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R-2013-184 2013-11-11RESOLUTION NO.R201 3-184 RESOLUTION OF THE CITY OF PEARLAND, TEXAS, APPROVING THE ISSUANCE OF $9,150,000 DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013; APPROVING A BOND RESOLUTION, A PRIVATE PLACEMENT LETTER, AND OTHER DOCUMENTS RELATING TO THE BONDS; MAKING CERTAIN FINDINGS AND CONTAINING OTHER PROVISIONS RELATED THERETO STATE OF TEXAS COUNTIES OF BRAZORIA, FORT BEND AND HARRIS CITY OF PEARLAND WHEREAS, by City Ordinance No. 891, the City of Pearland, Texas (the "City") created Reinvestment Zone Number Two, City of Pearland, Texas (the "Zone") pursuant to Chapter 311, Texas Tax Code (the "TIRZ Act"); and WHEREAS, by Resolution No. 2004-107 adopted by the City Council of the City on June 28, 2004, the City authorized the creation of the Development Authority of Pearland (the "Authority") as a local government corporation pursuant to Subchapter D of Chapter 431, Texas Transportation Code (the "LGC Act"), to aid, assist and act on behalf of the City in the performance of the City's governmental and proprietary functions with respect to the common good and general welfare of the Zone; and WHEREAS, by City Ordinance No. R2004-170, the City authorized an agreement with the Zone and the Authority (the "Tri -Party Agreement"), which sets forth, among other things, the duties and responsibilities of the Authority, the City and the Zone as they relate to reimbursements for Project Costs (as defined in the Indenture) in the Zone, and pursuant to which the City and the Zone have agreed to pay the Authority on an annual basis certain of the Tax Increments (as defined in the Indenture) then available in the Tax Increment Fund (as defined in the Indenture); and WHEREAS, the Tri -Party Agreement authorizes the Authority to issue bonds secured by payments made to the Authority under the Tri -Party Agreement and further authorizes the Authority to issue such bonds for the purpose of making developer reimbursements for Project Costs only with the approval of the City; and WHEREAS, the Authority has previously issued its $13,995,000 Tax Increment Contract Revenue Bonds, Series 2004, (the "Series 2004 Bonds"), its $9,775,000 Tax Increment Contract Revenue Bonds, Series 2005 (the "Series 2005 Bonds"), its $9,970,000 Tax Increment Contract Revenue Bonds, Series 2006 (the "Series 2006 Bonds"), its $15,950,000 Tax Increment Contract Revenue Bonds, Series 2007 (the "Series 2007 Bonds"); its $8,815,000 Tax Increment Contract Revenue Bonds, Series 2009 (the "Series 2009 Bonds") (collectively, the "Refunded Bonds"); HOU:3364762.2 and its $56,915,000 Tax Increment Contract Revenue and Refunding Bonds (the "Series 2012 Bonds"); and WHEREAS, the Authority desires to issue its Tax Increment Contract Revenue Bonds, Series 2013 in the aggregate principal amount of $9,150,000 (the "Bonds") pursuant to a resolution authorizing the issuance of the Bonds (the "Bond Resolution") adopted by the Authority on November 11, 2014, and the Authority desires to use the proceeds from the sale of such Bonds for the purposes of (1) paying Project Costs (which includes amounts owed to developers under certain development agreements and the acquisition and the construction of certain public works and public improvements within the Zone) and (2) paying costs of issuance of the Bonds, all under and pursuant to the authority of the Act and all other applicable law; and WHEREAS none of the proceeds of the Bonds shall be used for the purpose of paying or otherwise providing for educational facilities, and WHEREAS the City Council desires to approve the issuance of the Authority's Tax Increment Contract Revenue Bonds, Series 2013; Now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS THAT: Section 1. Preamble. The facts and recitations set out in the preamble of this Resolution are found to be true and correct and are hereby adopted and made a part hereof for all purposes. Section 2. Approval of Bonds; Authorization of Agreements; Approval of Reimbursements. City Council hereby approves the issuance of the Bonds by the Authority and all reasonable agreements necessary in connection with the issuance of the Bonds, including without limitation the following: the Private Placement Letter with Compass Mortgage Corporation (attached hereto as Exhibit A) and any and all other documents and agreements reasonable and necessary for the Authority to issue the Bonds (collectively, the "Agreements"). City Council hereby reconfirms its prior approval of certain developer reimbursements and acknowledges that a portion of the proceeds from the sale of the Bonds will be used to make such reimbursements. Section 3. Approval of Bond Resolution. City Council hereby approves the Authority's Bond Resolution authorizing the issuance of the Authority's $9,150,000 Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013, a copy of which is attached hereto as Exhibit B. Section 4. Authorization of Other Matters Relating Thereto. The Mayor, City Secretary and other officers and agents of the City are hereby authorized and directed to do any and all things necessary or desirable to carry out the provisions of this Resolution. Section 5. Effective Date. This Resolution shall take effect immediately upon passage. Section 6. Public Meeting. It is officially found, determined and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, 2 HOU:3364762.2 place and subject matter of the public business to be considered at such meeting, including this Resolution, was given all as required by the Texas Government Code, Chapter 551, as amended. 3 HOU:3364762.2 PASSED AND APPROVED this 1 lth day of November, 2013. ATTEST: y Secr ity of Pearland, Texas (SEAL) HOU:3364762.2 Mayor City of Pearland EXHIBIT A Private Placement Letter See Transcript Tab A-1 HOU:3364762.2 EXHIBIT B Bond Resolution See Transcript Tab B-1 HOU:3364762.2 Resolution No. R2013-184 $9,150,000 DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013 November 26, 2013 ANDREWS KURTH STRAIGHT TALK IS GOOD BUSINESS.' • 6 • •• •• VS •..: .w.. .-...I Sofa • art • y. .• .•. •.I d ••. • S .4 1' • •H • •• • Iw 11 'NI. .••I notswomi0111111111M1111111 n • S. •IJ• -.It. .4 ..1••.....I•_. 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Development Authority of Pearland $9,150,000 Tax Increment Contract Revenue Bonds, Series 2013 ANDREWS ATTORNEYS KURTHLLP STRAIGHT TALK IS GOOD BUSINESS ° ALLEN BOONE HUMPHRIES ROBINSON LLP ANDREWS KURTH LLP 3200 SOUTHWEST FREEWAY 600 TRAVIS SUITE 2600 SUITE 4200 HOUSTON, TEXAS 77027 HOUSTON, TEXAS 77002 November 26, 2013 Development Authority of Pearland Pearland, Texas Compass Mortgage Corporation, as Purchaser Houston, Texas We have acted as Co-Bond Counsel to the Development Authority of Pearland (the "Issuer") in connection with the issuance and sale of the Issuer's Tax Increment Contract Revenue Bonds, Series 2013, in the aggregate principal amount of $9,150,000 (the "Bonds") pursuant to the terms of a Trust Indenture dated as of April 30, 2012 (the "Indenture"), between the Issuer and Regions Bank (the "Trustee"), and a Bond Resolution, dated as of October 28, 2013 (the "Resolution"). Except as otherwise indicated, terms defined in the Indenture are used in this opinion with the meanings assigned to them in the Indenture. In our capacity as Co-Bond Counsel, we have participated in the preparation of and have examined a transcript containing certified copies of certain proceedings of the Board of Directors of the Issuer, and certain certificates and other documents of representatives of the City of Pearland, Texas (the "City"), Reinvestment Zone Number Two, City of Pearland, Texas (the "Zone"), Alvin Independent School District ("AISD"), Brazoria County, Fort Bend County, the Issuer, the Trustee, and of others. We have relied upon those certificates as to certain factual matters which we have not independently verified. We have also examined such portions of the Constitution and statutes of the State of Texas, and such applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), court decisions, regulations and published rulings of the Internal Revenue Service, as we have deemed necessary for the purposes of this opinion. Reference is made to an opinion of even date of the City Attorney of the City with respect to, among other matters, the authority of the City to enter into and perform its obligations under the Tri-Party Agreement and the participation agreements with AISD, Brazoria County and Fort Bend County and their authorization, execution, delivery, binding effect and enforceability by and upon the City. Based on the foregoing, and subject to the matters set forth below, we are of the opinion that: 1. The Issuer is duly created and validly existing as a Texas nonprofit local government corporation acting on behalf of the City created pursuant to Chapter 431, Texas Transportation Code, and has the corporate power to adopt the Resolution, enter into and perform the obligations under the Indenture, and issue the Bonds. The transcript of proceedings evidences complete legal authority for the issuance of the Bonds in full compliance with the Constitution and the laws of the State of Texas presently effective. 2. The Indenture and Resolution have been duly authorized by the Issuer, have been duly executed and delivered by the Issuer and constitute valid and binding obligations of the Issuer. By the terms of the Indenture, all of the Issuer's right, title and interest in and to the Pledged Revenues, which include the Contract Tax Increments and the amounts required from time to time to be deposited in or credited to the account of the Debt Service Fund, the Reserve Fund, and the Pledged Revenue Fund created pursuant to the Indenture, together with any investments and reinvestments thereof, have been assigned to the Trustee. 3. The Bonds have been duly authorized, executed, issued and delivered by the Issuer and are the legal and valid obligations of the Issuer. The Bonds are entitled to the benefits and security of the Indenture. The Bonds are payable by the Issuer out of the Pledged Revenues created by the Indenture and the revenues derived therefrom. 4. The Bonds are limited obligations solely of the Issuer and are not general obligations of the Issuer, the State of Texas, Brazoria County, Fort Bend County, the City, AISD, or any other entity. The Issuer has no authority to levy taxes. 5. We have examined executed Bond numbered IB-1. In our opinion, the form of said Bond and its execution is regular and proper. IT IS OUR FURTHER OPINION that: 1. Interest on the Bonds is excludable from gross income of the holders thereof for federal income tax purposes under existing law. 2. Interest on the Bonds is not includable in the alternative minimum tax on individuals and corporations, except that interest on the Bonds will be included in the "adjusted current earnings" of a corporation (other than any S corporation, regulated investment company, REIT, REMIC or FASIT) for purposes of computing its alternative minimum tax liability. In providing such opinions, we have relied on representations of the Issuer, the City, the Issuer's financial advisors, the Zone, and the Purchaser (as defined in the Bond Resolution), with respect to matters solely within the knowledge of the Issuer, the City, the Issuer's financial advisors, the Zone, and the Purchaser, which we have not independently verified, and have assumed continuing compliance with the covenants in the Indenture and Resolution pertaining to those sections of the Code which affect the exclusion from gross income of interest on the Bonds for federal income tax purposes. In the event that such representations or report are determined to be inaccurate or incomplete, interest on the Bonds could become includable in gross income from the date of their original delivery, regardless of the date on which the event causing such inclusion occurs. Except as stated above, we express no opinion as to any federal, state or local tax consequences resulting from the ownership of, receipt or accrual of, interest on, or acquisition, ownership or disposition of, the Bonds. Owners of the Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to financial institutions, property and casualty insurance and life insurance companies, certain S corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, taxpayers owning an interest in a FASIT that holds tax-exempt obligations and individuals otherwise qualifying for the earned income credit. In addition, certain foreign corporations doing business in the United States may be subject to the "branch profits tax" on their effectively-connected earnings and profits (including tax-exempt interest such as interest on the Bonds). The opinions set forth above are based on existing law, which is subject to change. Such opinions further are based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement these opinions to reflect any facts or circumstances that may hereafter come to our attention or to reflect any changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service (the "Service"); rather, such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representations and covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Bonds. If an audit is commenced, in accordance with its current published procedures, the Service is 460483.docx likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted in the Resolution not to take any action, or omit to take any action within its control, that if taken or omitted, respectively, may result in the treatment of interest on the Bonds as includable in gross income for federal income tax purposes. 460483.docx SIGNATURE IDENTIFICATION AND NO-LITIGATION CERTIFICATE THE STATE OF TEXAS § COUNTIES OF BRAZORIA, FORT BEND AND HARRIS § We, the undersigned officers of the Development Authority of Pearland (the "Authority"), certify that we officially signed, by our manual or facsimile signatures, on behalf of the Corporation, the following described bonds, to wit: DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013, dated November 26, 2013, in the original aggregate principal amount of $9,150,000 (the "Bonds"). That the Bonds have been duly and officially executed by the undersigned with their manual or facsimile signatures in the same manner appearing hereon, and the undersigned hereby adopt and ratify their respective signatures in the manner appearing on each of the Bonds, whether in manual or facsimile form, as the case may be, as their own signatures. That on the date of such signing and on the date hereof, we were and are the duly chosen, qualified and acting officers authorized to execute the Bonds. We further certify that no litigation is pending or, to our knowledge, threatened in any court to restrain or enjoin the issuance or delivery of the Bonds, or the levy, collection or application of the sales taxes pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity of the Bonds, the resolution dated November 11, 2013 authorizing the issuance, sale and delivery of the Bonds (the "Resolution"), or contesting the powers of the Corporation or the authorization of the Bonds or the Resolution. We further certify that the information and data contained in the General Certificate dated November 11, 2013, remain true and correct as of this date. HOU:3364886.2 WITNESS OUR HANDS AND THE SEAL OF THE CORPORATION this W6ve .her- a.L , 2013. SIGNATURES TITLE OF OFFICE Chair Secretary Before me, on this day personally appeared the foregoing individuals, known to me to be the persons whose names were subscribed in my presence to the foregoing instrument. Given under my hand and seal of office this day ofjJ ~a , 2013. (Notary Seal) HOU:3364886.2 I V ATTORN EY GENERAL O F TEXAS GREG ABBOTT November 25, 2013 THIS IS TO CERTIFY that the Development Authority of Pearland (the "Issuer"), has submitted the Development Authority of Pearland Tax Increment Contract Revenue Bond, Series 2013 (the "Bond"), in the principal amount of $9,150,000, for approval. The Bond is dated November 15, 2013, numbered I-1, and was authorized by a Resolution of the Issuer passed on November 11, 2013 (the "Resolution"). The Office of the Attorney General has examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Issuer contained in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. We express no opinion relating to the official statement or any other offering material relating to the Bond. Based on our examination, we are of the opinion, as of the date hereof and under existing law, as follows (capitalized terms, except as herein defined, have the meanings given to them in the Resolution): (1) The Bond has been issued in accordance with law and is a valid and binding limited obligation of the Issuer. (2) The Bond is payable from and equally and ratably secured by a lien of the Pledged Revenues, as provided in the Resolution and the Indenture. (3) The Bond does not constitute, within the meaning of any statutory or constitutional provision, an indebtedness, an obligation or a loan of credit of the State of Texas, the City of Pearland, Texas, Alvin Independent School District, Brazoria County, Texas, Fort Bend County, Texas, or any other municipality, county, or other municipal or political corporation or subdivision of the State of Texas. POST OFFICE Box 12548, AUSTIN, TEXAS 78711-2548 TEL: (512) 463-2100 WWW.TEXASATTORNEYGENERAL.GOV An Equal Employment Opportunity Employer • Printed an Recycled Paper Development Authority of Pearland Tax Increment Contract Revenue Bond, Series 2013 - $9,150,000 -Page 2- (4) Neither the State of Texas, the City of Pearland, Texas, Alvin Independent School District, Brazoria County, Texas, Fort Bend County, Texas, nor any other political corporation, subdivision, or agency of the State of Texas shall be obligated to pay the Bond or the interest thereon, and neither the faith and credit nor the taxing power of the State of Texas, the City of Pearland, Texas, Alvin Independent School District, Brazoria County, Texas, Fort Bend County, Texas, or any other political corporation, subdivision, or agency thereof is pledged to the payment of the principal of or interest on such Bond. Therefore, the Bond is approved. Attorney -ral of the State of Texas No. 56308 Book No. 2013-I) ?CH *See attached Signature Authorization OFFICE OF THE ATTORNEY GENERAL § OF THE STATE OF TEXAS § I, GREG ABBOTT, Attorney General for the State of Texas, do hereby authorize the employees of the Public Finance Division of the Office of the Attorney General to affix, a digital image of my signature,' in my capacity as Attorney General, to the opinions issued by this office approving the issuance of public securities by the various public agencies, non-profit corporations, districts, entities, bodies politic or corporate, or political subdivisions of this State as required by law, the opinions approving those contracts designated by the Legislature as requiring the approval of the Attorney General, and the obligations, proceedings and credit agreements required by law to be approved by the Attorney General. The authorized digital image of my signature is attached as Exhibit A and is hereby adopted as my own for the purposes set forth herein. This supercedes any prior signature authorizations for the same purpose. The authority granted herein is to be exercised on those occasions when I am unavailable to personally sign said opinions, and upon the condition that the opinions to which the digital image signature is affixed have been approved by an authorized Assistant Attorney General following the completion of the Public Finance Division's review of the transcripts of proceedings to which the opinions relate. Given under my hand and seal of office at Austin, Texas, this the day of January, III• GREG TT Attorney eral of the State of Texas OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, Anabel Santos , q Bond Clerk FX Assistant Bond Clerk in the office of the Comptroller of the State of Texas, do hereby certify that, acting under the direction and authority of the Comptroller on the 25th day of November 2013 , I signed the name of the Comptroller to the certificate of registration endorsed upon the: Development Authority of Pearland Tax Increment Contract Revenue Bond, Series 2013 , numbered jj dated November 15, 2013 , and that in signing the certificate of registration I used the following signature: IN WITNESS WHEREOF I have executed this certificate this the 25th day of November 2013 . ;7%v( S~ç I, Susan Combs, Comptroller of Public Accounts of the State of Texas, certify that the person who has signed the above certificate was duly designated and appointed by me under authority vested in me by Chapter 403, Subchapter H, Government Code, with authority to sign my name to all certificates of registration, and/or cancellation of bonds required by law to be registered and/or cancelled by me, and was acting as such on the date first mentioned in this certificate, and that the bonds/certificates described in this certificate have been duly registered in the office of the Comptroller, under Registration Number 82681 . GIVEN under my hand and seal of office at Austin, Texas, this the 25th day of November 2013 . SUSAN COMBS Comptroller of Public Accounts of the State of Texas OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, SUSAN COMBS, Comptroller of Public Accounts of the State of Texas, do hereby certify that the attachment is a true and correct copy of the opinion of the Attorney General approving the: Development Authority of Pearland Tax Increment Contract Revenue Bond, Series 2013 numbered of the denomination of $ 9,150,000 , dated November 15, 2013 , as authorized by issuer, interest 3.77 percent, under and by authority of which said bonds/certificates were registered electronically in the office of the Comptroller, on the 25th day of November 2013 , under Registration Number 82681 . Given under my hand and seal of office, at Austin, Texas, the 25th day of November 2013 . Yt- SUSAN COMBS Comptroller of Public Accounts of the State of Texas FEDERAL TAX CERTIFICATE I, the undersigned officer of Development Authority of Pearland (the "Authority"), make this certification for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest to be paid on the Authority's Unlimited Tax Bonds, Series 2013 (the "Bonds"), which are being issued in the aggregate principal amount of $9,150,000 and delivered simultaneously with the delivery of this certificate. I do hereby certify as follows in good faith on the date hereof (the "Issue Date"): 1. Responsible Officer. I am the duly chosen, qualified and acting officer of the Authority for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Authority. I am the officer of the Authority charged, along with other officers of the Authority, with responsibility for issuing the Bonds. 2. Code and Regulations. I am aware of the provisions of sections 141, 148, 149 and 150 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations (the "Regulations") heretofore promulgated under sections 141, 148, 149 and 150 of the Code. This certificate is being executed and delivered pursuant to sections 1.141-1 through 1.141-15, 1.148-0 through 1.148-11, 1.149(b)-1, 1.149(d)-1, 1.149(g)-1, 1.150-1 and 1.150-2 of the Regulations. 3. Definitions. The capitalized terms used in this certificate (unless otherwise defined) that are defined in the resolution authorizing the issuance of the Bonds dated November 11, 2013 (the "Resolution ") shall for all purposes hereof have the meanings therein specified. All such terms defined in the Code or Regulations shall for all purposes hereof have the same meanings as given to those terms in the Code and Regulations unless the context clearly requires otherwise. 4. Reasonable Expectations. The facts and estimates that are set forth in this certificate are accurate. The expectations that are set forth in this certificate are reasonable in light of such facts and estimates. There are no other facts or estimates that would materially change such expectations. In connection with this certificate, the undersigned has to the extent necessary reviewed the certifications set forth herein with other representatives of the Authority as to such accuracy and reasonableness. The undersigned has also relied, to the extent appropriate, on representations set forth in the certificate of Compass Mortgage Corporation (the "Purchaser"), in its capacity as the purchaser of the Bonds, attached hereto as Exhibit A and the representations set forth in the certificate of BOSC, Inc. in its capacity as the financial advisor to the Authority (the "Financial Advisor") attached hereto as Exhibit B. The undersigned is aware of no fact, estimate or circumstance that would create any doubt regarding the accuracy or reasonableness of all or any portion of such documents. 5. Description of Governmental Purpose. The Authority is issuing the Bonds pursuant to the Resolution to provide funds that will be used to finance the project more fully described in the Official Statement for the Bonds (the "Project"), including (a) certain Project Costs as set forth in the Project and Financing Plan and (b) to pay the costs of issuance of the Bonds. 6. Expenditure of Proceeds of the Bonds. The sale proceeds from the issuance of the Bonds will be $9,150,000.00. Such amount represents the stated redemption price at maturity (excluding accrued interest for those Bonds the interest on which is paid at least once annually) of the Bonds of $9,150,000.00. No portion of the purchase price of any of the Bonds is provided by the issuance of any other issue of obligations. (a) The sale proceeds will be expended as follows: (i) The amount of $173,464.00 will be disbursed to pay other costs of issuance on the Bonds. (ii) The amount of $8,976,536.00 will be deposited in the Project Fund and used to pay the costs of the Project. The aggregate amount of the costs of acquisition and construction of the Project is anticipated to be not less than such amount. Any costs of the Project not financed out of original or investment proceeds of the Bonds will be financed out of the Authority's available funds. (b) Reimbursement. Other than to the extent of preliminary expenditures (i.e., architectural, engineering, surveying, soil testing, Bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction, or rehabilitation of the Project, other than land acquisition, site preparation, and similar costs incident to commencement of construction), no portion of the amounts described in paragraph 6 above will be disbursed to reimburse the Authority for any expenditures made by the Authority prior to the date that is 60 days before the earlier of the date hereof or the date the Authority adopted a resolution (the "Declaration"), if any, describing the Project, stating the maximum principal amount of obligations expected to be issued for the Project, and stating the Authority's reasonable expectation on that date that it would reimburse expenditures for costs of the Project with proceeds of an obligation. The Declaration, if any, is not an official intent to reimburse that was declared as a matter of course, or in an amount substantially in excess of the amount expected to be necessary for the Project. The Authority has not engaged in a pattern of failure to reimburse 460240 -2- original expenditures covered by official intents. Such reimbursed portion will be treated as spent for purposes of paragraphs 11 and 15 below. (c) No Working Capital. Except for an amount that does not exceed 5 percent of the sale proceeds of the Bonds (and that is directly related to capital expenditures financed by the Bonds), the Authority will only expend proceeds of the Bonds for (i) costs that would be chargeable to a capital account if the Authority's income were subject to federal income taxation and (ii) interest on the Bonds in an amount that does not cause the aggregate amount of interest paid on all of the Bonds to exceed that amount of interest on the Bonds that is attributable to the period that commences on the date hereof and ends on the later of (A) the date that is three years from the issue date of the Bonds or (B) the date that is one year after the date on which the Project is placed in service. 7. Pre-issuance Accrued Interest. The Bonds are dated the date of delivery. Therefore, Authority will receive from the Purchaser no amount representing accrued interest on the Bonds. 