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R98-26 03-09-98RESOLUTION NO. R98-26 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, APPROVING THE RESOLUTION OF BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5 AUTHORIZING THE ISSUANCE OF $4,140,000.00 UNLIMITED TAX REFUNDING BONDS, SERIES 1998A. WHEREAS, the Brazoria County Municipal Utility District No. 5 (the "District") is located within the extraterritorial jurisdiction of the City of Pearland, Texas (the "City"); and WHEREAS, by Resolution No. R80-13, dated June 9, 1980, the City consented to the creation of the District, and placed certain conditions on the issuance of bonds by the District, including the approval by the City Council of the District's resolution authorizing the issuance of such bonds; and WHEREAS, the City Council has considered such a bond resolution in connection with the issuance of the District's proposed $4,140,000.00 Unlimited Tax Refunding Bonds, Series 1998A, and has found it to be acceptable; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: All of the matters and facts set forth in the preamble hereof are Section 1. true and correct. Section 2. The resolution of the board of directors of Brazoria County Municipal Utility District No. 5, attached hereto and made a part hereof as Exhibit "A", authorizing the issuance of its $4,140,000.00 Unlimited Tax Refunding Bonds, Series 1998A, is hereby approved. RESOLUTION NO. R98-26 Section 3. The Mayor of the City of Pearland is hereby authorized to execute all documents required to be provided to the Attorney General of Texas in connection with the issuance of such bonds by the District. Section 4. This Resolution shall take effect immediately from and after its passage in accordance with the provisions of the Charter of the City of Pearland and it is accordingly so resolved. PASSEr'), APPROVED and ADOPTED this the A. D., 1998. 9th day of March TOM REID MAYOR ATTEST: 11yNsGE~ETFA RY APPROVED AS TO FORM: AMY MOTES McCULLOUCNI CITY ATTORNEY 2 [1 RESOLUTION AUTHORIZING THE ISSUANCE OF $4,140,000 UNLIMITED TAX REFUNDING BONDS, SERIES 1998A; AUTHORIZING THE REDEMPTION PRIOR TO MATURITY OF CERTAIN OUTSTANDING BONDS; AUTHORIZING THE ADVANCE REFUNDING OF CERTAIN OUTSTANDING BONDS AND THE EXECUTION AND DELIVERY OF AN • ESCROW AGREEMENT AND THE PURCHASE OF CERTAIN ESCROWED SECURITIES; AND CONTAINING OTHER MATTERS RELATED THERETO STATE OF TEXAS COUNTY OF BRAZORIA • WHEREAS, Brazoria County Municipal Utility District No. 5 (the "District") has heretofore issued its $1,735,000 Unlimited Tax Bonds, Series 1982 (the "Series 1982 Bonds"); $2,750,000 Unlimited Tax Bonds, Series 1983 (the "Series 1983 Bonds"); $1,620,000 Unlimite1 Tax Bonds, Series 1984 (the "Series 1984 Bonds"); $6,065,000 Unlimited Tax Refunding Bonds (the "Series 1992 Bonds"); and $2,020,000 Unlimited Tax Bonds, Series 1995 (the "Series 1995 Bonds"); and WHEREAS, the District desires to refund certain of the outstanding bonds from the Seri s 1992 Bonds (the "Refunded Bonds") in advance of their maturities; and WHEREAS, at an election held on 7 November 1987, the voters of the District, by a vo e of 28 "For" and 5 "Against," authorized the District to issue $17,670,000 in bonds for the purpose of refunding any bonds or other evidences of indebtedness of the District issued or to be issued for any lawful purpose of the District, as well as financing improvements to the District's water, sewer, and drainage systems, and further that such authorization was in place of unissued bonds Authorized at the District's earlier bond elections, held on 4 April 1981 and 8 November 198 , for the purpose of financing improvements to the District's water, sewer, and drainage systems; and WHEREAS, Article 717k, Vernon's Texas Civil Statutes, as amended, provides that the District is authorized to issue refunding bonds for the purpose of refunding the Refunded Bonds in advance of their maturities, and to accomplish such refunding by depositing directly with a paying agent for the Refunded Bonds the proceeds of such refunding bonds, together with other available funds, in an amount sufficient to provide for the payment or redemption of the Refunded Bonds, and that such deposit shall'constitute the making of firm banking and financial arrangements for the discharge and fmal payment or redemption of the Refunded Bonds; and WHEREAS, as described in this Resolution, the District intends to issue $4,140,000 in bonds (the "Bonds") to refund the Refunded Bonds in the amount of$3,675,000. As a result of the issuance of the Bonds, the District's remaining authorized but unissued bonds for the purpose of refunding any bonds or other evidences of indebtedness issued or to be issued for any lawful purpose or for the purpose of financing improvements to the District's water, sewer, and drainage LRO W LET T\5949.2\B/RES O LUTION2021 systems will be $9,120,000. After issuance of the Bonds, none of the principal amount of the Series 1982 Bonds; none of the principal amount of the Series 1983 Bonds; $115,000 in total principal amount of the Series 1984 Bonds; $1,850,000 in total principal amount of the Series 1992 Bonds; and $2,020,000 in total principal amount of the Series 1995 Bonds will remain outstanding; and WHEREAS, the Board of Directors of the District has found and determined that the issuance of the Bonds will restructure the District's debt by reducing the debt service payments from 1998 through 2012 and that the issuance of the Bonds will also (i) reduce the District's average annual debt service payments; and(ii) decrease the District's total debt service payments. The Board of Directors has further found and determined that such refunding will allow the District to pay its debt service while lowering taxes and that such benefits are sufficient consideration for the refunding of the Refunded Bonds; and WHEREAS, the District desires to enter into an escrow agreement (the "Escrow Agreement") with Texas Commerce Bank National Association, Houston, Texas, a nation it banking association (the "Escrow Agent"), as authorized in Article 717k, Vernon's Texas Civil Statutes, pursuant to which proceeds of the Bonds herein authorized will be deposited, invested, and applied in a manner sufficient to provide for the full and timely payment of all interest on and principal of the Refunded Bonds; and WHEREAS, upon the issuance of the Bonds herein authorized and the creation of the escrow referred to above, the Refunded Bonds shall no longer be regarded as being outstanding, except for the purpose of being paid pursuant to such Escrow Agreement, and the pledges, lien, trusts, and all other covenants, provisions, terms, and conditions of the resolutions authorizing the issuance of the Refunded Bonds shall be, with respect to the Refunded Bonds, discharged, terminated and defeased; Now, Therefore • BE IT RESOLVED BY THE BOARD OF DIRECTORS OF BRAZORIA COUNT MUNICIPAL UTILITY DISTRICT NO. 5 THAT: 1. Definitions. Throughout this Resolution the following terms and expressions as used herein shall have the meanings set forth below: The term "Bonds" shall mean the $4,140,000 Brazoria County Municipal Utility District No. 5 Unlimited Tax Refunding Bonds, Series 1998A, authorized in this Resolution, unless the context clearly indicates otherwise. The term "Business Day" shall mean any day which is not a Saturday, Sunday, legal holiday, or a day on which the Registrar is authorized by law or executive order to remain closed. The term "City" shall mean the City of Pearland, Texas, or any other municipal corporation succeeding to the powers, rights, privileges, and functions of the City and, when appropriate, the City Council of the City. LROWLET115949.2\B/RESOLUTION2021 2 The term "Code" shall mean the Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder and under the Internal Revenue Code of 1954. The term "Dated Date" shall mean 1 1998. The term "Debt Service Fund" shall mean the interest and sinking fund established by the District by the resolution adopted by the District for its Series 1982 Bonds as reaffirmed pursuant_ to section 18 of this Resolution. The term "District" shall mean Brazoria County Municipal Utility District No. 5 of Brazoria County, Texas. The term "Escrowed Securities" shall mean the open market United States Treas Obligations or United States Treasury Securities, State and Local Government Series, originall purchased with proceeds of the Bonds. The term "Interest Payment Date" shall mean 1 March 1998 and each 1 September and 1 March thereafter until maturity or earlier redemption of the Bonds. The term "Issuance Date" shall mean the date on which the Bonds are delivered to d paid for by the Underwriter. The term "Outstanding Bonds" shall mean the previously issued bonds that rema'i outstanding after the refunding of the Refunded Bonds; specifically, the term refers to die unrefunded bonds of the Series 1984 Bonds, the Series 1992 Bonds, and the Series 1995 Bonds. The term "Owner" or "Registered Owner" shall mean any person who shall be the • registered owner of any of the Bonds or any Outstanding Bonds. The term "Record Date," when used in connection with any Bonds, shall mean the close of business on the fifteenth (15th) calendar day of the month next preceding each Interest Payment Date. The term "Refunded Bonds" shall mean the District's Series 1992 Bonds maturing on 1 March in the years 2005 to 2012, inclusive, in the principal amount of$3,675,000. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of, and the principal amounts of the Bonds registered t , each Owner. The term "Registrar" shall mean Texas Commerce Bank National Association, Houston, Texas, a national banking association, and its successors in the capacities of paying agent and Registrar for the Bonds. LROWLETT15949.2\B/RESOLUTION2021 3 The term "Regulations" shall mean the temporary or final Income Tax Regulations applicable to the Bonds issued pursuant to sections 141 through 150 of the Code. Any reference to a section of the Regulations shall also refer to any successor provision to such section hereafter promulgated by the Internal Revenue Service pursuant to sections 141 through 150 of the Code applicable to the Bonds. The term "Resolution" as used herein and in the Bonds shall mean this Resolution authorizing the Bonds. The term "Revenues" shall mean the moneys received by the District from the ownershi and operation of the District's System, after deduction of the reasonable costs of administration, efficient operation and adequate maintenance of the System, as well as under specific contracts. The term "System" shall mean all of the District's waterworks, sanitary sewer, and drainage and storm sewer system providing water, sewer, and drainage services to consumeis within the District, presently existing or to be constructed, all additions thereto, and all works, improvements, facilities, plants, equipment, and appliances connected therewith. The term "Underwriter" shall mean Rauscher Pierce Refsnes, Inc. 2. Authorization; Consideration. The Bonds shall be issued in fully registered fornn., without coupons, in the total authorized aggregate principal amount of Four Million One Hundred Forty Thousand Dollars ($4,140,000). It is hereby found and determined that such refunding will restructure the District's debt by reducing the.District's debt service payments from 1998 through 2012 and that the issuance of the Bonds will also: (i) reduce the District's average debt service payments; and (ii) decrease the District's total debt service payments. It is further found and determined that such refunding will allow the District to pay its debt service while lowering taxes and that such benefits are sufficient consideration for the refunding of the Refunded Bonds. 3. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as the "$4,140,000 Brazoria County Municipal Utility District No. 5 Unlimited Tax Refunding Bonds, Series 1998A," and shall be dated 1 _ 1998. The Bonds shall bear interest at the rates sl t forth in section 4 of this Resolution from the later of 1 1998 or the most recent Interest Payment Date to which such interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30-day months, payable on 1 March 1998, and semiannually thereafter on 1 September and 1 March of each year until maturity or prior redemption. 4. Initial Bond; Number and Denominations. The Bonds shall be initially issued as one bond (the "Initial Bond"), in the aggregate principal amount of$4,140,000 and bearing interst at the rates and maturing on 1 March in each of the years in the amounts set forth in the schedules below. The Initial Bond may be transferred and exchanged as set out in this Resolution. The bonds delivered on transfer of,or in exchange for the Initial Bond and other LROWLET115949.2\B/RESOLUTION2021 4 Bonds (the "Definitive Bonds") shall be numbered in order of their authentication by the Registrar, shall be in the denomination of$5,000 or integral multiples thereof, and shall mature on the 1st day of March in each of the years indicated below and bear interest at the per annum rates in accordance with the following schedules: Principal Year of Interest Amount Maturity Rate - $ 20,000 1998 40,000 1999 40,000 2000 45,000 2001 45,000 2002 45,000 2003 50,000 2004 400,000 2005 420,000 2006 445,000 2007 470,000 2008 - 490,000 - 2009 515,000 2010 545,000 2011 570,000 2012 5. Execution of Bonds; Seal. The Bonds, including the Initial Bond, shall be signed by the President or Vice President of the Board of Directors of the District and countersigned by th' Secretary or Assistant Secretary of the Board of Directors of the District by their manua, lithographed, or facsimile signatures, and the official seal of the District shall be impressed oar placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the District had been manually impressed upon each of the Bonds. If any officer of the District whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office, all as'provided in the Bond Procedures Act of 1981, as amended. 6. Approval by Attorney General; Registration by Comptroller. The Initial Bond shall be delivered to the Attorney General of Texas for approval and shall be registered by tl+ Comptroller of Public Accounts of the State of Texas. The manually executed registration certificate of the Comptroller of Public Accounts, substantially in the form provided in section 16 of this Resolution, shall be affixed or attached to the Initial Bond. LROWLETT15949.2\B/RESOLUTION2021 5 7. Authentication. Except for the Initial Bond, which need not be authenticated by the Registrar, only such Bonds as shall bear thereon an Authentication Certificate, substantially in the form provided in section 16 of this Resolution, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Resolution or shall be valid or obligatory for any purpose. Such duly executed Authentication Certificate shall be conclusive evidence that the Bond so authenticated was delivered by the Registrar hereunder. 8. Payment of Principal and Interest. The Registrar is hereby appointed as the Registrar and paying agent for the Bonds. The principal of the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon them presentation and surrender as they respectively become due and payable, at the principal payment office of the Registrar. The interest on each Bond shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Registe . Any accrued interest payable at maturity on a Bond shall be paid upon presentation and surrende of such Bond at the principal payment office of the Registrar. If the date for payment of the principal of or interest on any Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day. 9. Successor Registrars. The District covenants that at all times while any Bonds are outstanding it will provide a national or state banking corporation organized under the laws 9If the United States or any State, with trust powers and subject to supervision or examination by Federal or state authority, to act as Registrar for the Bonds.. The District reserves the right to change the Registrar for the Bonds on not less than thirty (30) days' written notice to the Registrar, so long as any such notice is effective not less than thirty (30) days prior to the next • succeeding principal or interest payment date on the Bonds. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Register or copies thereof to the e new Registrar, and the new Registrar shall notify each Owner, by United States mail, first clas , postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have,agreed to the provisions of this section. 10. Special Record Date. If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a nevi record date for the payment of such interest, to be known as a Special Record Date. Tile Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the District. Such Special Record Date shall be fifteen (15) da}s prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each Owner of record of an affected Bond as of the close of business on the day prior to the mailing of such notice. LROWLET115949.2\B/RESOLUTION2021 6 11. Ownership: Unclaimed Principal and Interest. Subject to the further provisions of this section 11, the District, the Registrar, and any other person may treat the person in whose name any Bond is registered as the absolute Owner of such Bond for the purpose of making and receiving payment of the principal of or interest on such Bond, and for all other purposes, whether such Bond is overdue, and neither the District nor the 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 Bond in accordance with this section 11 shall be valid and effectual and shall discharge the liability of the District and the Registrar upon such Bond to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and returned to the District to be reported anh disposed of by the District in accordance with the provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. 