not a Hedge Bond. Neither the Bonds nor the Refunded Bonds are "hedge bonds" within the meaning of Section 1.149(g) of the regulations. 25. No Abusive Arbitrage Device. The Bonds are not and will not be a part of an issue in which an abusive arbitrage device (as defined in Section 1.148-10(a) of the Regulations) is used. 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, and (ii) increasing the burden on the market for tax-exempt obligations. In this regard, the City issued the Bonds for the primary purpose of accomplishing the bona fide governmental purposes set forth in paragraph 3 of this Certificate. Based on all the facts and circumstances, the City has not issued the Bonds in an amount higher than is reasonably necessary to accomplish the governmental purposes of the Bonds, the City has not issued the Bonds earlier than is reasonably necessary to accomplish the governmental purposes of the Bonds and the City is not allowing the Bonds to remain outstanding longer than is reasonably necessary to accomplish the governmental purposes of the Bonds. The City would have issued the Bonds regardless of any arbitrage benefit which it may realize in connection with the Bonds. In fact, the City reasonably expects that even if the Bonds were not tax-exempt obligations and if market rates of interest on taxable and tax-exempt obligations were equal to each other and to the rates at which the Bonds are in fact now being issued, the City would have issued the Bonds, notwithstanding the loss of any opportunity to borrow at lower tax-exempt rates and invest at higher taxable rates. (a) No Impermissible Sinking Fund. No portion of the Bonds has a maturity determined primarily for the purpose of creating a sinking fund with respect to the Bonds the yield on which will be blended with the yield on the investment of other proceeds of the Bonds to reduce the negative arbitrage related to such investment. 8 (b) No Window Refunding. No portion of the Bonds has been structured with the purpose of making available released revenues that will allow the City to avoid transferred proceeds, to invest such released revenues at a yield materially higher than the yield on the Bonds or to pay principal and interest on another issue of obligations of the City. (c) No Sale of a Conduit Loan. No portion of the gross proceeds of the Bonds has been or will be used to acquire, finance or refinance a conduit loan. 26. No Arbitrage. On the basis of the foregoing facts, estimates and circumstances, it is expected that the proceeds of the Bonds will not be used in a manner that would cause any of the Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Code and the Regulations. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change such expectations. [This space intentionally left blank.] 9 WITNESS MY HAND, this 19th day of June, 1996. CITY OF PEARLAND, TEXAS By: 12 &l Ji C seee.fr r Di r of Finance f EXHIBIT A -- Certificate of Financial Advisor r r r r r r r r r r r r r 10 P EXHIBIT A CERTIFICATE OF FINANCIAL ADVISOR The undersigned hereby certifies with respect to the sale of City of Pearland, Texas .. $8,870,000 Water and Sewer System Revenue Bonds, Series 1996B (the "Bonds"), as follows: 1. The undersigned is a duly authorized representative of Rauscher Pierce Refsnes, Inc., the financial advisor ("Financial Advisor") to the City of Pearland, Texas (the "City") in connection with the sale and delivery of the Bonds. In this capacity, the undersigned is familiar with the facts stated herein. 2. The term "Initial Offering Prices" means the respective initial offering prices (exclusive of accrued interest) for each maturity (stated in term of dollars or as a percent of par) of the Bonds as set forth in the following table. MATURITY PRINCIPAL INTEREST INITIAL DATE AMOUNT RATE OFFERING PRICE 1997 $ 85,000 2.900% $ 85,000 1998 165,000 3.200% 165,000 1999 170,000 3.400% 170,000 2000 175,000 3.550% 175,000 2001 185,000 3.770% 185,000 2002 210,000 3.800% 210,000 2003 420,000 3.900% 420,000 - 2004 440,000 4.000% 440,000 2005 455,000 4.100% 455,000 2006 475,000 4.200% 475,000 2007 495,000 4.300% 495,000 2008 515,000 4.400% 515,000 2009 540,000 4.500% 540,000 2010 560,000 4.600% 560,000 2011 590,000 4.700% 590,000 2012 615,000 4.750% 615,000 2013 645,000 4.800% 645,000 2014 675,000 4.800% 675,000 2015 710,000 4.850% 710,000 2016 745.000 4.850% 745.000 Total $8,870,000 $8,870,000 3. The term "Sale Date" means the first day on which there was a binding contract in writing for the issuance of the Bonds by the City to the initial purchaser of the Bonds on Page A-1 specific terms that were not later modified or adjusted in any material respect. In the case of the Bonds, the Sale Date is May 13, 1996. 4. The term "Issue Date" means the first day on which there is physical delivery of the written evidence of the Bonds in exchange for the purchase price (but not earlier than the day interest on the Bonds begins to accrue for federal income tax purposes). In the case of the Bonds, the Issue Date is June 19, 1996. 5. Based on the actual facts and reasonable expectations in existence on the Sale Date, the Initial Offering Price for each maturity of the Bonds: a. Represented the price (payable in cash, with no other economic consideration being included, and exclusive of accrued interest), at which the Bonds were sold to the initial purchaser; and b. Did not exceed what the City believed to be the respective fair market value of each such maturity of the Bonds as of the Sale Date. 6. Interest on the Bonds begins to accrue on June 19, 1996; therefore, there is no pre-issuance accrued interest on the Bonds. The aggregate of the respective Initial Offering Prices of all the maturities of the Bonds, without adjustment for any costs of issuance, is $8,870,000.00. 