8. Investment Proceeds. The best estimate of the Authority is that investment proceeds resulting from the investment of any proceeds of the Bonds pending expenditure of such proceeds for costs of the Project will be retained in the Construction Fund and disbursed to pay or reimburse Project costs in addition to those described in paragraph 6 above. 9. No Replacement Proceeds. Other than amounts described herein, there are no amounts that have a sufficiently direct nexus to the Bonds or to the governmental purposes of the Bonds that the amounts would have been used for such purpose if the proceeds of the Bonds were not used or to be used for such purpose. (a) No Sinking Funds. Other than to the extent described herein, there is no debt service fund, redemption fund, reserve fund, replacement fund, or similar fund reasonably expected to be used directly or indirectly to pay principal or interest on the Bonds. (b) No Pledged Funds. Other than amounts described herein, there is no amount that is directly or indirectly, other than solely by reason of the mere availability or preliminary earmarking, pledged to pay principal or interest on the Bonds, or to a guarantor of part or all of the Bonds, such that such pledge provides reasonable assurance that such amount will be available to pay principal or interest on the Bonds if the Authority encounters financial difficulty. For purposes of this certification, an amount is treated as so pledged if it is held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of the holders or the guarantor of the Bonds. 460240 -3- (c) No Other Replacement Proceeds . There are no other replacement proceeds allocable to the Bonds because the Authority reasonably expects that the term of the Bonds will not be longer than is reasonably necessary for the governmental purposes of the Bonds. The Bonds would be issued to achieve a debt service savings independent of any arbitrage benefit as evidenced by the expectation that the Bonds reasonably would have been issued if the interest on the Bonds were not excludable from gross income (assuming that the hypothetical taxable interest rate would be the same as the actual tax-exempt interest rate). Furthermore, even if the Bonds were outstanding longer than necessary for the purpose of the Bonds, no replacement proceeds will arise because the Authority reasonably expects that no amounts will become available during the period that the Bonds remain outstanding longer than necessary based on the reasonable expectations of the Authority as to the amounts and timing of future revenues. 10. Yield on the Bonds . For the purposes of this Certificate, the yield on the Bonds is the discount rate that, when used in computing the present value as of the issue date of the Bonds, of all unconditionally payable payments of principal, interest and fees for qualified guarantees on the Bonds, produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of the Bonds as of the issue date. For purposes of determining the yield on the Bonds, the issue price of the Bonds is the sum of the issue prices for each group of substantially identical Bonds, plus pre-issuance accrued interest. For each group of substantially identical Bonds, the issue price is the first price at which a substantial amount (i.e., ten percent) is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of Purchasers and wholesalers). The issue price is based upon the representations of the Purchasers set forth in Exhibit A hereto. No Purchasers discount, issuance costs, or costs of carrying or repaying the Bonds is taken into account for purposes of computing the yield on the Bonds. The yield with respect to the portion of the Bonds subject to optional redemption is computed by treating such Bonds as retired at the stated redemption price at the final maturity date because (a) the Authority has no present intention to redeem prior to maturity the Bonds that are subject to optional redemption; (b) no Bond is subject to optional redemption at any time for a price less than the retirement price at final maturity plus accrued interest; (c) no Bond is subject to optional redemption within five years of the issue date of the Bonds; (d) no Bond subject to optional redemption is issued at an issue price that exceeds the stated redemption price at maturity of such Bond by more than one-fourth of one percent multiplied by the product of the state redemption price at maturity of such Bond and the number of complete years to the first optional redemption date for such Bond; and (e) no Bond subject to optional redemption bears interest at a rate that increases during the term of the Bond. 460240 -4- In the case of that portion of the Bonds subject to mandatory redemption, the yield on the Bonds is calculated by treating the outstanding stated principal amounts payable on the mandatory redemption dates as payments on such dates because the Purchasers have represented that the stated redemption price at maturity of such Bonds does not exceed the issue price of such Bonds by more than one-fourth of one percent multiplied by the product of the stated redemption price at maturity and the number of years to the date of the weighted average maturity (determined by taking into account the mandatory redemption schedule) of such Bonds. The yield on the Bonds, as set forth on Exhibit B, is 3.770563 percent. 11. Project . The Authority has incurred or will incur within six months of the date hereof a binding obligation to a third party which is not subject to any contingencies within the control of the Authority or a related party pursuant to which the Authority is obligated to expend at least five percent of the sale proceeds of the Bonds on the Project. The Authority reasonably expects that work on or acquisition of the Project will proceed with due diligence to completion and that the proceeds of the Bonds will be expended on the Project with reasonable dispatch. The Authority reasonably expects that 85 percent of the sale proceeds of the Bonds will have been expended on the Project prior to the date that is three years after the issue date. Any sale proceeds not expended prior to the date that is three years after the issue date, will be invested at a yield not "materially higher" than the yield on the Bonds, except as set forth in paragraph 15 below. The Authority reasonably expects that any amount derived from the investment of moneys received from the sale of the Bonds and from the investment of such investment income will not be commingled with substantial other receipts or revenues of the Authority and will be expended prior to the date that is three years after the issue date, or one year after receipt of such investment income, whichever is later. Any such investment proceeds not expended prior to such date will be invested at a yield not "materially higher" than the yield on the Bonds, except as set forth in paragraph 13 below. 12. Funds . Pursuant to the Indenture, the Authority created the Pledged Revenue Fund, the Debt Service Fund, the Debt Service Reserve Fund, the Project Fund, the Surplus Fund, and the Rebate Fund. Pledged Revenues (as defined in the Indenture) deposited in the Pledged Revenue Fund shall be applied by the Trustee as follows: (i) to the Debt Service Fund, amounts necessary to make the amounts on deposit therein equal to the interest and principal due in the next twelve-month period; (ii) to the Debt Service Reserve Fund, amounts required to attain the Reserve Requirement; (iii) to the payment of fees and expenses of the Trustee and Paying Agent/ Registrar; and (iv) to the Surplus Fund of the Authority for use by the Authority for any lawful purpose. The Rebate Fund and the Project Fund were created for purposes other than paying debt service on the Bonds. Therefore, in the event that the 460240 -5- Authority encounters financial difficulties, there is no assurance that amounts on deposit in such funds, if any, will be available to pay debt service on the Bonds. (a) Debt Service Fund. The Authority created pursuant to the Indenture the Debt Service Fund to be used primarily to achieve a proper matching of revenues and debt service on the Bonds within each bond year. The Authority expects that the Pledged Revenues and amounts received from investment of moneys held in the Debt Service Fund will be sufficient to pay debt service each year on the Bonds. The portion of the Debt Service Fund which will be depleted by the payment of debt service on the Bonds at least once each bond year, except for a reasonable carryover amount not to exceed the greater of (i) one year's earnings on the Debt Service Fund for the immediately preceding bond year or (ii) one-twelfth of the principal and interest payments on the issue for the immediately preceding bond year, will constitute a bona fide debt service fund and will be treated as a separate fund (the "Bona Fide Portion") for purposes of this Certificate. Amounts, other than proceeds of the Bonds, remaining in the Debt Service Fund, after the annual payment of all principal of and interest and premium, if any, on the Bonds, other than the reasonable carryover amount described in the preceding sentence will be treated for purposes of this Certificate as a separate fund (the "Reserve Portion"). The Authority reasonably expects that the sum of any amounts in the Debt Service Fund which (i) are allocable to such Reserve Portion and the Debt Service Reserve Fund or (ii) are allocable to the Bona Fide Portion, but are not spent for the payment of debt service on the Bonds within 13 months after the date of receipt of such amount, together with the amounts on deposit in the Debt Service Reserve Fund, will not exceed the least of (x) 10 percent of the ten percent of the stated principal amount of the Bonds (or sale proceeds in the event that the amount of original issue discount exceeds two percent multiplied by the stated redemption price at maturity of the Bonds), (y) the maximum annual principal and interest requirements on the Bonds, or (z) 125 percent of the average annual principal and interest requirement on the Bonds, at any time so long as the Bonds are outstanding. To the extent any such accumulations exceed such amount, the excess amount will be invested at a yield not in excess of the yield on the Bonds, except as set forth in paragraph 19 below. (b) Debt Service Reserve Fund. Pursuant to the Indenture, the Authority created the Debt Service Reserve Fund to be used to secure payment of debt service on the bonds in the event that the monies in the Debt Service Fund are insufficient. The Authority will periodically deposit revenues into the Debt Service Reserve Fund in an amount sufficient to cause the balance in the Debt Service Reserve Fund to be at least equal to the Reserve Requirement as defined in the Indenture. The Financial Advisor has represented that such amount is reasonably required as set forth in Exhibit B hereto. Furthermore, to the extent 460240 -6- that the portion of the amount in deposit in the Debt Service Reserve Fund and the Reserve Portion, if any, of the Debt Service Fund allocable to the Bonds in the aggregate exceeds the least of (a) ten percent of the stated principal amount of the Bonds (or sale proceeds in the event that the amount of original issue discount exceeds two percent multiplied by the stated redemption price at maturity of the Bonds), (b) the maximum annual principal and interest requirements of the Bonds, and (c) 125 percent of average annual principal and interest requirements of the Bonds, such excess will be invested in obligations the yield on which is not in excess of the yield on the Bonds, except as set forth in paragraph 19 below. (c) Surplus Fund. Pursuant to the Indenture, any amounts remaining in the Pledged Revenue Fund after payment of debt service on the Bonds, any required transfers to the Debt Service Reserve Fund and payment of any fees and expenses of the Trustee and the Paying Agent/ Registrar are to be deposited into the Surplus Fund and used for any lawful purpose of the Authority. In the event that the Authority encounters financial difficulties, there is no assurance that amounts on deposit in the Surplus Fund will be available for payment of debt service on the Bonds. (d) Rebate Fund. Pursuant to the Indenture, the Authority created a Rebate Fund. As set forth in Section 4.07 of the Indenture, amounts are to be transferred into the Rebate Fund from the Pledged Revenue Fund in the event that a rebate payment is due to the Internal Revenue Service. In the event that the Authority encounters financial difficulties, there is no assurance that amounts on deposit in the Rebate Fund will be available for payment of debt service on the Bonds. 13. Minor Portion. All gross proceeds will be invested in accordance with paragraphs 11 and 12 above. To the extent such amounts remain on hand following the periods set forth in paragraphs 11 and 12 above or exceed the limits set forth in paragraph 12 above, the Authority will invest such amounts at a restricted yield as set forth in such paragraphs; provided, however, that a portion of such amounts, not to exceed in the aggregate the lesser of $100,000 or five percent of the sale proceeds of the Bonds, may be invested at a yield which is higher than the yield on the Bonds. 14. Issue. There are no other obligations which (a) are sold at substantially the same time as the Bonds (i.e., within 15 days), (b) are sold pursuant to the same plan of financing with the Bonds, and (c) will be paid out of substantially the same source of funds as the Bonds. 15. Compliance with Rebate Requirements. (a) General. The Authority has covenanted in the Resolution that it will take all necessary steps to comply with the requirement that "rebatable arbitrage earnings" on the investment of the "gross proceeds" of the Bonds, within the meaning of section 148(f) of the Code be rebated to 460240 -7- the federal government. Specifically, the Authority will (a) maintain records regarding the investment of the "gross proceeds" of the Bonds as may be required to calculate such "rebatable arbitrage earnings" separately from records of amounts on deposit in the funds and accounts of the Authority which are allocable to other bond issues of the Authority or moneys which do not represent "gross proceeds" of any bonds of the Authority, (b) calculate at such intervals as may be required by applicable Regulations, the amount of "rebatable arbitrage earnings," if any, earned from the investment of the "gross proceeds" of the Bonds and (c) pay, not less often than every fifth anniversary date of the delivery of the Bonds and within 60 days following the final maturity of the Bonds, or on such other dates required or permitted by applicable Regulations, all amounts required to be rebated to the federal government. Further, the Authority will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the "gross proceeds" of the Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's-length and had the yield on the issue not been relevant to either party. (b) Two-Year Spending Exception . The Authority hereby makes the elections, if any, set forth below for purposes of the two-year spending exception from arbitrage rebate: DO NOT ELECT ELECT N/A ® q q 1. To use actual facts to apply the provisions of paragraphs (e) through (m) of section 1.148-7 of the Regulations. Section 1.148-7(f) (2) of the Regulations. q q q 2. To exclude earnings on a reasonably required reserve or replacement fund from the definition of "available construction proceeds" for purposes of the spending requirements. Section 1.148-7(i) (2) of the Regulations. q ® q 3. To treat the portion of the Bonds that is not a refunding issue as two, and only two, separate issues, one of which (a) meets the definition of a construction issue and (b) is reasonably expected as of the date hereof to finance all of the construction expenditures to be financed by the Bonds. Section 1.148-7(j) (1) of the Regulations. 460240 -8- q ® q 4. To pay a penalty (the "1-1/2% penalty") to the United States in lieu of the obligation to pay arbitrage rebate on available construction proceeds in the event that the Bonds fail to satisfy any of the semiannual spending requirements for the two-year rebate exception. Section 1.148-7(k) (1) of the Regulations. The Authority reasonably expects that at least 75 percent of the "available construction proceeds" of the Bonds, within the meaning of section 1.148-7(i) of the Regulations, will be allocated to "construction expenditures," within the meaning of section 1.148-7(g) of the Regulations, for property owned by the Authority. 16. Not an Abusive Transaction. (a) General. No action taken in connection with the issuance of the Bonds is or will have the effect of (a) enabling the Authority to exploit, other than during an allowable temporary period, the difference between tax-exempt and taxable interest rates to obtain a material financial advantage (including as a result of an investment of any portion of the gross proceeds of the Bonds over any period of time notwithstanding that, in the aggregate, the gross proceeds of the Bonds are not invested in higher yielding investments over the term of the Bonds), and (b) overburdening the tax-exempt bond market by issuing more bonds, issuing bonds earlier, or allowing bonds to remain outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes of the Bonds, based on all the facts and circumstances. Specifically, (i) the primary purpose of each transaction undertaken in connection with the issuance of the Bonds is a bona fide governmental purpose; (ii) each action taken in connection with the issuance of the Bonds would reasonably be taken to accomplish the governmental purposes of the Bonds if the interest on the Bonds were not excludable from gross income for federal income tax purposes (assuming the hypothetical taxable interest rate would be the same as the actual tax-exempt interest rate on the Bonds); (iii) the proceeds of the Bonds will not exceed by more than a minor portion the amount necessary to accomplish the governmental purposes of the Bonds and will in fact not be substantially in excess of the amount of proceeds allocated to expenditures for the governmental purposes of the Bonds. (b) No Sinking Fund. No portion of the Bonds has a term that has been lengthened primarily for the purpose of creating a sinking fund or similar fund with respect to the Bonds. (c) No Window. No portion of the Bonds has been structured with maturity dates the primary purpose of which is to make available released revenues that will 460240 -9- enable the Authority to make available revenues that may be invested to be ultimately used to pay debt service on another issue of obligations. (d) No Sale of Conduit Loan. No portion of the gross proceeds of the Bonds has been or will be used to acquire, finance, or refinance any conduit loan. 17. No Arbitrage. On the basis of the foregoing facts, estimates and circumstances, it is expected that the gross proceeds of the Bonds will not be used in a manner that would cause any of the Bonds to be an "arbitrage bond" within the meaning of section 148 of the Code and the Regulations. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change such expectations. 18. No Private Use, Payments or Loan Financing. (a) General. The Authority reasonably expects, as of the date hereof, that no action or event during the entire stated term of the Bonds will cause either the "private business tests" or the "private loan financing test," as such terms are defined in the Regulations, to be met. (i) No portion of the proceeds of the Bonds will be used in a trade or business of a nongovernmental person. For purposes of determining use, the Authority will apply rules set forth in applicable Regulations and Revenue Procedures promulgated by the Internal Revenue Service, including, among others, the following rules: (A) Any activity carried on by a person other than a natural person or a state or local governmental unit will be treated as a trade or business of a nongovernmental person; (B) the use of all or any portion of the project financed by the Bonds is treated as the direct use of proceeds; (C) a nongovernmental person will be treated as a private business user of proceeds of the Bonds as a result of ownership, actual or beneficial use of the proceeds pursuant to a lease, or a management or incentive payment contract, or certain other arrangements such as a take-or-pay or other output-type contract; and (D) the private business use test is met if a nongovernmental person has special legal entitlements to use directly or indirectly the Project. The Authority and each developer that may use any portion of the Project during an initial development period reasonably expect on the date hereof to proceed with all reasonable speed to develop each portion of the Project and the property benefited by that portion of the Project and to transfer each such portion of the Project to a governmental person. Each such portion of the Project will in fact be transferred to a governmental person promptly after the property benefited by each such portion of the Project is developed. (ii) The Authority has not taken and will not take any deliberate action that would cause or permit the use of any portion of the Project to change such that such portion will be deemed to be used in the trade or business of a nongovernmental 460240 -10- person for so long as any of the Bonds remains outstanding (or until an opinion of nationally recognized bond counsel is received to the effect that such change in use will not adversely affect the excludability from gross income for federal income tax purposes of interest payable on the Bonds). For this purpose any action within the control of the Authority is treated as a deliberate action. A deliberate action occurs on the date the Authority enters into a binding contract with a nongovernmental person for use of the Project that is not subject to any material contingencies. (iii) All payments of the debt service on the Bonds will be paid from and secured by a generally applicable tax. For this purpose, a generally applicable tax is a tax (A) which is an enforced contribution exacted pursuant to legislative Authority in the exercise of the taxing power that is imposed and collected for the purpose of raising revenue to be used for governmental purposes and (B) which has a uniform tax rate that is applied to all persons of the same classification in the appropriate jurisdiction using a generally applicable manner of determination and collection. No portion of the payment of the debt service on the Bonds will be directly or indirectly derived from payments (whether or not to the Authority or any related party) in respect of property, or borrowed money, used or to be used for a private business use. Furthermore, no portion of the payment of the debt service on the Bonds will be directly or indirectly secured by any interest in property used or to be used for a private business use or payments in respect of property used or to be used for a private business use. (iv) No portion of the proceeds of the Bonds will be directly or indirectly used to make or finance a loan to any person other than a state or local governmental unit. (b) Dispositions of Personal Property in the Ordinary Course. The Authority does not reasonably expect that it will sell or otherwise dispose of personal property components of the Project financed with the Bonds other than in the ordinary course of an established governmental program that satisfies the following requirements: (i) The weighted average maturity of the portion of the Bonds financing personal property is not greater than 120 percent of the reasonably expected actual use of such personal property for governmental purposes; (ii) The reasonably expected fair market value of such personal property on the date of disposition will be not greater than 25 percent of its cost; (iii) Such personal property will no longer be suitable for its governmental purposes on the date of disposition; and (iv) The Authority is required to deposit amounts received from such disposition in a commingled fund with substantial tax or other governmental revenues 460240 -11- and the Authority reasonably expects to spend such amounts on governmental programs within 6 months from the date of commingling. Furthermore, the Authority will not sell or otherwise dispose of all or any portion of the Project in circumstances in which the foregoing requirements are not satisfied unless it has received an opinion of nationally recognized bond counsel to the effect that such disposition will not adversely affect the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. (c) Other Agreements. The Authority will not enter into any agreement with any nongovernmental person regarding the use of all or any portion of the Project during the stated term of the Bonds unless it has received in each and every case an opinion of nationally recognized bond counsel to the effect that such agreement will not adversely affect the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. 19. Weighted Average Maturity. The weighted average maturity of the Bonds is the sum of the products of the issue price of each group of identical Bonds and the number of years to maturity (determined separately for each group of identical Bonds and taking into account mandatory redemptions), divided by the aggregate sale proceeds of the Bonds. 20. Bonds are not Hedge Bonds. Not more than 50 percent of the proceeds of the new money portion 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 Authority reasonably expects that at least 85 percent of the spendable proceeds of the new money portion of the Bonds will be used to carry out the governmental purposes of the Bonds within the three-year period beginning on the date the Bonds are issued. EXECUTION PAGE FOLLOWS 460240 -12- DEVELOPMENT AUTHORITY OF PEARLAND By: Name: Tom Reid Title: Chair Date: November 26, 2013 460240 -13- EXHIBIT A CERTIFICATE OF PURCHASER Compass Mortgage Corporation, an Alabama corporation, is the Purchaser (the "Purchaser") of the Development Authority of Pearland, Texas (the "Authority") Tax Increment Contract Revenue Bonds, Series 2013 in the aggregate principal amount of $9,150,000 (the "Bonds"). I, the undersigned, hereby certify as follows on behalf of the Purchaser: (a) I am the duly chosen, qualified and acting officer of the Purchaser for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Purchaser. I am the officer of the Purchaser charged, with responsibility for the Bonds. (b) The Purchaser has purchased the Bonds from the Issuer for an aggregate purchase price of $9,150,000.00, which price includes no amount of accrued interest. The Purchaser intends to hold the Bonds for investment purposes and not in the capacity of bondhouse, broker, dealer, or similar person or organization acting in the capacity of underwriter or wholesaler. The Bonds is not being offered to the public and is not being issued in exchange for property. The issue price described above is equal to the fair market value of the Bonds on the sale date. For this purpose, the sale date is the first date on which there is a binding contract for the sale or exchange of the Bonds. The Purchaser hereby authorizes the Issuer to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Purchaser hereby authorizes Allen Boone Humphries Robinson LLP to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached. COMPASS MQ.RT AGE, EQRP ATION By: Name: Deb '~LeaI / s e n i or Title: Date: November 26, 2013 B-1 CERTIFICATE OF FINANCIAL ADVISOR I, the undersigned officer of the Financial Advisor, make this certificate for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest on the Bonds. Each capitalized term used herein has the meaning or is the amount, as the case may be, specified for such term in the Federal Tax Certificate to which this Exhibit B is attached (the "Federal Tax Certificate"). I hereby certify as follows as of the Issue Date: 1. I am the duly chosen, qualified and acting officer of the Financial Advisor for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Financial Advisor. I am the officer of the Financial Advisor who has worked with representatives of the Authority in structuring the financial terms of the Bonds. 2. The yield on the Bonds, based on the issue price (including any pre- issuance accrued interest) of $9,150,000.00 is not less than 3.770563 percent. For purposes of this certificate, the term "yield" means that yield which is computed as described in paragraph 10 of the Federal Tax Certificate. The issue price of the Bonds and the bond insurance premium, if any, used in computing yield on the Bonds is based solely on the Issue Price Certificate of the Purchasers attached as Exhibit A to the Federal Tax Certificate. 