12. Registration, Transfer, and Exchange. So long as any Bonds remain outstanding, th Registrar shall keep the Register at its principal payment and, subject to such reasonable regulation as it may prescribe, the Registrar shall provide for the registration and transfer. of Bonds in accordance with the terms of this Resolution. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal payment office of the Registrar, duly endorsed for transfer, or accompanied by assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond in proper form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing • interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal payment office of the Registrar for a Bond or Bonds of the same maturity and interest rate in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized io authenticate and deliver exchange Bonds in accordance with the provisions of this section 12. Each Bond delivered in accordance with this section 12 shall be entitled to the benefits and security of this Resolution to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. A new Bond or Bonds registered and delivered in exchange or transfer shall be m denominations of$5,000 or any integral multiple and shall bear interest at the same rate and be 1 for a like aggregate principal amount as the Bond or Bonds surrendered for exchange or transf 9r. No service charge will be made for any transfer or exchange, but the District or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover any tax or other LROWLETI15949.2\B/RESOLUTION2021 7 - governmental charge that may be imposed in connection with the transfer or exchange of such Bond. Neither the District nor the Registrar shall be required to transfer or to exchange any Bond or Bonds during the period beginning at the opening of business on a Record Date and ending at the close of business on the next succeeding Interest Payment Date or to transfer or exchange any Bond selected for redemption, in whole or in part, where such redemption is scheduled to occur within thirty (30) calendar days. 13. Mutilated, Lost, or Stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding. The District or the Registrar may require the Owner of a mutilated Bond to pay a sum sufficient to cover any tax or other governmental charge that ma}/ be imposed in connection therewith, including the fees and expenses of the Registrar. If an0 Bond is lost, apparently destroyed, or wrongfully taken, the District, pursuant to the applicably laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and delive a replacement Bond of like maturity, interest rate, and principal amount, bearing a number no contemporaneously outstanding. The District or the Registrar may require the Owner of a lost apparently destroyed, or wrongfully taken Bond, before any replacement Bond is issued, to: (1) furnish to the District and the Registrar satisfactory evidence of the ownership o= and the circumstances of the loss, destruction, or theft of such Bond; (2) furnish such security or indemnity as may be required by the Registrar and the District to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar, and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the District and the Registrar. If after the delivery of a replacement Bond a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the District and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall 14 entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, costs, or expense incurred by the District or the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed, or wrongfully taken Bond has become or is about to become due and payable, the District in its discretion may, instead of issuing . replacement Bond, authorize the Registrar to pay such Bond. LROWLET215949.2\B/RESOLUTION2021 8 Each replacement Bond delivered in accordance with this section 13 shall be entitled to the benefits and security of this Resolution to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. 14. Cancellation of Bonds. All Bonds paid in accordance with this Resolution, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper record regarding such destruction. The Registrar shall furnish the District with an appropriate certificate of destruction of such Bonds. 15. Optional Redemption. The District reserves the right, at its option, to redeem prior to maturity the Bonds, including the Term Bonds, maturing on 1 March 2007 and thereafter, m whole or from time to time in part, in such manner as the District may select, on 1 March 2000, or on any date thereafter, at a price equal to the principal amount of the Bonds, or portions thereof so called for redemption, plus accrued interest to the date of redemption. Principal amounts may be redeemed only in integral multiples of$5,000. If fewer than all the Bonds are redeemed at any time, the particular Bonds to be redeemed shall be selected by the District in denominations of$5,000 or any integral multiple thereof within any one maturity. The Owner of any Bond, all or a portion of which has been called for redemption, shall be required to present same to the Registrar for payment of the redemption price on the portion oif the Bond so called for redemption and issuance of a new Bond in the principal amount equal to the portion of such Bond not redeemed. If a Bond subject to redemption is in a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with section 12 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of . the Bond so surrendered. Notice of any redemption identifying the Bonds to be redeemed in whole or in part shall be given by the Registrar at least thirty (30) days prior to the date fixed for redemption by sending written notice by first class mail to the Owner of each Bond to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, thle redemption price, the place at which the Bonds are to be surrendered for payment, and, if less than all Bonds outstanding are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice given as provided in this section 15 shall be conclusively presumed too have been duly given, regardless of whether the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemptio price of the Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed f r redemption. When Bonds have been called for redemption in whole or in part and due provisio has been made to redeem same as herein provided, the Bonds or portions thereof so redeem+d shall no longer be regarded as outstanding except for the purposes of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which LROWLETT15949.2\B/RESOLUTION2021 9 would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. 16. Form of the Bonds. The form of the Bonds, including the form of the Registrar's Authentication Certificate and the form of Assignment, along with the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached or affixed to the Initial Bond for the Bonds initially issued, shall be, respectively, substantially as follows, with such additions, deletions, and variations as may be necessary or desirable and not prohibited by this Resolution: LRO WLETI15949.2\B/RES OLUTTON2021 10 FORM OF BOND United States of America State of Texas REGISTERED REGISTERED NUMBER AMOUNT BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5 UNLIMITED TAX REFUNDING BOND SERIES 1998A INTEREST RATE MATURITY DATE DATED DATE CUSIP No. 1 1998 BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5 (the "District"), a conservation and reclamation district, a body politic and corporate and a governmental agency created under the Constitution and laws of the State of Texas, situated in Brazoria County, Texas FOR VALUE RECEIVED,hereby acknowledges itself indebted to and PROMISES TO PAY TO or registered assigns, on the Maturity Date specified above, the sum of DOLLARS (or so much thereof as shall not have been paid upon prior redemption)upon presentation and surrender of this bond at the principal payment office of Texas Commerce Bank National Association, Houston, Texas (the "Registrar"), and to pay interest thereon from the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid or duly provided for, on 1 March 1998 and thereafter semiannually on 1 September and 1 March in each year at the peer annum rate of interest specified above, computed on the basis of a 360-day year of twelve 30-day months. The principal of this Bond is payable at the agency of the District, which shall be th� principal office of the Registrar executing the Authentication Certificate appearing hereon, upon presentation and surrender of this Bond. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will be paid to the owner in whose name this Bond (or one or more predecessor Bonds) is registered at the close of business on the Record Date four such interest which shall be the fifteenth (15th) day of the month next preceding such Interest Payment Date. All such payments may be made by the Registrar by check dated as of the Interest Payment Date and mailed to the Registered Owner. LROWLETI15949.2\B/RESOLUTION2021 11 REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the President or Vice President of the Board of Directors of the District and countersigned with the manual or facsimile signature of the Secretary or Assistant Secretary of the Board of Directors of the District, and the official seal of the District has been duly impressed, or placed in facsimile, on this Bond. BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5 OF BRAZORIA COUNTY, TEXAS By: [Facsimile Signature] President, Board of Directors ATTEST: [Facsimile Signature] Secretary, Board of Directors (SEAL) (Back Panel of Bonds) Brazoria County Municipal Utility District No. 5 Unlimited Tax Refunding Bonds (TEXT CONTINUED) THIS BOND is one of a duly authorized series of Bonds, aggregating $4,140,000 (fir "Bonds"), issued for the purpose of refunding certain of the District's $6,065,000 Unlimited Tax Refunding Bonds, Series 1992, pursuant to a resolution adopted by the Board of Directors of tle District on 1998 (the "Resolution") and by authority of an election held 7 November 1987, all under and in strict conformity with the Constitution and laws of the State of Texas. The Bonds are subject to redemption prior to maturity and pay interest semiannually until maturity or earlier redemption. THE DISTRICT RESERVES THE RIGHT TO REDEEM, at its option, Bonds maturing on 1 March 2007 and thereafter,prior to their scheduled maturities,in whole or from time to tine in part, in integral multiples of$5,000, on 1 March 2006, or on any date thereafter, at a price equal to the principal'amount of the Bonds or portions thereof so called for redemption, plus accrued interest to the date of redemption. Reference is made to the Resolution for complete details concerning the manner of redeeming Bonds. LROWLET \5949.2\B/RESOLUTION2021 12 • NOTICE OF ANY REDEMPTION shall be given at least thirty(30) days prior to the date fixed for redemption by first class mail, addressed to the Registered Owners of each Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Bonds or portions thereof have been called for redemption, and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. AS PROVIDED IN THE BOND RESOLUTION and subject to certain limitations as therein set forth, this Bond is transferable on the Register of the District, upon surrender of this Bond for transfer at the principal office of the Registrar, duly endorsed by the Owner, of accompanied by written instrument of transfer in form satisfactory to the Registrar, duly executed by the Registered Owner hereof or his attorney duly authorized in writing, and thereupon one or more new fully registered Bonds of the same Maturity Date, of authorized denominations,bearin the same rate of interest, and for the same aggregate principal amount, will be issued to the designated transferee or transferees. NEITHER THE DISTRICT NOR THE REGISTRAR shall be required (i) to issue, transfer, or exchange any Bond during a period beginning at the opening of business thirty (30 days before the day of the first mailing of a notice of redemption of Bonds hereunder and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Bond so selected for redemption in whole or in part when such redemption is scheduled to occur within thirty (30) calendar days. THE DISTRICT, THE REGISTRAR, and any agent of either of them may treat the persons in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether this Bond be overdue, and neither the District, the Registrar, nor any such agent shall be affected by notice to the contrary. THIS BOND,AND THE OTHER BONDS OF THE SERIES OF WHICH IT IS A PART, are payable from the proceeds of a direct annual ad valorem tax levied, without limit as to rate or amount, upon all taxable property within the District. Reference is made to the Resolution for more complete description of the funds charged with and pledged to the payment of this Bond and the series of which it is a part. By acceptance of this Bond, the Owner hereof expressly assents to all of the provision of the Resolution. IT IS HEREBY CERTIFIED, RECITED, AND COVENANTED that this Bond has bee i duly and validly issued and delivered; that all acts, conditions, and things required or proper to be performed, to exist, and to be done precedent to or in the issuance and delivery of this Bondi, and the series of Bonds of which it is a part, to render the same lawful and valid, have been performed, exist, and have been done in accordance with law; and that due provision has been made for the payment of the interest on and the principal of this Bond, and the series of Bonds LROWLETIl5949.2\8/RESOLUTION2021 13 of which it is a part, by the levy of a direct, annual ad valorem tax upon all taxable property within the District sufficient for said purposes, as provided in the Resolution; and that the issuance of this series of Bonds does not exceed any Constitutional or statutory limitation. Form of Registration Certificate of Comptroller of Public Accounts OFFICE OF THE COMPTROLLER § OF PUBLIC ACCOUNTS § REGISTER NO. STATE OF TEXAS § I HEREBY CERTIFY THAT this Bond has been examined, certified as to validity, ant approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this day of , 1998. Comptroller of Public Accounts of the State of Texas (SEAL) LROWLETT15949.2\B/RESOLUTION2021 14 Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been delivered pursuant to the Resolution described in the text of this Bond, in exchange for or in replacement of a bond, bonds, or a portion of a bond approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Date of Authentication: TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: Authorized Signature Form of Assignment ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee): the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Registered Owner(s) NOTICE: The signature(s) above must correspon to the name(s) of the registered owner(s) as shown on the face of this Bond in every particular, without any alteration, enlargement, or change whatsoever. LROWLET115949.2\B/RESOLUTION2021 15 Signature Guaranteed: NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. 17. Form of Initial Bond. The Initial Bond shall be in the form set forth in section 16 of this Resolution except that: a. immediately under the name of the Bond, the headings "Interest Rate," "Maturi Date," and "CUSIP No." shall all be eliminated. b. in the first paragraph: (i) after the words "the sum of' shall be inserted "FOUR MILLION ONE HUNDRED FORTY THOUSAND" before the word "DOLLARS" (ii) the words "on the Maturity Date specified above" shall be deleted and th following shall be inserted: "on the first day of March in each of the year indicated below in the following principal installments and bearing interest at th� per annum rates in accordance with the following schedule: Principal Year of Interest Amount Maturity Rate • [Information to be inserted from the schedule in section 4 hereofj" (iii) the words "executing the Authentication Certificate appearing hereon" shall be deleted and an additional sentence shall be added to the paragraph as follow: "The Initial Registrar is Texas.Commerce Bank National Association, Housto , Texas." (iv) the words "(or one or more predecessor Bonds)" shall be deleted. c. the Initial Bond shall be numbered T-1. d. the words "Facsimile Signature" in the signature block on the front of the bon shall be deleted. LROWLETT\5949.2\B/RESOLUTION2021 16 cab) CdN6) 18. Legal Opinions; CUSIP. The respective legal opinions of Coats, Rose, Yale, Holm, Ryman&Lee, P.C., Houston, Texas, Bond Counsel, and Fulbright&Jaworski, L.L.P., Houston, Texas, Special Tax Counsel, and CUSIP numbers may be printed on the Bonds, but errors or omissions in the printing of such opinions or such numbers shall have no effect on the validity of the Bonds. 19. Debt Service Fund. The following fund is hereby created and/or reaffirmed: Debt Service Fund. The Debt Service Fund is hereby reaffirmed to be the same fund that was created in the resolution authorizing the issuance of the Series 1982 Bonds. 