7. The term "yield" shall have the meaning ascribed to it in Section 148(h) of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations in effect thereunder, and, when used with respect to the Bonds, shall mean that interest rate which when used as a discount factor to compute the present value as of the Issue Date of all scheduled payments of principal of and interest on the Bonds produces an amount equal to the present value, using the same discount rate, of the Issue Price of the Bonds. Yield on the Bonds shall not take into account or reflect any underwriters' discount, cost of issuance of the Bonds or costs of carrying or repaying the Bonds. For purposes hereof, yield is and shall be calculated on the basis of a 360-day year with interest compounded semi-annually. The yield with respect to that portion of the Bonds subject to optional redemption is computed by treating such Bonds as retired at the stated redemption price on the final maturity date because (i) the City has no present intention to redeem prior to maturity the Bonds which are subject to optional redemption, (ii) no Bond is subject to optional redemption at any time for a price less than the retirement price at final maturity plus accrued interest, (iii) no Bond is subject to optional redemption within five years of the Issue Date, (iv) no Bond subject to optional redemption is issued at an Issue Price that exceeds the stated redemption price at maturity of such Bond by more than one-fourth of one percent multiplied by the product of the stated redemption price at maturity of such Bond and the number of complete years to the first optional redemption date for such Bond; and (v) no Bond subject to optional redemption bears Page A-2 interest at a rate that increases during the term of the Bond. No Bond is subject to mandatory early redemption. As set forth in paragraph 5(d) of the No Arbitrage Certificate to which this Certificate is attached, proceeds of the Bonds in the amount of $34,266.30 will be used to purchase municipal bond insurance for the Bonds from Financial Security Assurance Inc. ("FSA"). The insurance premium paid to FSA constitutes a qualified guarantee fee; thus, the insurance premium in the amount of$34,266.30 will be taken into account in calculating the yield on the Bonds. The insurance premium is separately stated from all other fees or charges payable to the City or the insurer. It is reasonably expected that FSA as guarantor, will not be called upon to make any payment with respect to the Bonds for which FSA will not be reimbursed immediately or upon commercially reasonable repayment terms (during a workout period that is not unreasonably long) for any payment under the FSA guarantee. All payments to FSA for any nonguarantee service performed by the guarantor will be fully and adequately compensated separate and apart from the guarantee fees described above based on a comparison to payments that would be charged for the nonguarantee service if such service was performed by a person other than a guarantor. The insurance premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor), and the present value of the debt service savings expected to be realized as a result of such insurance exceeds the present value of the insurance premium discounted at a rate equal to the yield on the Bonds which results assuming recovery of the insurance premium. No portion of the insurance premium is refundable upon the redemption or defeasance of the Bonds. As a result of the guarantee by FSA, the interest rates on the Bonds, as set forth above, are less than those which would have been necessary in order to sell the Bonds at the respective Initial Offering Prices without such guarantee. The present value of such interest savings expected to result from such guarantee is greater than the present value of the insurance premium. In both cases, such present values have been determined as of the Issue Date using the yield on the Bonds (computed for this purpose by treating the premium as additional interest on the Bonds) as the discount rate. As stated in paragraph 13 above, the Series 1996A Bonds and the Bonds (the "Combined Issue") will be treated as a single issue of obligations for federal tax purposes. Thus, the yield on the Combined Issue, calculated in the manner set forth above and based on the information set forth in the Certificate of Financial Advisor, attached hereto as Exhibit A, is 4.614198 percent. 8. With respect to the issuance of the Bonds, the representations set forth in paragraph 22 of the No Arbitrage Certificate are, to the best of our knowledge, true, correct and complete. We understand that the City will rely on the above in making certain representations to Mayor, Day, Caldwell & Keeton, L.L.P., Bond Counsel to the City, and in complying with the conditions of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations in effect thereunder, necessary for interest on the Bonds to be and remain excludable from gross income for federal income tax purposes. Page A-3 EXECUTED and DELIVERED as of and on June 19, 1996. Very truly yours, FINANCIAL ADVISOR RAUSCHER PIERCE REFSNFS, INC. By: Frank J. Ildebrando Senior Vice President 0313705.01 069618/1931 • • a • Page A-4 CERTIFICATE OF BOND INSURER The undersigned hereby certifies on behalf of Financial Security Assurance Inc. ("FSA"), in connection with the issuance by FSA of its Policy No. 21221-N (the "Policy") in respect of the$8,870,000 in principal amount of City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996E (the "Bonds") that: (i) the Policy is an unconditional and recourse obligation of FSA (enforceable by or on behalf of the holders of the Bonds) to pay the scheduled principal of and interest on the Bonds in the event of Nonpayment by the Issuer (as set forth in the Policy), (ii) the insurance premium of$34,226.30 (the "Premium") is a charge for the transfer of credit risk and was determined in arm's length negotiations and is required to be paid as a condition to the issuance of the Policy, (iii) no portion of such premium represents an indirect payment of costs of issuance, including rating agency fees, other than fees paid by FSA to maintain its ratings, which, together with all other overhead expenses of FSA, are taken into account in the formulation of its rate structure, or for the provision of additional services by us, nor the direct or indirect payment for a cost, risk or other element that is not customarily borne by insurers of tax-exempt bonds (in transactions in which the guarantor has no involvement other than as a guarantor), (iv) FSA is not providing any services in connection with the Bonds other than providing the Policy, and except for the Premium, FSA will not use any portion of the Bond proceeds, (v) Except for payments under the Policy in the case of Nonpayment by the Issuer, there is no obligation to pay any amount of principal or interest on the Bonds by FSA, (vi) The Issuer is not entitled to a refund in excess of the unearned portion of the premium for the Policy in the event a Bond is retired before the final maturity date, (vii) In connection with the issuance of the Policy, FSA did not grant to the Issuer any credit against the Premium for any portion of the insurance premium paid by the Issuer with respect to the bonds being