3. The Financial Advisor computed the weighted average maturity of the Bonds to be 9.605 years, as set forth in paragraph 19 of the Federal Tax Certificate. 4. Based upon the scheduled debt service on the Bonds and the Authority's outstanding bonds, the amount on deposit in the Authority's Debt Service Reserve Fund should be maintained as of the end of the current fiscal year as a balance in the Authority's Debt Service Reserve Fund consistent with accepted standards of prudent fiscal management for similar governmental issuers and in order to provide a reserve against periodic fluctuations in the amount and timing of tax increment revenues collected by the Authority for debt service purposes. Any significant reduction in the amount of the Reserve Requirement would result in a correspondingly higher interest cost to the Authority. 5. To the best of my knowledge the statements set forth in paragraph 16 of the Federal Tax Certificate are true. The Authority may rely on the statements made herein in connection with making the representations set forth in the Certificate and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. Allen Boone I lumphries Robinson LLP also may rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. BOSC, INC. Form 8038-G I Information Return for Tax -Exempt Governmental Obligations (Rev. September 2011) ► Under Internal Revenue Code section 149(e) I OMB No. 1545-0720 ► See separate instructions. Department Revenue n the Treasury Caution: If the issue price is under $100,000, use Form 8038-GC. Internal Revenue Service Reporting Authority If Amended Return, check here ► q 1 Issuer's name 2 Issuer's employer identification number (EIN) Development Authority of Pearland 20-1677972 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a 4 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 5 Report number (For IRS Use Only) 3919 Liberty Drive 3 6 City, town, or post office, state, and ZIP code 7 Date of issue Pearland, Texas 77581 November 26, 2013 8 Name of issue 9 CUSIP number Tax Increment Contract Revenue Bonds, Series 2013 N/A 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information (see 10b Telephone number of officer or other instructions) employee shown on 10a Bill Eisen, City Manager 281-652-1663 JJ Type of Issue (enter the issue price). See the instructions and attach schedule. 11 Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Public safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Environment (including sewage bonds) . . . . . . . . . . . . . . . . . . . . 16 Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Other. Describe ► Streets, sidewalks, utilities, parks 11 12 13 14 15 16 17 18 9,150,000 0.0 19 If obligations are TANS or RANs, check only box 19a . . . . . . . . . . . . . ► q If obligations are BANS, check only box 19b . . . . . . . . . . . . . . . . ► q 20 If obligations are in the form of a lease or installment sale, check box . . . . . . . . ► q — iTiiii Description of Obligations. Complete for the entire issue for which this form is being filed. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield 21 9/1/2029 $ 9,150,000.00 $ 9,150,000.00 9.6049 years 3.7706 % Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . . . 23 Issue price of entire issue (enter amount from line 21, column (b)) . . . . . 24 Proceeds used for bond issuance costs (including underwriters' discount) . . 24 173,464 00 25 Proceeds used for credit enhancement . . . . . . . . . . . . 25 0 00 26 Proceeds allocated to reasonably required reserve or replacement fund . 26 0 00 27 Proceeds used to currently refund prior issues . . . . . . . . . 27 0 00 28 Proceeds used to advance refund prior issues . . . . . . . . . 28 0 24 29 Total (add lines 24 through 28) . . . . . . . . . . . . . . . . . . . . . . . 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) . . . 22 0 00 23 9,150,000 00 29 173,464 00 30 8,976,536 00 Description of Refunded Bonds. Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . . ► N/A years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . . ► N/A years 33 Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) . . . . . . ► N/A 34 Enter the date(s) the refunded bonds were issued ► (MM/DD/YYYY) N/A For Paperwork Reduction Act Notice, see separate instructions. cat. No. 63773S Form 8038-G (Rev, 9-2011) Form 8038-G (Rev. 9-2011) Page 2 Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) . . . . 35 0 00 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . 36a 0 00 Enter the final maturity date of the GIC ► Enter the name of the GIC provider ► 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units . . . . . . . . . . . . . . . . . . . . . . . . 37 0 00 38a If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► q and enter the following information: b Enter the date of the master pool obligation ► c Enter the EIN of the issuer of the master pool obligation ► _ d Enter the name of the issuer of the master pool obligation ► 39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box . . . . ► 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . . . ► 41a If the issuer has identified a hedge, check here ► q and enter the following information: b Name of hedge provider ► C Type of hedge ► d Term of hedge ► 42 If the issuer has superintegrated the hedge, check box . . . . . . . . . . . . . . . . . . . . . ► 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box . . . . . . . . ► 44 If the issuer has established written procedures to monitor the requirements of section 148, check box . . . 45a If some portion of the proceeds was used to reimburse expenditures, check here ► q and enter the amount of reimbursement . . . . . . . . . ► b Enter the date the official intent was adopted ► Under penalties of perjury, I de at I have examined this return and accompanying schedules and statements, and to the best of my knowledge Signature and belief, they are true, correct and co lete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to and process this r urn, to the perso that I e authorized above. Consent ~o" &C I ( 1"z-xx (I Tom Reid, Chair Signature of issuer's authorized representative Date Type or print name and title Paid Print/Type preparer's name Pr s signature Date Check q if PTIN Preparer Tina M. Kyle ) i /2 t,) i3 self-employed P01066476 Use Only Firm's name ► Allen Boone Humphries Robinson LLP Firm's EIN ► 74-3091731 Firm's address ► 3200 Southwest Fwy, Ste 2600, Houston, TX 77027 Phone no. 713-860-6400 Form 8038-G (Rev. 9-2011) LI LI LI PAYING AGENT/REGISTRAR AGREEMENT THIS PAYING AGENT/REGISTRAR AGREEMENT dated as of November 11, 2013 (together with any amendments or supplements hereto, the "Agreement") is entered into by and between the DEVELOPMENT AUTHORITY OF PEARLAND (the "Issuer"), and COMPASS BANK, as paying agent/registrar (together with any successor in such capacity, the "Bank"). WITNESSETH: WHEREAS, the Issuer has duly authorized and provided for the issuance of its Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013 (the "Bonds") to be issued as fully registered bonds. WHEREAS, all things necessary to make the Bonds the valid obligations of the Issuer, in accordance with their terms, will be done upon the issuance and delivery thereof; WHEREAS, the Issuer and the Bank wish to provide the terms under which the Bank will act as Paying Agent to pay the principal of, redemption premium, if any, and interest on the Bonds, in accordance with the terms thereof, and under which the Bank will act as Registrar for the Bonds; and WHEREAS, the Issuer and the Bank have duly authorized the execution and delivery of this Agreement; and all things necessary to make this Agreement the valid agreement of the parties, in accordance with its terms, have been done. NOW, THEREFORE, it is mutually agreed as follows: ARTICLE I. APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.1. Appointment. The Issuer hereby appoints the Bank to act as Paying Agent with respect to the Bonds, to pay to the Registered Owners of the Bonds, in accordance with the terms and provisions of this Agreement and the resolution authorizing the issuance of the Bonds (the "Resolution"), the principal of, redemption premium, if any, and interest on all or any of the Bonds. The Issuer hereby appoints the Bank as Registrar with respect to the Bonds. The Bank hereby accepts its appointment, and agrees to act as Paying Agent and Registrar with respect to the Bonds. Section 1.2. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees set forth in the Bank's fee schedule attached as Exhibit A hereto. HOU:3364897.2 The Bank reserves the right to amend the fee schedule at any time, provided the Bank shall have furnished the Issuer with a written copy of such amended fee schedule at least 75 days prior to the date that the new fees are to become effective. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE II. DEFINITIONS Section 2.1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Bank" means Compass Bank, a commercial bank duly organized and existing under the laws of the United States of America. "Bond" or "Bonds" means any one or all of the "Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013" authorized by the Resolution. "Financial Advisor" means BOSC, Inc. and it's successors. "Issuer" means the Development Authority of Pearland. "Resolution" means the resolution of the Issuer authorizing the issuance of the Bonds. "Paying Agent" means Compass Bank when it is performing the functions of paying agent under this Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government or any entity whatsoever. "Registrar" means the Bank when it is performing the function of registrar under this Agreement. "Registered Owner" means the Person in whose name any Bond is registered in the books of registration maintained by the Bank under this Agreement. All other capitalized terms shall have the meanings assigned to them in the Resolution. 2 HOU:3364897.2 ARTICLE III. DUTIES OF THE BANK Section 3.1. Initial Delivery of the Bonds. The Bonds will be initially registered and delivered by the Bank to the purchaser designated by the Issuer as set forth in the Resolution. If such purchaser delivers a written request to the Bank not later than five business days prior to the date of initial delivery, the Bank will, on the date of initial delivery, exchange the Bonds initially delivered for Bonds of authorized denominations, registered in accordance with the instructions in such request and the Resolution. Section 3.2. Duties of Paying Agent. As Paying Agent and on behalf of the Issuer, the Bank shall, provided adequate funds have been provided to it for such purpose by or on behalf of the Issuer, timely pay on behalf of the Issuer the principal of and interest on each Bond in accordance with the provisions of the Resolution. If the issue is to be Depository Trust Company (DTC) eligible, the Paying Agent will comply with all eligibility requirements as outlined and agreed upon in the eligibility questionnaire. Section 3.3. Duties of Registrar. The Bank shall provide for the proper registration of the Bonds and the timely exchange, replacement and registration of transfer of the Bonds in accordance with the provisions of the Resolution. Any changes to Registered Owners for such exchange, replacement and registration shall be made by the Bank only in accordance with the Resolution. The Bank will maintain the books of registration in accordance with the Resolution and the Bank's general practices and procedures in effect from time to time. Section 3.4. Unauthenticated Obligations. The Issuer shall provide an adequate inventory of unauthenticated Bonds to facilitate transfers. The Bank covenants that it will maintain such unauthenticated Bonds in safekeeping and will use reasonable care in maintaining such Bonds in safekeeping, which shall be not less than the care it maintains for debt securities of other government entities or corporations for which it serves as registrar, or which it maintains for its own bonds. Section 3.5. Reports. Upon request of the Issuer, the Bank will provide the Issuer reports which will describe in reasonable detail all transactions pertaining to the Bonds and the books of registration for the period of time specified by the Issuer. The Issuer may also inspect and make copies of the information in the books of registration and such other documents related to the Bonds and in the Bank's possession at any time the Bank is customarily open for business, provided that HOU:3364897.2 reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the content of the books of registration to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a subpoena, court order or as otherwise required by law. Upon receipt of a subpoena, court order or other lawful request, the Bank will notify the Issuer immediately so that the Issuer may contest the subpoena, court order or other request if it so chooses. Section 3.6. Canceled Obligations. All Bonds surrendered for payment, redemption, transfer, exchange or replacement, if surrendered to the Bank, shall be promptly canceled by it and, if surrendered to the Issuer, shall be delivered to the Bank and, if not already canceled, shall be promptly canceled by the Bank. The Issuer may at any time deliver to the Bank for cancellation any Bonds previously authenticated and delivered which the Issuer may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly canceled by the Bank. All canceled Bonds held by the Bank shall be destroyed and evidence of such destruction shall be furnished to the Issuer. Section 3.7. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank by the Issuer. (b) The Bank shall not be liable to the Issuer for actions taken under this Agreement as long as it acts in good faith and exercises due diligence, reasonableness and care, as prescribed by law, with regard to its duties hereunder. (c) This Agreement is not intended to require the Bank to expend its own funds for performance of any of its duties hereunder. (d) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys. (e) The Bank may rely and shall be protected by the Issuer against any claim by the Issuer or any other Person in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Bond, but is protected in acting upon receipt of a Bond containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the holder or an agent of the holder. The Bank shall not be bound to make any investigation into the acts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security or other paper or document supplied by Issuer. (f) The Bank may consult with legal counsel, and the advice of such counsel or any opinion shall be full and complete authorization and protection with respect to any action taken, 4 HOU:3364897.2 suffered or omitted by it hereunder in good faith and in reliance thereon; provided that any such written advice or opinion is supplied to the Issuer by the Bank. Section 3.8. Money Held by Money held by the Bank hereunder shall be held in trust for the benefit of the Registered Owners of the Bonds. The Bank shall be under no obligation to pay interest on any money received by it hereunder. All money deposited with the Bank hereunder shall be secured in the manner and to the fullest extent required by law for the security of funds of the Issuer. Any money deposited with the Bank for the payment of the principal of or interest on any Bonds and remaining unclaimed by the Registered Owner after the expiration of three years from the date such funds have become due and payable shall be reported and disposed of by the Bank in accordance with the provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. To the extent such provisions of the Property Code do not apply to the funds, such funds shall be paid by the Bank to the Issuer upon receipt of a written request therefor from the Issuer. The Bank shall have no liability to the Registered Owners of the Bonds by virtue of actions taken in compliance with the foregoing provision. The Bank shall deposit all moneys received from the Issuer into a trust account to be held in a fiduciary capacity for the payment of the Bonds, with such moneys in the account that exceed the deposit insurance available by the Federal Deposit Insurance Corporation to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas to secure and be pledged as collateral for trust accounts until the principal and interest on such Bonds have been presented for payment and paid to the Registered Owners. Section 3.9. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 3.10. Interpleader. The Authority and the Escrow Agent agree that the Escrow Agent may seek adjudication of any adverse claim, demands or controversy over its persons as well as funds on deposit in a court of competent jurisdiction within the State of Texas; waive personal service of any process; and agree that service of process by certified or registered mail, return receipt requested, to the address set forth in this Agreement shall constitute adequate service. The Authority and the Escrow Agent further agree that the Escrow Agent has the right to file a bill of interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any person claiming an interest herein. 5 HOU:3364897.2 ARTICLE IV MISCELLANEOUS PROVISIONS Section 4.1. May Own Bonds. The Bank, in its individual or any other capacity, may become the owner or pledgee of Bonds with the same rights it would have if it were not the Paying Agent and Registrar for the Bonds. Section 4.2. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereof. Section 4.3. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 4.4. Notices. Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown herein, or such other address as may have been given by one party to the other by 15 days' written notice. Section 4.5. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 4.6. Successors and Assigns. All covenants and agreements herein by the Issuer and the Bank shall bind their successors and assigns, whether so expressed or not. This Agreement shall not be assigned by the Bank without the prior written consent of the Issuer. Section 4.7 Severability. If any provision of this Agreement shall be invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. Section 4.8. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim hereunder. 6 HOU:3364897.2 Section 4.9. Resolutions Govern Conflicts. This Agreement and the Resolution constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent and Registrar and if any conflict exists between this Agreement and the Resolution, the Resolution shall govern. The Bank agrees to be bound by the terms of the Resolution with respect to the Bonds. Section 4.10. Term and Termination. This Agreement shall be effective from and after its date and will terminate on the date of final payment by the Bank of principal, redemption premium, if any, and interest of the Bonds. This Agreement may be terminated for any reason by the Issuer or the Bank at any time upon 60 days' written notice; provided, however, that no such termination shall be effective until a successor has been appointed and has accepted the duties of the Bank hereunder. In the event of early termination, regardless of circumstances, the Bank shall deliver to the Issuer or its designee all funds, Bonds and all books and records pertaining to the Bank's role as Paying Agent and Registrar with respect to the Bonds, including, but not limited to, the books of registration. Section 4.11. Merger, Conversion, Consolidation or Succession. Any corporation into which the Bank may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion, or consolidation to which the Bank shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Bank shall ipso facto be the successor of the Bank hereunder without the execution or filing of any paper or any further act on the part of either of the parties hereto. In case any Bond shall have been registered, but not delivered, by the Bank then in office, any successor by merger, conversion, or consolidation to such authenticating Bank may adopt such registration and deliver the Bonds so registered with the same effect as if such successor Bank had itself registered the Bonds. Section 4.12. Bank Not a Trustee. This Agreement shall not be construed to require the Bank to enforce any remedy which any Registered Owner may have against the Issuer during any default or event of default under any agreement between any Registered Owner and the Issuer, including the Bond Order or to act as trustee for such Registered Owner. Section 4.13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 4.14. Governing Law. This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Texas. 7 HOU:3364897.2 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. DEVELOPMENT AUTHORITY OF PEARLAND Chair ADDRESS: 3519 Liberty Drive Pearland, Texas 77581 ATTEST: C Secretary HOU:3364897.1 By:_ Name: Title: Debbie-Leap ADDRESS: S-2 HOU:3364897.2 EXHIBIT A FEE SCHEDULE None $0.00 HOU:3364897.2 PAYING AGENT/REGISTRAR'S RECEIPT The undersigned duly authorized representative of Compass Bank, an Alabama banking corporation, paying agent/registrar for the following described bonds: DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013, dated November 15, 2013, in the total authorized aggregate amount of $9,] 50,000, certifies that said bonds have been delivered to the Purchaser, and that the purchase price has been received on behalf of the City. EXECUTED AND DELIVERED this 26th day of November, 2013. COMPASS BANK, an Alabama banking corporation By:~ j=-f Debbie Leal Senior Vice President Title: I IOU:3378030.1 DARRIN M. COKER CITY ATTORNEY TELEPHONE (281) 652-1678 JENIFER K. SMITH LEGAL SECRETARY TELEPHONE (281) 652-1664 TELECOPIER (281) 652-1679 .j 1 1 jam,) November 22, 2013 NGHIEM V. DOAN DEPUTY CITY ATTORNEY TELEPHONE (281) 652-1665 LAWRENCE G. PROVINS ASSISTANT CITY ATTORNEY II TELEPHONE (281) 652-1666 KATIE A. LEININGER ASSISTANT CITY ATTORNEY I TELEPHONE (281) 997-5918 Development Authority of Pearland Compass Mortgage Corporation Re: $9,150,000 Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013 (the "Bonds") Ladies and Gentlemen: I have reviewed: (i) City of Pearland Ordinance No. 891, creating Reinvestment Zone Number Two, City of Pearland, Texas (the "Zone"), (ii) City of Pearland Ordinance No. 918, approving the Project Plan and Reinvestment Zone Financing Plan (the "Project Plan"), (iii) City of Pearland Resolution No. 2004-107, authorizing the incorporation of the Development Authority of Pearland (the "Authority"), (iv) City of Pearland Ordinance No. 1276, approving the Enlarging of the Boundaries of the Zone, Amending the Project Plan, (v) City of Pearland Ordinances No. 1312 and 1313 enlarging the Zone, (vi) City of Pearland Ordinances No. 1312 and 1314 amending the Project Plan, and (vii) the City of Pearland Resolution No.2 01 3-1 3-_1a4 authorizing the issuance of the Bonds (together with the above-mentioned ordinance and resolution, the "Ordinances and Resolutions"), (viii) that certain Agreement by and between City of Pearland, Texas (the "City"), the Zone, and the Authority as approved by the City Council by Ordinance No. R2004-170, as amended by City Resolution No. R2007-143 (the "Tri-Party Agreement"), (ix) that certain Interlocal agreement approved by the City by Resolution No.R99- 45 adopted by the City Council on June 14, 1999, by and between the City, the Zone, and Alvin Independent School District (the "AISD Agreement"), (x) that certain Interlocal Agreement approved by the City by Resolution No. R99-62 adopted by the City Council on August 30, 1999, by and between the City, the Zone, and Brazoria County, as amended by a First Amendment approved by the City by Resolution No. R2006-181 (the "Brazoria Agreement"), and (xi) that certain Interlocal Agreement approved by the City by Resolution No. R99-57 adopted by the City Council on August 9, 1999, as amended by a First Amendment approved by the City by Resolution No. R2006-182 (the "Fort Bend Agreement", and together with the Tri- Party Agreement, the AISD Agreement and the Brazoria Agreement, the "Agreements"). I have also conducted such other investigations of fact and law as I have found necessary or advisable for purposes of this opinion. As the City Attorney, I am also aware of litigation and other legal matters related to the City that come to my attention in the performance of my duties. 3519 LIBERTY DRIVE • PEARLAND, TEXAS 77581-5416 • 281-652-1600 e www.ci.pearland.tx.us ~.® Printed on Recycled Paper November 26, 2013 Based on such review, I am of the opinion that: 1. The City is a home rule city duly organized and existing under the Constitution and laws of the State of Texas with full power and authority, among other things, (i) to adopt and perform its duties and obligations under the Agreements, and (ii) to collect and transfer to the Authority the tax increments described in the Tri-Party Agreement. 2. The Agreements have been duly authorized, executed and delivered by, and the Ordinances and Resolutions have been duly adopted by, the City, and assuming due authorization, execution and delivery by other parties thereto, such instruments constitute legal, valid and binding obligations of the City enforceable in accordance with their terms, except to the extent that their enforceability may be limited by applicable provisions of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions generally, and except that such enforceability is subject to general principles of equality and the exercise of judicial discretion (regardless of whether such enforceability is considered in a proceeding in law or equity). 3. To my knowledge, compliance with the provisions of the Agreements and the Ordinances and Resolutions does not conflict with or constitute a breach of or default under, any applicable law, administrative regulation, court order or consent decree of the State of Texas or any department, division, agency, or instrumentality thereof or any loan agreement, note, resolution, indenture, agreement or other instrument to which the City is a party. 4. All approvals, consents and orders of any governmental authority, board, agency, or commission having jurisdiction which would constitute conditions precedent to the performance by the City of its obligations under the Agreements and Ordinances and which reasonably can be obtained at this time have been obtained. 5. Except as disclosed in writing by the City to the addresses on or prior to the date of the sale of the Bonds, there is no litigation or proceeding against the City, pending or to my knowledge, after due inquiry, threatened, in any way contesting or affecting the validity or enforceability of the Agreements or the Ordinances and Resolutions, or contesting the powers of the City or its authority with respect to the Ordinances and Resolutions or the Agreements. In making the above statements, I have not reviewed the dockets of courts or relevant administrative agencies nor have I contacted such courts or agencies; I have relied solely on information brought to my attention as City Attorney as of the date of this letter. The information set herein is as of the date of this letter, and I disclaim any undertaking to advise you of changes which thereafter may be brought to my attention. This letter is solely for your information in connection with the sale of the Bonds and may not be relied upon by any other person without my prior written consent. It is not to be quoted in whole or in part or otherwise referred to in any documents, except for a closing list or transcript of the proceedings related to the issuance of the Bonds, including a transcript submitted to the Attorney General of the State of Texas, and is not to be filed with or furnished to any other governmental entity or person, November 26, 2013 without my prior written consent. The opinions herein expressed and the statements herein made are limited in all respects to the laws of the State of Texas and applicable federal law. Sincerely yours, Darrin Coker City Attorney CLOSING CERTIFICATE Re: Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013 The undersigned is the duly acting Chairman of the Board of Directors of the Development Authority of Pearland (the "Authority"). Pursuant to the Investment Letter between Compass Mortgage Corporation, an Alabama corporation (the "Purchaser") and the Authority, dated November 11, 2013, relating to the sale and purchase of the captioned Bonds (the "Bonds"), I hereby certify as follows: No litigation is pending against, nor to the best of my knowledge, threatened against the Authority contesting or attacking the Bonds; restraining or enjoining the authorization, execution, or delivery of the Bonds; affecting the provisions made for the payment of or security for the Bonds; in any manner questioning the authority of proceedings for the authorization, execution or delivery of the Bonds; or affecting the validity of the Bonds, the Bond Resolution, the Indenture, the corporate existence of the Authority, or the titles of the present directors of the Board. [Execution Page Follows] HOU:3364940.2 DEVELOPMENT AUTHORITY OF PEARLAND Dated: November a , 2013 By: _ Chairman, Board of Directors HOU:3364940.2 CERTIFICATE OF ABSENT DIRECTOR STATE OF TEXAS COUNTIES OF BRAZORIA, FORT BEND AND HARRIS CITY OF PEARLAND I, the undersigned, was a Director of the Board of Directors (the "Board") of the Development Authority of Pearland at the time that a special meeting of the Board was held on November 11, 2013, which meeting I did not attend, and at which meeting the Board adopted the following resolution: RESOLUTION AUTHORIZING THE ISSUANCE OF $9,150,000 DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013; APPROVING DOCUMENTS RELATING TO THE SERIES 2013 BONDS; AND CONTAINING OTHER PROVISIONS RELATED THERETO I hereby acknowledge that sufficient notice of such meeting was given to me and hereby waive any other notice to which I otherwise may have been entitled. WITNESS MY HAND THIS , 2013. 