Ord. 1414 2010-03-22CERTIFICATE FOR ORDINANCE
THE 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 March 22, 2010, 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, to wit:
Tom Reid
Mayor
Felicia Kyle
Mayor Pro Tern
Woodrow "Woody" Owens
Council Member
Steve Saboe
Council Member
Kevin Cole
Council Member
Scott Sherman
Council Member
and all of such persons were present, thus constituting a quorum. Whereupon, among other
business, the following was transacted at said meeting: a written
ORDINANCE AUTHORIZING ISSUANCE OF CITY OF PEARLAND,
TEXAS, WATER AND SEWER SYSTEM REVENUE BONDS, SERIES
2010A; PRESCRIBING THE TERMS AND CONDITIONS THEREOF;
PROVIDING FOR THE PAYMENT THEREOF; AWARDING THE SALE
THEREOF; AUTHORIZING THE PREPARATION AND DISTRIBUTION OF
AN OFFICIAL STATEMENT TO BE USED IN CONNECTION WITH THE
SALE OF THE BONDS; AUTHORIZING THE PURCHASE OF BOND
INSURANCE; MAKING OTHER PROVISIONS REGARDING SUCH BONDS
AND MATTERS INCIDENT THERETO; AUTHORIZING EXECUTION AND
DELIVERY OF A PAYING AGENT /REGISTRAR AGREEMENT;
CONTAINING OTHER MATTERS RELATED THERETO; AND
DECLARING AN EMERGENCY
(the "Ordinance was duly introduced for the consideration of the City Council and read in full.
It was then duly moved and seconded that the Ordinance be adopted on first reading; and, after
due discussion, such motion, carrying with it the adoption of the Ordinance, prevailed and
carried by the following vote:
AYES:5 NAYS:0 ABSTENTIONS:0
2. That a true, full and correct copy of the 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 such meeting; that the above
2
HOU:3002971.3
and foregoing paragraph is a true, full and correct excerpt from the City Council's minutes of
such 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
subject of the aforesaid meeting, and that the Ordinance would be introduced and considered for
adoption at such meeting, and each of such officers and members consented, in advance, to the
holding of such meeting for such purpose; that such meeting was open to the public as required
by law; and that public notice of the date, hour, place and subject of such meeting was given as
required by the Open Meetings Law, Chapter 551, Texas Government Code.
SIGNED AND SEALED this March 22, 2010.
r e
Mayor
CITY OF PEARLAND, TEXAS
3
HOU:3002971.2
CITY OF PEARLAND, TEXAS
WATER AND SEWER SYSTEM REVENUE BONDS
SERIES 2010A
ORDINANCE NO. 1414
HOU:3002971.3
TABLE OF CONTENTS
Page
ARTICLE I FINDINGS AND DETERMINATIONS l
ARTICLE 11 DEFINITIONS AND INTERPRETATIONS .------------.-------.l
Section Definitions l
Section 2.2. Interpretations ..----.—.—.---.--..----.—._------....—.---..5
ARTICLE III TERMS ()F THE SERIES 2OlUA Bonds 5
Section 3.l.
Name, Amount, Purpose, Authorization
5
Section 3.2.
Numbers, Date and Denomination ..---.—.-.—.--.—,,.____.__.__~`.5
Rates and Charges -------.—.--,---.---.-------------l3
Section 3.3.
Interest Payment Dates, Interest Rates and Maturities
5
Section 3.4.
Redemption Prior no Maturity .-------.—.--..--.—.—.—~--.—.---.h
Flow 0f Funds
Section 3.5.
Manner of Payment, Characteristics, Execution and Authentication —.—.---.7
Interest and Sinking Fund
Section 3.6.
Approval by Attorney General; Registration by Comptroller —.—.-------X
Reserve Fund
Section 3.7.
Authentication -----..—.,..--...—.---_-----.-----.----..K
Deficiencies iu Funds
Section 3.8.
Special Record Date
8
Section 3.9.
Ownership ---..—..--.—.---.-----.—.----.--------_---.8
Security for Uninvested Funds
Section
B Only System
9
Section 3. 11.
Payments and Notices no Cede &cCn.
g
Section 3 I�
3uc�cuanr��curd�mT�ennmhorn'�raoo��(�n�bl I� {�n�/
System
I0
Section 3.13.
Registration, Transfer, and Exchange --..—.-----.-----.,—....--IO
Section 3.14.
Cancellation of Series 70lOA Bonds
l]
ARTICLE ]V FORM OF SERIES 20l8A BONDS AND CERTIFICATES —.------.—.—..l2
Section Forms l2
ARTICLE V SECURITY AND SOURCE OF PAYMENT FOR THE BONDS —.--.----..\2
Section 5.l.
Pledge and Source of Payment ..--.-----,--.--_,_____.__,_.12
Section 5.2.
Rates and Charges -------.—.--,---.---.-------------l3
Section
Special Funds
I]
Section
Flow 0f Funds
l3
Section 5.5.
Interest and Sinking Fund
l4
Section
Reserve Fund
l5
Section 5.7.
Deficiencies iu Funds
l6
Section 5.8.
Investment 0f Funds; Transfer nf Investment Income
lh
Section 5.9.
Security for Uninvested Funds
|6
ARTICLE VT ADDITIONAL BONDS
Sectinu6.1. AdditiuuolBoodu—.-----------
Section 6.2. Subordinate Lieu Obligations
Section 6.3. Special Project Bonds
---..---------..—.~...~.l7
--.--.----.—.----..---.l7
--.----------.-----..I8
'--------'---'—'—''---'}8
xoo:3002971.3
ARTICLE VII COVENANTS AND PROVISIONS RELATING TO BONDS
l8
Section 7.l.
Punctual Payment oF Bonds
lH
Section 7.2.
Power u} Own and Operate S Power
l9
Section 7.3.
Maintenance 0f System
1g
Section 7.4.
Sale or Encumbrance of System ----------.—.—.---------.—..lg
Section 7.5.
loaura000 ---.----.....-----..--------,---.---.--.--..lg
Governing Law
Section 7.6.
Accounts, Records and Audits
}g
Section 7.7.
Competition .-----.—..—.-------.--.---,,--.------.--.20
Section 11.6.
Section 7.8.
Pledge and Encumbrance of Net Revenues
20
Section 7.9.
Covenants with Respect t0 Certain Assumed Water District Bonds
20
Section 7.I[i
Registered Owners' and Remedies
20
Section 7.1l.
Defe8Souce
2l
Section 7.12.
Legal ---,.—.—.--..—.--.--.----.---.-----.—..--.22
Section 7.13.
Unavailability of Authorized Publication
22
Section 7.14.
No Recourse Against City Officials
22
ARTICLE VIII CONCERNING THE PAYING AGENT/REGISTRAR 22
Section 8.l. Acceptance 22
Section 8.2. Fiduciary Account 2g
Section8.3. Bonds Presented 7]
Section 8.4. Series 2Ol0A Bonds Not Presented 23
Section 8.5. May Own Series 2Ul0A Bonds 23
Section 8.6. Successor -----..---.---.--.—,.---,..24
ARTICLE DCPROVISIONS CONCERNING SALE AND APPLICATION OF
PROCEEDS OF SERIES 2UlOA Bonds 24
Section 9. Sale of Series 20lOA Bonds 24
Section 9.2. Approval, Registration and —.-----.—..---.---------.24
Section 9.3. Offering Documents; Ratings --.--_.—______.____.________.25
Section 9.4. Application n[ Proceeds o[ Series 20[A}k Bonds 25
Section 9.5. Tax Exemption ....................—..._^_________.._.__._.__..25
Section l0.l. Annual Reports -------.—.—..—.------.---.—..—.-------,28
Section I[i2. Material Event Notices 20
Section 10.3. Limitations, Disclaimers, and Amendments 29
ARTICLE XI MISCELLANEOUS ------.------.------.------------..3O
Section
D.l.