refunded by the Bonds, and (viii) FSA would not have issued the Policy unless the ordinance authorizing the Bonds (the "Ordinance") required the Bonds to be secured by a Reserve Fund funded and maintained (as provided in the Ordinance). FSA makes no representation as to the nature of the interest to be paid on the Bonds or the treatment of the Policy under Section 1.148-4(f) of the Income Tax Regulations. FINANCIAL SECURITY ASSURANCE INC. 1 By: /2/71' Managin ector Dated: June 19, 1996 City of Pearland,Texas(Pearland) Fort„ 8038—G Information Return for Tax-Exempt Governmental Obligations ► Under Internal Revenue Code section 149(e) OMB No.1545-0720 (Rev. May 1995) ► See separate Instructions. Daprtment of the Treasury (Note: Use Form 8038-GC if the issue price is under$100,000.) unhertrf Revenue Service Part I Reporting Authority If Amended Return,check here ► 0 1 Issuer's name 2 Issuer's employer identification number 4.' CITY OF PEARLAND, TEXAS 74i6028909 3 Number and street(or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 3519 LIBERTY DRIVE _ G19 96-1 S City,town,or post office,state,and ZIP code 6 Date of issue PEARLAND, TEXAS 77581 JUNE 19, 1996 7 Name of issue CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM 8 CUSIP number _ REVENUE REFUDNING BONDS, SERIES 1996A AND SERIES 1996B NONE . Part II Type of Issue (check applicable box(es) and enter the issue price) 9 0 Education (attach schedule-see instructions) 9 $ 10 0 Health and hospital (attach schedule-see instructions) 10 11 0 Transportatioi 11 12 0 Public safety 12 13 0 Environment(including sewage bonds) 13 14 0 Housing 14 15 ® Utilities 15 9,985,000.00 16 0 Other. Describe (see instructions) ► 16 17 If obligations are tax or other revenue anticipation bonds, check box ► 0 iiiigy A ,r • 18 If obligations are in the form of a lease or installment sale, check box ► 0 it .i 1, _ ,.. Part III Description of Obligations 0 (e) (9) Maturity date Interestt rate Issue price Stated redemption WeightedYiettld Net interest price at maturity average maturity cost 19 Final maturity. - 9/1/2016 4.850% 745,000.00 745,000.00 e x :, ,. - _; ; 20 Entire issue . 9,985,000.00 9,985,000.00 12.203years 4.614% 4.600 % Part IV Uses of Proceeds of Bond Issue(including underwriters' discount) 198 616 • 21 Proceeds used for accrued interest 21 2,750.88 22 Issue price of entire issue(enter amount from line 20, column(c)) . . . . . 22 9,985,000.00 23 Proceeds used for bond issuance costs(including underwriters'discount) . 23 328,274.81 24 Proceeds used for credit enhancement 24 34,266.30 25 Proceeds allocated to reasonably required reserve or replacement fund . 25 - 0flet- 26 Proceeds used to currently refund prior issues 26 - 0 27 Proceeds used to advance refund prior issues 27 1,086,725. 19 _:::. 28 Total (add lines 23 through 27) 28 1,449,266.30 29 Nonrefunding proceeds of the issue(subtract line 28 from line 22 and enter amount here). . 29 8,535,733.70 Part V Description of Refunded Bonds (Complete this part only for refunding bonds.) 30 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . ► 3.400 years 31 Enter the remaining weighted average maturity of the bonds to be advance refunded . . ► N/A years 32 Enter the last date on which the refunded bonds will be called ► 9/1/1996 33 Enter the date(s) the refunded bonds were issued ► 1978 Part VI Miscellaneous 34 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . 34 N/A 35 Enter the amount of the bonds designated by the issuer under section 265(b)(3)(B)(i)(III)(small issuer exception) 35 9,985,000.00 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract(see instructions) 36a N/A b Enter the final maturity date of the guaranteed investment contract . 11. "s.�«�..-it s„.. 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a N/A b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the issuer ► and the date of the issue ► 38 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . ► 0 39 If the issuer has identified a hedge, check box ► 0 Under penalties of perjury.I declare that I have examined this return and accompanying schedules and statements.and to the best or my knowledge - and belief. y are true.correct.a omplete. Please / JIM CAUSEY Sign ' /7 7% �' ' '6-(( ( 7/24/96 , DIRECTOR OF FINANCE Here igna e or issuer' authorized representative Oate Type or print name and title For Paperwork uction A Notice, see page 1 of the Instructions. Cat.No.63773S Form 8038-G (Rev.5-95) CLOSING CERTIFICATE THE STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § We, the undersigned, Mayor and City Manager of the City of Pearland, Texas (the "City"), acting solely in our respective official capacities, hereby certify with respect to the $8,870,000 City of Pearland, Texas Water and Sewer System Revenue Bonds, Series 1996B (the "Bonds"), as follows: 1. We certify that the ordinance of the City Council of the City authorizing the issuance of the Bonds, dated May 13, 1996 (the "Ordinance") and the Paying Agent/Registrar Agreement have not been amended, modified, supplemented or repealed, except as may have been agreed to by the Texas Water Development Board and are in full force and effect. 2. We further certify that: (i) the City has authorized, by all necessary action, the execution and delivery or receipt and due performance of the Ordinance, Paying Agent/Registrar Agreement, Bonds, and any and all such other agreements and documents as may be required to be executed and delivered or received by the City in order to carry out, give effect to and consummate the transactions contemplated hereby and by the Ordinance and the City Council has authorized, by all necessary action, the adoption of the Ordinance; (ii) no litigation is pending or, to the best of our knowledge, threatened in any court to restrain or enjoin the issuance, sale or delivery of the Bonds, or the collection or application of the revenues pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity of the Bonds, or the Ordinance, or contesting the powers of the City or the authorization of the Bonds or the Ordinance; (iii) the adoption of the Ordinance by the City Council and the execution and delivery of the Bonds, and the compliance by the City and the City Council with the provisions thereof will not conflict with or constitute on the part of the City or the City Council a breach of or a default under any existing law, court or administrative regulation, decree or ordinance or any agreement, indenture, mortgage, lease or other instrument to which the City or the City Council is subject or by which