7 F Signature: Name: t i,' !,',-, I-IOU:3374083.1 November 26, 2013 without my prior written consent. The opinions herein expressed and the statements herein made are limited in all respects to the laws of the State of Texas and applicable federal law. Sincerely yours, Darrin Coker City Attorney John Robuck Vice President 1401 McKinney Street, Suite 1650 Houston, Texas 77010 Phone: (713) 289-5897 Email: jrobuck@boscinc.com boscinc.com November 21, 2013 Debbie Leal Senior Vice President BBVA Compass Bank BBVA Compass Plaza 2200 Post Oak Blvd., 20th Floor Houston, Texas 77056 RE: Development Authority of Pearland $9,150,000 Tax Increment Contract Revenue Bonds, Series 2013 (the "Bonds") Dear Ms. Leal: The delivery of the above referenced bonds is scheduled for Tuesday, November 26, 2013 at 10:00 a.m. at your bank at the above captioned address. Tanya Fischer of Andrews Kurth LLP, Houston, Texas, Bond Counsel, will be handling legal matters relating to the closing. At closing, Compass Mortgage Corporation, An Alabama Corporation will have $9,150,000.00 in immediately available funds ready to disburse as follows: 1. $8,979,376.00 (representing $8,975,000.00 in Project Fund Proceeds and $4,376.00 for Costs of Issuance) shall be wired, as follows: Wells Fargo Bank Account Name: Development Authority of Pearland ABA #: 121-000-248 Account #: 1007284258 2. $61,650.00 (representing $52,500.00 in Co-Bond Counsel fees and expenses and $9,150.00 in Attorney General Fees) shall be wired to Andrews Kurth LLP in consideration of their role of Co-Bond Counsel as described below: JPMorgan Chase Bank ABA #: 113 000 609 Account #: 00100184952 Attn: Tiffany Sanders (713) 750-3725 Reference: 10623666, 0021230 / 211777 Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013 Page 2 3. $52,500.00 shall be wired to Allen Boone Humphries Robinson LLP in consideration for their role as Co- Bond Counsel as described below: Allen Boone Humphries Robinson LLP c/o Amegy Bank of Texas P.O. Box 27459 Houston, Texas 77227 ABA #: 113 011 258 Account #: 3280756 4. $51,660.00 shall be wired to BOSC, Inc. in consideration of their role as Financial Advisor as described below: Bank of Oklahoma, N.A. ABA #: 1039-0003-6 FBO: BOSC, Inc. Account #: 473549335 Reference: Development Authority of Pearland Attn. Andrea White (405.272.2438) 5. $3,500.00 representing Bank Counsel fees and expenses shall be wired to Fulbright & Jaworski LLP as described below: Account Name: Fulbright & Jaworski LLP Bank Name: Bank of America Bank Address: Dallas, Texas 75250 Wire Routing Number: 026009593 ACH Routing Number:: 111000025 SWIFT Number: BOFAUS3N Account Number: 488040284929 References: Matter No. 11205918; Attorney Name: Marcus W. Deitz 6. $1,314.00 shall be withdrawn by BBVA Compass Bank from the proceeds of the Bonds to pay the MAC Underwriting Assessment Fee. Please contract me should you have any questions regarding this matter, or if I may be of any further assistance. Respectfully submitted, John Robuck Vice President BOSC, Inc. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013 Page 3 Cc: Bill Eisen, City of Pearland, Texas Claire Bogard, City of Pearland, Texas Rick Witte, Andrews Kurth LLP Tanya Fischer, Andrews Kurth LLP Gregg Jones, Andrews Kurth LLP Lynne Humphries, Allen Boone Humphries Robinson LLP Trey Lary, Allen Boone Humphries Robinson LLP Jessica Holoubek, Allen Boone Humphries Robinson LLP Sylvia Moore, Allen Boone Humphries Robinson LLP Marcus Deitz, Fulbright & Jaworski LLP Ryan O'Hara, BOSC, Inc. Andrea White, BOSC, Inc. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. Development Authority of Pearland, Texas Current Debt plus New Debt FINAL NUMBERS -Tax Increment Contract Revenue Bonds, Series 2013 Dated Date 1112612013 Series 2013 Delivery Date 11/26/1013 New Interest Interest Year Current Principal @ 3.770% @ 3.770% Total Total New Total Debt Ending Debt Due Due Due New Principal Service 09/30 Requirement 09/01 03/01 09/01 Interest & Interest Requirement 2014 4,381,511 430,000 91,030 172,478 263,507 693,507 5,075,018 2015 4,380,551 365,000 164,372 164,372 328,744 693,744 5,074,295 2016 4,376,981 380,000 157,492 157,492 314,984 694,984 5,071,965 2017 4,385,802 385,000 150,329 150,329 300,658 685,658 5,071,460 2018 4,381,553 405,000 143,072 143,072 286,143 691,143 5,072,696 2019 4,379,541 420,000 135,437 135,437 270,875 690,875 5,070,416 2020 4,144,613 445,000 127,520 127,520 255,041 700,041 4,844,654 2021 4,143,829 465,000 119,132 119,132 238,264 703,264 4,847,093 2022 3,887,745 735,000 110,367 110,367 220,734 955,734 4,843,479 2023 4,090,400 560,000 96,512 96,512 193,024 753,024 4,843,424 2024 4,060,200 615,000 85,956 85,956 171,912 786,912 4,847,112 2025 4,026,200 670,000 74,363 74,363 148,727 818,727 4,844,927 2026 3,998,400 725,000 61,734 61,734 123,468 848,468 4,846,868 2027 3,966,400 785,000 48,068 48,068 96,135 881,135 4,847,535 2028 3,930,200 850,000 33,270 33,270 66,541 916,541 4,846,741 2029 3,894,800 915,000 17,248 17,248 34,496 949,496 4,844,296 Totals $66,428,726 $9,150,000 $1,615,902 $1,697,350 $3,313,253 $12,463,253 $78,891,979 NEW13: Dated Date: 11/26/2013 Principal Due Dates: 09/01/2014 - 09/01/2029 Maturing Amount: 9,150,000.00 DAP 2012: NEW13 CSHPRIOR Prepared by: BOSC, Inc. - Houston, Texas (713) 289-5897 {JHR) 11/07/2013 @ 13:15 v9.69 Page-1 Development Authority of Pearland, Texas Sources & Uses Report FINAL NUMBERS -Tax Increment Contract Revenue Bonds, Series 2013 Sources of Funds: Principal Amount of Current Interest Bonds (CIBs) 9,150,000.00 Total SOURCES of Funds $9,150,000.00 Uses of Funds: Deposit to Construction Fund 8,975,000.00 Issuance Expenses: ($173,464.00) Co-Bond Counsel (Allen Boone) 52,500.00 Co-Bond Counsel (Andrews Kurth) 52,500.00 Trustee 500.00 Financial Advisory 52,000.00 Attorney General 9,150,00 Miscellaneous 2,000.00 Bank Counsel Fees 3,500.00 MAC UW Assessment Fee 1,314.00 Rounding Amount 1,536.00 Total USES of Funds $9,150,000.00 Miscellaneous Bond Issuance Information: Delivery Date: 11/26/2013 Principal Amount of the New Money Bonds 9,150,000.00 Proceeds of "The (new) Bonds" 9,150,000.00 "All Costs Included" TIC on the New Issue is 4.01955431% Federal Arbitrage Yield on the New Issue is 3.77056287% DAP_2012: RUN13 NEW13 Prepared by: BOSC, Inc. - Houston, Texas (713) 289-5897 (JHR) 11/07/2013 @ 13:15 v9.69 Page -2 Development Authority of Pearland, Texas FINAL NUMBERS -Tax Increment Contract Revenue Bonds, Series 2013 Dated Date = 1112 612 01 3 Series 2013 Delivery Date = 11/26/2013 Term Bond Bond Coupon Interest Total Fiscal Year Debt Service Dates Maturities Redemptions Proceeds Rate Yield Price Amount Debt Service Debt Service to Call 03/01/2014 - - - - - - 91,029.79 91,029.79 - 91,029.79 09/01/2014 - 430,000.00 430,000.00 3.770 3.770000 100.000000 172,477.50 602,477.50 693,507.29 602,477.50 03/01/2015 - - - - - - 164,372.00 164,372.00 - 164,372.00 09/01/2015 - 365,000.00 365,000.00 3.770 3.770000 100.000000 164,372.00 529,372.00 693,744.00 529,372.00 03/01/2016 - - 157,491.75 157,491.75 157,491.75 09/01/2016 - 380,000.00 380,000.00 3.770 3.770000 100.000000 157,491.75 537,491.75 694,983.50 537,491.75 03/01/2017 - - - - - - 150,328.75 150,328.75 - 150,328.75 09/01/2017 - 385,000.00 385,000.00 3.770 3.770000 100.000000 150,328.75 535,328.75 685,657.50 535,328.75 03/01/2018 - - - - - - 143,071.50 143,071.50 - 143,071.50 09/01/2018 - 405,000.00 405,000.00 3.770 3.770000 100.000000 143,071.50 548,071.50 691,143.00 548,071.50 03/01/2019 - - - - - - 135,437.25 135,437.25 - 135,437,25 09/01/2019 - 420,000.00 420,000.00 3.770 3.770000 100.000000 135,437.25 555,437.25 690,874.50 555,437.25 03/01/2020 - - - - - - 127,520.25 127,520.25 - 127,520.25 09/01/2020 - 445,000.00 445,000.00 3.770 3.770000 100.000000 127,520.25 572,520.25 700,040.50 572,520.25 03/01/2021 - 119,132.00 119,132.00 119,132.00 09/01/2021 - 465,000.00 465,000.00 3.770 3.770000 100.000000 119,132.00 584,132.00 703,264.00 584,132.00 03/01/2022 - - - - - - 110,366.75 110,366.75 - 110,366.75 09/01/2022 - 735,000.00 735,000.00 3.770 3.770000 100.000000 110,366.75 845,366.75 955,733.50 845,366.75 03/01/2023 - - - - - - 96,512.00 96,512.00 - 96,512.00 09/01/2023 560,000.00 560,000.00 3.770 3.770000 100.000000 96,512.00 656,512.00 753,024.00 5,216,512.00 03/01/2024 - - - - - - 85,956.00 85,956.00 - - 09/01/2024 - 615,000.00 ' 615,000.00 3.770 3.770000 100.000000 85,956.00 700,956.00 786,912.00 - 03/01/2025 - - - - - - 74,363.25 74,363.25 - - 09/01/2025 - 670,000.00 ' 670,000.00 3.770 3.770000 100.000000 74,363.25 744,363.25 818,726.50 03/01/2026 61,733.75 61,733.75 09/01/2026 - 725,000.00 ' 725,000.00 3.770 3.770000 100.000000 61,733.75 786,733.75 848,467.50 - 03/01/2027 - - - - - - 48,067.50 48,067.50 - 09/01/2027 - 785,000.00 ' 785,000.00 3,770 3.770000 100.000000 48,067.50 833,067.50 881,135.00 - 03/01/2028 - - - - - - 33,270.25 33,270.25 - 09/01/2028 - 850,000.00 ' 850,000.00 3.770 3.770000 100.000000 33,270.25 883,270.25 916,540.50 03/01/2029 - - - - - - 17,247.75 17,247.75 - - 09/01/2029 - 915,000.00 ' 915,000.00 3.770 3.770000 100.000000 17,247.75 932,247.75 949,495.50 Total - 9,150,000.00 9,150,000.00 3,313,248.79 12,463,248.79 12,463,248.79 11,821,971.79 Acc Int - - - - - - Grand Ttls 9,150,000.00 9,150,000.00 3 313 248.79 12 463 248.79 12 463 248.79 11 821 971.79 ' - Bonds callable ... 09/01/2023@100.000 TIC (Intl. all expenses) .... 4.01955431% Average Coupon ....... 3.77000000% TIC (Arbitrage TIC) ......... 3,77056287% Average Life (yrs) ... 9.60 IRS Form 8038 -G NIC = 3.770000% (with Adjstmnt of $0.00). Bond Years .................. 87,884.58 WAM (yrs) ............. 9.604872 NIC = 3.770000% (with Adjstmnt of $0.00). CAP 2012: NEW13 Prepared by: BOSC, Inc. - Houston, Texas (713) 289-5897 (JHR) 11/07/2013 @ 13:15 v9.69 Page-3 Development Authority of Pearland, Texas Proof of Federal Arbitrage Yield FINAL NUMBERS -Tax Increment Contract Revenue Bonds, Series 2013 Dated Date 11/2612013 Series 2013 Delivery Oath 11/26/2013 Proceeds to: Interest to: Recoverable, Disc Term BAB Total PV of Adj D/S Face Bondholder(+) Bondholder(+) Recurring Total Bond Adjstmt "Direct Pymt" Adjusted to 11/26/2013 Dates Amounts Issuer(-) Issuer(-) Fees Debt Service for Yld Calc Adjustment Cash Flow 3.77056287% 11/26/2013 0.00 -9,150,000.00 0.00 0.00 0.00 0.00 0.00 -9,150,000.00 -9,150,000.00 03/01/2014 0.00 0.00 91,029.79 0.00 91,029.79 0.00 0.00 91,029.79 90,136.88 09/01/2014 430,000.00 430,000.00 172,477.50 0.00 602,477.50 0.00 0.00 602,477.50 585,528.91 03/01/2015 0.00 0.00 164,372.00 0.00 164,372.00 0.00 0.00 164,372.00 156,792.00 09/01/2015 365,000.00 365,000.00 164,372.00 0.00 529,372.00 0.00 0.00 529,372.00 495,616.29 03/01/2016 0.00 0.00 157,491.75 0.00 157,491.75 0.00 0.00 157,491,75 144,720.80 09/01/2016 380,000.00 380,000.00 157,491.75 0.00 537,491.75 0.00 0.00 537,491.75 484,767.52 03/01/2017 0.00 0.00 150,328.75 0.00 150,328.75 0.00 0.00 150,328.75 133,073.72 09/01/2017 385,000.00 385,000.00 150,328.75 0.00 535,328.75 0.00 0.00 535,328.75 465,113.96 03/01/2018 0.00 0.00 143,071.50 0.00 143,071.50 0.00 0.00 143,071.50 122,005.80 09/01/2018 405,000.00 405,000.00 143,071.50 0.00 548,071.50 0.00 0.00 548,071.50 458,725.76 03/01/2019 0.00 0.00 135,437.25 0.00 135,437.25 0.00 0.00 135,437.25 111,260.91 09/01/2019 420,000.00 420,000.00 135,437.25 0.00 555,437.25 0.00 0.00 555,437.25 447,845.29 03/01/2020 0.00 0.00 127,520.25 0.00 127,520.25 0.00 0.00 127,520.25 100,916.16 09/01/2020 445,000.00 445,000.00 127,520.25 0.00 572,520.25 0.00 0.00 572,520.25 444,693.69 03/01/2021 0.00 0.00 119,132.00 0.00 119,132.00 0.00 0.00 119,132.00 90,821.17 09/01/2021 465,000.00 465,000.00 119,132.00 0.00 584,132.00 0.00 0.00 584,132.00 437,077.26 03/01/2022 0.00 0.00 110,366.75 0.00 110,366.75 0.00 0.00 110,366.75 81,053.92 09/01/2022 735,000.00 735,000.00 110,366.75 0.00 845,366.75 0.00 0.00 845,366.75 609,353.74 03/01/2023 0.00 0.00 96,512.00 0.00 96,512.00 0.00 0.00 96,512.00 68,280.11 09/01/2023 560,000.00 560,000.00 96,512.00 0.00 656,512.00 0.00 0.00 656,512.00 455,873.23 03/01/2024 0.00 0.00 85,956.00 0.00 85,956.00 0.00 0.00 85,956.00 58,582.27 09/01/2024 615,000.00 615,000.00 85,956.00 0.00 700,956.00 0.00 0.00 700,956.00 468,888.17 03/01/2025 0.00 0.00 74,363.25 0.00 74,363.25 0.00 0.00 74,363.25 48,823.11 09/01/2025 670,000.00 670,000.00 74,363.25 0.00 744,363.25 0.00 0.00 744,363.25 479,667.78 03/01/2026 0.00 0.00 61,733.75 0.00 61,733.75 0.00 0.00 61,733.75 39,045.13 09/01/2026 725,000.00 725,000.00 61,733.75 0.00 786,733.75 0.00 0.00 786,733.75 488,382.96 03/01/2027 0.00 0.00 48,067.50 0.00 48,067.50 0.00 0.00 48,067.50 29,286.86 09/01/2027 785,000.00 785,000.00 48,067.50 0.00 833,067.50 0.00 0.00 833,067.50 498,184.27 03/01/2028 _ 0.00 0.00 33,270.25 0.00 33,270.25 0.00 0.00 33,270.25 19,527.85 09/01/2028 850,000.00 850,000.00 33,270.25 0.00 883,270.25 0.00 0.00 883,270.25 508,839.16 03/01/2029 0.00 0.00 17,247.75 0.00 17,247.75 0.00 0.00 17,247.75 9,752.32 09/01/2029 915,000,00 915,000.00 17,247.75 0.00 932,247.75 0.00 0.00 932,247.75 517,363.00 Totals 9,150,000.00 0.00 3,313,246.79 0.00 12,463,248.79 0.00 0.00 3,313,248.79 0.00 Plus PV of Bond Insurance .......... 0.00 0.00 DAP 2012: NEW13 Prepared by: BOSC, Inc. - Houston, Texas (713) 289-5897 (JHR) 11/07/2013 @ 13:15 v9.69 Page-4 Development Authority of Pearland, Texas Partial Form 8038-G Report (Rev. 11-2000) FINAL NUMBERS -Tax Increment Contract Revenue Bonds, Series 2013 Dated Date = 11126/2013 Series 2013 Delivery Date = 11/2612013 Part Ill Description of Obliqations. (Complete for the entire issue for which this form is being filed.) (a) Final maturity date (b) Issue price (c) Stated redemption (d) Weighted (e) Yield price at maturity average maturity 21 09/01/2029 $9150000.00 $9,150,000.00 9.605 years 3.770563% Part IV Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest 22 0.00 23 Issue price of entire issue (enter amount from line 21, column (b)) 23 9,150,000.00 24 Proceeds used for bond issuance costs (including underwriters' discount) 24 173,464.00 ## 25 Proceeds used for credit enhancement 25 0.00 ## 26 Proceeds allocated to reasonably required reserve or replacement fund 26 0.00 ## 27 Proceeds used to currently refund prior issues 27 0.00 ## 28 Proceeds used to advance refund prior issues 28 0.00 ## 29 Total (add lines 24 through 28) 29 173,464.00 30 Wonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) 30 8,976,536.00 in V Description of Refunded Bonds (Complete this part only for refunding bonds.) 31 Enter the remaining weighted average maturity of the bonds to be currently refunded => 0.0000 years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded => 0.0000 years 33 Enter the last date on which the refunded bonds will be called => 34 Enter the date(s) the refunded bonds were issued See each Issue's O/S DAP 2012: RUN13 NEW13 Prepared by: BOSC, Inc. - Houston, Texas (713) 289-5897 (JHR) 11/07/2013 @ 13:15 v9.69 Page-5 Development Authority of Pearland, Texas Issuance Expenses for NEW13 FINAL NUMBERS - Tax Increment Contract Revenue Bonds, Series 2013 Expenses for NEW13 Expense Raises Exp has no Expense Title Type Units Arb Yield Affect Total on Arb Yield Underwriter's Discount V 0.000000 0.00 0.00 0.00 Rating Agency F 0.00 0.00 0.00 0.00 Co-Bond Counsel (Allen Boone) F 52,500.00 0.00 52,500.00 52,500.00 Co-Bond Counsel (Andrews Kurth) F 52,500.00 0.00 52,500.00 52,500.00 Printing F 0.00 0.00 0.00 0.00 Trustee F 500.00 0.00 500.00 500.00 Bond Insurance D 0.000000 0.00 0.00 0.00 Financial Advisory F 52,000.00 0.00 52,000.00 52,000.00 Attorney General V 1.000000 0.00 9,150.00 9,150.00 Miscellaneous F 2,000.00 0.00 2,000.00 2,000.00 Bank Counsel Fees F 3,500.00 0.00 3,500.00 3,500.00 MAC UW Assessment Fee F 1,314.00 0.00 1,314.00 1,314.00 Totals $0.00 $173,464.00 $173,464.00 Type: F- Fixed Expense V- Variable Expense Based on Issue Size D - Variable Expense Based on Total Debt Service E - Variable Expense Based on Total Debt Service Less Accrued Interest R - Variable Expense Based on Reserve Fund Requirement DAP_2012: EXP13 Prepared by: BOSC, Inc. - Houston, Texas (713) 289-5897 (JHR) 11/07/2013 @ 13:15 v9.69 Page-6 4.143.160) 1998 Base Year Value: (3,029.820) ,258.678,475 Es(inened Captured Value: 5191.296,323 Total Coverage DAP Current 59,150,000 Remaining Year Collections Parlicimalitn Tua Rate Collections (1.468075 850,641) Colluelioun 125/ 5,075,130 Q5 4,385,015 Series 2013 (a) T,lul 4,385.1115 Fonds 69(1,115 Ending 9/30 1,625,0)7 6,343.912 2(113 1.625,017 0.460075 850,640 6,343,912 5,1(75,13)) 4,381,511 693,507 5,075,018 112 2014 1,625,017 0.460075 850,640 6,343,912 5,075,130 4,380,551 693,744 5,074,295 835 2015 1,625,017 (1.460)175 850.640 6,343,912 5,075,130 4,376,981 694,984 5,071,965 3,165 2016 1,625,017 0.468075 850,640 6,343,912 5,075,130 4,385,802 685,658 5,071,460 3,670 2017 1,625,017 0.468075 850,640 6,343,912 5,075,130 4,381,553 691,143 5,072,696 2,434 2010 1,625,017 2019-2028 0.31205(1 930,640 6,343,912 5,075,130 4,379,541 690,875 5,070,416 4,714 2019 1,625,017 0.312050 567,093 6,060,366 4,848,293 4,144,613 70(),041 4,844,653 3,640 21)20 1,625,017 (1.312)150 567,093 6,060,366 4,848.293 4,143,829 703,264 4,847,(193 1,2)6) 2021 1,625,017 0.312050 567,093 6,066,366 4,848,293 3,887,745 955.734 4,843,478 4,814 2022 1,625,017 11.31205(1 567,093 6,060,366 4,848,293 4,090,400 753,024 4,843,424 4,869 2023 1,625,017 0.312050 567,093 6,060,366 4,848,293 4,060,200 786,912 4,047,112 1,181 2024 1,625017 0.312050 567,093 6,060,366 4,848,293 4,026,200 818,727 4,844,927 3,366 2025 1,625,017 0.312050 567,093 6,0611,366 4,848,293 3,998,400 848,468 4,846,868 1.425 2026 1,625.017 0.312050 567,093 6,060,366 4,848,293 3,966,400 881,135 4,847,535 756 2027 1,625,0)7 ().3)2050 567,093 6,060,366 4,848,293 3,930,200 916,341 4,846,74) 1,552 21128 1.625,0)7 1(.3)2050 567.093 6.060.366 4,848,293 3.804.0(00 949,496 4,844,296 3.997 2029 Total: 70,813,738 731,846 City of Pearland Brazoria Count Estimated Valuu: $1,603,976,126 Estimated Value: $ 1998 Base Year Value: (7.172.960) 1998 Base Year Value: Year Estimated Captured Value: 10ding 9/30 Participation 'Pas Rate 2013 36%, (125500)) 21)14 36% 0.2551)0(1 2015 36% 11.255000 2016 36% 0255006 2017 36% 0.235000 2018 36% 4255000 2019 36% 0,255000 2020 36% (1,25500) 2021 36% 0.255000 2022 36% 0.25311011 2023 36% 0.255000 2024 36% 0.255006 2(125 36% 0.255000 2026 36% 0.255000 2027 36% /1.253000 21628 36% 0.255000 2629 36% ((.25506)) CaIIeelb,ns Particinalion Tax Rate 3,868.256 38% ((.135900 3.868,256 38% ((.135900 3,060,256 38% 0.135900 3,868,256 38% 0.13590(1 3,868,256 38% (1.135900 3,868,256 38% 0,1359(6) 3,868,256 38% 0.135900 3,868,256 38% 0.135900 3,868,256 38% 0.135900 3,868,256 38% 0,135900 3,868,256 38% 0,135900 3,868,256 38% 0,135900 3,868,256 38% 0,135900 3,868.256 38% 0.135900 3,868,256 38% 0.135900 3.868,256 30% 0.135900 3,068,256 38% 0.135900 Development Authority of Pearland Private Placement - BBVA Compass Bank Bid Bond Issuance Parameters Values t August 15, 2013 (a) Generates 58,97536% in prucccds to rho Authority. P ivate Placement with BBVA Compass (( d an itleres( rue of3,77%. Co11celi n rave of 95%. Appmiued va)uc cu)uoa)cs provided by Slmdow Creek lunch. DEVELOPMENT AUTHORITY OF PEARLAND $9,150,000 TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013 The following information is included in the transcript submitted to the Office of the Attorney General for the purpose of obtaining Attorney General approval of the issuance of the referenced bonds, as required by H.B. 1564, 74th Legislature, Regular Session (Tex. Laws 1995, ch. 383, at 2930). A. No Official Statements printed since this was a private placement. 1. Name of bond issue: Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013 2. a) par amount of issue: $9,150,000 b) dollar amount of bond premium, if any: N/A c) dollar amount of bond original issue discount, if any: N/A 3. Dated date: November 15, 2013 4. Closing date (expected delivery date, on or about): November 26, 2013 5. By year, maturity amounts, coupon rates, prices or yields: N/A (If no reoffering yield (NRO) indicated, please provide yield separately.) 6. Call provisions, including premiums, if any: N/A 7. Mandatory redemption provisions: N/A 8. Debt-service schedule, principal and interest, and annual totals, with fiscal year identified: N/A 9. Use of derivative products associated with financing: N/A 10. If applicable, schedule of bonds refunded, including, by year, principal amount, coupon, and interest cost: N/A 11. Pledge: tax (ad valorem, sales, other), revenue, combination: Revenue 12. Type of credit enhancement (including PSF guarantee): N/A 13. Rating service(s) and rating(s) assigned to issue: N/A B. Additional Information 1. Type of sale: Private Placement 2. Pricing: November 11, 2013 3. If purchaser of bonds is a governmental entity, such as the Texas Water Development Board, please name purchaser: N/A 4. If a refunding bond issue, please provide final schedule of cash and present value savings (loss): See attached Exhibit A. 5. If a school district refunding bond issue, and the refunding involves "old debt" per the Texas Education Code, please provide schedule of principal and interest payments of refunding bonds associated with "old debt": N/A If the same issue also involves "new debt," please provide a schedule of principal and interest payments on the "new debt" portion as well. These two schedules together should equal total debt service by maturity: N/A 6. CAB's and CIB's — please provide the per annum bond interest rates by maturity as shown in the bond order document: N/A HOU:3376744.I 7. Costs of Issuance — please provide best estimate of costs. If final costs are significantly different, please submit changes directly to the Texas Bond Review Board. Call (512) 463-1741 or (512) 475-4802 (FAX). SERVICE FIRM ONE-TIME FEE ANNUAL FEE (a) in dollars Bond Rating Mood 's N/A S&P N/A Fitch N/A Other General Costs of Issuance (b) $166,150 $500 Any Specialized Costs of Issuance (c) $6,814 Credit Facility N/A Bond Insurance N/A Total Underwriting Spread (d) $0.00 Did underwriter pay rating fee(s) No Which one(s)? Did underwriter pay bond insurance fee? No PARTICIPANTS FIRM Financial Advisor BOSC, Inc. Bond Counsel _ Andrews Kurth LLP Allen Boone Humphries Robinson LLP Paying Agent/Registrar; Authenticating Agent Compass Bank Purchaser Compass Mortgage Corporation Underwriter's Counsel None (a) relates to the ongoing fees or recurring costs of a financing for services such as paying agent, remarketing agent, credit provider and other similar services (may be expressed as a formula as appropriate). (b) e.g., bond counsel, financial advisor, paying agent, printing, AG approval. (c) e.g., remarketing fees, escrow verification fees, etc. (d) the cost for marketing and selling the bonds, including takedown, structuring fee, underwriting risk and expenses. PERSON COMPLETING FORM: Telephone No. 713.220.3915 Name: Tanya Fischer Fax No. 713.238.7483 HOU:3376744.1 United States of America State of Texas Number Registered I-1 $9,150,000 DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BOND SERIES 2013 INTEREST RATE: 3.77% MATURITY DATE: September 1, 2029 DATED DATE: November 15, 2013 REGISTERED OWNER: COMPASS MORTGAGE CORPORATION PRINCIPAL AMOUNT: NINE MILLION ONE<HUNDRED. FIFTY THOUSAND AND NO/ 100 DOLLARS The DEVELOPMENT AUTHORITY OF PEARLAND (the "Authority"), a not- for-profit local government corporation created by the City of Pearland (the "City"), in the Counties of Brazoria, Fort Bend and Harris, in the State of Texas, for value received, promises to pay, but solely from certain Pledged Revenues as hereinafter provided, to, the Registered Owrfer identified above or registered assigns, on the Maturity Date specified above, =upon presentation and surrender of this Series 2013 Bond at the designated office of the Paying Agent/Registrar (the "Paying Agent/Registrar"), initially, Compass Bank, the principal amount identified above, such principal is legal tender for the payment of debts due the United States of America, and to pay, solely from such Pledged Revenues, interest thereon to be paid as described herein, calculated on the basis of a 360-day year of twelve 30-day months, from the later of the date of delivery to the Purchaser, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Series 2013 Bond is payable by check on March 1 and September 1, beginning on March 1, 2014, mailed to the Registered Owner as shown on the books of registration kept by the Paying Agent/Registrar as of the fifteenth (15th) calendar day of the month next preceding each interest payment date, or by such other method, acceptable to the Paying Agent/Registrar, requested by and at the risk and expense of the Registered Owner. THIS SERIES 2013 BOND shall be subject to mandatory sinking fund redemption in installments according the following schedule: Page 1 of 6 HOU:3374133.1 Principal Maturity Date Amount September 1 Interest Rate $430,000 2014 3.77% 365,000 2015 3.77 380,000 2016 3.77 385,000 2017 3.77 405,000 2018 3.77 420,000. 