20. Security of the Bonds. The Bonds are secured by and payable from the levy of a continuing, direct, annual ad valorem tax, without limit as to rate or amount, upon all taxable property within the District. To pay the interest on the Bonds, as well as the Outstanding BondsL and to create a sinking fund for the payment of the principal thereof when due, and to pay the expenses of assessing and collecting such taxes, there is hereby levied, and shall be assessed and collected in due time, a continuing, direct, annual ad valorem tax, without limit as to rate or amount, on all taxable property in the District for each year while any of the Bonds or the Outstanding Bonds are outstanding. All of the proceeds of such collections, except expenses incurred in that connection, shall be paid into the Debt Service Fund, which is hereby reaffirmed to be the same fund that was created in the resolution authorizing the issuance of the Series 1982 Bonds, and the aforementioned tax and such payments into such Debt Service Fund shall continue until the Bonds and the Outstanding Bonds and the interest thereon have been fully paid and discharged, and such proceeds shall be used for such purposes and no other. While said Bonds1 or any of them, are outstanding and unpaid, an ad valorem tax each year at a rate from year to year as will be ample and sufficient to provide funds to pay the interest on said Bonds and to provide the necessary sinking fund to pay the principal when due, full allowance being made for delinquencies and costs of collection, shall be levied, assessed, and collected and applied to the payment of principal and interest on the Bonds. 21. Remedies in Event of Default. In addition to any other rights and remedies provided by the laws of the State of Texas, the District covenants and agrees that in the event of defau# in payment of principal of or interest on any of the Bonds when due, or, in the event it fails to make the payments required to be made into the Debt Service Fund, as defined in section 19, or defaults in the observance or performance of any other of the covenants, conditions, or obligations set forth in this Resolution, the Registered Owners shall be entitled to a writ o mandamus issued by a court of competent jurisdiction compelling and requiring the District and the officials thereof to observe and perform the covenants, obligations, or conditions prescribed in this Resolution. Any delay or omission to exercise any right or power accruing upon any default shall not impair any such right or power or be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. LROWLETI\5949.2\B/RESOLUTION2021 17 In consideration of the purchase and acceptance of the Bonds authorized to be issued hereunder by the Registered Owners, the provisions of this Resolution shall constitute a contract between the District and the Registered Owners; and the covenants and agreements herein set forth to be performed on behalf of the District shall be for the equal benefit, protection, and security of each of the Registered Owners. The Bonds, regardless of the time or times of their issue or maturity, shall be of equal rank without preference, priority, or distinction of any Bond over any other, except as expressly provided herein. 22. Further Proceedings. After the Initial Bond shall have been executed, it shall be the duty of the President of the Board of Directors of the District and other appropriate officials and agents of the District to deliver the Initial Bond and all pertinent records and proceedings to the Attorney General of the State of Texas for examination and approval by the Attorney General After the Initial Bond shall have been approved by the Attorney General, it shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Initial Bond, the Comptroller of Public Accounts (or Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. 23. Sale; Bond Purchase Agreement. The Bonds are hereby sold and shall be delivered to the Underwriter at a price of $ plus accrued interest to the date of delivery, accordance with the terms of a Bond Purchase Agreement presented to and approved by the Board of Directors, which price and terms are hereby found and determined to be the most advantageous and reasonably obtainable by the District. The President of the Board of Directors and other appropriate officials of the District are hereby authorized and directed to execute suciii Bond Purchase Agreement on behalf of the District, and the President of the Board and all other officers, agents, and representatives of the District are hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Bonds. 24. Definitions Pertaining to Tax Exempt Status of the Bonds. When used in Sections 24 through 27, the terms listed below shall have the meanings specified below, unless it is otherwise expressly provided or unless the context otherwise requires: "Code"means the Internal Revenue Code of 1986, as amended by any amendments thereto enacted prior to the Issue Date. "Computation Date" has the meaning set forth in Section 1.148-3(e) of the Regulations. "Gross Proceeds" has the meaning set forth in Section 1.148-1(b) of the Regulations. "Investment"has the meaning stated in section 1.148-1(b) of the Regulations and includes: LROWLETT\5949.2\B/RESOLUTION2021 18 • (1) Stock: a share of stock in a corporation or a right to subscribe for or to receive such a share, (2) Debt: any indebtedness or evidence thereof, including without limitation United States Treasury bonds, notes, and bills (whether or not of the State and Local Government Series) and bank deposits (whether or not certificated or interest bearing or made pursuant to a depository contract), (3) Annuities and Deferred Payments: any annuity contract, or any other deferred payment contract acquired to fund an obligation of the District, or (4) Other Property: any other investment-type property. "Issue Date" means the date on which the Bonds are initially authenticated and delivere to the Purchaser against payment therefor. "Issue Price" of the Bonds of any series and stated maturity means the amounts set out in paragraph 4 of the Certificate of Underwriters executed on the Closing Date. "Net Sale Proceeds" has the meaning set forth in section 1.148-1(b) of the Regulations. "Proceeds" has the meaning set forth in section 1.148-1(b) of the Regulations. "Rebate Amount" has the meaning set forth in section 1.148-3 of the Regulations. "Regulations" shall mean the temporary or final Income Tax Regulations applicable to the Bonds issued pursuant to Sections 141 through 150 of the Code. Any reference to a section df • the Regulations shall also refer to any successor provision to such section hereafter promulgated by the Internal Revenue Service pursuant to Sections 141 through 150 of the Code and applicable to the Bonds. "Sale Proceeds" has the meaning set forth in section 1.148-1(b) of the Regulations. "Taxable Investment" means any Investment other than (1) Non-AMT Tax Exempt Obligations: an obligation the interest on which is excluded from the gross income, as defined in section 61 of the Code, of the owners thereof for federal income tax purposes (or, when such obligation was issued, was purported by the evidence of such obligation to be so excluded) and which is not a preference item, as defined in section 57 of the Code, (2) Tax Exempt Mutual Funds: an interest in a regulated investment company to the extent that at least 95% of the income to the holders of such interest is interest that is excludable from gross income under section 103(a) of the Code, LROWLETI15949.2\B/RESOLUTION2021 19 (3) Demand SLGS: one-day certificates of indebtedness issued by the United States Treasury pursuant to the Demand Deposit State and Local Government Series program described in 31 C.F.R. part 344, if the District in good faith attempts to comply with all the requirements of such program relating to the investment of Gross Proceeds, and (4) Exempt Temporary Investments: Taxable Investments which are held for the credit of the Current Account of the Debt Service Fund. "Yield" of (1) Taxable Investments: Taxable Investments to any date means the actuarial "yield" of all such Taxable Investments on or before such date as "yield" is defined • section 1.148-5(b) of the Regulations, and (2) Bonds: Any series of bonds means the actuarial "yield" of such Bonds, defined in section 1.148-4 of the Regulations, and for the Bonds shall be specified in certificate executed by an officer of the Board on the Initial Date. 25. Covenant To Maintain Tax-Exempt Status of Bonds. A. Not to Cause Interest to Become Taxable. The District shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property acquired constructed, or improved with Gross Proceeds or proceeds of the Refunded Bonds) in a manne which (or take or omit to take any other action which if taken or omitted, respectively), if mad or omitted, respectively, would cause interest on any Bond to be includable in the gross income as defined in section 61 of the Code, of the owners thereof for federal income tax purposes. The District shall adopt and comply with the provisions of such amendments hereof and supplements hereto as may, in the opinion of nationally recognized bond counsel, be necessary to