the City, the City Council or any of the City's properties is bound; and (iv) there has not been any material and adverse change in the affairs or financial condition of the City since September 30, 1995, the latest date as to which 2'ldited financial information is available. EXECUTED ON BEHALF OF THE CITY as of _ June. 19 , 1996. CITY OF PEARLAND, TEXAS Mayor City of Pearland, Texas City Manager City of Pearland, Texas 0303649.01 059609/1657 MAYOR, DAY, CALDWELL 8 KEETON, L.L.P 700 LOUISIANA, SUITE 1900 HOUSTON,TEXAS 77002-2778 (713)225-7000 100 CONGRESS AVENUE TELECOPIER(713)225-704 7 SUITE 1500 AUSTIN,TEXAS 78701-4042 (5121320-9200 TE LECOPI E R(5121 320-9292 June 19, 1996 WE HAVE ACTED as Bond Counsel for the City of Pearland, Texas (the "City") in connection with an issue of bonds (the "Bonds") described as follows: CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B, dated June 1, 1996, in the aggregate principal amount of $8,870,000, maturing on September 1 in each year from 1997 through and including 2016. The Bonds are issuable in fully registered form only, in denominations of$5,000 or integral multiples thereof, bear interest, are subject to redemption prior to maturity and may be transferred and exchanged as set out in the Bonds and in the ordinance (the "Ordinance") adopted by the City Council of the City authorizing their issuance. WE HAVE ACTED D as Bond Counsel for the sole purpose of rendering an opinion with respect to the legality and validity of the Bonds under the Constitution and laws of the State of Texas and with respect to the exclusion of interest on the Bonds from gross income under federal income tax law. In such capacity we have examined the Constitution and laws of the State of Texas; federal income tax law; and a transcript of certain certified proceedings pertaining to the issuance of the Bonds, as described in the Ordinance. The transcript contains certified copies of certain proceedings of the City; certain certifications and representations and other material facts within the knowledge and control of the City, upon which we rely; and certain other customary documents and instruments authorizing and relating to the issuance of the Bonds. We have also examined executed Bond No. R-1 of this issue. WE HAVE NOT BEEN REQUESTED to examine, and have not investigated or verified, any original proceedings, records, data or other material, but have relied upon the transcript of certified proceedings. We have not assumed any responsibility with respect to the financial condition or capabilities of the City or the disclosure thereof in connection with the sale of the Bonds. BASED ON SUCH EXAMINATION, it is our opinion as follows: (1) The transcript of certified proceedings evidences complete legal authority for the issuance of the Bonds in full compliance with the Constitution and laws of the State of Texas presently in effect; the Bonds constitute valid and June 19, 1996 Page 2 legally binding obligations of the City enforceable in accordance with the terms and conditions thereof, except to the extent that the rights and remedies of the owners of the Bonds may be limited by laws heretofore or hereafter enacted relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors of political subdivisions and the exercise of judicial discretion in appropriate cases; and the Bonds have been authorized and delivered in accordance with law; and (2) The Bonds are payable solely from and are equally and ratably secured by a first lien on the "Net Revenues" collected and received by the City from the operation of the City's System, as defined in the Ordinance, to be set aside and pledged to the payment of the Bonds and all bonds issued on a parity therewith, in the interest and sinking funds and reserve funds maintained for such purpose pursuant to the Ordinance. ALSO BASED ON OUR EXAMINATION AS DESCRIBED ABOVE, it is our further opinion that, subject to the restrictions hereinafter described, the Bonds are not "private activity bonds" within the meaning of the Code (as defined herein), interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes under existing law and is not subject to the alternative minimum tax on individuals or, except as hereinafter described, corporations. The opinion set forth in the first sentence of this paragraph is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted in the Ordinance to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. The Code and the existing regulations, rulings and court decisions thereunder, upon which the foregoing opinions of Bond Counsel are based, are subject to change, which could prospectively or retroactively result in the inclusion of the interest on the Bonds in gross income of the owners thereof for federal income tax purposes. INTEREST ON all tax-exempt obligations, including the Bonds, owned by a corporation (other than an S corporation, a regulated investment company, a real estate investment trust (RETT) or a real estate mortgage investment conduit (REMIC)) will be included in such corporation's adjusted current earnings for purposes of calculating such corporation's alternative minimum taxable income. A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax and the environmental tax imposed by the Code are computed. EXCEPT AS DESCRIBED ABOVE, we express no opinion as to any federal, state or local tax consequences resulting from the ownership of, receipt or accrual of interest on, or the acquisition or disposition of, the Bonds. Prospective purchasers of the Bonds should be aware June 19, 1996 Page 3 that the ownership of tax-exempt obligations, such as the Bonds, may result in collateral federal income tax consequences to, among others, financial institutions,property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who otherwise may qualify for the earned income tax credit and taxpayers who are deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Such prospective purchasers should consult their tax advisors as to the consequences of investing in the Bonds. Very truly yours, • 0303105.01 069620/1452 ` VEY'.. toy* ?'Ex As`.; Office of die gttornep Genera( EG *tote of Texas DAN MORALES \TTOR\El GE\ER:\L June 14, 1996 THIS IS TO CERTIFY that the City of Pearland, Texas (the "Issuer"), has submitted to me City of Pearland, Texas, Water and Sewer System Revenue Bonds, Series 1996B (the "Bonds") in the aggregate principal amount of $8,870,000 for approval. The Bonds are dated June 1, 1996, numbered R-1 through R-20, and were authorized by Ordinance No. 726 of the Issuer passed