2019 3.77 445,000 2020 3.77 465,000 2021 3.77 735,000 2022 3.77 560,000 2023 3.77 615,000 2024 3.77 670,000 2025 3.77 725,000 2026 3.77 785,000 2027 3,77 850,000 2028 3.77 915,000 2029 3.77 THE SERIES 2013 BONDS AND ALL PARITY BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE PLEDGED REVENUES, WHICH IS THE SOLE ASSET OF THE AUTHORITY PLEDGED THEREFOR. THE SERIES 2013 BONDS ARE OBLIGATIONS SOLELY OF THE AUTHORITY AND DO NOT CONSTITUTE, WITHIN THE MEANING OF ANY STATUTORY OR CONSTITUTIONAL PROVISION, AN INDEBTEDNESS, AN OBLIGATION OR A LOAN OF CREDIT OF THE CITY OF PEARLAND, THE STATE OF TEXAS, ALVIN INDEPENDENT SCHOOL DISTRICT, BRAZORIA COUNTY, FORT BEND COUNTY, HARRIS COUNTY OR ANY OTHER MUNICIPALITY, COUNTY, OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF TEXAS. NEITHER THE CITY OF PEARLAND, ALVIN INDEPENDENT SCHOOL DISTRICT, BRAZORIA COUNTY, FORT BEND COUNTY NOR HARRIS COUNTY IS OBLIGATED TO MAKE PAYMENTS ON THE SERIES 2013 BONDS. THIS SERIES 2013 BOND IS ONE OF A DULY AUTHORIZED SERIES OF SERIES 2013 BONDS aggregating $9,150,000 issued for the purpose of (1) paying Project Costs, (2) paying costs of issuance, all under and pursuant to the authority of the Act and all other applicable laws, and a resolution adopted by the Authority on November 11, 2013 (the "Resolution"). None of the proceeds of the Series 2013 Bonds shall be used for the purpose of paying or otherwise providing for educational facilities. Terms not otherwise defined herein shall have the meaning ascribed thereto in the Resolution. Page 2 of 6 HOU:3374133.1 THIS SERIES 2013 BOND AND THE SERIES OF WHICH IT IS A PART are limited obligations of the Authority that are together with all other Parity Bonds heretofore or hereafter issued under the Indenture described below, payable from, and are equally and ratably secured by a lien on the Pledged Revenues, which include the Contract Tax Increments, moneys on deposit in the Pledged Revenue Fund, the Debt Service Fund, and interest earned on moneys deposited therein, as defined and more fully provided in the Indenture of Trust dated as of May 1, 2012, between the Authority and Regions Bank, as Trustee (the "Indenture"). This Series 2013 Bond and the series of which it is a part and all other Parity Bonds, together with the interest thereon, are payable solely from such Pledged Revenues. . THE AUTHORITY RESERVES THE RIGHT, at its option, to redeem in whole or in part the Series 2013 Bonds on and after September 1, 2023, at par plus accrued interest on the amounts called for redemption to the date fixed for redemption. UNLESS WAIVED BY THE OWNER, NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the Registered Owners of each Series 2013 Bond to be. redeemed in whole or in part at the address shown on the books of registration kept by the Paying Agent/Registrar. Such notices shall state the redemption date, the redemption price, the place at which Series 2013 Bonds are to be surrendered for payment and, if less than all Series 2013 Bonds Outstanding of a particular maturity are to be redeemed, the numbers of the Series 2013 Bonds or portions thereof of such maturity to be redeemed. When Series 2013 Bonds or portions thereof have been called for redemption, and due provision has been made to redeem. the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS SERIES 2013 BOND IS TRANSFERABLE only upon presentation and surrender at the designated 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 Resolution. THIS SERIES 2013 BOND IS EXCHANGEABLE at the designated office of the Paying Agent/Registrar for Series 2013 Bonds in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Resolution. NEITHER THE AUTHORITY NOR THE PAYING AGENT/ REGISTRAR shall be required to transfer or exchange any Series 2013 Bond during the period beginning on the fifteenth calendar day of the month next preceding any interest payment date and ending on such interest payment date or to transfer any Series 2013 Bond called for redemption during the 30 day period prior to the redemption date. Page 3 of 6 HOU:3374133.1 THIS SERIES 2013 BOND shall not be valid or obligatory for any purpose or be entitled to any benefit under the Resolution unless this Series 2013 Bond is either (i) registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Paying Agent/Registrar by due execution of the authentication certificate endorsed hereon. THE AUTHORITY HAS RESERVED THE RIGHT to issue Additional Parity Bonds, subject to the restrictions contained in the Resolution and the Indenture, which may be equally and ratably payable from, and secured by a lien on and pledge of, the Pledged Revenues in the same manner and to the same extent as the Parity Bonds and this Series 2013 Bond and the series of which it is a part. IT IS HEREBY DECLARED AND REPRESENTED that this Series 2013 Bond has been duly and validly issued and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent' to or in the issuance and delivery of this Series 2013 Bond have been performed, existed, and been done in accordance with law;, that the Series 2013 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 2013 Bond and all of the Parity Bonds by the creation of the aforesaid lien on and pledge of the Pledged Revenues as provided in the Indenture. IN WITNESS WHEREOF, the Authority has caused this Series 2013 Bond to be executed by the manual or facsimile signatures of the Chair and Director. DEVELOPMENT AUTHORITY OF PEARLAND Chair, Board of Directors Director, Board of Directors Page 4 of 6 HOU:3374133.1 COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Series 2013 Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Series 2013 Bond has been registered by the Comptroller of Public Accounts of the State of Texas. N OV 252013 WITNESS MY SIGNATURE AND SEAL this Comptroller of Public Accounts of the State of Texas (SEAL) Page 5 of 6 HOU:3374133.1 Assignment For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within Series 2013 Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said Series 2013 Bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an institution which is a participant in the Securities Transfer Agent Medallion Program ("STAMP") or similar program. Registered Owner NOTICE: The signature above must correspond to the name of the Registered Owner as shown on the face of this Bond in every particular, without any alteration, enlargement or change whatsoever. Page 6 of 6 HOU:3374133.1 $9,150,000 DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013 TRANSCRIPT OF PROCEEDINGS November 26, 2013 Andrews Kurth LLP 600 Travis Street, Suite 4200 Houston, Texas 77002 (713) 220-4200 HOU:3003181.15 Development Authority of Pearland $9,150,000 Tax Increment Contract Revenue Bonds, Series 2013 1. Approving Opinion of Co-Bond Counsel 2. Investment Letter 3. Indenture of Trust 4. Certified Resolution Authorizing the Issuer to Issue the Bonds 5. Certified Issuer Resolution Authorizing the Issuance of the Bonds 6. General Certificate of Issuer 7. General Certificate of City 8. Certificate Regarding Additional Parity Bonds 9. Signature Identification and No-Litigation Certificate 10. Attorney General's Opinion and Comptroller's Registration Certificate 11. Federal Tax Certificate and IRS Form 8038-G 12. Paying Agent/Registrar Agreement 13. Paying Agent/Registrar Receipt 14. Opinion of City Attorney 15. Closing Certificate 16. Certificate of Absent Director 17. Closing Memorandum and Final Numbers 18. Bond Review Board Questionnaire 19. Specimen Bond HOU:3364322.1 Compass Mortgage Corporation, an Alabama Corporation November 11, 2013 Board of Directors Development Authority of Pearland Re: Development Authority of Pearland (the "Authority") Tax Increment Contract Revenue Bond Series 2013 Board Members: Subject to the conditions stated herein, Compass Mortgage Corporation, an Alabama Corporation (the "Purchaser"), hereby agrees to purchase the Authority's Tax Increment Contract Revenue Bond, Series 2013, in the principal amount of $9,150,000 at par (the "Bond"). The Bond will bear interest at an annual rate of 3.77% percent and will have the terms and redemption provisions and be secured as described in the Authority's Resolution authorizing the issuance of the Bond (the "Bond Resolution") and the Indenture of Trust, as may be further supplemented, securing the Bonds (the "Indenture"). The Authority reserves the right to redeem or refund the Bonds as provided in the Bond Resolution and the Indenture. Purchaser's agreement to purchase, and the Authority's agreement to sell, the Bonds are subject to Purchaser's receipt, on or before the date of purchase, of the following: 1. The duly executed Bonds payable to the order of Purchaser (which may be delivered to the Paying Agent/Registrar or Trustee on behalf of the Purchaser); 2. The opinion of Allen Boone Humphries Robinson LLP, Houston, Texas and Andrews Kurth LLP, Houston, Texas to the effect that (i) the Indenture and the Bond Resolution have been authorized, executed and delivered by the Authority and constitute valid and binding obligations of the Authority; (ii) the Bonds have been authorized, executed, issued and delivered by the Authority, and are the legal and valid special obligations of the Authority and are entitled to the benefits and security of the Indenture; and (iii) the interest on the Bonds is exempt from federal income taxation under existing statutes, regulations, published rulings, and court decisions existing on the date of said opinion; 3. Certified copies of the Bond Resolution and Indenture; 457770 3.docx 1 4. Certified copies of the approvals of the City of Pearland, Texas (the "City") and the Board of Directors of Reinvestment Zone Number Two, City of Pearland, Texas (the "Zone"), as applicable; 5. A copy of the agreement between the City, the Zone, and the Authority (the "Tri-Party Agreement") and the City Ordinance approving the Tri- Party Agreement; and 6. The Authority's certification to the effect that no litigation of any nature is then pending against, or to the best knowledge of the certifying directors, threatened against the Authority contesting or attacking the Bond; restraining or enjoining the authorization, execution, or delivery of the Bond; affecting the provisions made for the payment of or security for the Bond; in any manner questioning the authority of proceedings for the authorization, execution or delivery of the Bond; or affecting the validity of the Bond, the Bond Resolution, the Indenture, the corporate existence of the Authority, or the titles of the then present directors of the Board. 7. A certificate reflecting a Captured Appraised Value which, at the Participants' current tax rate, will generate Contract Tax Increments that will be at least 125 percent of projected Average Annual Debt Service of the Bonds. Capitalized terms in the preceding sentence shall have the meaning ascribed thereto in the Indenture. Purchaser recognizes that the Bonds constitute limited obligations of the Authority and are payable solely from the Contract Tax Increments, as defined in the Indenture, and certain funds on deposit with the Trustee, as defined in the Indenture, together with earnings and investments thereon (collectively, the "Pledged Revenues"). Purchaser recognizes that the Bonds are not payable from any other funds of the Authority other than the Pledged Revenues. Purchaser further recognizes that the Bonds are limited obligations solely of the Authority and are not obligations of the City and do not give rise to a charge against the general credit or taxing powers of the City, Brazoria County, Fort Bend County, Alvin Independent School District, the State of Texas or any entity other than the Authority. Purchaser recognizes that the Bond involve risks and has made such inspection and investigation of the Authority and its affairs as it deemed necessary to determine the investment quality of the Bond. Purchaser represents and warrants that: 1. Purchaser is acquiring the Bonds for its own account as evidence of a loan and has no present intention to reoffer the Bonds as a bondhouse, broker, dealer or other person acting as underwriter or wholesaler. 2. Purchaser is an "accredited investor" within the meaning of section 2(15) of the Securities Act of 1933 and/or a "qualified institutional buyer" as defined in Rule 144A under the Securities Act of 1933, as amended. 457770_3.docx 2 3. Purchaser has had an opportunity to make its own investigation of the condition of the Authority and the financial risks associated with the purchase and ownership of the Bonds and has evaluated fully such risks. Purchaser has had access to all information to which a reasonable investor would attach significance in making an investment decision with respect to the purchase of the Bonds. 4. Purchaser recognizes that the Authority has represented that the Bonds are high risk investments which are suitable only for sophisticated and well informed investors with sufficient knowledge and experience in financial and business matters to evaluate the merits and risks involved in the purchase and ownership of the Bonds. 5. Purchaser is a sophisticated and well informed investor. Purchaser acknowledges that the Bonds are not suitable for ordinary investors and, accordingly, will not make any sale or distribution to any person or entity except to a person or entity who is able to and does confirm in writing to Purchaser and the Authority the representations contained in paragraphs (1) through (4) and this paragraph to the same extent as if such paragraphs referred to such person or entity. 6. Purchaser is familiar with the creation, operation and financing of local government corporations created under Chapter 431, Subchapter D of the Texas Transportation Code, and tax increment reinvestment zones created under Chapter 311, Texas Tax Code. Purchaser further represents that it is familiar with the practice in the City of using local government corporations to administer and operate tax increment reinvestment zones and to issue tax increment contract revenue bonds to pay for the projects of tax increment reinvestment zones. 7. Purchaser is able and willing to bear the economic risk of the purchase and ownership of the Bonds. Purchaser further understands and acknowledges that the Bonds and any interest thereon are payable solely from and to the extent of the Pledged Revenues and no other Authority funds shall be encumbered, pledged, committed or used to pay the Bonds or interest accrued thereon. Notwithstanding anything herein to the contrary, the Purchaser's obligation to purchase the Bond shall be subject to the condition precedent that from the date hereof to the date of delivery of the Bond, there shall not have occurred any: (i) material adverse change in the financial condition or general affairs of the Authority; (ii) event, court decision, proposed law or rule which may have the effect of changing the federal income tax incidents of the Bond or the interest thereon or the transaction contemplated herein; or (iii) international or national crisis, suspension of stock exchange trading or banking moratorium materially affecting, in the Purchaser's opinion, the market value of the Bond. 457770 3.docx 3 In consideration of the purchase of the Bonds by the Purchaser, the Authority agrees to annually provide the Purchaser with (i) audited annual financial statements and (ii) copies of any annual financial information that is otherwise required to be provided by the Authority in connection with its continuing disclosure undertakings entered into pursuant to the United States Securities and Exchange Commission Rule 15c2-12 (the "Rule"), if any, with respect to other bonds of the Authority, each within 180 days after each fiscal year end. The parties hereto acknowledge that the Authority is not entering into a continuing disclosure undertaking pursuant to the Rule in connection with the issuance of the Bonds. The Authority further agrees to provide the Purchaser with copies of any annual report prepared by the City under Section 311.016, Texas Tax Code ("Section 311.016"), within 30 days after the City's deadline to provide such information as required by Section 311.016. Purchaser has not provided, and will not provide, financial, legal, tax, accounting or other advice to or on behalf of the Authority with respect to the Bonds, and the Authority has not relied on the Purchaser for such advice. [EXECUTION PAGES FOLLOW] 457770 3.docx 4 Respectfully submitted, COMPASS MORTGAGE CORPORATION, an Alabama Corporation By: rr Name: -` '~ ®ebbie Leal Senior Vice Presiden t Title: 4577703 The above and foregoing offer is hereby accepted by Development Authority of Pearland, as of the 11th day of November, 2013. Chairman, Board of Directors ATTEST: Secretary, Board of Directors 457770.docx INDENTURE OF TRUST By And Between DEVELOPMENT AUTHORITY OF PEARLAND, the "Authority" and REGIONS BANK as "Trustee" DATED AS OF MAY 1, 2012 SECURING DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE AND REFUNDING BONDS SERIES 2012 1-IOU:3210582.5 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND INTERPRETATION ................................................................3 . Section 1.01 Definitions .................................................................................................3 Section 1.02 Recitals, Table of Contents, Titles and Headings .....................................9 Section 1.03 Interpretation .............................................:........................................:...... 9 ARTICLE II GRANTING CLAUSES ...................................................................:......................10 ARTICLE III AUTHORIZATION OF TAX INCREMENT CONTRACT REVENUE BONDS; GENERAL TERMS AND PROVISIONS OF TAX . INCREMENT CONTRACT REVENUE BONDS; ADDITIONAL PARITY BONDS AND SUBORDINATE LIEN OBLIGATIONS ......................12 Section 3.01 Authorization of Tax Increment Contract Revenue Bonds .....................12 Section 3.02 Additional Parity Bonds ..........................................................................12 Section 3.03 Subordinate Lien Obligations ...................................................:.............13 Section 3.04 Declaration ............................................................................................14 ARTICLE IV FUNDS AND INVESTMENTS .............................................................................15 Section 4.01 Creation of Funds ....................................................................................15 Section 4.02 Pledged Revenue Fund ...........................................................................15 Section 4.03 Debt Service Fund ................................. ..............................................16 Section 4.04 Debt Service Reserve Fund .....................................................................16 Section 4.05 Project Fund ............................................................................................17 Section 4.06 Surplus Fund ............................................................................................17 Section 4.07 Rebate Fund ............................................................................................17 Section 4.08 Investments; Earnings .............................................................................18 ARTICLE V COVENANTS OF THE AUTHORITY ...................................................................20 Section 5.01 Payment of Tax Increment Contract Revenue Bonds and Performance of Obligations ...........................................................:........20 Section 5.02 Recordation and Execution of Security Instruments ..............................20 Section 5.03 Title Encumbrances of Pledged Revenues .................................:............20 Section 5.04 Pledged Revenues Not Encumbered .......................................................20 Section 5.05 Collection of Contract Tax Increments ...................................................21 Section 5.06 Amendment of Tr-Party Agreement ......................................................21 ARTICLE VI DEFAULT AND REMEDIES ...................................................:............................22 Section 6.01 Events of Default ....................................................................................22 Section6.02 Notices ....................................................................................................22 Section 6.03 Notice of Default ....................................................................:.:..............22 Section 6.04 Remedies in General ................................................................................22 Section 6.05 Appointment of Receivers ......................................................................23 Section 6.06 Trustee May Act Without Possession of Tax Increment Contract RevenueBonds .......................................................................................23 i HOU:3210582.5 Section 6.07 Trustee as Attorney in Fact .....................................................................23 Section 6.08 Remedies Not Exclusive .........................................................................23 Section 6.09 Limitation on Suits ...................................................................................23 Section 6.10 Right of Owners of the. Tax Increment Contract Revenue Bonds to Direct Proceedings ..........................................................................:...24 Section.6.11 Restoration of Rights and Remedies .......................................................24 Section 6.12 Waiver of Stay or Extension Laws ................................................•.........25 Section 6.13 Delay or Omission Not Waiver ....................................................... ....25 ARTICLEVII DISCHARGE ........................................................................................................26 Section 7.01 Discharge by Payment ............................................................................26 Section 7.02 Discharge by Deposit ....................................:.........................................26 ARTICLE VIII THE TRUSTEE ..........................................................................................:........28 Section 8.01 Acceptance of Trusts ...............................................................................28 Section 8.02 Reliance by Trustee .................................................................................30 Section 8.03 Certificate of the Authority as Proof .......................................................30 Section 8.04 Trustee May Own Tax Increment. Contract Revenue Bonds ...........:......30 Section 8.05 Compensation of Trustee ........................................................................30 Section 8.06 Removal of Trustee ................................................................ .............30 Section 8.07 Resignation of Trustee .............................................................. ......31 Section 8.08 Appointment of Successor Trustee ..........................................:..............31 Section 8.09 Powers of Successor Trustee ..................................................................31 Section 8.10 Merger, Conversion or Consolidation of Trustee ...................................32 Section8.11 Funds Transfer ........................................................................................32 ARTICLE IX MODIFICATION OF INDENTURE .....................................................................33 Section 9.01 Supplemental Indentures Not Requiring Consent of Owners of the Tax Increment Contract Revenue Bonds ..........................................33 Section 9.02 Supplemental Indentures Requiring Consent of Owners of the Tax Increment Revenue Bonds ...............................................................33 Section9.03 Consents ..................................................................................................34 ARTICLE X GENERAL PROVISIONS .......................................................................................35 Section 10.01 Proof of Execution of Writings and Ownership .....................................35 Section 10.02 Benefits of Indenture .................................................. .............................35 Section 10.03 No Individual Liability .............................................. .............................35 Section10.04 Notice ....................................................................... ............................... 3 6 Section 10.05 Governing Law .................:......................................... .............................36 Section 10.06 Severability ................................................................ .............................36 Section 10 07 Successors and Assigns 36 .............................................................I............. Section 10.08 Execution in Several Counterparts ..........................................................36 ii HOU:3210582.5 INDENTURE OF TRUST THIS INDENTURE OF TRUST, dated as of the 1st day of May, 2012, (the "Indenture"), is made by and between DEVELOPMENT AUTHORITY OF PEARLAND, a not-for-profit local government corporation organized under Chapter 431, Texas Transportation Code and existing under the laws of the State of Texas (the "Authority"), and Regions Bank, an Alabama state banking corporation with a corporate trust office in Houston, Texas (together with any successor trustee hereunder, the "Trustee"). WITNESSETH WHEREAS, by Ordinance No. 891, adopted on December 21, 1998, the City of Pearland (the. "City") created Reinvestment Zone Number Two, City of Pearland, Texas (the "TIRZ"). pursuant to Chapter 311, Texas Tax Code, and approved a preliminary project plan for the TIRZ and a preliminary reinvestment zone financing plan for the TIRZ; and WHEREAS, by Resolution No. 2004-107, adopted on June 28, 2004, the City authorized the creation of the Authority to aid, assist and act on behalf of the City in the performance of the City's governmental and proprietary functions with respect to, and to provide financing for, the. TIRZ; and WHEREAS, by Ordinance No. R2004-170, adopted on October 11, 2004,_ the City approved that certain Agreement by and between the City, the TIRZ, and the Authority (the "Tri- Party Agreement"), pursuant to which the City delegated to the Authority the power and authority to issue, sell or deliver its bonds, notes or other obligations in accordance with the terms of the Tri-Party Agreement; and WHEREAS, the Authority has previously issued its $13,995,000 Tax Increment Contract Revenue Bonds, Series 2004, (the "Series 2004 Bonds"), its $9,775,000 Tax Increment Contract Revenue Bonds, Series 2005 (the "Series 2005 Bonds"), its $9,970,000 Tax Increment Contract Revenue Bonds, Series 2006 (the "Series 2006 Bonds"), its $15,950,000 Tax Increment Contract Revenue Bonds, Series 2007 (the "Series 2007 Bonds"); and its $8,815,000 Tax Increment Contract Revenue Bonds, Series 2009 (the "Series - 2009 Bonds") (collectively, the "Refunded Bonds"); WHEREAS, the Authority intends to issue its Tax Increment Contract Revenue Bonds (as herein defined), in one or more series; and WHEREAS, by Resolution No. 2012-55, adopted on April 30, 2012, the City authorized the Authority to issue, sell, or deliver its Tax Increment Contract Revenue and Refunding Bonds, Series 2012 for purpose of paying Project Costs and refunding the Refunded Bonds; and WHEREAS, the Participants (as herein defined) have agreed to make certain payments, which are sufficient to pay the principal of, interest on and redemption requirements of the Tax Increment Contract Revenue Bonds, the charges and expenses of paying agents, registrars and trustees, utilized in connection with the issuance of the Tax Increment Contract Revenue Bonds, and all amounts required to establish and maintain the funds to be established under this Indenture and the Bond Resolution (as herein defined); and HOU:3210582.5 WHEREAS, in order to further secure the Tax Increment Contract Revenue Bonds, the Authority has determined to enter into this Indenture with the Trustee for the purpose of assigning and pledging to the Trustee the Contract Tax Increments (as herein defined), for the purpose of establishing the Pledged Revenue Fund, the Project Fund, the Debt Service Fund, the Debt Service Reserve Fund and the Surplus Fund pursuant hereto and thereby providing the Pledged Revenues (as herein defined) to be held by the Trustee to secure the payment of principal of and interest on all Tax Increment Contract Revenue Bonds from time to time issued under the Bond Resolutions. NOW, THEREFORE, in consideration of the premises, the acceptance by the Trustee of the trusts hereby created, the purchase and acceptance of the Tax Increment Contract Revenue Bonds by the Owners thereof, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Authority and the Trustee do hereby mutually covenant and agree, for the equal and proportionate benefit of the respective Owners from time to time of the Tax Increment Contract Revenue Bonds, as follows: [END OF RECITALS] HOU.3210582.5 ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.01 Definitions . Unless otherwise expressly provided or unless the context clearly requires otherwise, the following terms shall have the respective meanings specified below for all purposes of this Indenture: "Act" shall mean Chapter 431, Texas Transportation Code, as amended. "Additional Parity Bonds" shall mean the additional parity Tax ' Increment Contract Revenue Bonds permitted to be issued by the Authority pursuant to Section 3.02 of this Indenture. "AISD" shall mean Alvin Independent School District. "AISD Agreement" shall mean that Interlocal Agreement approved by the City by Resolution No. R99-45, adopted on June 14, 1999, by and between the City, AISD and the TIRZ pursuant to which AISD has agreed to transfer a portion of its Tax Increment to the Tax Increment Fund, as amended. "Annual Debt Service" means for any annual period (any fiscal year or any other twelve (12) consecutive calendar month period), an amount equal to the sum of (i) all interest on the Bonds which is .due during such period, plus (ii) that portion of the Principal Installment or Installments of the Bonds which is due during such period, as limited and calculated in the following manner: (a). Except as modified below, (i) for any twelve (12) consecutive calendar month period other than the calendar year, whether or not such period constitutes the Authority's current fiscal year or any future Authority fiscal year, the aggregate amount of interest on and Principal Installment of the Bonds which