Related Matters
30
Section ll.2.
8 —.---.—.---.---.---_----.--------_----.3l
Section 11.3.
Open Meeting --------------.--.----.-----------..3l
Section 11.4.
Governing Law
3l
Section 11.5.
Repealer
Section 11.6.
Emergency ------.---.----..----.---.-----.-------.]l
Section 11.7.
Effective Date
ii
CITY OF PEARLAND
ORDINANCE NO. 1414
ORDINANCE AUTHORIZING ISSUANCE OF CITY OF PEARLAND,
TEXAS, WATER AND SEWER SYSTEM REVENUE BONDS, SERIES
2010A; PRESCRIBING THE TERMS AND CONDITIONS THEREOF;
PROVIDING FOR THE PAYMENT THEREOF; AWARDING THE SALE
THEREOF; AUTHORIZING THE PREPARATION AND DISTRIBUTION OF
AN OFFICIAL STATEMENT TO BE USED IN CONNECTION WITH THE
SALE OF THE BONDS; AUTHORIZING THE PURCHASE OF BOND
INSURANCE; MAKING OTHER PROVISIONS REGARDING SUCH BONDS
AND MATTERS INCIDENT THERETO; AUTHORIZING EXECUTION AND
DELIVERY OF A PAYING AGENT /REGISTRAR AGREEMENT;
CONTAINING OTHER MATTERS RELATED THERETO; AND
DECLARING AN EMERGENCY
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 Chapter 1502, Texas Government Code, 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 2010A Bonds (hereinafter defined) as hereinafter
authorized.
(c) The conditions precedent to the issuance of additional bonds which are
contained in the ordinances authorizing the issuance of the Previously Issued Bonds and
the Series 2010A Bonds (both hereinafter defined) have been met, and the City is
authorized to issue the revenue bonds and make the pledges and covenants set forth
herein.
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:
"Act" shall mean Chapter 1502, Texas Government Code, as amended.
HOU:3002971.3
"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 2010A Bonds
(and the issuance of the City's Water and Sewer System Revenue Refunding Bonds, Series
2010B which are being issued concurrently with the Series 2010A Bonds), the Average Annual
Principal and Interest Requirements are hereby determined to be $7,514,633.00 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.
"Bonds" shall mean any or all of the Previously Issued Bonds, the Series 2010A 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.
"Business Day" shall mean any day other than (1) a Saturday or a Sunday, (2) a legal
holiday or the equivalent on which banking institutions generally are authorized or required to
close in New York, New York or Houston, Texas or any other city in which is located the
principal corporate trust office of the Paying Agent/Registrar or (3) a day on which the New
York Stock Exchange is closed in whole or in part.
"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.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"DTC" shall mean The Depository Trust Company of New York, New York, or any
successor securities depository.
"DTC Participant" shall mean brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations on whose behalf DTC was created to hold securities
to facilitate the clearance and settlement of securities transactions among DTC Participants.
"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 and the Reserve Fund (each
hereinafter defined in Article V hereof); 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.
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HOU:3002971.3
"Interest Payment Date, when used in connection with any Series 2010A Bond, shall
mean September 1 or March 1 of each year as applicable commencing September 1, 2010.
"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 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 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 Wells Fargo Bank, N.A., Houston, Texas, and its
successors in that capacity.
"Previously Issued Bonds" shall mean the Outstanding City of Pearland, Texas Water
and Sewer System Adjustable Rate Revenue Bonds, Series 1996B, City of Pearland, Texas,
Water and Sewer System Adjustable Rate Revenue Bonds, Series 1999, City of Pearland, Texas,
3
HOU:3002971.3
Water and Sewer System Revenue Bonds, Series 2001, City of Pearland, Texas, Water and
Sewer System Revenue Bonds, Series 2003, the City of Pearland, Texas, Water and Sewer
System Revenue and Refunding Bonds, Series 2006, the City of Pearland, Texas, Water and
Sewer System Revenue Bonds, Series 2007 and the City of Pearland, Texas, Water and Sewer
System Revenue Bonds, Series 2008, and the City of Pearland, Texas, Water and Sewer System
Revenue Bonds, Series 2009.
"Purchaser" shall mean the underwriting syndicate comprised of First Southwest
Company, Wells Fargo Brokerage Services, LLC and BOSC, Inc.
"Record Date" shall mean, with respect to any Interest Payment Date, the fifteenth day
of the month, whether or not a Business Day, next preceding each Interest Payment Date.
"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 2010A Bonds.
"Series 2010A Bonds" shall mean the City of Pearland, Texas, Water and Sewer System
Revenue Bonds, Series 2010A, authorized by 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.
"Surety Policy" shall mean and include a surety bond, bond insurance policy or other
credit agreement, as authorized by Section 1502.064, Texas Government Code, provided that the
issuer of any Surety Policy shall be rated in the highest rating category at the time of issuance of
such Surety Policy by A.M. Best Company, Standard Poor's Ratings Group, or Moody's
Investors Service. A Surety Policy shall insure all Bonds and Additional Bonds on a pro rata
basis. A Surety Policy may include a letter of credit Or other agreement or instrument, including
any related reimbursement or financial guaranty agreement, whereby the issuer is obligated to
provide funds up to and including the maximum amount and under the conditions specified in
such agreement or instrument.
"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
0
HOU:3002971.3
assets of any other public, private or non profit entities. The System shall not include any
Special Project.
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
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 2010A Bonds
Section 3.1. Name, Amount, Purpose, Authorization The City of Pearland, Texas
Water and Sewer System Revenue Bonds, Series 2010A shall be issued in fully registered form,
without coupons, in the aggregate principal amount of FOURTEEN MILLION FOR
THOUSAND AND NO /100 DOLLARS ($14,040,000) for the purpose of constructing certain
repairs, improvements, additions and extensions to the System and payment of expenses of
issuance of the Series 2010A Bonds, all under and pursuant to the authority of the Act and all
other applicable law.
Section 3.2. Numbers Date and Denomination The Series 2010A Bonds shall be
initially issued bearing the numbers, in the principal amounts and bearing interest at the rates set
forth in Section 3.3 hereof. The Series 2010A Bonds shall be dated as of April 1, 2010, and shall
be issued in denominations of $5,000 of principal amount or any integral multiple thereof.
Section 3.3. Interest Payment Dates, Interest Rates and Maturities The Series 2010A
Bonds shall bear interest from the later of the April 1, 2010, 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 September 1 and March 1 of each year, commencing September 1, 2010, until
maturity or prior redemption.
The Series 2010A 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 this
Ordinance:
Bond
Maturity
Principal
Interest
Number
O( 9/01)
Amount
Rate
R -1
2011
$370,000
2.000%
R -2
2012
380,000
1.750
R -3
2013
390,000
1.750
R -4
2014
395,000
2.000
R -5
2015
405,000
2.000
R -6
2016
410,000
2.500
5
HOU:3002971.3
Bond
Maturity
Principal
Interest
Number
09 /01)
Amount
Rate
R -7
2017
$425,000
3.000%
R -8
2018
440,000
3.125
R -9
2019
455,000
3.250
R -10
2020
475,000
3.500
R -11
2021
495,000
4.000
R -12
2022
515,000
4.000
R -13
2023
535,000
4.000
R -14
2024
555,000
4.000
R -15
2025
580,000
4.000
R -16
2026
600,000
4.000
R -17
2027
625,000
4.125
R -18
2028
650,000
4.250
R -19
2029
680,000
4.250
R -20
2030
710,000
4.375
R -21
2035
3,950,000
4.500
Section 3.4. Redemption Prior to Maturity
(a) The City reserves the right, at its option, to redeem prior to maturity Series
2010A Bonds maturing on or after September 1, 2020, in whole or in part, in principal
installments of $5,000 or any integral multiple thereof, on September 1, 2019, or any date
thereafter, at a price equal to the principal amount of the Series 2010A Bonds or portions
thereof called for redemption plus accrued interest to the date of redemption.