on May 13, 1996 (the "Ordinance"). I have examined the law and such certified proceedings and other papers as I deem necessary to render this opinion. As to questions of fact material to my opinion, I have relied upon representations of the Issuer contained in the certified proceedings and other certifications of public officials furnished to me without undertaking to verify the same by independent investigation. I express no opinion relating to the official statement or any other offering material relating to the Bonds. Based on my examination, I am of the opinion, as of the date hereof and under existing law, as follows (capitalized terms, except as herein defined, have the meanings given to them in the Ordinance): (1) The Bonds have been issued in accordance with law and are valid and binding special obligations of the Issuer. _ (2) The Bonds are payable from and secured by a first lien on the Net Revenues collected and received by the Issuer from the operation and ownership of the Issuer's water and sewer system. (3) The owner of the Bonds shall never have the right to demand payment of the Bonds from any funds raised or to be raised by taxation. 512/463-2100 P.O. BOX 12548 AUSTIN, TEXAS 78711-2548 PRI\UH)ctv CIL L I LI>P API R \\ IAA AL E\1P1 OY\tE\T OPPORTI'\IT1 E\WI'Lt>1 f.R City of Pearland, Texas, Water and Sewer System Revenue Bonds, Series 1996B Page Two Therefore, the Bonds are approved. Attorney General of the State of Texas No. 30362 Book No.96-B on ma OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, John Sharp, Comptroller of Public Accounts of the State of Texas, do hereby certify that the attachment is a true and correct copy of the opinion of the Attorney General approving the: City of Pearland, Texas, Water and Sewer System Revenue Bonds, Series 1996B numbered R-1/R-20, of the denomination of $ various, dated June 1 , 1996, as authorized by issuer, interest various percent, under and by authority of which said bonds/certificates were registered electronically in the office of the Comptroller, on the 14th day of June, 1996, under Registration Number 58329. Given under my hand and seal of office, at Austin, Texas, the 14th day of June, 1996. , v/I __5/4 JOHN SHARP Comptroller of Public Accounts of the State of Texas OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, Melissa Guzman, Bond Clerk X Assistant Bond Clerk in the office of the Comptroller of the State of Texas, do hereby certify that, acting under the direction and authority of the Comptroller on the 14th day of June. 1996, I signed the name of the Comptroller to the certificate of registration endorsed upon the: • City of Pearland. Texas.Water and Sewer System Revenue Bonds. Series 1996B, numbered R-1/R-20, dated June 1. 1996, and that in signing the certificate of registration I used the following signature: IN WITNESS WHEREO I have executed this c 'ficate this the 14th day of June. 1996. I, John Sharp, Comptroller of Public Accounts of the State of Texas, certify that the person who has signed the above certificate was duly designated and appointed by me under authority vested in me by TEX. REV. CIV. STAT. ANN. art. 4362 (1969), with authority to sign my name to all certificates of registration, and/or cancellation of bonds required by law to be registered and/or cancelled by me, and was acting as such on the date first mentioned in this certificate, and that the bonds/certificates described in this certificate have been duly registered in the office of the Comptroller, under Registration Number 58329. GIVEN under my hand and seal of office at Austin, Texas,this the 14th day of June. 1996. JOHN SHARP Comptroller of Public Accounts of the State of Texas FSA Financial Security Assurance Inc. June 19, 1996 Municipal Bond Insurance Policy No. 21221-N With Respect to $8.870.000 In Aaaregate Principal Amount of City of Pearland,Texas Water and Sewer System Revenue Bonds, Series 1996B Ladies and Gentlemen: I am Associate General Counsel of Financial Security Assurance Inc., a New York stock insurance company ("Financial Security"). You have requested my opinion in such capacity as to the matters set forth below in connection with the issuance by Financial Security of its above-referenced policy(the"Policy"). In that regard, and for purposes of this opinion, I have examined such corporate records, documents and proceedings as I have deemed necessary and appropriate. Based upon the foregoing, I am of the opinion that: 1. Financial Security is a stock insurance company duly organized and validly existing under the laws of the State of New York and authorized to transact financial guaranty insurance business therein. 2. The Policy has been duly authorized, executed and delivered by Financial Security. 3. The Policy constitutes the valid and binding obligation of Financial Security, enforceable in accordance with its terms, subject,as to the enforcement of remedies,to bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy or insolvency of Financial Security and to the application of general principles of equity. I am a member of the Bar of the State of New York, and do not express any opinion as to any law other than the laws of the State of New York. Very truly yours, eewaetv etrat_i_64,4._ Constance A. Begelfer Associate General Counsel City of Pearland,Texas, 3519 Liberty Drive, Pearland, Texas 77581. Texas Water Development Board, 1700 North Congress, Austin,Texas 78711. mie City of Pearland,Texas(Pearland) 330 Park Ak enue fork.Nev.York 10022•Tel: 212.826.0100.Fax:212.688.3101 'Nev. lurk•London•Sdne. $8,870,000 CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS SERIES 1996B RECEIPT AND CROSS RECEIPT June 19, 1996 1, the undersigned, a duly authorized representative of Texas Commerce Bank National Association, Houston, Texas, hereby acknowledge receipt on behalf of the City of Pearland, Texas (the "City'), of the full purchase price for the City's Water and Sewer System Revenue Bonds, Series 1996B, in the total amount of $8,674,817, representing the par amount of the Bonds of $8,870,000 less an origination fee of $195,183.00 paid to the Texas Water Development Board . TEXAS COMMERCE BANK NATIONAL ASSOCIATION Houston, Texas By: (1A A _WI Name: ARLASCOH Title: CORPORATE TRUST OFFICEr 1, the undersigned, a duly authorized representative of the Texas Water Development Board, hereby acknowledge receipt from the City of the initial bonds of its Water and Sewer System Revenue Bonds, Series 1996B, dated June 1, 1996, which have been delivered to the undersigned in proper form on