was paid ' or mandatorily redeemed or is scheduled to accrue and be paid or mandatorily redeemed during such twelve (12) consecutive month period; and (ii) for any fiscal year while the Authority's fiscal year is the same as the calendar year, the aggregate amount of interest on and Principal Installment of the Bonds which was paid or mandatorily redeemed or is scheduled to accrue and be paid or mandatorily redeemed after January 1 of such fiscal year and on or before the next following January 1; and (b) . As to any annual period prior to the date of any calculation, such requirements shall be calculated solely on the basis of Bonds which were Outstanding as of the first (1st) day of such period; and as to any future year such requirements shall be calculated solely on the basis of Bonds Outstanding as of the date of calculation; and (c) As to any Bonds that bear interest at a variable interest rate which cannot be ascertained at the time of calculation, an interest rate equal to the greater of (i) an annual interest rate as reasonably determined by the Authority's financial advisor which rate shall be equal - to the Bond Buyer Revenue Bond Index (or, if the Bond Buyer Revenue Bond Index is unavailable, a comparable index chosen), or (ii) the weighted 1-IOU:3210582.5 average rate of interest born by such Bonds (or other indebtedness of comparable credit' quality, maturity and purchase terms in the event that such Bonds were not outstanding) during the preceding Fiscal Year (or any period of comparable length ending within 180 days) prior to the date of calculation, shall be presumed to apply for all future dates and the principal shall be evenly allocated over the life of the Bond issue with an equal amount of principal deemed due each year but solely for the purpose of spreading the principal requirements for calculation of coverage; and (d) Notwithstanding the foregoing, all amounts which are deposited to the credit of the Debt Service Reserve Fund from original proceeds from the sale of any Bonds and amounts which have been or are expected to be realized as interest and investment earnings on amounts on deposit in the Debt Service Fund (other than those amounts which are to be deposited into the Rebate Fund pursuant to Section 4.07 of this Indenture) and which are used or scheduled to be used to pay interest on or Principal : Installments of Bonds during any annual period, shall be deemed to reduce the Annual Debt Service for any such annual period io the extent of such interest and investment earnings; and the amount of such deposits shall be excluded from and shall not constitute Annual Debt Service for any such annual period. For purposes of calculating a Reserve Requirement, "Annual Debt Service" shall, be defined as provided in the Bond Resolution establishing such Reserve Requirement. "Authority" shall mean the Development Authority of Pearland, or it's legal successors. "Authorized Representative" shall mean the Chairman or the Vice Chairman of the Authority designated to perform a specified act, to sign a specified document or to act generally on behalf of the Authority by a Written instrument furnished to the Trustee. "Average Annual Debt Service" shall mean the total Annual Debt Service (as of the date of the calculation) divided by the remaining number of years until the final maturity of the Bonds. The Average Annual Debt Service calculated under this Indenture shall remain in effect until the next date when such calculation is required under this Indenture. For the purposes of calculating the Average Annual Debt Service, any fractional year shall be included in the calculation as a full year. "Board" shall mean the Board ofDirectors of the Authority. . "Bond Counsel" shall mean Allen Boone Humphries Robinson LLP and Andrews Kurth LLP or such other nationally recognized firm engaged by the Authority. "Bond Resolutions" shall mean the resolutions from time to time adopted by the Authority authorizing the Tax Increment Contract Revenue Bonds. "Bonds" or "Tax Increment Contract Revenue Bonds" shall mean one or more series of bonds issued by the Authority pursuant to this Indenture and the Bond Resolutions. "Brazoria County" shall mean Brazoria County, Texas. m HOU:3210582.5 "Brazoria County Agreement" shall mean that Interlocal Agreement approved by the City by Resolution No. R99-62, adopted on August 30, 1999, by and between the City, Brazoria County and the TIRZ pursuant to which Brazoria County has agreed to transfer a portion of its Tax Increment to the Tax Increment Fund, as amended. "Business Day" shall mean any day which is not a Saturday, Sunday, a day on which banking institutions in the city where the principal corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive order to close, or a legal holiday. "Captured Appraised Value" shall mean, with respect to each Taxing Unit in each year, the total appraised value of real property taxable by the Taxing Unit and located in the TIRZ for that year less the Tax Increment Base of the Taxing Unit. "City" shall mean the City of Pearland, Texas. "Code" shall mean the Internal Revenue Code of 1986, as amended, and all applicable Internal Revenue Service Regulations thereunder "Contract Tax Increments" shall mean Tax Increments from time to time required to be deposited by the Participants into the Tax Increment Fund pursuant to the TIRZ Act and the Participant Contracts and payable to the Authority by the City pursuant to the Tri-Party Agreement. "Costs of Issuance" shall mean all charges, costs and expenses of the Authority incurred in connection with the authorization, issuance; sale and delivery of Tax Increment Contract Revenue Bonds including, but not limited to, legal fees, financial advisory fees, bond insurance premiums, fiscal or escrow agent fees, printing fees, accounting fees, consultant fees, verification fees, travel expenses, rating agency fees, fees of the Trustee and its counsel and Attorney General fees. "Debt Service" shall mean the Principal Installments and interest on the Bonds. "Debt Service Fund" shall mean the fund so designated and created pursuant to Article IV of this Indenture. "Debt Service Reserve Fund" shall mean one or more - of the funds so designated and created by a Bond Resolution pursuant to Article IV of this Indenture. "Eligible Investments" shall mean any investments permitted by the Authority's written Investment Policy, as may be amended from time to time, adopted pursuant to the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended. "Event of Default" shall mean any Event of Default described in Section 6.01 of this Indenture. "Exempt Securities" means bonds or other evidences of obligations, the interest on which is exempt from federal income taxation under Section 103(a) of the Code. 5 HOU:3210582.5 "Fair Market Value" shall mean as of any particular time: (i) as to Eligible Investments the bid and asked prices of which are published on a regular basis in a financial journal or publication of general circulation in the United States of America, the bid price for such Eligible Investments so published on or most recently prior to the date of valuation by the Trustee, or (ii) as to Eligible Investments the bid and asked prices of which are not published on a regular basis in a financial journal or publication of general circulation in the United States of America, the average bid price on such Eligible Investments at the date of valuation by the Trustee, as reported to the Trustee by any two nationally recognized dealers (in the opinion of the Trustee) in such Eligible Investments. "Fiscal Year" mans the fiscal year of the Authority, initially the 12-month period ending September 30, 2012. "Fort Bend County" shall mean Fort Bend County, Texas. "Fort Bend County Agreement" shall mean that Interlocal Agreement approved by the City by Resolution No. R99-57, adopted on August 9, 1999, by and between the City, Fort Bend County and the TIRZ pursuant to which Fort Bend County has agreed to transfer a portion of its Tax Increment to the Tax Increment Fund, as amended. "Fund" shall mean any one or more, as the case may be, of the separate special Funds created and established or required to be maintained pursuant to this Indenture. "Interest Payment Date", when used in connection with any Bond, shall mean March 1 and September 1 commencing on such March 1 or September 1 as shall be set forth in the Bond Resolution for such Bonds. "Mandatory Redemption Installment" shall mean, as of any particular date of calculation and with respect to any Series of Bonds, the amount of money to be applied to the mandatory redemption (including any mandatory redemption premium, if any) of Bonds in any fiscal year prior to maturity pursuant to this Indenture or any . Bond Resolution, as such Mandatory Redemption Installment shall have been previously reduced by the principal amount of any Bonds of such Series of the maturity with respect to which such Mandatory Redemption Installment is payable which are purchased or redeemed by the Trustee in accordance with the provisions of this Indenture or of any Bond Resolution, other than a Mandatory Redemption Installment redemption or purchase. "Maximum Annual Debt Service" shall mean the greatest amount of the Annual Debt Service calculated for any future fiscal year. "Outstanding". when used with reference to Bonds, shall mean, as of a particular date, all Bonds theretofore and thereupon delivered except: (a) any Bond canceled by or on behalf of the Authority at or before said date, (b) any Bond defeased or no longer considered Outstanding pursuant to the provisions of the Resolution or otherwise defeased as permitted by applicable Hou :3210582.5 law, and (c) any such Bond in lieu of or in substitution for which another Bond shall have been delivered pursuant to the Resolution.. . "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 shall mean the Owners at a particular time of the specified percentage or proportion in aggregate principal amount. of all Bonds then Outstanding under the Resolution. ."Parity Bonds" shall mean the Bonds and each series of Additional Parity Bonds from time to time hereafter issued, but only to the extent such Parity Bonds remain Outstanding. . "Participant Contracts" shall mean, collectively, the Tri-Party Agreement, the AISD Agreement, the Brazoria County Agreement; the Fort Bend County Agreement, and any other contracts or orders heretofore or from time to time hereafter entered into between the Authority and Participants, containing provisions with respect to the payment by Participants of Tax Increments. "Participants" shall mean the City, AISD, Brazoria County and Fort Bend County. "Paying Agent/Registrar" shall mean the bank or trust company so designated in the Bond Resolutions. "Pledged Revenue Fund" shall mean the fund so designated and created pursuant to Article IV of this Indenture. "Pledged Revenues" shall have the meaning assigned to that term in Article II of this Indenture. "Principal Installment" means, as of any particular date of computation and with respect to Bonds of a particular Series, an amount of money equal to the aggregate of (a) the principal amount of Outstanding Bonds of said Series which mature on a single future date, reduced by the aggregate principal amount of such Outstanding Bonds of such Series which would at or before said future date be retired as a result of Mandatory Redemption Installments applied in accordance with this Indenture plus (b) the amount of any Mandatory Redemption Installment payable on said future date for the retirement of any Outstanding Bonds of said Series. "Principal Installment Payment Date", when used in connection with any Bond, shall mean September 1 of each year in which principal is scheduled to be paid. "Project and Financing Plan" shall mean the final Project Plan and Reinvestment Zone Financing Plan of the TIRZ adopted by the Board of Directors of the TIRZ on August 23, 1999, and approved by the City on August 23, 1999, by Ordinance No. 918, and as amended from time to time. "Project Costs" shall mean all project costs identified in the Project and Financing Plan as authorized by the TIRZ Act and the Tri-Party Agreement. 7 HOU:32I0582.5 "Project Fund" shall mean the fund so designated and created pursuant to Article IV of this Indenture. "Rebate Fund" shall mean the fund so designated and created pursuant to Article IV of this Indenture. '"Register" or "Bond 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 of the Bonds registered to, each Owner. "Regulations" shall mean the Income Tax Regulations promulgated under the Code. "Reserve Fund Surety Policy" shall mean an insurance policy or other credit agreement, as such term is defined by Section 1371.001, Texas Government Code, in a principal amount equal to the portion of the Reserve Requirement or a particular Debt Service Reserve Fund to be satisfied and issued by a financial institution or , insurance company which on the initial date of such policy has a rating for its long term unsecured debt or claims paying ability in the highest letter category by two major municipal securities evaluation sources. "Reserve Requirement" for a particular Series of Bonds shall be defined in the Bond Resolution authorizing the issuance of such Series of Bonds, if such Bond Resolution imposes such a requirement. There shall be no Reserve Requirement for the series of bonds (the "Series 2012 Bonds") authorized by the Bond Resolution dated April 30, 2012. "Series" shall mean' all of the Bonds authenticated and delivered on issuance and pursuant to this Indenture or any Bond Resolution authorizing the issuance of such Bonds as a separate series of Bonds or any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds. "State" or "State of Texas" shall mean the State of Texas. "Surplus Fund" shall mean the Authority's Surplus Fund so designated and created pursuant to Article IV of this Indenture. "Tax Increment" shall mean, with respect to each Taxing Unit in each year, the amount of property taxes levied by the Taxing Unit for that year on the Captured Appraised Value of real property taxable by the Taxing Unit and located in the TIRZ. "Tax Increment Base" shall mean the total appraised value of property in the TIRZ as of January 1, 1998 plus the total appraised value of real property taxable by a Taxing Unit and annexed into the TIRZ as determined on January I of the year in which such property was annexed into the TIRZ. "Tax Increment Contract Revenue Bonds" or Bonds" shall mean one or more series of bonds issued by the Authority pursuant to this Indenture and the Bond Resolutions. "Tax Increment Fund" shall mean the City's TIRZ Tax Increment Fund created and maintained in accordance with Ordinance No. 891 and the TIRZ Act. 0 HOU:3210582.5 "Taxing Unit" shall mean; in addition to the Participants, a special district or authority (including a junior college district, a hospital district, a navigation district, or other district created by or pursuant to the V.T.C.A. Water Code), or any other political subdivision of the State of Texas, whether created by or pursuant to the Texas Constitution or a local, special, or general law; that is authorized to impose and is imposing ad valorem taxes on real property in the TIRZ, even if the governing . body of another political unit determines the tax rate for the unit or otherwise governs its affairs. - "TIRZ". shall mean Reinvestment Zone Number Two, City of Pearland, Texas as• enlarged from time to time; "TIRZ Act" shall mean Chapter 311, Texas Tax Code; as amended. "Tri-Party Agreement" shall mean that certain Agreement by and between the City, the TIRZ, and the Authority approved by the City by Ordinance No. R2004-170, adopted on October 11, 2004, and'adopted on October 5, 2004, by the -Board and the Board of Directors of the TIRZ, as amended. "Trustee" shall mean Regions Bank, and its successors in that capacity. Section 1.02 Recitals, Table of Contents, Titles and Headings . The terms and phrases used in the recitals of this Indenture have been included for convenience of reference only and the meaning, construction and interpretation of such words and phrases for purposes of this Indenture shall be determined solely by reference to Section 1.01. hereof. The table of contents, titles and headings of the articles and sections of this Indenture 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 and shall never be considered or given any effect in construing this Indenture or any provision hereof or in ascertaining intent, if any question of intent should arise. Section 1.03 Interpretation . Unless the context requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural' number and vice versa. This Indenture and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of this Indenture and the Tax Increment Contract Revenue Bonds. [END OF ARTICLE I] HOU:3210582.5 ARTICLE II GRANTING CLAUSES In order to secure the payment of the principal of, redemption premium, if any, and interest on all Tax Increment Contract Revenue Bonds as the same are issued and become due and payable, whether at maturity or by prior redemption, and the performance and observance of all of the covenants and conditions herein contained, and in consideration of the premises, the acceptance by the Trustee of the trusts hereby created, the purchase and - acceptance of the Tax Increment Contract Revenue Bonds by the Owners thereof, and other good and valuable. consideration, the receipt and sufficiency of which are hereby acknowledged, the Authority does hereby GRANT, BARGAIN, CONVEY, ASSIGN and PLEDGE to the Trustee and its successors in trust hereunder, subject to the provisions of this Indenture, all of the Authority's right, title and interest in and to the following described properties and interests, direct or indirect, whether now owned or hereafter acquired (collectively, the "Pledged Revenues"): (a) The Contract Tax Increments and all, of the Authority's right, title and interest thereto under the Participant Contracts and the Tri-Party Agreement. (By definition, the Contract Tax Increments do not include the Tax Increments of Taxing Units other than the City, AISD, Brazoria County and Fort Bend County.) (b) All moneys deposited or required to be deposited in the Pledged Revenue Fund, the Debt Service Fund, and the Debt Service Reserve Fund held by the Trustee pursuant to the provisions of this Indenture and all interest earnings and investment income therefrom. (c) Any and all property of every kind and nature (including without limitation, cash, obligations or securities) which may from time to time hereafter be conveyed, assigned, hypothecated, endorsed, pledged, mortgaged, granted, or delivered to or deposited with the Trustee as additional security hereunder by the Authority, or anyone on behalf of the Authority, or which pursuant to any of the provisions hereof may come into the possession or control of the Trustee as security hereunder, or of a receiver lawfully appointed hereunder, all of which property the Trustee is authorized to receive, hold and apply according to the terms hereof. If and when an agreement is reached with Fort Bend Independent School District or another Taxing Unit for the payment of its Tax Increments into the Tax Increment Fund, the Authority may, but not necessarily will, grant its right, title and interest in such Tax Increments to the Trustee . as security hereunder. TO HAVE AND TO HOLD all the same, with, all rights and privileges appurtenant thereto, unto the Trustee and its successors in trust forever. IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, for the equal and proportionate benefit and security of the Owners from time to time of the Tax Increment Contract Revenue Bonds secured and to be secured hereunder; or any of them, without preference, priority or distinction as to lien or otherwise of any Tax Increment Contract Revenue 10 HOU:3210582.5 Bond over any other Tax Increment Contract Revenue Bond, except as otherwise expressly provided in this Indenture. PROVIDED, HOWEVER, that if the Authority, its successors or assigns, shall well and truly pay, or cause to be paid, the principal of the Tax Increment Contract Revenue Bonds and the interest and redemption premium, if any, due or to become due thereon, at the times and in the manner provided in the Tax Increment Contract Revenue Bonds, and in the Bond Resolutions according to the true intent and meaning thereof, and shall cause the payments to be made into the Funds maintained hereunder in the amounts required by this Indenture and the Bond Resolutions, or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee or Paying Agent/Registrar the entire amount due or to become due thereon, or an amount sufficient to provide for the payment thereof, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then this Indenture and the rights and liens hereby granted shall cease, terminate and be void; otherwise this Indenture is to be and shall remain in full force and effect. [END OF ARTICLE II] 11 HOU:32I 0582.5 ARTICLE III• AUTHORIZATION OF TAX INCREMENT CONTRACT REVENUE BONDS: GENERAL TERMS AND PROVISIONS OF TAX INCREMENT CONTRACT REVENUE BONDS: ADDITIONAL PARITY BONDS AND SUBORDINATE LIEN OBLIGATIONS Section 3.01 Authorization of Tax Increment Contract Revenue Bonds . (a) The Tax Increment Contract Revenue Bonds may be authorized from time to time by the Authority pursuant to Bond Resolutions duly adopted by the Board, which Bond Resolutions shall specify the dates, denominations, principal amounts, interest rates, maturities, redemption provisions, forms of bonds, manner of payment, provision for execution and authentication, application of proceeds and all other terms and provisions of the Tax Increment Contract Revenue Bonds not otherwise provided herein. (b) At or prior to the issuance of each series of Tax Increment Contract Revenue Bonds pursuant to any Bond Resolution, the Authority shall provide to the Trustee the following: (i) a certified copy of the Bond Resolution; (ii) the approving opinion of the Authority's Bond Counsel with respect to such series of Tax Increment Contract Revenue Bonds to the effect (i) that the Bonds are legal, valid and binding obligations of the Authority except to the extent that their enforceability may be limited by applicable provisions of the federal bankruptcy laws and any other • similar laws affecting the rights of creditors of political subdivisions generally, and except that such enforceability is subject to general principles of equity and the exercise of judicial discretion (regardless of whether such enforceability is considered in a proceeding in law or at equity), and (ii) that the Bonds are issued pursuant to the terms of this Indenture; (iii) if such series of Tax Increment Contract Revenue Bonds are being issued to refund any previously issued Tax Increment Contract Revenue Bonds, the identity, redemption date and redemption price of the Tax Increment Contract Revenue Bonds to be refunded; (iv) a debt service schedule with regard to such series of Tax Increment Contract Revenue Bonds and all Tax Increment Contract Revenue Bonds that will then be Outstanding after the issuance of such series of Tax Increment Contract Revenue Bonds and refunding of any Tax Increment Contract Revenue Bonds being refunded thereby; and (v) the amount of the Reserve Requirement, for such series of Tax Contract Revenue Bonds, if any, and the amount of the Reserve Requirement with respect to any other series of Tax Increment Revenue Bonds, if any. Section 3.02 Additional Parity Bonds . The Authority reserves the right to issue, for any lawful purpose (including the refunding of any previously issued Parity Bonds), one or more 12 HOU:3210582.5 series of Additional Parity Bonds payable from and secured by a lien on the Pledged Revenues, on a parity with the Bonds, and any previously issued Additional Parity Bonds; provided, however, that no Additional Parity Bonds may be issued unless: (a) The Additional Parity Bonds mature on, and interest is payable on, the Principal Installment Payment Dates and Interest Payment Dates, respectively; (b) The City has approved issuance of the Additional Parity Bonds on the terms set forth in the Tri-Party Agreement, as the same may be modified from time to time; (c) There shall be on deposit in the particular Debt Service Reserve Funds (to the extent created and established by Bond Resolutions pursuant to Section 4.04), after the issuance of the Additional Parity Bonds, an amount equal to the Reserve Requirement on all Bonds that have a Reserve Requirement that will be Outstanding after the issuance of such Additional Parity Bonds; • (d) The Authority certifies that it is not in material default with the terms of the Indenture, any Bond Resolution, or the Tri-Party Agreement; • (e) The Authority has received a certificate meeting the requirements set forth in paragraph (f) below which shows Captured Appraised Value which, at the Participants' tax rates then in existence, will generate Contract Tax Increments that will be at least 125 percent of projected Average Annual Debt Service, taking into account the Bonds and the Additional Parity Bonds to be issued; provided, however, that this requirement shall not apply to the issuance of any series of Additional Parity Bonds for refunding purposes that will have the result of reducing the Average Annual Debt Service requirements on Parity Bonds; and (f) The certificate required by paragraph (e) above may be either: (i) a certificate of the appropriate county appraisal district or districts showing certified values, adjusted for exemptions, (ii) a certificate of the appropriate county appraisal district or. districts showing estimated or preliminary values, adjusted for exemptions and losses due to protests based on historical data (iii) a certificate of a registered Texas tax assessor/collector showing certified values of the appropriate county appraisal district or districts, adjusted for exemptions or estimated or preliminary values of the appropriate county appraisal district or districts, adjusted for exemptions and losses due to protests based on historical data, or (iv) a projection prepared by an independent real estate appraiser. Section 3.03 Subordinate Lien Obligations. The Authority reserves the right to issue, for any lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on all or part of the Pledged Revenues that are junior and subordinate to the lien on Pledged Revenues securing payment of the Parity Bonds. Such subordinate lien obligations may be further secured by any other source of • payment lawfully available for such purposes. Such subordinate lien obligations will provide that they are payable from all or part of the Pledged 13 HOU:3210582.5 Revenues only if and to the extent such amounts could otherwise be deposited to the Debt Service Reserve Fund (for Reserve Fund Surety Policy obligations) or to the Surplus Fund. Section 3.04 Declaration . It is hereby expressly declared that all revenues, receipts, moneys and other properties hereby pledged are to be dealt with and disposed of under, upon and subject. to the terms, conditions, covenants, agreements, uses and purposes set forth in this Indenture. [END OF ARTICLE III] 14 HOU:3210582.5 ARTICLE IV FUNDS AND INVESTMENTS Section 4.01 Creation of Funds. There are hereby created or confirmed the following Funds: (A) Pledged Revenue Fund; (B) Debt Service Fund; (C) Debt Service Reserve Fund; (D) Project Fund; (E) Rebate Fund; and (F) Surplus Fund. Each Fund, other than the Surplus Fund and the Project Fund, shall be maintained by the Trustee separate and apart from all other funds of the Authority. The Authority shall maintain its Surplus Fund and Project Fund at a depository of the Authority's selection and in accordance with the Tri-Party Agreement. The Pledged Revenue Fund, the Debt Service Fund and the Debt Service Reserve Fund shall constitute trust funds which shall be held in trust by the Trustee solely for the benefit of the Owners of the Tax Increment Contract Revenue Bonds. Section 4.02 Pledged Revenue Fund. There is hereby created and established with the Trustee a fund to be designated the "Pledged Revenue Fund." The Contract Tax Increments shall be deposited into the Pledged Revenue Fund. Money in the Pledged Revenue Fund shall be held in trust by the Trustee and applied in the following manner and order of priority: (A) First, to the Debt Service Fund amounts necessary to make the amounts on deposit therein equal to the interest and Principal Installments due. on the Tax Increment