(b) The Series 2010A Bonds maturing on September 1 in the year 2035 (the
"Term Bonds are subject to mandatory sinking fund redemption in the following
amounts (subject to reduction as hereinafter provided), on the following dates, in each
case at a redemption price equal to the principal amount of the Series 2010A Bonds or the
portions thereof so called for redemption plus accrued interest to the date fixed for
redemption:
Mandato Redemption Dates Principal Amounts
Term Bonds Maturing September 1, 2035 September 1, 2031
$740,000
September 1, 2032
755,000
September 1, 2033
785,000
September 1, 2034
825,000
September 1, 2035 (maturity)
845,000
The particular Term Bonds to be redeemed shall be selected by the Registrar by lot or
other customary random selection method, on or before July 15 of each year in which
Term Bonds are to be mandatorily redeemed. The principal amount of Term Bonds to be
mandatorily redeemed in each year shall be reduced by the principal amount of such
Term Bonds that have been optionally redeemed on or before July 15 of such year and
which have not been made the basis for a previous reduction.
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HOU:300297 L3
(c) Series 2010A Bonds may be redeemed only in integral multiples of $5,000
of principal amount. If a Series 2010A Bond subject to redemption is in a denomination
larger than $5,000, a portion of such Series 2010A Bond may be redeemed, but only in
integral multiples of $5,000. In selecting portions of Series 2010A Bonds for
redemption, the Registrar shall treat each Series 2010A Bond as representing that number
of Series 2010A Bonds of $5,000 denomination which is obtained by dividing the
principal amount of such Series 2010A Bond by $5,000. Upon surrender of any Series
2010A Bond for redemption in part, the Registrar, in accordance with Section 3.11
hereof, shall authenticate and deliver in exchange therefor a Series 2010A Bond or Bonds
of like maturity and interest rate in an aggregate principal amount equal to the
unredeemed portion of the Series 2010A Bond so surrendered.
(d) Not less than thirty (30) days prior to a redemption date for the Series
2010A Bonds, a notice of redemption will be sent by U.S. mail, first class postage
prepaid, in the name of the City to each Owner of a Series 2010A Bond to be redeemed
in whole or in part at the address of such Owner appearing on the Register at the close of
business on the Business Day next preceding the date of mailing. Such notices shall state
the redemption date, the redemption price, the place at which Series 2010A Bonds are to
be surrendered for payment and, if less than all Series 2010A Bonds outstanding are to be
redeemed, the numbers of Series 2010A Bonds or portions thereof to be redeemed. Any
notice of redemption so mailed as provided in this Section will be conclusively presumed
to have been duly given, whether or not the Owner receives such notice. By the date
fixed for redemption, due provision shall be made with the Registrar for payment of the
redemption price of the Series 2010A Bonds or portions thereof to be redeemed. When
Series 2010A Bonds have been called for redemption in whole or in part and notice of
redemption has been given as herein provided, the Series 2010A Bonds or portions
thereof so redeemed shall no longer be regarded to be outstanding, except for the purpose
of receiving payment solely from the funds so provided for redemption, and interest
which would otherwise accrue or compound after the redemption date on any Series
2010A Bond or portion thereof called for redemption shall terminate on the date fixed for
redemption.
Section 3.5. Manner of Payment, Characteristics, Execution and Authentication The
Paying Agent/Registrar shall be the paying agent for the Series 2010A Bonds. The Series 2010A
Bonds shall be payable, shall have the characteristics, shall be signed and executed, shall be
sealed, and shall be authenticated, all as provided Form of Bond included as Exhibit A to this
Ordinance. The Series 2010A Bonds initially delivered shall also have attached or affixed to
each such Series 2010A Bond the registration certificate of the Comptroller of Public Accounts
of the State of Texas.
The Series 2010A Bonds shall be signed on behalf of the City by the Mayor and
countersigned by the City Secretary by their manual, lithographed, or facsimile signatures
thereon. Such facsimile signature on the Series 2010A Bonds shall have the same effect as if
each of the Series 2010A Bonds had been signed manually and in person by each of said
officials. If any officer of the City whose manual or facsimile signature shall appear on the
Series 2010A Bonds, as provided in the Form of Bond included as Exhibit A hereto, shall cease
to be such officer before the authentication of the Series 2010A Bonds or before the delivery of
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HOU:3002971.3
the Series 2010A Bonds, such manual or facsimile signature shall nevertheless be valid and
sufficient for all purposes as if such officer had remained in such office.
The approving legal opinion of Andrews Kurth LLP, Houston, Texas, Bond Counsel,
may be printed on the Series 2010A Bonds over the certification of the City Secretary, which
may be executed in facsimile. CUSIP numbers also may be printed on the Series 2010A Bonds,
but errors or omissions in the printing of either the opinion or the numbers shall have no effect
on the validity of the Bonds.
Section 3.6. Approval by Attorney General; Registration by Comptroller The Initial
Series 2010A Bond shall be delivered to the Attorney General of the State of Texas for
examination and approval and shall be registered by the Comptroller of Public Accounts of the
State of Texas. The manually executed registration certificate of such Comptroller substantially
in the form provided in Exhibit A of this Ordinance shall be affixed or attached to the Initial
Series 2010A Bonds.
Section 3.7. Authentication Except for the Series 2010A Bonds to be initially issued,
which need not be authenticated, only such Series 2010A Bonds as shall bear thereon a
certificate of authentication substantially in the form provided in Exhibit A of this Ordinance,
manually executed by an authorized representative of the Paying Agent/Registrar, shall be
entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such
duly executed certificate of authentication shall be conclusive evidence that the Series 2010A
Bond so authenticated was delivered by the Paying Agent/Registrar hereunder.
Section 3.8. Special Record Date If interest on any Series 2010A Bond is not paid on
any Interest Payment Date and continues unpaid for 30 days thereafter, the Paying
Agent/Registrar shall establish a new record date for the payment of such interest, to be known
as a "Special Record Date." The Paying Agent/Registrar shall establish a Special Record Date
when funds to make such interest payment are received from or on behalf of the City. Such
Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past
due interest, and notice of the date of payment and the Special Record Date shall be sent by
United States mail, first class, postage prepaid, not later than five (5) days prior to the Special
Record Date, to each Registered Owner of an affected Series 2010A Bond as of the close of
business on the day prior to the mailing of such notice.
Section 3.9. Ownership Subject to the further provisions of this Section, the City, the
Paying Agent/Registrar, and any other person may treat the person in whose name any Series
2010A Bond is registered on the Register as the absolute Owner of such Series 2010A Bond for
the purpose of making and receiving payment of the principal of or interest on such Series
2010A Bond, and for all other purposes, whether or not such Series 2010A 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 2010A Bond
in accordance with this Section 3.9 shall be valid and effectual and shall discharge the liability of
the City and the Paying Agent/Registrar upon such Series 2010A Bond to the extent of the sums
paid.
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Section 3. 10. Book -Entry Only System The definitive Series 2010A Bonds shall be
initially issued in the form of a separate single fully registered Series 2010A Bond for each of the
maturities thereof. Upon initial issuance, the ownership of each such Series 2010A Bond shall
be registered in the name of Cede Co., as nominee of DTC, and except as provided in Section
3.12 hereof, all of the Outstanding Bonds shall be registered in the name of Cede Co., as
nominee of DTC. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the
effect that DTC has determined to substitute a new nominee in place of Cede Co., and subject
to the provisions in this Ordinance with respect to interest checks being mailed to the Owner at
the close of business on the Record Date, the word "Cede Co." in this Ordinance shall refer to
such new nominee of DTC.