preserve or perfect such exclusion. Without limiting the generality of the foregoing,the District shall comply with each of the specific covenants in this Section at all times prior to the last maturity of Bonds unless and until the District shall have received a written opinion of nationally recognized bond counsel to the effect that failure to comply with such covenant will not adversely affect the excludability of interest on any Bond from the gross income of the owner thereof for federal income tax purposes, and thereafter such covenant shall no longer be binding upon the District to the extent described in such opinion, anything in any other Subsection of this Section to the contrary notwithstanding. B. No Private Use or Payments. At all times prior to the last maturity date of Bonds, whether by stated maturity or earlier redemption, the District shall neither (1) use nor permit the use of Gross Proceeds (or any property acquired, constructed or improved with Gross Proceeds or with proceeds from the sale of a series oif bonds of which the Refunded Bonds are a part or income from the investment LROWLET \5949.2\B/RESOLUTION2021 20 thereof) in any trade or business carried on by any Person (or in any activity of any Person other than a natural person) other than a state or local government, no (2) directly or indirectly impose or accept any charge or other payment for use of Gross Proceeds (or use of any property acquired, constructed, or improved with Gross Proceeds or with proceeds from the sale of a series of bonds of which the, Refunded Bonds are a part or income from the investment thereof) in any trade or business carried on by any Person (or in any activity of any Person other than a natural person) other than a state or local government, unless either(i) such use is merely as a member (and, except possibly for the amount of use and any corresponding rate adjustment, is extended by the District on the same terms as to all other members) of the general public or (ii) such charge or payment consists of taxes of gener application within the District or interest earned on temporary Investments acquired with Gros Proceeds pending application of such Gross Proceeds for their intended purposes. For purpose of this Subsection B, property is considered to be "used" by a Person if: (a) Sale or Lease: it is sold or otherwise disposed of, or leased, to such Person; (b) Management Contract: it is operated, managed, or otherwise physically employed, utilized, or consumed by such Person, excluding operation o9 management pursuant to an agreement which meets the condition described in I.R.S. Rev. Proc. 97-13; (c) Capacity, Output, or Service Commitment: capacity in or output or servic from such property is reserved or committed to such Person under a take or-pay, output, incentive payment, or similar contract or arrangement; (d) Preferential Service: such property is used to provide service to (or suc service is committed to or reserved for) such Person on a basis or terms which (except possibly for the amount of use and any corresponding rate adjustment) are different from the basis or terms on which such service is provided (or committed or reserved) to members of the public generally;; (e) Developer: such Person is a developer and a significant amount of property acquired, constructed, or improved with proceeds from the sale of a series of bonds of which the Refunded Bonds are a part serves only a limited area substantially all of which is owned by such Person, or limited group of developers, unless such property carries out an essentiO governmental function, use by such Person is during a initial development period, and such property is developed and sold to (and occupied by) members of the general public in accordance with the Regulations; or LROWLETIl5949.2\B/RESOLUTION2021 21 (f) Other Incidents .of Ownership: substantial burdens and benefits of ownership of such property are otherwise effectively transferred to such Person, but the temporary investment of Gross Proceeds or proceeds of bonds of any series of which the Refunded Bonds are a part pending application for their intended purposes shall not constitute "use" of Gross Proceeds or such proceeds. C. No Private Loan. The District shall not use Gross Proceeds to make or finance loans to any Person other than a state or local government, excluding loans consisting of temporary investments of Gross Proceeds pending application of such Gross Proceeds for their intendecii purposes. For purposes of this Subsection C, Gross Proceeds are considered to be "loaned" to a Person if(1)property acquired, constructed, or improved with Gross Proceeds or with proceeds from the sale of bonds of the series of which a Refunded Bond is a part is sold or leased to su4 Person in a transaction which creates a debt for federal income tax purposes, (2) capacity in or service from such property is committed to such Person under a take-or-pay, output, or similar contract or arrangement, or (3) indirect benefits, or burdens and benefits of ownership, of Gross Proceeds or such property are otherwise transferred to such Person in a transaction which is the economic equivalent of a loan. D. Not to Invest at Higher Yield. The District shall not, at any time prior to the final maturity date of the Bonds, directly or indirectly invest Gross Proceeds in any Taxable Investment (or use Gross Proceeds to replace money so invested), if, as a result of sucfi investment, the Yield of all Taxable Investments acquired with(or representing an investment of) Gross Proceeds (or money replaced thereby), whether then held or previously disposed of, to the date of such investment exceeds the Yield of the Bonds. Notwithstanding the foregoing, however, the following Investments shall be excluded from the limitation described in t 's . Subsection D: (1) Thirty Day Period for Sale Proceeds: Taxable Investments acquired with ( r representing an investment of) income from investment of proceeds from the sa��e of the Bonds, to the extent such Taxable Investments are held during the thirty days after receipt of such income and will not be applied to discharge any Refund- ed Bonds or appurtenant coupons; (2) 1998 Debt Service Fund Deposits: Taxable Investments acquired with (or representing an investment of) amounts held for the credit of the Debt Service Fund for payment of the debt service on the Bonds during the then current bond year(the "1998 Debt Service Fund"), but only during the first 13 months after the date of deposit of such amounts to the Debt Service Fund; (3) Debt Service Fund Deposits: Taxable Investments acquired with (or representirg an investment of) amounts deposited in the Debt Service Fund allocated to the Bonds but in excess of the amounts held for the credit of the 1998 Debt Serviee LROWLETI\5949.2\B/RESOLUTION2021 22 Fund to the extent such Taxable Investments are held during the first 30 days after the date of deposit of such amounts to such 1998 Debt Service Fund or, if held more than 30 days after deposit, do not exceed 10% of the proceeds of the Bonds; and (4) Other Investments: any other Taxable Investments acquired with(or representing an investment of) Gross Proceeds described in Clause (3) of the definition thereof and allocable to a Refunded Bond of any series, to the extent the aggregate amount of Gross Proceeds invested in such Taxable Investments does not exceed the lesser of$100,000 or 5% of the proceeds from sale of the Bonds. The District shall not use any money to pay principal of or interest on the Bonds, or pledge (or permit to be pledged) or otherwise restrict any money, funds,- or Taxable Investments so as to give reasonable assurance of their availability for such purpose, except in each case amounts deposited to the Debt Service Fund. E. Investment of Certain Funds Allocable to the Refunded Bonds. The District shall not directly or indirectly invest unspent amounts allocable to Refunded Bonds of any series in any Investment (or use such amounts to replace money so invested) prior to the date on which such amounts shall become Gross-Proceeds pursuant thereto, if as a result of such investment the Yielcli to the date of such investment of all Taxable Investments acquired with such amounts so allocable .