Contract Revenue Bonds in the period ending on the next March 1; (B) ' Second, to the extent created in a Bond Resolution, to the particular Debt Service Reserve Funds amounts required to attain the Reserve Requirement on a pro rata basis (based upon the percentage of the Reserve Requirement for such Series of Bonds compared to the Reserve Requirement for all Bonds); (C) Third, to the payment of fees and expenses of the Trustee and Paying Agent/Registrar; and (D) Fourth, to the Surplus Fund for use by the Authority for any lawful purpose. Moneys can be transferred from the Pledged Revenue Fund to the Surplus Fund at any time provided that immediately prior to any such transfers the deposits required by Sections 4.02(A) through (C) above have been made or provided for. 15 HOU:3210582.5 Section 4.03 Debt Service Fund . There is hereby. created and established with the Trustee a fund to be designated the "Debt Service Fund." Money in the Debt Service Fund shall be held in trust by the Trustee. The Authority shall deposit or cause to.be deposited into the Debt Service Fund accrued interest on the Tax Increment Contract Revenue Bonds, capitalized interest on the Tax Increment Contract Revenue Bonds, transfers from the Pledged. Revenue Fund as provided in Section 4.02, transfers from the Debt Service Reserve Fund as provided in Section 4.04, and, to the extent necessary, other Pledged Revenues in such amounts and at such times to provide that amounts necessary to pay interest and Principal Installments, due on the Tax Increment Contract Revenue Bonds. The Trustee shall transfer on each Interest Payment Date and each Principal Installment Payment 'Date to the Paying Agent/Registrar such amounts in the Debt Service Fund to pay Principal Installments and interest on the Tax Increment Contract Revenue Bonds as the same become due. With respect to any Tax Increment Contract Revenue Bonds that are subject to be paid and credited through The Depository Trust Company, the Trustee shall make all such transfers such that the Authority shall be in. compliance with the Principal and Interest Guidelines in the Operational Arrangement of the Depository Trust Company, as amended from time to time. Otherwise, such transfers shall be made as may be reasonably requested by the Owners of any Series of Tax Increment Contract Revenue Bonds. Section 4.04 Debt Service Reserve Fund . Each Bond Resolution authorizing a Series of Bonds may create and establish with the Trustee one or more, finds to be designated a "Debt Service Reserve Fund." A Debt Service Reserve Fund may be pledged to the payment of a particular Series of Bonds and may be so designated (e.g. "Series 2012 Debt Service Reserve Fund"). Money in a Debt Service Reserve Fund shall be held in trust by the Trustee and held solely for the benefit of the Owners of the particular Series of Bonds for which it was created. Each Debt Service Reserve .Fund shall initially be funded as .provided in the respective Bond Resolutions. (A) If, on any Interest Payment Date or Principal Installment Payment Date, after .transferring finds to the Debt Service Fund as provided in Section 4.02, the Debt Service Reserve Fund contains amounts less than the Reserve Requirement for a particular Series of Bonds, the Trustee shall withdraw from the Pledged Revenue Fund and deposit into each Debt Service Reserve Fund containing less than the Reserve Requirement for such Debt Service Reserve Fund, the amount required to attain the Reserve Requirement for each Series of Bonds. If there are not sufficient funds in the Pledged Revenue Fund to fund the Reserve Requirement of the various Debt Service Reserve Funds, the Trustee shall deposit to each Debt Service Reserve Fund containing less than the Reserve Requirement an amount calculated on a pro rata basis (based upon the percentage of the stun of Reserve Requirements for each individual Series of Bonds with Reserve Requirements compared to sum of the' Reserve Requirements for all Series of Bonds) into the Debt Service Reserve Fund all interest and income earned from the investment of amounts credited to the Debt Service Reserve Fund until the Reserve Requirements of the various Debt Service Reserve Funds are again attained. (B) So long as a Debt Service Reserve Fund contains amounts at least equal to the sum of the Reserve Requirements, all earnings on such Debt Service Reserve Fund shall be transferred and deposited, as collected, into the Debt Service Fund. 16 HOU:3210532.5 (C) Amounts deposited into_.a Debt Service Reserve Fund (i) shall be used to pay interest on or Principal Installments of the Tax Increment Contract Revenue Bonds of that particular Series when insufficient funds are available for such purpose in the Debt Service Fund or (ii) may be applied toward the payment of interest on or Principal Installments of Tax Increment Contract Revenue Bonds of the particular Series in connection with the refunding or redemption of such Series of Tax Increment Contract Revenue Bonds. (D) The Authority expressly reserves the right at any time to satisfy all or part of the Reserve Requirement for one or more of the Debt Service Reserve Funds by obtaining for the benefit of one or more of the Debt Service Reserve Funds one or more Reserve Fund Surety Policies. In the event the Authority elects to substitute at any time a Reserve Fund Surety Policy for any funded amounts in a Debt Service Reserve Fund, it. may apply any bond proceeds thereby released, to the greatest extent permitted by law, to any purposes for which any.Bonds were issued and any other funds thereby released to any purposes for which such funds may lawfully be used, including the payment of debt service on any Bonds. The premium for any Reserve Fund Surety Policy shall be paid from bond proceeds or other funds of the Authority lawfully available for such purpose. Any Reserve Fund Surety Policy shall be authorized by resolution. All amounts deposited in or required to be deposited in a Debt Service Reserve Fund may be used to pay obligations incurred to providers of Reserve Fund Surety Policies, including amounts advanced thereunder, interest on such advances and related costs and expenses. Section 4.05 Project Fund. There is hereby created and established . a fund to be designated the "Project Fund" and held and maintained by the Authority. Subaccounts may be established and created as the Authority deems appropriate. The Project Fund and any subaccounts thereof, shall initially be funded as provided in the Bond Resolutions. The money and securities in the Project Fund shall be applied as provided herein. Authority is hereby authorized and directed to make disbursements from the Project Fund and any subaccounts thereof and to issue its checks therefor or otherwise pay for Project Costs including the repayment of any loans, notes or other obligations used to finance Project Costs. Section 4.06 Surplus Fund. Subject to the provisions of Section 4.02(D), there shall be deposited into the Surplus Fund any amounts remaining in the Pledged Revenue Fund. After transfer to the Surplus Fund, such amounts may be used by the Authority for any lawful purpose free from the lien and pledge of this Indenture. Section 4.07 Rebate Fund. (A) Any provision hereof to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien created by the Indenture. The Trustee shall transfer from the Pledged Revenue Raid to the credit of the Rebate Fund each amount directed by the Authority to be transferred thereto. . 17' HOU:3210582.5 (B) Within five days after each transfer of funds to the Rebate Fund necessary to meet the requirements of Article VIII of the Bond Resolution or this Section 4.07, the Trustee shall withdraw from the Rebate Fund and pay to the United States the balance of the Rebate Fund. All payments to the United States pursuant to this Section shall be (i) made by the Trustee for the account and in the name of the Authority, (ii) paid by check mailed by registered mail (return receipt requested), addressed to the Internal Revenue Service Center, .Ogden, Utah 84201 (or such other Service Center as may be designated by the. Internal Revenue Service from time to time), and (iii) accompanied by the relevant Internal Revenue Service Form 803 8-T provided by the Authority. (C) The Trustee shall preserve copies (either in original form or by image) of all statements and forms received from the Authority pursuant to this Indenture and all records maintained by it of transactions in the Rebate Fund and shall deliver such materials to the Authority within 60 days following the discharge of the last of the Bonds. (D) The Trustee may in good faith conclusively rely on the instructions of the Authority with regard to any actions to be taken by it pursuant to this Section and shall have no liability for any consequences of any failure of the Authority to supply accurate or sufficient instructions. (E) If at any time during the term of this Indenture; the Trustee or the Authority desires to take any action that would otherwise be prohibited by the terms of this Section, such person will be permitted to take such action only if it shall first obtain and provide to the other person named herein an opinion of Bond Counsel (acceptable to both the Trustee and the Authority) to the effect that such action will not adversely affect the exclusion of interest on the Bonds from gross income of the holders thereof for federal income tax purposes and shall be in compliance with the laws of the State of Texas and the terms of this Indenture. Section 4.08 Investments; Earnings . Monies deposited into the Pledged Revenue Fund, the Debt Service Fund, and the Debt Service Reserve Fund shall be invested and reinvested in Eligible" Investments as directed in writing to the Trustee by the Authority; provided that all such Eligible Investments shall be directed by the Authority in such manner that the money required to be expended from any Fund will be available at the proper time or times. (A) All investments and any profits realized from or interest accruing on such investments shall belong to the Fund from which the monies for such investments were taken (except as otherwise expressly provided in this Indenture). All losses on investments shall be charged against the Fund to which such investments are credited. The Trustee shall have the right to have sold in the open market a sufficient amount of any such investments at any time that a Fund does not have sufficient uninvested funds on hand to meet the obligations payable out of such Fund. The Trustee shall not be liable or responsible for any loss resulting from any such investment or resulting from the sale of any such investment as herein authorized. (B) At the direction of the Authority, a portion of the investment income from any Fund may be paid directly to the Rebate Fund, free and clear of the lien and pledge of HOU:3210582.5 this Indenture, for payment to the United States pursuant to Section 4.07 in order to maintain the tax-exempt status of the Bonds. (C) The Trustee may make any investment through its or an affiliate's investment department, and the Trustee or such affiliate may receive compensation in connection with such investments. As amounts invested are needed for disbursement from any Funds, the Trustee shall cause a sufficient amount of the investments credited to that Fund to be redeemed or sold and converted into cash to the credit of that Fund. Securities transaction charges incident to any purchase, sale, or redemption of Eligible Investments shall be charged to the Authority. (D) The Authority by its execution of this Indenture covenants to restrict the investment of money in the Funds created under this Indenture in such manner and to such extent, if any, as may be necessary, after taking into account reasonable expectations at the time the Bonds are delivered to their original purchaser, so that the Bonds will not constitute arbitrage bonds under the Code and the Regulations, and the Trustee hereby agrees to comply with the Authority's instructions with respect to the investment of money in the Funds created under this Indenture. (E) The Authority has covenanted to provide the Trustee with written instructions to assure that any amounts that, in accordance with the Code and applicable regulations, are required to be invested at a restricted yield will be invested either (i) in Exempt Securities or (ii) at a yield that is not materially higher than the yield on the Bonds, determined in accordance with the Code and applicable Regulations, unless in the opinion of Bond Counsel, investment of such at a higher rate will not adversely affect the. exclusion from gross income of interest on the Tax Increment Contract Revenue Bonds for federal income tax purposes. For the purpose of applying this Section, amounts on deposit in each Fund shall be accounted for on a first in, first out basis. The Trustee, at the Authority's direction, is authorized to yield restrict any investment in accordance with Article VIII of the Bond Resolutions. (F) For the purpose of determining the amount on deposit to the credit of any such Fund, obligations in which money in such Fund shall have been invested shall be valued at the Fair Market Value. The Trustee shall provide a valuation of the Eligible Investments in the Funds established under this Indenture as of the last Business Day of each month. [END OF ARTICLE IV] 19 HOU:3210532.5 ARTICLE V COVENANTS OF THE AUTHORITY Section 5.01 Payment of Tax Increment Contract Revenue Bonds and Performance of Obligations . The Authority covenants to promptly pay or cause to be paid the principal of, redemption premium, if any, and interest on the Tax Increment Contract Revenue Bonds as the same become due and payable, whether at maturity or by prior redemption, in accordance with the terms of the Tax Increment Contract Revenue Bonds and the Bond Resolutions; to pay when due all fees, charges and other amounts due to the Trustee and the Paying Agent/Registrar for the discharge of their duties hereunder; and to faithfully keep and perform all of its covenants, undertakings and agreements contained in this Indenture, the Tr-Party Agreement, the Bond Resolutions and the Tax Increment Contract Revenue Bonds. Section 5.02 Recordation and Execution of Security Instruments . The Authority covenants to cause this Indenture, any supplemental indentures, and all other security instruments, financing statements and supplements thereto that may be necessary, to be filed, recorded, and refiled, in such manner, at such times and in such places as may be required by law in order to fully preserve and protect the rights and security of the Owners of the Tax Increment Contract Revenue Bonds and to perfect and preserve the lien of this Indenture. Without limiting the generality of the foregoing, the Authority shall execute and deliver such additional instruments and perform such additional acts as may be necessary and proper after the execution of this Indenture and to transfer to any successor Trustee or Trustees the assets, powers, instruments and funds held in trust hereunder and to confirm the lien of this Indenture with respect to any Bond or Tax Increment Contract Revenue Bonds, and shall take all action that may at any time be necessary, in the opinion of the Trustee, to secure the interests of the Owners of the Tax Increment Contract Revenue Bonds. Section 5.03 Title Encumbrances of Pledged Revenues . The Authority covenants that it has good and indefeasible title to the Contract Tax Increments, subject - to the assignments and pledges contained herein. So long as any Tax Increment Contract Revenue Bonds remain Outstanding, except as permitted by Sections 3.02 and• 3.03 of this Indenture, the Authority covenants not to sell, transfer, assign, pledge, encumber, mortgage or otherwise dispose of, directly or indirectly, by merger or otherwise, or cause or suffer same, or create or allow to accrue or exist any lien upon, all or any part of its interest in the Pledged Revenues or any portion thereof, except for the lien of this Indenture. Section 5.04 Pledged Revenues Not Encumbered . (a) The Pledged Revenues are not in any manner pledged to the payment of any debt or obligation of the Authority other than the Tax Increment Contract Revenue Bonds. The Authority covenants that it will not in any manner pledge or further encumber the Pledged Revenues unless such pledge or encumbrance is junior and subordinate to the lien and pledge hereunder securing the Tax Increment Contract Revenue Bonds. (b) Provided, however, the lien on, pledge of, and rights in and to the Contract Tax Increments established, made, and granted in Article II of this. Indenture and this Section 5.04 constitutes a lien thereon, subject only to the rights, if any, of the holders of 20 Ho1J:321 0582.5 bonds or other obligations . that have been heretofore or are hereafter issued by a Participant that are payable from and secured by a general levy of ad valorem taxes throughout the taxing jurisdiction of the Participant. Section 5.05 Collection of Contract Tax Increments. Subject to the provisions of applicable law and the Tri-Party Agreement, the Authority covenants and agrees to use its best efforts to cause each Participant to pay to the City, when due, all Contract Tax Increments to provide for the payment of principal of and interest on the Tax Increment Contract Revenue Bonds. Section 5.06 Amendment of Tri-Party Agreement. The Authority covenants not to cause any amendment of the -Tii-Party Agreement that will in any manner materially impair the rights of the Owners of the Tax Increment Contract Revenue Bonds. [END OF ARTICLE V] 21. HOU:3210582.5 ARTICLE VI DEFAULT AND REMEDIES Section 6.01 Events of Default . An Event of Default hereunder shall consist of any of the following acts or occurrences: (A) failure to pay when due Principal Installments or interest on any Tax Increment Contract Revenue Bond; or (B) failure to deposit to the Debt Service Fund money sufficient for the payment of any Principal Installments or interest payable on the Tax Increment Contract Revenue Bonds by no later than the, date when such Principal Installment or interest becomes due and payable. Section 6.02 . Notices . In order to provide the Authority with information with respect to its obligations under this Indenture, the Trustee shall provide the Authority the following notices: (A) Notice of any draws upon any Debt Service Reserve Fund which are required to be transferred to the Debt Service Fund for the payment of Principal .Installments of or interest on any Tax Increment Contract Revenue Bonds, together with the description of the amount drawn; and (B) Notice of transfers to the Surplus Fund pursuant. to Section 4.02 and Section 4.06. Section 6.03 Notice of Default . The Trustee shall also be required to give reasonably prompt notice to the Authority of the occurrence of any Event of Default hereunder of which the Trustee has actual knowledge, Section 6.04 Remedies in General . If an Event of Default hereunder shall occur and be continuing, then, in addition to all of the other rights and remedies granted to the Trustee hereunder, the Trustee in its discretion, subject to the provisions of this Indenture, may proceed to. protect and enforce its rights and the. rights of the Owners of Tax Increment Contract Revenue Bonds by suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture, the Bond Resolutions or the Tax Increment Contract Revenue Bonds or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable' or other remedy, as the Trustee, being advised by counsel, shall deem most effectual- to protect and enforce any of the rights of the Trustee or such Owners of the Tax Increment Contract Revenue Bonds, including, without limitation, the right to seek a writ of mandamus issued by a court of competent jurisdiction compelling the members of the Board or other officers of the Authority or any Participant to make payment of the Contract Tax Increments (but only from and to the extent of the sources provided in this Indenture and the Participant Contracts) or to observe and perform such covenant, obligations or conditions of this Indenture or the Tri-Party Agreement. 22 HOU:3210582.5 Section 6.05 Appointment of Receivers. If an Event of Default hereunder shall occur and be continuing, and upon filing of a bill in equity or commencement of other judicial proceedings to enforce the rights of the Trustee and the Owners hereunder, the Trustee shall be • entitled as a matter of right, and to the extent permitted by law, to the appointment of a receiver or receivers of the Pledged Revenues and the income, rents, profits and use thereof pending such proceedings, with such powers as the court making such appointment shall confer. Section 6.06 * Trustee May Act Without Possession of Tax Increment Contract Revenue Bonds. All rights of action under this Indenture or under any Tax Increment Contract Revenue Bonds may be enforced by the Trustee without possession of any of the Tax Increment Contract Revenue Bonds or the. production thereof on any trial or other proceedings relative thereto, and any such suit or proceedings instituted by the Trustee shall be brought in its name, as Trustee for the ratable benefit of the Owners of the Tax Increment Contract Revenue Bonds, subject to the provisions of this Indenture. Section 6.07 Trustee as Attorney in Fact. The Trustee is hereby appointed (and the Owners of the Tax Increment Contract Revenue Bonds, by taking and owning same from time to time, shall be deemed to have so appointed the Trustee) the true and lawful attorney in fact of the Owners of the Tax Increment Contract Revenue Bonds, to make or file, in the names of the Owners of the Tax Increment Contract Revenue Bonds, or in behalf of all Owners of the Tax Increment Contract Revenue Bonds as a class, any proof of debt, amendment to proof of debt, petition or other document, and to do and perform any and all acts and things for and in the name of the Owners of the Tax Increment Contract Revenue Bonds as a class as may be necessary or advisable, in the judgment of the Trustee, in order to have the claims of the Owners of the Tax Increment Contract Revenue Bonds against the Authority approved in any equity receivership, insolvency, liquidation, bankruptcy, reorganization or other proceedings to which the Authority shall be a party and to receive payment of or on account of such claims. Any such receiver, assignee, liquidator or trustee is hereby authorized by each of the Owners to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Owners, to pay to the Trustee any amount due for compensation and expenses of the Trustee, including counsel fees, incurred up to the date of such distribution, and the Trustee shall have full power of substitution and delegation in respect of any such powers. Section 6.08 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Tax Increment Contract Revenue Bonds, or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. Section 6.09 Limitation on Suits. All rights of action in respect of this Indenture shall be exercised only by the Trustee, and no Owner of any Bond secured hereunder shall have any right to institute any suit, action or proceeding at law or in equity for the appointment of a receiver or for any other remedy hereunder or by reason hereof, unless and until the Trustee shall have received written request of the Owners of not less than twenty-five percent (25%) in 23 HOU:3210582.5 aggregate principal amount of the Tax Increment Contract Revenue Bonds then Outstanding and shall have been furnished reasonable- indemnity and shall have refused or neglected , for ten (10) days thereafter to institute such suit, action or proceedings. The making of such request and the furnishing of such indemnity shall in each and every case be conditions precedent to the execution and enforcement by any Owner of any Bond of the powers and remedies given to the Trustee hereunder and to the institution and maintenance by any such Owner of any action or. cause of action for the appointment of a receiver or for any other remedy hereunder, but the Trustee may, in its discretion, and when duly requested in writing by the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Tax Increment Contract Revenue Bonds then Outstanding and when furnished indemnity satisfactory to protect it against expenses, charges and liability shall, forthwith, - take such appropriate action by judicial proceedings or otherwise in respect of any existing default on the part of the Authority as the Trustee may deem expedient in the interest of the Owners of the Tax Increment Contract Revenue Bonds. Nothing contained in this Article, however, shall affect or impair the right of any Owner, which shall be absolute and unconditional, to enforce the payment of the Principal Installments and interest on the Tax Increment Contract Revenue Bonds of such Owner, but only out of the moneys for such payment as herein provided, or the obligation of the Authority, which shall also be absolute and unconditional, to make payment of the Principal Installments and interest on the Tax Increment Contract Revenue Bonds issued hereunder, but only out of the funds provided herein for such payment, to the respective Owners thereof at the time and place stated in said Tax Increment Contract Revenue Bonds. Section 6.10 Right of Owners of the Tax Increment Contract Revenue Bonds to Direct Proceedings. Notwithstanding any provision of this Indenture to the contrary, the Owners of more than fifty percent (50%) in aggregate principal amount of the Tax Increment Contract Revenue Bonds then Outstanding shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the time, method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture or for any remedy available to the Trustee or exercising any trust or power, conferred on the Trustee or any other proceedings hereunder; provided, however, that such direction shall not be contrary to law or the provisions of this Indenture, and the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall determine that the proceeding so directed would involve :it in personal liability or would be unjustly prejudicial to the Owners of the Tax Increment Contract Revenue Bonds not consenting. Section 6.11 Restoration of Rights and Remedies. If the Trustee or any Owner of a. Bond has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Owner of a Bond, then and in every such case the Authority, the Trustee and the Owners of the Tax Increment Contract Revenue Bonds shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Owners of the Tax Increment Contract Revenue Bonds shall continue as though no such proceeding had been instituted. 