With respect to Series 2010A Bonds registered in the name of Cede Co., as nominee of
DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any
DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in
the Series 2010A Bonds. Without limiting the immediately preceding sentence, the City and the
Paying Agent/Registrar shall have no responsibility or obligation with respect to (a) the accuracy
of the records of DTC, Cede Co. or any DTC Participant with respect to any ownership
interest in the Series 2010A Bonds, (b) the delivery to any DTC Participant or any other person,
other than a Registered Owner of a Series 2010A Bond, as shown on the Register, of any notice
with respect to the Series 2010A Bonds, including any notice of redemption or (c) the payment
to any DTC Participant or any other person, other than a Registered Owner of a Series 2010A
Bond as shown in the Register, of any amount with respect to principal of Series 2010A Bonds,
premium, if any, or interest on the Series 2010A Bonds.
Except as provided in Section 3.11 of this Ordinance, the City and the Paying
Agent/Registrar shall be entitled to treat and consider the person in whose name each Series
2010A Bond is registered in the Register as the absolute owner of such Series 2010A Bond for
the purpose of payment of principal of, premium, if any, and interest on Series 2010A Bonds, for
the purpose of giving notices of redemption and other matters with respect to such Series 2010A
Bond, for the purpose of registering transfer with respect to such Series 2010A Bond, and for all
other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of Series 2010A
Bonds, premium, if any, and interest on the Series 2010A Bonds only to or upon the order of the
respective owners, as shown in the Register as provided in this Ordinance, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to fully
satisfy and discharge the City's obligations with respect to payment of principal of, premium, if
any, and interest on the Series 2010A Bonds to the extent of the sum or sums so paid. No person
other than an owner shall receive a Series 2010A Bond evidencing the obligation of the City to
make payments of amounts due pursuant to this Ordinance.
Section 3.11. Payments and Notices to Cede Co. Notwithstanding any other
provision of this Ordinance to the contrary, as long as any Series 2010A Bonds are registered in
the name of Cede Co., as nominee of DTC, all payments with respect to principal of,
premium, if any, and interest on the Series 2010A Bonds, and all notices with respect to such
Series 2010A Bonds shall be made and given, respectively, in the manner provided in the
representation letter of the City to DTC.
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Section 3.12. Successor Securities Depository; Transfer Outside Book -Entry Only
S sue In the event that the City or the Paying Agent/Registrar determines that DTC is
incapable of discharging its responsibilities described herein and in the representation letter of
the City to DTC, and that it is in the best interest of the beneficial owners of the Series 2010A
Bonds that they be able to obtain certificated Series 2010A Bonds, the City or the Paying
Agent/Registrar shall (a) appoint a successor securities depository, qualified to act as such under
Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC of the
appointment of such successor securities depository and transfer one or more separate Series
2010A Bonds to such successor securities depository or (b) notify DTC of the availability
through DTC of Series 2010A Bonds and transfer one or more separate Series 2010A Bonds to
DTC Participants having Series 2010A Bonds credited to their DTC accounts. In such event, the
Series 2010A Bonds shall no longer be restricted to being registered in the Register in the name
of Cede Co., as nominee of DTC, but may be registered in the name of the successor securities
depository, or its nominee, or in whatever name or names a Registered Owner of a Series 2010A
Bond transferring or exchanging Series 2010A Bonds shall designate, in accordance with the
provisions of this Ordinance.
Section 3.13. Registration, Transfer, and Exchange The Paying Agent/Registrar shall
keep the Register at its principal corporate trust office and, subject to such reasonable regulations
as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of
Series 2010A Bonds in accordance with the terms of this Ordinance.
Each Series 2010A Bond shall be transferable only upon the 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 2010A Bond in proper form for transfer, the Paying Agent/Registrar
shall authenticate and deliver in exchange therefor, within three (3) Business Days after such
presentation, a new Series 2010A Bond or Series 2010A Bonds, registered in the name of the
transferee or transferees, in the same maturity and aggregate principal amount and bearing
interest at the same rate as the Series 2010A Bond or Series 2010A Bonds so presented.
All Series 2010A Bonds shall be exchangeable upon presentation and surrender thereof at
the principal corporate trust office of the Paying Agent/Registrar for a Series 2010A Bond or
Series 2010A Bonds of the same maturity in any authorized denomination and interest rate, in an
aggregate amount equal to the unpaid principal amount of the Series 2010A Bond or Series
2010A Bonds presented for exchange. The Paying Agent/Registrar shall be and is hereby
authorized to authenticate and deliver exchange Series 2010A Bonds in accordance with the
provisions of this Section 3.11. Each Series 2010A Bond delivered in accordance with this
Section 3.11 shall be entitled to the benefits and security of this Ordinance to the same extent as
the Series 2010A Bond or Series 2010A Bonds in lieu of which such Series 2010A Bond is
delivered.
The City or the Paying Agent/Registrar may require the Owner of any Series 2010A
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 2010A Bond. Any fee or charge of
the Paying Agent/Registrar for such transfer or exchange shall be paid by the City.
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The Paying Agent/Registrar shall not be required to transfer or exchange any Series
2010A Bond called for redemption in whole or in part during the forty -five (45) day period
immediately prior to the date fixed for redemption; provided, however, that this restriction shall
not apply to the transfer or exchange by the Registered Owner of the unredeemed portion of a
Series 2010A Bond called for redemption in part.
Section 3.14. Cancellation of Series 2010A Bonds All Series 2010A Bonds paid or
redeemed in accordance with this Ordinance, and all Series 2010A Bonds in lieu of which
exchange Series 2010A Bonds or replacement Series 2010A 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 furnish the
City with appropriate certificates of destruction of such Series 2010A Bonds.
Section 3.15. Mutilated Lost or Stolen Series 2010A Bonds Upon the presentation
and surrender to the Paying Agent/Registrar of a mutilated Series 2010A Bond, the Paying
Agent/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 City or the Paying Agent/Registrar may require the Owner of such Series
2010A 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 2010A Bond is lost, apparently destroyed, or wrongfully taken, the City,
pursuant to the applicable laws of the State of Texas, and in the absence of notice or knowledge
that such Series 2010A Bond has been acquired by a bona fide purchaser, shall execute and the
Paying Agent/Registrar shall authenticate and deliver, a replacement Series 2010A 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
2010A Bond;
(b) furnished such security or indemnity as may be required by the Paying
Agent/Registrar and the City to save them harmless;
(c) paid all expenses and charges in connection therewith, including, but not
limited to, printing costs, legal fees, fees of the Paying Agent/Registrar, and any tax or
other governmental charge that may be imposed; and
(d) met any other reasonable requirements of the City and the Paying
Agent/Registrar.
If, after the delivery of such replacement Series 2010A Bond, a bona fide purchaser of
the original Bond in lieu of which such replacement Bond was issued presents for payment such
original Series 2010A Bond, the City and the Paying Agent/Registrar shall be entitled to recover
such replacement Series 2010A 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
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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 mutilated, lost, apparently destroyed, or wrongfully taken Series 2010A Bond
has become or is about to become due and payable, the City in its discretion may, instead of
issuing a replacement Series 2010A Bond, authorize the Paying Agent/Registrar to pay such
Series 2010A Bond.
Each replacement Series 2010A Bond delivered in accordance with this Section 3.13
shall be entitled to the benefits and security of this Ordinance to the same extent as the Series
2010A Bond or Series 2010A Bonds in lieu of which such replacement Series 2010A Bond is
delivered.
ARTICLE IV
FORM OF SERIES 2010A BONDS AND CERTIFICATES
Section 4.1. Forms The form of the Series 2010A Bonds, including the form of the
Paying Agent/Registrar's Authentication Certificate, the form of Assignment, the form of the
Comptroller's Registration Certificate and the form of the Statement of Insurance, if any, which
shall be attached or affixed to the Initial Series 2010A Bonds, shall be, respectively, as described
in Exhibit A to this Ordinance, with such additions, deletions, and variations as may be necessary
or desirable and not prohibited by this Ordinance.