(or with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of the series of bonds of which such Refunded Bonds are a part, unless the aggregate amount or Gross Proceeds invested in such Taxable Investments does not exceed the product of(a) the lesser of $100,000 or 5% of the proceeds from the sale of all bonds of the series of which such Refunded Bond is a part and (b) a fraction, the numerator of which is equal to the aggregate principal amount of the Refunded Bonds of such series and the denominator of which is equal • to the aggregate original principal amount of all bonds of such series. F. No Federal Guarantees, Etc. The District shall not either (a) use Gross Proceeds in an amount which exceeds 5% of the proceeds from the sale of the Bonds (i) to make loans which are guaranteed in whole or in part by the United States or any agency or instrumentality thereof, including any entity with statutory authority to borrow from the United States, or (ii) to invest in any deposit or account in a financial institution to the extent such deposit or account is insured under federal law by the Federal Deposit Insurance Corporation, the National Credit Union Administration, or any similar federally-chartered corporation, or (b) otherwise permit payment of principal of or interest on the Bonds to be directly or indirectly guaranteed in whole or in pait by the United States or any agency or instrumentality thereof, including any entity with statutory authority to borrow from the United States (e.g., by the investment of amounts held for the credit of the Debt Service Fund in federally-guaranteed or federally-insured obligations. Notwithstanding the foregoing, however, the District may acquire: . LROWLET115949.2\B/RESOLUTION2021 23 • (1) Certain Temporary Investments: Investments described in Subsection D(2) of this Section, whether or not federally-guaranteed or federally-insured, to the extent such Investments are held during the period described in such Subsection; (2) Treasury Investments: Investments issued by the United States Treasury; and (3) Investments Permitted by Regulations: any other Investments permitted by regulations of the United States Department of Treasury issued under section 149(b)(3)(B)(v) of the Code. G. Not to Divert Arbitrage Profits. Prior to the final maturity of the Bonds, the District shall not at any time invest amounts held for the credit of the Debt Service Fund in any Investment purchased at other than an arm's length price or for which there is not an established market at the time of investment, except possibly for Investments described in Subsection D(2)11 of this Section to the extent such Investments are acquired and mature or are disposed of during the period described in such Subsection. H. No Excess Proceeds. The District shall apply all amounts received from the salgj of the Bonds, all transferred proceeds, as defined in Section 1.148-1(b) of the Regulations, and all income from the investment thereof (1) , to pay principal of or interest on the Refunded Bonds, (2) in the case of accrued interest received from the Purchaser on the Issuance Date, to pay interest on the Bonds on the immediately succeeding Interest Payment Date, (3) to pay the administrative costs of repaying the Refunded Bonds, carrying and repaying the Bonds, and purchasing, carrying, and selling or redeeming Investments acquired with such amounts, or (4) in the case of such amounts described in such Clause (3), for the purposes for which the bonds of the respective series of which the related Refunded Bonds a part were issued, • except possibly for an amount which does not exceed 1% of the Sale Proceeds of the Bonds. I. To File Informational Report. The District shall execute and file with th Secretary of the Treasury,not later than the 15th day of the second calendar month after the clos of the calendar quarter in which the Closing Date occurs (or by such later date as such Secretary may permit for reasonable cause or may prescribe with respect to any portion of such statement,), a statement containing the information and in the form required by section 149(e) of the Co•e or the Regulations promulgated thereunder. LROWLETTl5949.2\B/RESOLUTION2021 24 J. Not to Cause Bonds to Become Hedge Bonds. The District covenants and represents that: (1) the District reasonably expected to use at least 85% of the spendable proceeds of each series of bonds of which the Refunded Bonds were a part to carry out the governmental purposes of such bonds within three years from the date each such series was issued, and _ (2) not more than 50% of the proceeds of each series of bonds of which the Refunded Bonds were a part were invested in nonpurpose investments (as defined in section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more. K. Payment of Rebatable Arbitrage. Except to the extent otherwise provided section 148(f) of the Code and the regulations and rulings thereunder, (1) The District shall account for all Gross Proceeds (including all receipts and expenditures thereof) on its books of account separately and apart from all otheil funds (and receipts, expenditures, and investments thereof) and shall maintain all records of such accounting with the transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date. Th� District may, however, to the extent permitted by law, commingle Gross Proceeds of the Bonds with other money of the District,provided that the District separately accounts for each receipt and expenditure of such Gross Proceeds and the obligations acquired therewith. (2) - Not less frequently than each Computation Date, the District shall either (i) cause • to be calculated by a nationally recognized accounting or financial advisory firm or(ii) calculate and cause its calculations to be verified by a nationally recognized accounting or financial advisory firm, in either case in accordance with rules se forth in Section 148(f) of the Code and Section 1.148-3 of the Regulations an rulings thereunder, the Rebate Amount with respect to the Bonds. The District shall maintain such calculations with the official transcript of the proceedings relating to the issuance of the Bonds until six years after the final Computation Date. (3) As additional consideration for the purchase of the Bonds by the purchasers an the loan of money represented thereby, and in order to induce such purchase bV measures designed to preserve the excludability of the interest thereon from the gross income of the owners thereof for federal income tax purposes, the Distrit shall remit to the United States the amount described in paragraph (2) above anFl the amount described in paragraph (4) below, at the times, in the installments, to the place, in the manner, and accompanied by such forms or other information as LROWLET115949.2\B/RESOLUTION2021 25 Ca) (jib) is or may be required by section 148(f) of the Code and the Regulations and rulings thereunder. (4) The District shall exercise reasonable diligence to assure that no errors are made in the calculations required by paragraph (2) and, if such error is made, to discover and promptly to correct such error within a reasonable amount of time thereafter, including payment to the United States of any interest and any penalty under section 1.148-3(h) of the Regulations. 26. Qualified Advance Refunding. The District represents that the Bonds are being issued exclusively to refund the Refunded Bonds and that: (1) Less than 25% of the debt service on each of the Series 1977 Bonds, the Series 1982 Bonds, and the Series 1991 Bonds has been secured or derived, either directly or indirectly, by payments made with respect to property used in the trade or business of any person other than the District, and no proceeds of any such series of bonds have been used directly or indirectly to make or fmance loans to any person. (2) The Refunded Bonds are being called for redemption, and will be redeemed, no later than the earliest date on which they may be redeemed. (3) The Bonds are being issued solely for the purposes stated in Section 2 of thi Bond Resolution. The debt service savings achieved by the District are a resul solely of the interest rates on the Bonds being lower than the interest rates on the Refunded Bonds. In the issuance of the Bonds the District has employed no "device" to obtain a material financial advantage (based on arbitrage), within th9 meaning of section 149(d)(4) of the Code, apart from savings attributable to lowe interest rates. (4) After the Initial Date, any remaining unspent proceeds of the Refunded Bonds wil be invested so as to produce a Yield not greater than the Yield on the issue of Refunded Bonds from which such proceeds were derived. 27. Qualified Tax-Exempt Obligations. The District hereby designates the Bonds "qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Code. The District hereby warrants and represents that (a) the aggregate face amount (or, in the case of obligations on which interes is paid less frequently than semiannually,the aggregate amount of principal and interest due at Maturity) of all debt obligations issued or expected tc be issued by the District. in the calendar year of the Closing Date (including the Bonds) is not reasonably expected to exceed $10,000,000 LROWLETT\5949.2\B/RESOLUTION2021 26 (b) there are no other Persons which derive their authority from or are subject to the control of the District and which have authority to issue obligations described in section 103 of the Code; and (c) consequently, the Bonds are eligible to be "qualified tax-exempt obligations" pursuant to section 265(b)(3) of the Code. The President or any other officer of the Board is hereby authorized to take such other action as may be necessary to make effective the designation herein. 