the date hereof. TEXAS WATER DEVELOPMENT BOARD By: Name: Title: 0304074.01 069419/1350 1 $8,870,000 CITY OF PEARLAND, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS SERIES 1996B ' RECEIPT AND CROSS RECEIPT June 19, 1996 I, the undersigned, a duly authorized representative of Texas Commerce Bank National Association, Houston, Texas, hereby acknowledge receipt on behalf of the City of Pearland, Texas (the "City"), of the full purchase price for the City's Water and Sewer System Revenue Bonds, Series 1996B, in the total amount of $8,870,000, representing the par amount of the Certificates of$8,870,000. TEXAS COMMERCE BANK NATIONAL ASSOCIATION Houston, Texas p. By: Name: Title: I, the undersigned, a duly authorized representative of the Texas Water Development Board, hereby acknowledge receipt from the City of the initial bonds of its Water and Sewer System Revenue Bonds, Series 1996B, dated June 1, 1996, which have been delivered to the undersigned in proper form on the date hereof. TEXAS WATER DEVELOPMENT BOARD By: c Name: , T ( PtrN� Title: � Ld�-►tee 0304074.01 069617/1510 200 ' 39dd 2LB060C IZI Et' : 01 96 , 61 N(lf Eva • 2-1 # -ay 46, 1.1noA Sinn .12=A -sn r3EUDI o award 'stint s nb Arc omit nog{/1 -zmoq cftp 3o am ocp=qv s p 06 uelp act nit pailluttios ay ;SZIta o tssl sltp41 tuproi nogcllratunoop a'ptdM03 itnp a id •sucytrtiqo Ras Jo pp q 'r(nq al noprpoututcoat = _ E >oo sx it asnroaq 'K4at minnu, c iOU st Soars s?qj.••ttearietaiostrl 'Jo£1tt4Ei?e't nn so 'tit saltreq'J 3o unsai8 SE umttniya IOptOpMeSTIS 'p 2u tp 2q SEED stgl iEgi ludut,1 E tpin+ of Sutci 0 30 U,OPAIDPP s4dtS 4VIPL4 4$ur i S,Foci �' PIXPtrelS SPI 2t7Sn I=CI141 - tffi's otp jo otp i so S Ct:KiB Jo satrap Aui;;O Sn 1(jr ou =old iinuEt otp oi load= tb 'arms[otp tip:na ra$ III Su0?IY.,La to • IO Snednino iaoA Jo nomsod jig Ut t 2UBl) Urns/ lltts= Arm sluounsnipe ItrwaidStAurckaoo.mo( 4j.dootternstn puoq aq _ 00 PaS'Eq iztz PQE lam""":'"'jO 10001Ardaz 3o P004110214 30 Itt:441IS aK 200 sr01721 S2it�, a�,�.�.�g,�,,��tld�3n E P aAEq PuE Pa m4ns nowfutio3ux l pa ?^a arm; as '`o:iz2 qu ioacqns i1 no 2upsi SciOOd '9 imparts L>IO,� i nb i Smos{ Ol lurnsit►d 1183310(Y3- y � • r`oc (N-rang A.)170M '9IOZ-1,667 'I i q S P '9661 `6! a!atoP '$966I '. S 'spin anzadv JdiaS pun asivM ` .I 4plivinnd P 4 0001OZ9 :ag • ZZOOT 3110A A ' N atttl341.V wed 0�£ dnarD 6ltre1E¢n9 reptruln,ri • -aui a b S2Faoas ptptretnA • Jo0D3O *A110 c3 Jan) ' 30014sa1 J 'd 112I ' i 9661 481 aunr • • Z9Z88OZfZIZXY1 Oi:L t-80Zr7 LZ aUO411 49O 1-l+000 t 110.3.AACW VOA MON A8Mpeap9 se . Pie .2 q •C .UQdwOO ll.+irMa n '1u In IlatIAK3 V •SeoPueS SBLIABH s,.foad P1PUS E/Z 30Vd Z4H06EEZIZI 'OI VS3'WO2[d 9b' It 96-61-NI1P JUN-19-98 11 ,49 PROM.FSA ID. 12123390e72 PAGE 3/3 MMoody investors Service June 19, 199 Financial Security Assurance 350 Park Avenue New York, New York 10022 Dear FSAI Moody's Investors Service has assigned the rating of Asa (FSA Insured - Policy 21221-N) to the $8,870,000.00 City of'Pearland Texas, Water and Sewer System revenue Bonds, Series 1996 8, dated June 19, 1996, which sold through negotiation on May 07, 1996. The rating is based; upon an insurance policy provided by Financial Security Assurance,w Should you have any`Cquestions regarding the above, please do not hesitate to contact 'the assigned analyst, Margaret Kessler at (212) 553-1884. Sincerely yours, lectliam William deSante vice President and Managing Director Public Finance Department Wd:yr JUN 19 ' 96 10: 50 ,+ 12123390872 PP6E . 003 i ♦'�'i • / `- `✓ ✓f...:*-/ / ✓ : ♦ ig ♦'Wig ♦,i, • ♦ .% w , � •.. i0 '' ;W.., rM r. . y� ..�!Aid¢•.may, � �, ' .. y r..•=' .•ta .. •7•.w r''7 7 vT t' ;„:-.,1) " U•• FINANCIAL 'f' ' , ■ r SECURITY ♦ = ASSURANCES '�.�-f. MUNICIPAL BOND ; " f It..),):�' INSURANCE POLICY . � 1 0 ,1 2 ISSUER: City of Pearland, Texas Policy No.: 21221-N it;), ii, �,i OBLIGATIONS: $8,870,000 in aggregate pnncipal amount of Effective Date: June 19, 1996 t Z• ) CI Water and Sewer System Revenue Bonds, Series 19968 .. '�• / _ Premium: $34,226.30 f t ,,sir >. ii FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), in consideration of the payment of t `( t ..`'°- the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees l ,,/-� to any Owner, as hereinafter defined, of the above described Obligations, the full and complete payment ", (/I -,„, required to be made by or on behalf of the Issuer to Texas Commerce Bank National Association, S ; f'I �"` :_ Houston, Texas, or its successor(the"Paying Agent") of an amount equal to (i) the principal of (either at 1 1 the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) 3,9 ,,l ��,,; and interest on, the Obligations as such payments shall become due but shall not be so paid (except 1 ;r,.�' ; /�' -17 that in the event of any acceleration of the due date of such principal by reason of mandatory or optional [1 w I (9 redemption or acceleration resulting from default or otherwise, other than any advancement of maturity I,-,, ) pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such _ � -r'/ - amounts and at such times as such payments of principal would have been due had there not been any • -s,;`, '• 4‘,1 such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered t ` \ - from any Owner pursuant to a final judgment by a court of competent jurisdiction that such payment _ -1 ,:` .xs! ' constitutes an avoidable preference to such Owner within the meaning of any applicable bankruptcy law. ' ' t :3 \i ., The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein ry; collectively as the"Insured Amounts". t . � �.i Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by o ;�` registered or certified mail, or upon receipt of written notice by registered or certified mail, by Financial ;,N ,l Securityor its designee from the PainAgent or anyOwner of an Obligation the payment of an Insured S '" "I.3 �. �' t 9 Paying 9 P Y � :.� t Amount for which is then due, that such required payment has not been made, Financial Security on the �' due date of such payment or within one business day after receipt of notice of such nonpayment, ,; l whichever is later, will make a deposit of funds in an account with the Paying Agent or, if Financial S_ ,: .; \ ' - Security, shall have elected to appoint a fiscal agent for purposes of this policy (the "Insurer's Fiscal - . -- Agent"), then with the Insurer's Fiscal Agent, sufficient for the payment of any such Insured Amounts 'w' "=%' which are then due. Upon presentment and surrender of such Obligations or presentation of such other t Al!)y�' proof of ownership of the Obligations, together with any appropriate instruments of assignment to . . 