Section 4.2. Legal Opinion; CUSIP Numbers The approving legal opinion of
Andrews Kurth LLP, Houston, Texas, Bond Counsel, may be printed on the Series 2010A Bonds
over the certification of the City Secretary, which may be executed in facsimile. CUSIP numbers
also may be printed on the Series 2010A Bonds, but errors or omissions in the printing of either
the opinion or the numbers shall have no effect on the validity of the Bonds.
ARTICLE V
SECURITY AND SOURCE OF
PAYMENT FOR THE BONDS
Section 5.1. Pledg 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 and pledge of 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 are hereby 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
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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, including
all amounts owed by the City to a provider of a Surety Policy, if any, as and when the same
become due. For the purpose of complying with its obligation to fix, charge and collect rates and
charges, as herein provided, the City shall be entitled to rely on the certificate described in
Section 6.1 of this Ordinance, as therein provided, in determining the amount of interest
anticipated to be paid in respect of Bonds bearing interest at a variable rate.
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
(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;
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(b) Second to make all deposits into the Interest and Sinking Fund required
by any ordinance authorizing the issuance of Bonds;
(c) Third to reimburse the provider of a Surety Bond any amounts advanced
under such Surety Bond;
(d) Fourth to pay interest to any provider of a Surety Bond any amounts
advanced under such Surety Bond;
(e) Fifth to make all deposits into the Reserve Fund required by any
ordinance authorizing the issuance of Bonds;
(f) Sixth 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
(g) Seventh 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, after 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
(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, prior redemption or tender, 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.
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On or before each date principal becomes due and/or each 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 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 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 Fund may be
transferred to the Revenue Fund; but if and whenever the balance in the Reserve Fund is reduced
below such amount, monthly deposits into such Fund shall be resumed and continued in amounts
at least equal to one twelfth (1 /12th) of the Average Annual Principal and Interest Requirements
on the Bonds until the Reserve Fund has been restored to such amount. 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.
The requirements of the immediately preceding paragraph of this Section
notwithstanding, the City may provide a Surety Policy or Policies issued in amounts equal to all
or part of the Average Annual Principal and Interest Requirements on the Bonds in lieu of
depositing cash into the Reserve Fund; provided, however, that no such Surety Policy may be so
substituted unless (i) the ordinance authorizing the substitution of the Surety Policy for all or part
of the Average Annual Principal and Interest Requirements on the Bonds contains a finding that
such substitution is cost effective and (ii) the City obtains an opinion of nationally recognized
bond counsel that such substitution is permitted by applicable Texas law then in effect. If a
Surety Policy or Policies are issued in accordance with the preceding sentence, such Surety
Policy or Policies shall be drawn upon and reimbursed on a pro rata basis.
In the event a Surety Policy issued to satisfy all or a part of the City's obligation with
respect to the Reserve Fund causes the amount then on deposit in the Reserve Fund to exceed the
Average Annual Principal and Interest Requirements on all Bonds, the City may transfer such
excess amount to any fund or funds established for the payment of or security for Bonds or any
Subordinate Lien Obligations (including any escrow established for the final payment of any
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such obligations pursuant to Chapter 1207, Texas Government Code); provided, however, that
no funds constituting bond proceeds shall be transferred for the benefit of the Subordinate Lien
Obligations.
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 Special 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) that the
money required to be expended from any Special 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 Special Fund from which such investment was made.
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.
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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 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
(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 sixty (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
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l; 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 50% (20 as long as the
Series 1999 Bonds shall remain outstanding) 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(f) 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 fiord 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.
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.
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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.
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 any 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
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shall request the same. All expenses incurred in preparing such audits shall be Maintenance and
Operation Expenses.
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
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 system revenues shall provide that all such pledges
of and liens on water or sewer system 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 system 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 system 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 system revenues which did not terminate upon the
annexation and dissolution by the City of such water district.
Section 7.10. Registered Owners' Rights and Remedies This Ordinance shall constitute
a contract between the City and the Owners of the Series 2010A Bonds from time to time
Outstanding and this Ordinance shall be and remain irrepealable until the Series 2010A Bonds
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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 2010A 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 2010A 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 2010A 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.
Section 7.11. Defeasance The City may defease the provisions of this Ordinance and
discharge its obligations to the Registered Owners of any or all of the Series 2010A Bonds to pay
the principal of and interest thereon in any manner now or hereafter permitted by law, including
by depositing with the Paying Agent/Registrar or with the State Treasurer of the State of Texas
either:
(a) cash in an amount equal to the principal amount of such Series 2010A
Bonds plus interest thereon to the date of maturity or redemption; or
(b) pursuant to an escrow or trust agreement, cash and /or (i) direct noncallable
obligations of United States of America, including obligations that are unconditionally
guaranteed by the United States of America; (ii) noncallable obligations of an agency or
instrumentality of the United States, including obligations that are unconditionally
guaranteed or insured by the agency or instrumentality and that, on the date the governing
body, of the issuer adopts or approves the proceedings authorizing the issuance of
refunding bonds, are rated as to investment quality by a nationally recognized investment
rating firm not less than AAA or its equivalent; or (iii) noncallable obligations of a state
or an agency or a county, municipality, or other political subdivision of a state that have
been refunded and that, on the date the governing body of the issuer adopts or approves
the proceedings authorizing the issuance of refunding bonds, are rated as to investment
quality by a nationally recognized investment rating firm not less than AAA or its
equivalent, which, in the case of (i), (ii) or (iii), may be in book -entry form, and the
principal of and interest on which will, when due or redeemable at the option of the
holder, without further investment or reinvestment of either the principal amount thereof
or the interest earnings thereon, provide money in an amount which, together with other
moneys, if any, held in such escrow at the same time and available for such purpose, shall
be sufficient to provide for the timely payment of the principal of and interest thereon to
the date of maturity or earlier redemption;
provided, however, that if any of the Series 2010A 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 2010A Bonds shall no longer be
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regarded to be Outstanding or unpaid. Any surplus amounts not required to accomplish such
defeasance shall be returned to the City.
Section 7.12. Legal Holiday In any case where the date of maturity of interest on or
principal of the Series 2010A Bonds or the date fixed for redemption of any Series 2010A Bonds
shall be in the City a legal holiday or a day on which the Paying Agent/Registrar for the Series
2010A 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 2010A 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 2010A Bonds or for any claim based thereon or
on this Ordinance against any official of the City or any person executing any Series 2010A
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 (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 Wells Fargo Bank, N.A., Houston, Texas, is hereby
appointed as the initial Paying Agent/Registrar for the Series 2010A 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. The registration of and payment of the principal of,
premium, if any, and interest on the Series 2010A Bonds when due shall be effectuated pursuant
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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 Tem 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 and affix the City's seal thereto.
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 2010A Bonds properly and timely presented to the Paying Agent/Registrar for payment
shall be paid without the necessity of further instructions from the City. Such Series 2010A
Bonds shall be canceled as provided herein.
Section 8.4. Series 2010A 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 2010A Bonds which have not been presented for payment
prior to the date specified in such certificate. Such certificate shall:
(a) Specify the Series 2010A 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 2010A 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.
Funds held by the Paying Agent/Registrar that represent principal of and interest on the
Series 2010A 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 2010A
Bonds by virtue of actions taken in compliance with this Section.
Section 8.5. Paying Agent/Registrar May Own Series 2010A Bonds The Paying
Agent/Registrar in its individual or any other capacity, may become the Owner or pledgee of
Series 2010A Bonds with the same rights it would have if it were not the Paying
Agent/Registrar.
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Section 8.6. Successor Pang Agents/Registrars The City covenants that at all times
while any Series 2010A 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
2010A 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 2010A
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 2010A 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.