28. Use of Proceeds. Proceeds from the sale of-the Bonds shall, promptly upon receip by the District, be applied as follows: (a) Accrued interest shall be deposited into the Debt Service Fund. (b) The balance of the proceeds from the sale of the Bonds shall be applied t• establish an escrow fund (the "Escrow Fund") to refund the Refunded Bonds, as more fully provided below and, to the extent not otherwise provided for, to pay all expenses arising in connection with the issuance of the Bonds, the establishment of the Escrow Fund, and the refunding or the Refunded Bonds. Any proceeds of the Bonds remaining after making all such deposits and payments shall be deposited into the Debt Service Fund. 29. Redemption of Refunded Bonds. The District hereby irrevocably calls the following bonds of the District for redemption prior to maturity on the dates set forth below, at a price of par, and authorizes and directs notice of such redemption to be given in accordance with th- • resolutions authorizing the issuance of such bonds: Bonds To Be Redeemed Redemption Date Series 1992 Bonds; 1 March 2001 Maturities 2005 through 2007, inclusive, and 2012 30. Escrow Agreement. The discharge and defeasance of the Refunded Bonds; and the establishment of the Escrow Fund, shall be effected pursuant to the terms and provisions of an Escrow Agreement to be entered into by and between the District and Texas Commerce Bank National Association, Houston, Texas, as Escrow Agent,which shall be substantially in the form attached hereto as Exhibit "A," the terms and provisions of which are hereby approved, subject to such insertions, additions, and modifications as shall be necessary (a) to carry out the program designed for the District by Underwriter and which shall be certified as to the mathematical accuracy by Deloitte & Touche, certified public accountants, whose report shall be attached o LROWLETI15949.2\B/RESOLUTION2021 27 the Escrow Agreement (the "Verification Report"); (b) to maximize the District's present value savings and/or to minimize the District's costs of refunding; (c) to comply with all applicable laws and regulations relating to the refunding of the Refunded Bonds; and (d) to carry out the other intents and purposes of this Resolution, and the President or Vice President of the Board of Directors is hereby authorized to execute and deliver such Escrow Agreement on behalf of the District in multiple counterparts and the Secretary or Assistant Secretary is hereby authorized tol attest thereto and affix the District's seal. 31. Purchase of United States Treasury Securities - State and Local Government Series. To assure the purchase of the Escrowed Securities referred to in the Escrow Agreement, the President or Vice President of the Board of Directors is hereby authorized to agree to purchase and purchase or direct to be purchased, United States Treasury Securities - State and Local Government Series, in such amounts and maturities and bearing interest at such rates as may b4 provided for in the Escrow Agreement, and to execute, or authorize to be executed, any and all purchase agreements, commitments, letters of authorization, and other documents necessary to effect the foregoing, and any actions heretofore taken for such purpose are hereby ratified and approved. 32. Additional Bonds and Refunding Bonds. The District expressly reserves the right t issue,in one or more installments, for the purpose of completing,repairing,improving, extending enlarging, or replacing the System or for any other lawful purpose, such unlimited tax bonds may hereafter be authorized at future elections (the "Additional Bonds"). Such Additional Bonds may be payable from and equally secured by a pledge of and lien on the Revenues, if such revenue bonds are approved by the voters of the District. The District also reserves the right to issue additional revenue bonds ("Revenue Bonds") in one or more installments for the purpose of completing, repairing, improving, extending, enlarging, or replacing the System, which will be payable solely from the Revenues. Such Revenue Bonds may be payable from and equally secured by a lien on and pledge of the Revenues, if such revenue bonds are approved by the voters of the District. The District also reserves the right to issue inferior lien bonds and pledge the Revenues to the payment thereof, such pledge to be subordinate in all respects to the Bonds, and previously issued Additional Bonds and Revenue Bonds. The District further reserves the right to issue bonds in one or more installments for t1r purchase, construction, improvement, extension, replacement, enlargement or repair of water, sewer and/or drainage facilities necessary under a contract or contracts with persons, corporations, municipal corporations, political subdivisions, or other entities, such bonds to be payable fronl and secured by the proceeds of such contract or contracts. The District further reserves the riglit to refund such bonds. The District further reserves the right to issue in any manner permitted by law: (i) the unissued unlimited tax refunding bonds authorized at the bond election held 7 November 1987; LROWLETI15949.2\B/RESOLUTION2021 28 and (ii) such other unlimited tax refunding bonds as may hereafter be authorized at subsequent elections to refund any Bonds and Additional Bonds at or prior to their respective dates o maturity or redemption. 33. Related Matters. To satisfy in a timely manner all of the District's obligations under this Resolution, the Bond Purchase Agreement with the Underwriter, and the Escrow Agreement, the President and Secretary of the Board of Directors of the District and all other appropriate officers and agents of the District are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the refunding of the Refunded Bonds including, without limitation, executing and delivering on behalf of the District all certificates, consents, receipts requests, and other documents as may be reasonably necessary to satisfy the District's obligations under the Escrow Agreement, the Bond Purchase Agreement, and this Resolution and to direct the transfer and application of funds of the District consistent with the provisions of such EscroW Agreement and this Resolution. 34. Registrar. The form of agreement setting forth the duties of the Registrar is hereb approved, and the appropriate officials of the District are hereby authorized to execute such agreement for and on behalf of the District. 35. Official Statement. The Board of Directors of the District hereby ratifies, authorizes and approves, in connection with the sale of the Bonds, the preparation and distribution of the Preliminary Official Statement, dated 1998, and a final Official Statement! substantially in the same form containing such additional information and amendments as may be necessary to conform to the terms of the Bonds, this Resolution, and the Bond Purchas Agreement for the Bonds. The appropriate officials of the District are hereby authorized to sigia such Official Statement and/or to deliver certificates pertaining to such Official Statement aS prescribed therein, dated as of the date of payment for and delivery of the Bonds. • 36. Amendments to Bond Resolution. The District may, without the consent of o notice to any Holders of the Bonds, amend, change or modify this Resolution as may be required (a)by the provisions hereof, (b) for the purpose of curing any ambiguity, inconsistency, or formal defect or omission herein, or (c) in connection with any other change which is not to the prejudice of the Holders of the Bonds. Except for such amendments, changes, or modification, the District shall not amend, change, or modify this Resolution in any manner without the consent of the Holders of the Bonds. 37. No Personal Liability. No recourse shall be had for payment of the principal of or interest on any Bonds or for any claim based thereon, or on this Resolution, against any official or employee of the District or any person executing any Bonds. 38. Open Meeting. It is hereby officially found and determined that the meeting t which this Resolution was adopted was open to the public, and public notice of the time, place, and purpose of said meeting was given, all as required by the Texas Government Code, Section 551.043, as amended. LROWLETT\5949.2\B/RESOLUTION2021 29 PASSED AND APPROVED this day of , 1998. /s/ Rich A. Willoughby President, Board of Directors ATTEST: /s/ Kelly C. Flanagan Secretary, Board of Directors (SEAL) LROWLET115949.2\B/RESOLUTION2021 30