1 evidence the assignment of the Insured Amounts due on the Obligations as are paid by Financial t . ''4 - Security, and appropriate instruments to effect the appointment of Financial Security as agent for such _'� 5 Owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the . •, -. c ) Obligations, such instruments being in a form satisfactory to Financial Security, the Paying Agent or IS i; _ Insurers Fiscal Agent 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 4-_=, ,; -4 t 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. rf. _4 5 , - .,, In the event the Insurer Is unable to fulfill its contractual obligation under this policy •I ... •l • or contract or application or certificate or evidence of coverage, the policyholder or `f. A$I certificateholder is not protected by an Insurance guaranty fund or other solvency t ff f i \ protection arrangement. `..e.. �f yA 1:� /�♦ /y, /�+�♦ ..n n. -' �.�+ `2 � /-♦ �� /`". L " .. ;L l` ; r 0...'i� ,,, �Wi :. '`�./j�, `:;;/l� r1;::i� T``vJJ' \ ' `v.,,'. '`,�' �, tv.�` `." p F Page2of2 ,_e��\ Policy No. 21221 N ,,,,N.• ., _ 3 '%- ., 1 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 ;li"4{ ' the underlying security for the Obligations. .' • /:�� }t 3 Any service of process on Financial Security may be made to Financial Security at its offices at 350 t)`!' \, Park Avenue, New York, New York 10022-6022 and such service of process shall be valid and binding. ,t),, S This policy is non-cancellable for any reason. The premium on this policy is not refundable for any t r� - reason including the payment prior to maturity of the Obligations. i. e '1�' ...4V `- 7 In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this Poky to be • . - executed on its behalf by its Authorized Officer. >`� ,/r\. . ? 4'n,... Countersignature FINANCIAL SECURITY ASSURANCE INC. < /'fit,^ , \ 40 N.`-1IN By �aYI �L�ti �, i 4 �'� , R `{� . . ,`# Authorized Officer _ J , V'''''i 1 1 ,, ).* 1 4/:),4. ) "1 1-.1,.))14. • P s i M it •,,,),) ,) ,.:e( •, .......;?...A )„,4., _ y A subsidiary of Financial Security Assurance Holdings Ltd. (212) 826-0100 ; ... 350 Park Avenue, New York, N.Y. 10022-6022 Cs 4 t t, � Form 500NY (TX 3/91) /i., `,fir y . f. STATEMENT OF INSURANCE FINANCIAL SECURITY ASSURANCE INC. ("FINANCIAL SECURITY"), NEW YORK,NEW YORK,HAS DELIVERED ITS INSURANCE POLICY WITH RESPECT TO THE SCHEDULED PAYMENTS DUE OF PRINCIPAL OF AND INTEREST ON THIS BOND TO TEXAS COMMERCE BANK NATIONAL ASSOCIATION,OR ITS SUCCESSOR, AS PAYING AGENT FOR THE BONDS(THE"PAYING AGENT"). SAID POLICY IS ON FILE AND AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE PAYING ▪ AGENT AND A COPY THEREOF MAY BE OBTAINED FROM FINANCIAL SECURITY OR THE PAYING AGENT. UNITED STATES OF AMERICA STATE OF TEXAS CITY OF PEARLAND,TEXAS, WATER AND SEWER SYSTEM REVENUE BOND, SERIES 1996E .10 NUMBER DENOMINATION R-1 S85,000 REGISTERED REGISTERED INTEREST RATE: ISSUANCE DATE: MATURITY DATE: CUSIP: 2.90% June 19, 1996 tenfl 997 704883BG1 t. i ; t r Registered Owner Texas Water Development Board Principal Amount: Eighty-five Thousand and No/100 Dollars • r ✓ v Fw.- ` {e;t *> The CITY OF PEARLAND,TEXAS,a municipal corporation duly incorporated under the laws of the State of Texas(herein t ';;4or�Idlue received, hereby promises to pay,to the Registered Owner identified above or registered assigns,solely from certain pledged revenues and funds as hereinafter specified and from no other source,on the Maturity Date specified above, upon presentation and surrender of this bond at the principal corporate trust office of the "Paying Agent/Registrar,'initially Texas Commerce Bank National Association,Houston,Texas,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 the United States of America,the Principal Amount identified above(or so much as shall not have been paid upon prior redemption),and to pay, solely from such pledged revenues and funds,interest thereon at the Interest Rate shown above,calculated on the basis of a 360-day year composed of twelve 30-day months,from the later of the Issuance Date identified above or the most recent interest payment date to which interest has been paid or duly provided for. The date of this bond is June 1, 1996,but interest shall accrue on the principal amount hereof from the Issuance Date. Interest on this bond is payable on each March 1 and September I,beginning March 1, 1997,until the maturity or redemption date of this bond or until the City's obligation with respect to this bond has been satisfied. Interest on this bond shall be payable by check mailed by the Paying Agent/Registrar to the Registered Owner of record as of the 15th day of the month next preceding the interest payment date as shown on the books of registration kept by the Paying Agent/Registrar. So long as the Texas Water Development Board(herein the "TWDB") is the holder of this bond,payment of the principal and interest on this bond shall be made to the TWDB by wire transfer at no cost to the TWDB. THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS (herein the "Series 1996B Bonds") in the aggregate principal amount of S8,870,000 issued pursuant to an ordinance adopted by the City Council of the City (herein the "Ordinance") for the purpose of constructing certain repairs, improvements,additions and extensions to the City's waterworks and sanitary sewer system, including particularly the construction of a new wastewater treatment plant,under and pursuant to the authority of Articles 1111-1 1 18,Vernon's Texas Civil Statutes,as amended,and all other applicable law. 4.1 THIS BOND AND ALL OF THE SERIES 1996B BONDS are special obligations of the City that are equally and ratably payable from and secured by a first lien on the'Net Revenues'collected and received by the City from the operation and ownership of the City's water and sewer system as defined and provided in the Ordinance,which Net Revenues are required to be set aside for and pledged to the payment of the Series 1996B Bonds and all additional bonds issued on a parity therewith,in the interest and sinking fund and the reserve fund required to be maintained for the payment of all such bonds,all as more fully described and provided for in the Ordinance. This bond and the series of which it is a part,together with the interest thereon,are payable solely from such Net Revenues and do not constitute an indebtedness or general obligation of the City. THE CITY SHALL HAVE THE OPTION OF CALLING THE SERIES 1996B BONDS MATURING ON AND AFTER