ARTICLE IX
PROVISIONS CONCERNING SALE AND APPLICATION
OF PROCEEDS OF SERIES 2010A Bonds
Section 9.1. Sale of Series 2010A Bonds The sale of the Series 2010A Bonds to the
Purchaser at a price of $13,843,301.35 (representing the principal amount of the Series 2010A
Bonds less an original issue discount on the Series 2010A Bonds of $108,948.65 and less an
underwriting discount of $87,750.00), plus accrued interest to the date of delivery of the Series
2010A Bonds, in accordance with the terms of the Bond Purchase Agreement presented to and
hereby approved by the City Council, in substantially the form attached hereto as Exhibit C
which price and terms are hereby found and determined to be the most advantageous reasonably
obtainable by the City. The Mayor, Mayor Pro -Tem and all other officials, agents and
representatives of the City are hereby authorized to do any and all things necessary or desirable
to provide for the issuance and delivery of the Bonds.
Section 9.2. Approval, Registration and Delivery The Mayor and the City Secretary
are hereby authorized to have control and custody of the Series 2010A 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 2010A Bonds) as may be
necessary to accomplish the delivery of the Series 2010A Bonds and to assure the investigation,
examination, and approval thereof by the Attorney General of Texas and the registration of the
initial Series 2010A Bonds by the Comptroller of Public Accounts of the State of Texas. Upon
registration of the Series 2010A 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
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registration certificate prescribed herein to be attached or affixed to each Series 2010A 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 2010A Bonds is subject
to the unqualified approving opinion as to the legality of the Series 2010A Bonds of the Attorney
General of Texas and of Andrews Kurth LLP, Houston, Texas, Bond Counsel.
Section 9.3. Offering Documents; Ratings The City hereby approves the form and
contents of the Preliminary Official Statement and the final Official Statement, dated as of the
date hereof, relating to the Series 2010A Bonds, and any addenda, supplement or amendment
thereto, and ratifies and approves the distribution of such Preliminary Official Statement and
Official Statement in the offer and sale of the Series 2010A Bonds and in the reoffering of the
Series 2010A Bonds by the Purchaser, with such changes therein or additions thereto as the
officials executing same may deem advisable, such determination to be conclusively evidenced
by their execution thereof. The Mayor is hereby authorized and directed to execute, and the City
Secretary is hereby authorized and directed to attest, the final Official Statement. It is further
hereby officially found, determined and declared that the statements and representations
contained in the Preliminary Official Statement and final Official Statement are true and correct
in all material respects, to the best knowledge and belief of the City Council, and that, as of the
date thereof, the Preliminary Official Statement was an official statement of the City with respect
to the Series 2010A Bonds that was deemed "final" by an authorized official of the City except
for the omission of no more than the information permitted by subsection (b)(1) of Rule 15c2 -12
of the Securities and Exchange Commission. Copies of the Preliminary Official Statement and
the Official Statement are attached hereto as Exhibits D and Exhibit E respectively.
Further, the City Council hereby ratifies, authorizes and approves the actions of the
Mayor, the City's financial advisor and other consultants in seeking a rating on the Series 2010A
Bonds from Moody's Investors Service, Inc. and Standard Poor's Ratings Services and such
actions are hereby ratified and confirmed.
Section 9.4. Application of Proceeds of Series 2010A Bonds Proceeds from the sale
of the Series 2010A Bonds shall, promptly upon receipt by the City, be applied as follows:
(a) First, accrued interest and premium, if any, shall be deposited into the
Interest and Sinking Fund; and
(b) Second, the remaining proceeds from the sale of the Series 2010A Bonds
shall be deposited to a separate construction fund of the City and used 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 2010A Bonds. Any proceeds of the Series 2010A Bonds
remaining after making all such deposits and payments shall be deposited into the Interest
and Sinking Fund.
Section 9.5. Tax Exemption The City intends that the interest on the Bonds shall be
excludable from gross income of the owners thereof for federal income tax purposes pursuant to
Sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended (the
"Code and all applicable temporary, proposed and final regulations (the "Regulations and
procedures promulgated thereunder and applicable to the Bonds. For this purpose, the City
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covenants that it will monitor and control the receipt, investment, expenditure and use of all
gross proceeds of the Bonds (including all property the acquisition, construction or improvement
of which is to be financed directly or indirectly with the proceeds of the Bonds) and take or omit
to take such other and further actions as may be required by Sections 103 and 141 through 150 of
the Code and the Regulations to cause interest on the Bonds to be and remain excludable from
the gross income, as defined in Section 61 of the Code, of the owners of the Bonds for federal
income tax purposes. Without limiting the generality of the foregoing, the City shall comply
with each of the following covenants:
(a) The City will use all of the proceeds of the Bonds to (i) provide funds for repairs,
improvements, additions and extensions to the System, which will be owned and operated by the
City and (ii) to pay the costs of issuing the Bonds. The City will not use any portion of the
proceeds of the Bonds to pay the principal of or interest or redemption premium on, any other
obligation of the City or a related person.
(b) The City will not directly or indirectly take any action, or omit to take any action,
which action or omission would cause the Bonds to constitute "private activity bonds" within the
meaning of Section 141(a) of the Code.
(c) Principal of and interest on the Bonds will be paid solely from Pledged Revenues
collected by the City, investment earnings on such collections, and as available, proceeds of the
Bonds.
(d) Based upon all facts and estimates now known or reasonably expected to be in
existence on the date the Bonds are delivered, the City reasonably expects that the proceeds of
the Bonds will not be used in a manner that would cause the Bonds or any portion thereof to be
an "arbitrage bond" within the meaning of Section 148 of the Code.
(e) At all times while the Bonds are outstanding, the City will identify and properly
account for all amounts constituting gross proceeds of the Bonds in accordance with the
Regulations. The City will monitor the yield on the investments of the proceeds of the Bonds
and, to the extent required by the Code and the Regulations, will restrict the yield on such
investments to a yield which is not materially higher than the yield on the Bonds. To the extent
necessary to prevent the Bonds from constituting "arbitrage bonds," the City will make such
payments as are necessary to cause the yield on all yield restricted nonpurpose investments
allocable to the Bonds to be less than the yield that is materially higher than the yield on the
Bonds.
(f) The City will not take any action or knowingly omit to take any action that, if
taken or omitted, would cause the Bonds to be treated as "federally guaranteed" obligations for
purposes of Section 149(b) of the Code.
(g) The City represents that not more than fifty percent (50 of the proceeds of the
Bonds will be 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 within the meaning of
Section 149(g)(3)(A)(ii) of the Code, and the City reasonably expects that at least eighty -five
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percent (85 of the spendable proceeds of the Bonds will be used to carry out the governmental
purpose of the Bonds within the three -year period beginning on the date of issue of the Bonds.
(h) The City will take all necessary steps to comply with the requirement that certain
amounts earned by the City on the investment of the gross proceeds of the Bonds, if any, be
rebated to the federal government. Specifically, the City will (i) maintain records regarding the
receipt, investment, and expenditure of the gross proceeds of the Bonds as may be required to
calculate such excess arbitrage profits separately from records of amounts on deposit in the funds
and accounts of the City allocable to other obligations of the City or moneys which do not
represent gross proceeds of any obligations of the City and retain such records for at least six
years after the day on which the last outstanding Bond is discharged, (ii) account for all gross
proceeds under a reasonable, consistently applied method of accounting, not employed as an
artifice or device to avoid in whole or in part, the requirements of Section 148 of the Code,
including any specified method of accounting required by applicable Regulations to be used for
all or a portion of 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 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.
(i) 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 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 Bonds not been
relevant to either party.
0) The City will timely file or cause to be filed with the Secretary of the Treasury of
tie United States the information required by Section 149(e) of the Code with respect to the
Bonds on such form and in such place as the Secretary may prescribe.
(k) The City will not issue or use the Bonds as part of an "abusive arbitrage device"
(as defined in Section 1.148 -10(a) of the Regulations). Without limiting the foregoing, the
Bonds are not and will not be a part of a transaction or series of transactions that attempts to
circumvent the provisions of Section 148 of the Code and the Regulations, by (i) enabling the
City to exploit the difference between tax exempt and taxable interest rates to gain a material
financial advantage, or (ii) increasing the burden on the market for tax exempt obligations.
(1) Proper officers of the City charged with the responsibility for issuing the Bonds
are hereby directed to make, execute and deliver certifications as to facts, estimates or
circumstances in existence as of the date of issuance of the 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 Bonds, the City will take such actions as are necessary and
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appropriate to assure the continuous accuracy of the representations contained in such
certificates.
(m) The covenants and representations made or required by this Section are for the
benefit of the Bond holders and any subsequent Bond holder, and may be relied upon by the
Bond holders and any subsequent 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 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 9.5 shall survive the defeasance
and discharge of the Bonds for as long as such matters are relevant to the exclusion of interest on
the Bonds from the gross income of the owners for federal income tax purposes.
ARTICLE X
CONTINUING DISCLOSURE UNDERTAKING
Section 10.1. Annual Reports The City shall provide annually to the Municipal
Securities Rulemaking Board (the "MSRB within six months after the end of each fiscal year
ending in or after 2010, financial information and operating data with respect to the City of the
general type described in Exhibit F hereto. Any financial statements so to be provided shall be
(1) prepared in accordance with the accounting principles described in Exhibit F 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 unaudited financial statements for the applicable fiscal year
by the required time, and audited financial statements when and if audited financial statements
become available.
If the City changes its fiscal year, it will notify the MSRB 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
documents (i) available to the public on the MSRB's internet web site or (ii) filed with the SEC.
Section 10.2. Material Event Notices The City shall notify the MSRB in a timely
manner, of any of the following events with respect to the Series 2010A 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;
�cl�xci�Z�x�r[�
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
2010A Bonds;
G. Modifications to rights of holders of the Series 2010A Bonds;
H. Series 2010A Bond calls;
I. Defeasances;
J. Release, substitution, or sale of property securing repayment of the Series 2010A
Bonds; and
K. Rating changes.
The District shall also notify the MSRB in an electronic format prescribed by the MSRB,
in a timely manner, of any failure by the District to provide financial information or operating
data in accordance with this Section by the time required by this 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 2010A 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 2010A 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 2010A Bonds, and nothing in this Article, express or implied, shall give any benefit
or any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Article and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Article or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Series 2010A Bonds at any future
date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER
OR BENEFICIAL OWNER OF ANY SERIES 2010A 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
29
HOU:3002971.3
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT
OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR
SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Article shall
constitute a breach of or default under 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 2010A Bonds in the primary offering of the Series 2010A 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 2010A 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 2010A 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 2010A Bonds in the primary offering of
the Series 2010A 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.
"Rule" means SEC Rule 15c2 -12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
ARTICLE XI
MISCELLANEOUS
Section 11.1. 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
30
HOU:3002971.3
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 2010A 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 as may be
reasonably necessary to satisfy the City's obligations under the Ordinance and to direct the
transfer and application of finds 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.
Section 11.2. 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 11.3. 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 11.4. Governing Law This Ordinance shall be construed in accordance with
and governed by the laws of the State of Texas.
Section 11.5. Repealer All ordinances, or parts thereof inconsistent herewith, are
hereby repealed to the extent of such inconsistency.
Section 11.6. Emergency It is hereby officially found and determined that this
Ordinance relates to an immediate public emergency affecting life, health, property and public
peace, and that such emergency exists, the specific emergency being that the proceeds from the
sale of the Series 2010A Bonds are required as soon as possible for necessary and urgently
needed improvements, and that this Ordinance be passed and approved on the date of its
introduction.
Section 11.7. Effective Date This Ordinance shall be in force and effect from and after
its passage on the date shown below.
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HOU:3002971.3
PASSED AND APPROVED on first reading pursuant to Section 3.10 of the City Charter
this March 22, 2010.
'Zzz:=� TLC
Mayor, City of Pearland, Texas
ATTEST:
�'I'ko'Ll
VOW
C' Secret ity o eatiand, Texas
Exhibit A
Form of Bond
Exhibit B
Paying Agent/Registrar Agreement
Exhibit C
Bond Purchase Agreement
Exhibit D
Preliminary Official Statement
Exhibit E
Official Statement
Exhibit F
Description of Annual Financial Information
S -1
HOU:3002971 2
1 ON of I
FORM OF BOND
United States of America
State of Texas
NUMBER DENOMINATION
1 R-
REGISTERED REGISTERED
CITY OF PEARLAND, TEXAS
WATER AND SEWER SYSTEM REVENUE BONDS
SERIES 2010A
2 INTEREST RATE: DATED DATE: 2 MATURITY DATE: 2 CUSIP:
April 1, 2010 September 1,
REGISTERED OWNER:
PRINCIPAL AMOUNT:
'THE CITY OF PEARLAND, TEXAS (the "City"),, a municipal corporation duly
incorporated under the laws of the State of Texas, for value received hereby promises to pay, but
solely from certain Net Revenues as hereinafter provided, to the Registered Owner identified
above or registered assigns, on the Maturity Date specified above, upon presentation and
surrender of this Series 2010A Bond at the designated payment office of Wells Fargo Bank, N.A.
in Houston, Texas (the "Paying Agent/Registrar the principal amount identified above, 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, and to pay, solely from
such Net Revenues, interest thereon at the rate described below, calculated on the basis of a 360
day year, composed of twelve 30 -day months, from the later of the Dated Date identified above
1 Initial Bond shall be numbered T- 1.
2 Omitted from Initial Bond.
3 The first sentence of the Initial Bond shall read as follows:
"THE CITY OF PEARLAND, TEXAS (the "City a municipal corporation duly incorporated under the
laws of the State of Texas, for value received hereby promises to pay, but solely from certain Net Revenues as
hereinafter provided, to the Registered Owner identified above or registered assigns, on the Maturity Date
specified below, upon presentation and surrender of this Series 2010A Bond at the designated payment office
of Wells Fargo Bank, N.A. in Houston, Texas (the "Paying Agent/Registrar the principal amount set forth in
the following schedule: [Insert information regarding years of maturity, principal amounts and interest rates
from Section 3.3 of the Ordinance], 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, and to
pay, solely from such Net Revenues, interest thereon at the rate described above, calculated on the basis of a
360 -day year, composed of twelve 30 -day months, from the later of the Dated Date identified above or the
most recent interest payment date to which interest has been paid or duly provided for."
FEW
HOU:3002971.3
or the most recent interest payment date to which interest has been paid or duly provided for.
Interest on this Series 2010A Bond is payable by check sent by United States mail, first class,
postage prepaid, payable on September 1 and March 1, beginning on September 1, 2010, mailed
to the Registered Owner as shown on the books of registration kept by the Paying
Agent/Registrar as of the fifteenth calendar day of the month next preceding each interest
payment date. Any accrued interest payable at maturity or earlier redemption shall be paid upon
presentation and surrender of this Series 2010A Bond at the principal corporate trust office of the
Paying Agent/Registrar.
THIS SERIES 2010A Bond IS ONE OF A DULY AUTHORIZED SERIES OF BONDS
(the "Series 2010A Bonds aggregating $14,040,000, issued for the purpose of constructing
certain repairs, improvements, additions and extensions to the City's waterworks and sanitary
sewer system and payment of costs of issuance of the Series 2010A Bonds, all under and
pursuant to Chapter 1502, Texas Government Code, as amended, and an ordinance adopted by
the City on March 22, 2010 (the "Ordinance and other applicable law. Capitalized terms used
herein without definition are defined in the Ordinance.
THIS SERIES 2010A Bond AND THE SERIES OF WHICH IT IS A PART are special
obligations of the City that are payable from and are equally and ratably secured by a first lien on
and pledge of 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 and pledged to the payment of the Outstanding Bonds,
as described in the Ordinance, the Series 2010A Bonds, and all Additional Bonds issued on a
parity therewith, in the Interest and Sinking Fund and the Reserve Fund maintained for the
payment of all such Bonds, all as more fully described and provided for in the Ordinance.