September 1, 2006 FOR — REDEMPTION PRIOR TO MATURITY on September 1,2005,or any date thereafter, in whole or in part and if in part, in inverse order of maturity(but if less than all the Series 1996B Bonds of a single maturity art called for redemption,those bonds called shall be selected by lot or other customary random method by the Paying Agent/Registrar),at par plus accrued interest to the date fixed for redemption. SERIES 1996B BONDS MAY BE REDEEMED IN PART only in integral multiples of$5,000 of principal amount or maturity amount,as applicable. If a Series 1996B Bond subject to redemption is in a denomination larger than$5,000,a portion of such Series 1996B Bond may be redeemed,but only in integral multiples of S5,000. In selecting portions of Series 1996E Bonds for redemption,the Paying Agent/Registrar shall treat each Series 1996B Bond as representing that number of Series 1996B Bonds of$5,000 denomination which is obtained by dividing the principal amount(or maturity amount)of such Series 1996B Bond by$5,000. Upon surrender of any Series 1996B Bond for redemption in part,the Paying Agent/Registrar,in accordance with the provisions of the Ordinance,shall authenticate and deliver in exchange therefore a Series I 996B Bond or Series 1996B Bonds of like maturity and interest rate in an aggregate principal amount(or maturity amount) ' " equal to the unredeemed portion of the Series 1996B Bond so surrendered. NOTICE OF ANY SUCH OPTIONAL REDEMPTION identifying the Series I996B Bonds to be redeemed shall be sent by first-class mail,postage prepaid, to the Registered Owners thereof at their au:.,ressea as shown on the books of registration kept by the Paying Agent/Registrar not leas than thirty(30)days before the date fixed for such redemption. Notice of redemption shall also be sent by certified mail, return receipt requested,to at least two national information services,and any securities depository institution registered under the Securities Exchange Act of 1934, as amended,acting as securities depository under the Ordinance. Each redemption notice shall contain the complete official name of the Series 1996B Bonds,CUSIP numbers,certificate numbers,the redemption date,the redemption price, the redemption agent's name and address with a contact person's name and telephone number,the date of issuance,the maturity date, and any other information ▪ appropriate to identify sufficiently the Series 1996B Bonds being redeemed. 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 Series 1996B 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 Series I996B Bonds which are to be so redeemed thereby automatically shall be redeemed prior to ir.cir 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 by the Paying Agent/Registrar with the funds so provided for such payment. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL WATER AND SEWER SYSTEM REVENUE BONDS,subject to the restrictions contained in the Ordinance,which bonds may be secured by a lien on a parity with,or subordinate and inferior to,the lien on the Net Revenues securing this bond and the series of which it is a part. THE PAYING AGENT/REGISTRAR IS NOT REQUIRED TO ACCEPT for transfer or exchange any Series 1996B Bond called for redemption during the fifteen(15)days prior to mailing of any notice of redemption;provided,however,that such limitation shall not apply to the transfer or exchange by the registered owner of a Series 1996B Bond called for redemption in Dart. THE REGISTERED OWNER HEREOF shall never have the right to demand payment out of any funds raised or to be raised by taxation. REFERENCE IS HEREBY MADE TO THE ORDINANCE,a copy of which is on file in the office of the Paying Agent/Registrar,and to all of the provisions of which the Registered Owner of this bond by the acceptance hereof hereby assents,for definitions of terms;the description of and the nature and extent of the security for the Series I996B Bonds;the priority for the application and use of the income and revenues cf the System;the Net Revenues pledged to the payment of the principal of and interest on the Series 1996B Bonds:the nature and extent and manner of enforcement of the lien and oledee securing the navment of the Series t f THIS BONG shall not be valid or obligatory fur any purpose or be entitied to any benefit under the Ordinance unless this bond either(i)is registered by the Con:,troller of Public Amounts of the State of Texas or (ii) is authenticated by the Paying Agent/Regissrnr by due execution of the authentication certificate manually endorsed hereon. Such duly executed certificate of suthcn:ication shall be conclusive evidence that this bond was delivereu by the Paying Agent/Regitrtar ceder the provision,of tilt Ordinance. IN WTNEESS WHEREOF,the City has cause.!its corporate seal to be impressed or placed in facsimile hereon and has in the Ordinance directed this bond to he signed by the Mayor and countersigned by the City Secretary by their printed facsimile signatures. feRif j..i2 ' • (SEAL) .::1'‘..k..,.4;,;.e. ;:,,•;: t!,,,,- . om_I c— / ," t ._., + ice :.�. .: Itit ,,....?,•...' _4,?,, • •:�j� .+.'. '•.,?+tom ...e . ? r� „. �s+'+++orsa•++ ,� City Secretary j'f4htr. __eststty ASSIGNMENT For value received,the undersigned hereby sells, assigns, and transfers unto -'. ' • , riln ,41,1114-• . 11 IRA iff rim (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER) ` 4 t 2.. Gr �� Y :; (Print or type name,address,and zip code of transferee) -- the within bond and hereby irrevocably constitutes and appoints attorney to transfer said bond on the books kept for registration thereof,with full power of substitution in the premises. DATED: Signature Guaranteed: Registered Owner NOTICE: The signature must be guaranteed by a commercial bank or a NOTICE:The signature on this assignment must correspond with the name member firm of a national securities exchange. Notarized or witnessed of the Registered Owner as it appears on the face of the within bond in every signatures are not acceptable. particular,withou.alteration or enlargement or any change whatever. AUTHENTICATION CERTIFICATE Registration Date: :his 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 isaued in conversion of and exchange for or replacement or a bond,bonds or a portion of a bond or bonds of an issue which originally was approved by the Attorney('enerel of toe Mate of Texas and registered by the Comptroller of Public Accounts of the State of Texas. TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: Authorized Signature 0306388.02 069618/1:".