THIS SERIES 2010A BOND AND THE SERIES OF WHICH IT IS A PART ARE
PAYABLE SOLELY FROM SUCH NET REVENUES AND NEITHER THE STATE, NOR
ANY POLITICAL SUBDIVISION OR AGENCY OF THE STATE, SHALL BE OBLIGATED
TO PAY THE SAME OR THE INTEREST THEREON AND NEITHER THE FAITH AND
CREDIT NOR THE TAXING POWER OF THE STATE, THE CITY, OR ANY OTHER
POLITICAL CORPORATION, SUBDIVISION OR AGENCY THEREOF IS PLEDGED TO
THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST ON THE SERIES 2010A
BONDS. THE OWNER HEREOF SHALL NEVER HAVE THE RIGHT TO DEMAND
PAYMENT OF THIS SERIES 2010A BOND OUT OF ANY FUNDS RAISED OR TO BE
RAISED BY AD VALOREM 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 2010A 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 2010A Bonds; the nature and extent
and manner of enforcement of the lien and pledge securing the payment of the Series 2010A
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
A -2
HOU:3002971.3
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 provisions
thereof. Capitalized terms used herein, unless otherwise defined, have the same meanings
assigned in the Ordinance.
THE CITY RESERVES THE RIGHT, at its option, to redeem the Series 2010A Bonds
maturing on September 1, 2020, and thereafter prior to their scheduled maturities, in whole or in
part, in integral multiples of $5,000 on September 1, 2019, or any date thereafter at par plus
accrued interest on the principal amounts called for redemption to the date fixed for redemption.
THE SERIES 2010A BONDS MATURING on September 1 in the year 2035 (the "Term
Bonds are subject to mandatory sinking fund redemption in the following amounts (subject to
reduction as hereinafter provided), on the following dates, in each case at a redemption price
equal to the principal amount of the Series 2010A Bonds or the portions thereof so called for
redemption plus accrued interest to the date fixed for redemption:
Mandatory Redemption Dates Principal Amounts
Term Bonds Maturing September 1, 2035 September 1, 2031
$740,000
September 1, 2032
755,000
September 1, 2033
785,000
September 1, 2034
825,000
September 1, 2035 (maturity)
845,000
The particular Term Bonds to be redeemed shall be selected by the Registrar by lot or other
customary random selection method, on or before July 15 of each year in which Term Bonds are
to be mandatorily redeemed. The principal amount of Term Bonds to be mandatorily redeemed
in each year shall be reduced by the principal amount of such Term Bonds that have been
optionally redeemed on or before July 15 of such year and which have not been made the basis
for a previous reduction.
NOT LESS THAN THIRTY (30) DAYS prior to a redemption date, a notice of
redemption will be sent by U.S. mail, first class postage prepaid, in the name of the City to each
registered owner of a Series 2010A Bond to be redeemed in whole or in part at the address of the
registered owner appearing on the registration books of the Paying Agent/Registrar at the close
of business on the business day next preceding the date of mailing. When Series 2010A Bonds
or portions thereof have been called for redemption and due provision has been made to redeem
the same, the amounts so redeemed shall be payable solely from the funds provided for
redemption, and interest which would otherwise accrue on the Series 2010A Bonds or portions
thereof called for redemption shall terminate on the date fixed for redemption.
4 THIS SERIES 2010A Bond shall not be valid or obligatory for any purpose or be
entitled to any benefit under the Ordinance unless this Bond is authenticated by the Paying
Agent/Registrar by due execution of the authentication certificate endorsed hereon.
4 In the Initial Bond, this paragraph shall read as follows: "THIS SERIES 2010A Bond shall not be valid or
obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Bond is registered by
the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto."
A -3
HOU:3002971.3
THIS SERIES 2010A BOND IS TRANSFERABLE only upon presentation and
surrender at the designated payment 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, subject to the terms and conditions of the Ordinance.
THIS SERIES 2010A BOND IS EXCHANGEABLE at the corporate trust office of the
Paying Agent/Registrar for bonds in the principal amount of $5,000 or any integral multiple
thereof, subject to the terms and conditions of the Ordinance.
THE PAYING AGENT/REGISTRAR IS NOT REQUIRED to accept for transfer or
exchange any Series 2010A Bond called for redemption in whole or in part during the 45 day
period immediately prior to the date fixed for redemption.
THE REGISTERED OWNER of this Series 2010A Bond, by acceptance hereof,
acknowledges and agrees to be bound by all the terms and conditions of the Ordinance.
THE CITY has covenanted in the Ordinance that it will at all times provide a legally
qualified Paying Agent/Registrar for the Series 2010A Bonds and will cause notice of any
change of Paying Agent/Registrar to be mailed to each Registered Owner.
THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY
BONDS, subject to the restrictions contained in the Ordinance, which may be equally and ratably
payable from, and secured by a first lien on and pledge of, the Net Revenues in the same manner
and to the same extent as the Outstanding Bonds, which includes this Series 2010A Bond and the
series of which it is a part.
IT IS HEREBY DECLARED AND REPRESENTED that this Series 2010A Bond has
been 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
Series 2010A Bond have been performed, have existed, and have been done in accordance with
law; that the Series 2010A Bonds do not exceed any statutory limitation; and that provision has
been made for the payment of the principal of and interest on this Series 2010A Bond and all of
the Series 2010A Bonds by the creation of the aforesaid lien on and pledge of the Net Revenues.
IN WITNESS WHEREOF, the City has caused its corporate seal to be impressed or
placed in facsimile hereon and has caused this Series 2010A Bond to be executed by the Mayor
and countersigned by the City Secretary by manual, lithographed, or printed facsimile signatures.
CITY OF PEARLAND, TEXAS
Mayor
(SEAL)
COUNTERSIGNED
City Secretary
HOU:3002971.3
[FORM OF COMPTROLLER'S REGISTRATION CERTIFICATE]
The following form of Comptroller's Registration Certificate shall be attached or affixed
to each of the Series 2010A Bonds initially delivered.
THE STATE OF TEXAS
OFFICE OF THE COMPTROLLER
OF PUBLIC ACCOUNTS
REGISTER NO.
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
W TV
Comptroller of Public Accounts
of the State of Texas
M
HOU:30029713
[FORM OF AUTHENTICATION CERTIFICATE]
The following form of Authentication Certificate shall appear on each of the Series
2010A Bonds.
AUTHENTICATION CERTIFICATE
Registration Date:
This bond is one of the Series 2010A Bonds described in and delivered pursuant to the
within- mentioned Ordinance; and, except for the Series 2010A 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.
WELLS FARGO BANK, N.A.
By:
Authorized Signature:
Date of Authentication:
Met
HOU:3002971.3
[FORM OF ASSIGNMENT]
The following form of assignment shall appear on each of the Series 2010A 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.
f�7:rY�l��i
Signature Guaranteed:
NOTICE: The signature must be guaranteed
by a commercial bank or a member firm of a
national securities exchange. Notarized or
witnessed signatures are not acceptable.
Registered Owner
NOTICE: The signature on this assignment
must correspond with the name of the
Registered Owner as it appears on the face of
the within bond in every particular, without
alteration or enlargement or any change
whatever.
Gail
HOU30029713
PAYING AGENUREGISTRAR AGREEMENT
See Tab 4
HOU:3002971.3
BOND PURCHASE AGREEMENT
See Tab 3
HOU:3002971.3
10,14091 i
PRELIMINARY OFFICIAL STATEMENT
See Tab 5
HOU:3002971.3
EXHIBIT E
OFFICIAL STATEMENT
See Tab 6
HOU:3002971.3
EXHIBIT F
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Article X of this Ordinance:
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Article are as specified below:
The financial statements of the City for the most recently concluded fiscal year.
Accounting Principles
The accounting principles referred to in Article X are the accounting principles described
in the notes to the financial statements referred to in paragraph 1 above.
HOU:3002971.3