24 HOU:3210582.5 Section 6.12 Waiver of Stay or Extension Laws. To the extent that it may lawfully do so, the Authority covenants that it will . not at any time insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of any stay or extension law whenever or wherever enacted, which may affect the covenants or the performance of this Indenture. The Authority also covenants that it will not otherwise hinder, delay or impede the execution of any power herein granted to the Trustee. Section 6.13 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Owner of any Bond to exercise. any right or remedy accruing upon any Event of Default hereunder shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Owners may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Owners of the Tax Increment Contract Revenue Bonds, as the case may be. [END OF ARTICLE VI] 25 HOU:3210582.5 ARTICLE VII DISCHARGE • . Section 7.01 Discharge by Payment . When all Tax Increment Contract Revenue Bonds have been paid in full as to principal and as to interest and premium, if any, or when all Tax Increment Contract Revenue Bonds have become due and payable, whether at maturity or by prior redemption or otherwise, and the Authority shall have provided for the payment of the whole amount due or to become due on all Tax Increment Contract Revenue Bonds ' then outstanding, including all interest which has accrued thereon or which may accrue to the date of maturity or redemption by depositing with the Trustee or the Paying Agent/Registrar, for payment of such outstanding Tax Increment Contract Revenue Bonds and the interest thereon and any premium which may be due thereon, the entire .amount due or to become due thereon, or amounts and investments sufficient to provide for such payment as provided in the Bond Resolutions, and the Authority shall also have paid or caused to be paid all sums payable hereunder by the Authority, including the compensation due or to become due the Trustee, then the Trustee shall, upon receipt of a letter of instructions from the Authority requesting the same, discharge and release the lien of this Indenture and execute and deliver to the Authority such releases or other instruments as shall be required to release the lien hereof. Section 7.02 Discharge by Deposit . The Authority may discharge its obligation to the Owners of any or all of the Tax Increment Contract Revenue Bonds to pay principal, interest and redemption premium (if any) thereon in any manner then permitted by law, including, but not limited to, by depositing with any paying agent for such Tax Increment Contract Revenue Bonds either: (i) cash in an amount equal to the principal amount and redemption premium, if any, of such Tax Increment Contract Revenue Bonds plus interest thereon to the date of maturity or redemption, or (ii) pursuant to an escrow or trust agreement, cash and/or Investments in principal amounts and maturities and bearing interest at rates sufficient (in the opinion of an independent certified public accountant) to provide for the timely payment of the principal amount and redemption premium, if any, of such Tax Increment Contract Revenue Bonds plus interest thereon to the date of maturity or redemption; provided, however, that if any of the Tax Increment Contract Revenue 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 the Bond Resolution authorizing such Tax Increment Contract Revenue Bonds. Upon such deposit, such Tax Increment Contract Revenue Bonds shall no longer be regarded to be Outstanding or unpaid. For'the purpose of this Section 7.02, "Investments" shall mean: (a) direct noncallable obligations of the United States, including .obligations that are unconditionally guaranteed by the United States; (b) 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 Authority authorizes the discharge by deposit of any or all of the Tax Increment Contract Revenue Bonds, are rated as to investment E0 HOU:3210582.5 quality by a nationally recognized investment rating firm not less than AAA or its equivalent; and (c) 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- Authority authorizes the discharge by deposit of any or all of the Tax Increment Contract Revenue Bonds, are rated as to investment quality by a nationally recognized investment rating firm of not less than AAA or its equivalent. [END OF ARTICLE VII] 2'7 HOU:3210552.5 ARTICLE VIII THE TRUSTEE Section 8.01 Acceptance of Trusts . The Trustee, for itself and its successors and assigns, hereby accepts the trusts under this Indenture, but only upon the following terms and conditions set forth in this Article. (a) • Notwithstanding any provision of the Indenture to the contrary, prior to an Event of Default hereunder, and after the curing of any such Event of Default, the Trustee shall not be liable for the performance of any duties, except such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee.. In case of an Event of Default which has not been cured, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and shall use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) In the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely upon the truth, completeness and accuracy of the letters of instruction, statements, certificates, opinions, certified resolutions and other certified showings conforming to the requirements of this Indenture. (c) The Trustee may execute any of the trusts or powers hereof and perform any duties required of it, by or through attorneys or agents selected by it with reasonable care, and shall be entitled to, and shall be protected in relying upon, advice of counsel concerning all matters of trust hereof and its duties hereunder, and may in all cases pay such reasonable compensation as it shall deem proper to all such attorneys and agents as may reasonably be required and employed in connection with the trusts, hereof, and the Trustee shall not be responsible for the acts or negligence of such attorneys, agents or counsel, if selected with reasonable care. (d) The Trustee shall not be responsible for any recitals herein, in the Bond Resolutions or in the Tax Increment Contract Revenue Bonds. The Trustee may require of the Authority full information and advice as to the performance of the covenants, conditions and agreements contained in this Indenture. The recitals and statements of fact and warranties contained in this Indenture, the Bond Resolutions and in the Tax Increment Contract Revenue Bonds shall be taken as statements by the Authority and shall not be considered as made by or as imposing any obligation or liability upon the Trustee. (e) Except as otherwise provided in this Indenture, the Trustee shall not be bound to recognize any person as an Owner of any Bond or to take action at such persons request, unless such person's name appears as the Registered Owner of such Bond in the Register. (f) Except as otherwise 'expressly provided by the provisions of this Indenture, the Trustee shall not be obligated and may not be required to give or furnish HOU:3210582.5 any notice, demand, report, request, reply, statement, advice or opinion to. any Owner of any Bond or to the Authority or any other person, and the Trustee shall not incur any liability for its failure or refusal to give or furnish same unless obligated or required to do so by express provision of the provisions hereof. (g) . Nothing herein contained shall relieve the Trustee from liability for its own grossly negligent action or failure to act or its own willful misconduct, except that the Trustee shall not incur any liability (i) for any error of judgment made in good faith by a responsible officer or responsible officers thereof, unless it shall be proved that it was grossly negligent in ascertaining the pertinent facts, or (ii) in respect of any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of the percentage of the Tax Increment. Contract Revenue Bonds specified herein relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee under this Indenture. (h) - None of the provisions contained. in this Indenture shall require the Trustee to advance, expend or risk its own funds or to otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to. it by the security afforded to it by the terms of this Indenture. (i) The Trustee shall have no responsibility with respect to any information in any offering memorandum or other disclosure material distributed, with respect to the Tax Increment Contract Revenue Bonds, and the Trustee shall have no responsibility for compliance with securities laws in connection with the issuance and sale of the Tax Increment Contract Revenue Bonds. (j) In the event the Trustee shall receive inconsistent or conflicting requests and indemnity from two or more groups of Owners, each representing less than a majority of 'the aggregate principal amount of the Tax Increment Contract Revenue Bonds then Outstanding, the Trustee, in its sole discretion, may determine. what action, if any, shall be taken. (k) Except -as otherwise especially provided by the provisions of this Indenture, the Trustee shall not be obligated and may not be required to give or furnish any notice, demand, report, request, reply, statement, advice or opinion to any Owner of any Tax Increment Revenue Bond or to the Authority or any other person, and the Trustee shall not incur any liability for its failure or refusal to give or furnish same unless obligated or required to do so by express provisions hereof. (1) The Trustee shall not be required to give any bond or surety with respect to the performance of its duties or the exercise of its powers under this Indenture. (m) Until termination of this • Indenture, the Trustee shall file continuation statements at the Authority's expense as required to continue in effect the Uniform 29 HOU:3210582.5 Commercial Code financing statement filed with the Secretary of State of the State of Texas listing the Trustee as the secured party and the Authority as the debtor. Section 8.02 Reliance by Trustee. To the extent not prohibited by this Article, the trustee may rely, and shall be protected in acting upon, any letters of instruction, statements, certificates, certified resolutions, opinions, notices, consents, orders; appraisals, reports, policies, bonds or other papers or documents believed by it to be genuine and to have been signed or presented to it by the proper person or persons, and the Trustee may consult with counsel and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Trustee hereunder in good faith and in conformity with the opinion of such counsel. Notwithstanding the foregoing, upon receipt by the Trustee of documents furnished to it by the Authority which are specifically required to be delivered tinder this Indenture, the Trustee shall examine the same to determine whether they conform to the requirements of this Indenture; however, the Trustee shall have no obligation to analyze the same or evaluate their substance. Section 8.03 Certificate of the Authority as Proof. Whenever in the administration of the trusts of this Indenture, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, then, in the absence of bad faith • on the part of the. Trustee, and unless other evidence in respect thereof. be herein specifically prescribed, and unless an Event of Default hereunder, to the actual knowledge of the Trustee, shall have occurred and be continuing, such matter may be deemed to be conclusively proved and established by a certificate of the Authority, executed by the Chairman of the Authority and delivered to, the Trustee, and such certificate shall be full warranty to the Trustee for any action taken or suffered by it tinder the provisions of this Indenture in reliance . thereon. Section 8.04 Trustee May Own Tax Increment Contract Revenue Bonds. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Tax Increment Contract Revenue Bonds or other certificates or evidences of ownership or pledge thereof issued hereunder, with the same rights it would have if it were not the Trustee. Section 8.05 Compensation of Trustee. The Authority shall pay to the Trustee in a timely manner all reasonable fees, charges and expenses of the Trustee (including the reasonable fees, charges and expenses of its agents and counsel) for the administration and execution of the trusts hereby created and the performance of its powers and duties hereunder, including the ordinary and extraordinary services performed by the Trustee under this Indenture. Whenever the Trustee incurs expenses or renders services in connection with any bankruptcy or insolvency proceeding, such expenses (including the fees and expenses of its counsel) and the compensation of such services are intended to constitute expenses of administration under any bankruptcy or insolvency law or law relating to creditors' rights generally. Section 8.06 Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing, signed by the Owners of a majority in principal amount of the Tax Increment Contract Revenue Bonds then Outstanding and delivered to. the Trustee, with notice thereof given to the Authority. 30 HOU:3210582.5 Section 8.07 Resignation of Trustee. The Trustee may at any time resign and be discharged from the trusts hereby ' created by giving written notice to the Authority and by providing written notice to the Owners of its intended resignation at least sixty (60) days in advance thereof. Such notice shall specify the date on which such resignation shall take effect and shall be sent by first class mail, postage prepaid to each Registered Owner of Tax Increment Revenue Bond. Resignation by the Trustee shall not take effect unless and until a successor to such Trustee shall have been appointed as hereinafter provided. Section 8.08 Appointment of Successor Trustee. In case the Trustee hereunder shall resign, or shall be removed or dissolved, or shall be in the course of dissolution or liquidation, or shall otherwise become incapable of acting hereunder, or in case the Trustee shall be taken"under control of any public officer or officers or a receiver appointed by a court, a successor may be appointed by the Owners of a majority in principal amount of the Tax Increment Contract Revenue Bonds then Outstanding, by an instrument or concurrent instruments in writing, signed by such Owners or their duly authorized representatives and delivered to the Trustee, with notice thereof given to the Authority; provided, however, that in any of the events above mentioned, the Authority may nevertheless appoint a temporary Trustee to fill such vacancy until a successor shall be appointed by the Owners in the manner above provided, and any such temporary Trustee so appointed by the Authority shall immediately and without further act be automatically succeeded by the successor to the Trustee appointed by the Owners. The Authority shall provide written notice to the Owners. of the appointment of any successor Trustee, whether temporary or permanent, in the manner provided in the preceding Section of this Indenture for providing notice of the resignation of the Trustee. Any successor Trustee or temporary Trustee shall be a trust company or bank in good standing located in or incorporated under , the laws of the State of Texas duly authorized to exercise trust powers and subject to examination by federal or state authority, having a reported capital and surplus of not less than $100,000,000. In the event that no appointment of a successor Trustee is made by the Owners or by the Authority pursuant to the foregoing provisions of this Section at the time 'a vacancy in the office of the Trustee shall have occurred, the Owner of any Bond issued hereunder or the retiring Trustee may apply to any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice as it shall deem proper, if any, appoint a successor Trustee. Section 8.09 Powers of Successor Trustee. Each successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Authority, an instrument in writing accepting such appointment hereunder, and thereupon such successor Trustee, without 'any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor, but such predecessor Trustee shall, nevertheless, on the written request of the Authority, execute and deliver an instrument transferring to such successor Trustee all the estates, properties, rights, powers, trusts, duties and obligations of such predecessor hereunder. Each predecessor Trustee shall immediately deliver all properties, securities and moneys held by it to its successor; provided, however, that before any such delivery is required or made, all proper fees, advances and expenses of the predecessor Trustee shall be paid in full. Should any deed, conveyance or instrument in writing be required from the. Authority by any successor Trustee for properties, rights, powers, trusts, duties and obligations hereby vested or intended to be vested in the 31 HOU:3210582.5 predecessor Trustee, any and all such deeds, conveyances and instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority. The resignation of any Trustee, appointing a successor Trustee hereunder, together with all deeds, conveyances and other instruments provided for in this Article shall, at the expense of the Authority, be properly filed or recorded and a copy thereof shall be filed with such successor Trustee, together with a statement showing such filing or recordation.. Section 8.10 Merger, Conversion or Consolidation of Trustee. Notwithstanding any provision hereof to the contrary, any corporation or association into which the Trustee may be merged or converted, or with which it may be consolidated, or any corporation succeeding to all. or substantially all of the corporate trust business of the Trustee, or any corporation or association resulting from any merger, conversion or consolidation to which the Trustee shall be a party, shall be the successor Trustee under this Indenture without the execution or filing of any instrument or any other act on the part of any of the parties hereto. Section 8.11 Funds Transfer. If any payment is to be made by the Trustee to the Authority or its designee by funds transfer, the Authority agrees to enter into an agreement concerning funds transfer instructions in a form to be provided by the Trustee. Until the. Authority executes such an agreement, the Trustee shall not be required to make any payment under the Indenture to the Authority or its designee by funds transfer. [END OF VIII] 32 . HOU:3210582.5 ARTICLE IX MODIFICATION OF INDENTURE Section 9.01 - Supplemental Indentures Not Requiring Consent of Owners of the Tax Increment Contract Revenue Bonds. The Authority and the Trustee may, without the consent of the Owners of any of the Tax Increment Contract Revenue Bonds, enter into one or more supplemental indentures, which shall form a part hereof, for any one or more of the following purposes: (a) to cure any ambiguity, inconsistency or formal defect or omission in this Indenture; (b) to grant to or confer upon the Trustee for the benefit of the Owners of the Tax Increment Contract Revenue Bonds any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Owners of the Tax Increment Contract Revenue Bonds or the Trustee or either of them; (c) to subject to the lien of this Indenture additional revenues; properties or collateral; (d) to modify, amend or supplement this Indenture or any supplemental indenture in such manner as to provide further assurances that interest on the Tax Increment Contract Revenue Bonds will, to the greatest extent legally possible, be excludable from gross income for federal income tax purposes; (e) to obtain bond insurance for any Tax Increment Contract Revenue Bonds; (f) to provide for one or more Reserve Fund Surety Policies; (g) to permit the assumption of the Authority's obligations hereunder by any other entity that may become the legal successor to the Authority; and (h) to define or redefine the Reserve Requirement or clarify the relationship between particular Debt Service Reserve Funds and particular series of Bonds. provided, however, that no provision in such supplemental indenture shall be inconsistent with this Indenture or shall impair in any manner the rights of the Owners of the Tax Increment Contract Revenue Bonds. Section 9.02, Supplemental Indentures Requiring Consent of Owners of the Tax Increment Revenue Bonds. Except as otherwise provided in the preceding Section, any modification, change or amendment of this Indenture may be made only by a supplemental indenture adopted and executed by the Authority and the Trustee with the consent of the Owners of not less than a majority of the aggregate principal amount of the Tax Increment Contract Revenue Bonds then Outstanding. 33 HOU:32 t0582.5 Notwithstanding the preceding paragraph of this Section, no modification, change or amendment to this Indenture shall, without the consent of the Owner of each Bond so affected, extend the time of payment of the Principal Installments or interest thereon, or reduce the Principal Installments or premium, if any, thereon; or the rate of interest thereon, or make the Principal Installments or - interest thereon payable in any coin or currency other than that hereinbefore provided, or deprive such Owner of the lien hereof on the revenues pledged hereunder. Moreover, without the consent of the Owner of each Bond then Outstanding, no modification, change or amendment to this Indenture shall permit the creation of any lien on the revenues pledged hereunder equal or prior to the lien hereof, or reduce the aggregate principal amount of Tax Increment Contract Revenue Bonds, the Owners of which are required to approve any such modification, change or amendment of this Indenture. Section 9.03 Consents . Consents required pursuant to this Article shall be valid only if given following the giving of notice by or on behalf of the Authority requesting such consent, setting forth the substance of the supplemental indenture in respect of which such consent is sought and stating that copies thereof are available at the office of the Trustee for inspection, to the Owners of Tax Increment Contract Revenue Bonds whose consent is required in accordance with the provisions of this Article. Such notice shall be given by sending such notice by first- class mail; postage prepaid, to the registered Owners of such Tax Increment Contract Revenue Bonds. Any consent or other action, by. an Owner of any Bond in accordance with this Article shall bind every future owner of the same Bond and the Owner of any Bond issued in exchange therefor or in lieu thereof. [END OF ARTICLE IX] 34 HOU:3210582.5 ARTICLE X GENERAL PROVISIONS Section 10.01 Proof of Execution of Writings and Ownership . Any instrument provided. in this Indenture to be signed or executed by the Owners of all or any portion of the Tax Increment Contract Revenue Bonds may be in any number of writings of similar tenor and may be signed or executed by such Owners in person or by their duly authorized representatives. Proof of the execution of any such instrument, or of the writing appointing any such agent, or of the ownership of any Bond, shall be sufficient for any of the purposes of this Indenture and shall be conclusive in favor of the Authority and the Trustee with respect to any actions taken by either under such instruments if: . (a) the fact and date of the execution by any person of any such instrument is proved by (i) a certificate of any officer of any jurisdiction who by law has power to take acknowledgments of deeds within such jurisdiction, to the effect that the person signing such instrument acknowledged before him the execution thereof, or (ii), an affidavit of a witness of such execution; and (b) the ownership_ of any Bond registered as to both principal and interest is proved by the registration books kept by the Paying Agent/Registrar. Section 10.02 Benefits of Indenture . The covenants, stipulations and agreements contained in this Indenture are and shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns, and the Owners of the Tax Increment Contract Revenue Bonds, and nothing in this Indenture expressed or implied shall be construed to confer upon or give to any other person any right, remedy or claim under or by reason of this Indenture. Section 10.03 No Individual Liability . No covenant or agreement contained in the Tax Increment Contract Revenue Bonds or in this Indenture shall be deemed to be the covenant or agreement of any member of the Board of Directors of the Authority or any officer, agent, employee or representative of the Authority in his individual capacity, and neither the officers, agents, employees or representatives of the Authority nor any person executing the Tax Increment Contract Revenue Bonds shall be personally liable thereon or be subject to any personal liability or accountability by reason of the issuance thereof, whether by virtue of any constitution, statute or rule of law, or by the enforcement of • any assessment or penalty, or otherwise, all such liability being expressly released and waived as a condition of and in consideration for the execution of this Indenture, the adoption of the Bond Resolutions and the issuance of the Tax Increment Contract Revenue Bonds. 35 IHOU:3210582.5 Section 10.04 Notice . Any notice, demand, direction, request, or other instrument authorized or required by this Indenture to be given to or filed with the Trustee or the Authority shall be deemed to be effective for all'purposes of this Indenture if and when sent by (i) personal delivery, to the persons designated below at the address designated below, (ii) registered or certified mail, postage prepaid, to the address specified below or (iii) facsimile transmission to the number specified below with confirmation of receipt by telephone, or to such other person, at such other address or to such other number as may be designated in writing by the parties: Trustee: Regions Bank . Corporate Trust Services 1717 St. James Place, Suite 500 Houston, TX 77056 Attn: Doug Milner Facsimile: (713) 693-5348 Telephone: (713) 693-5303 Authority: Development Authority of Pearland c/o the City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Attn: City Manager Facsimile: (281) 652-1708 Telephone: (281) 652-1663 Section 10.05 Governing Law . This Indenture shall be governed in all respects, including validity, interpretation and effect, by, and shall be enforceable in accordance with, the laws of the State of Texas. Section 10.06 Severability . If any provision of this Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions shall not in any way be affected or impaired. In case any covenant, stipulation, obligation or agreement contained in the Tax Increment Contract Revenue Bonds, the Bond Resolutions or in this Indenture shall for any reason be held to be usurious or in violation of law, then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the Authority to the full extent permitted by law. Section 10.07 Successors and Assigns . This " Agreement shall be binding upon the Authority and the Trustee and their successors and assigns. Section 10.08 Execution in Several Counterparts . This Indenture may be simultaneously executed in several counterparts all of which shall constitute one and the same instrument and each of which shall be, and shall be deemed to be, an original. 3e HOU:3210582.5 37 IN WITNESS WHEREOF, the Authority and the Trustee have caused this Indenture to be signed, sealed and attested on their behalf by their duly authorized representatives, all as of the date first hereinabove written. DEVELOPMENT AUTHORITY OF PEARLAND Chair ATTEST: Secretary Trustee ATTEST: (SEAL) HOU:3210582.2 IN WITNESS WHEREOF, the Authority and the Trustee have caused this Indenture to be signed, sealed and attested on their behalf by their duly authorized representatives, all as of the date first hereinabove written. DEVELOPMENT AUTHORITY OF PEARLAND Chair ATTEST: Secretary REGIONS BANK, T stee By: Title: VICE PREfi{IEN'~ Trustee. ATTEST: (.SEAL) 'e 37 HOU:3210592.3 CERTIFICATE FOR RESOLUTION THE STATE OF TEXAS COUNTIES OF BRAZORIA, FORT BEND AND HARRIS CITY OF PEARLAND I, 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 November 11, 2013, 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 Greg Hill Mayor Pro Tern Scott Sherman Councilmember Susan Sherrouse Councilmember Keith Ordeneaux Councilmember Anthony D. Carbone Councilmember and all of such persons were present, thus constituting a quorum. Whereupon, among other business, the following was transacted at said meeting: a written RESOLUTION OF THE CITY OF PEARLAND, TEXAS APPROVING THE ISSUANCE OF DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013; APPROVING A BOND RESOLUTION, A PRIVATE PLACEMENT LETTER, AND OTHER DOCUMENTS RELATING TO THE BONDS; MAKING CERTAIN FINDINGS AND CONTAINING OTHER PROVISIONS RELATED THERETO (the "Resolution") was duly introduced for the consideration of the City Council and read in full. It was then duly moved and seconded that the Resolution be adopted; and, after due discussion, such motion, carrying with it the adoption of the Resolution, prevailed and carried by the following vote: AYES: 5 NAYS: 0 ABSTENTIONS: 0 2. That a true, full and correct copy of the Resolution adopted at the meeting described in the above and foregoing paragraph is attached to and follows this certificate; that the Resolution has been duly recorded in the City Council's minutes of such meeting; that the above 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 Resolution; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of the City Council as indicated therein; that each of the officers and members of the City Council was duly and sufficiently notified officially and personally, in advance, of the date, hour, place and subject of the aforesaid meeting, and that the Resolution 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. HOU:3364747. I SIGNED AND SEALED this November 11, 2013. ~A1 IT Mayor CITY OF PEARLAND, TEXAS HOU:3364747.1 RESOLUTION NO. 2013-184 RESOLUTION OF THE CITY OF PEARLAND, TEXAS, APPROVING THE ISSUANCE OF $9,150,000 DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013; APPROVING A BOND RESOLUTION, A PRIVATE PLACEMENT LETTER, AND OTHER DOCUMENTS RELATING TO THE BONDS; MAKING CERTAIN FINDINGS AND CONTAINING OTHER PROVISIONS RELATED THERETO STATE OF TEXAS § COUNTIES OF BRAZORIA, FORT BEND AND HARRIS § CITY OF PEARLAND § WHEREAS, by City Ordinance No. 891, the City of Pearland, Texas (the "City") created Reinvestment Zone Number Two, City of Pearland, Texas (the "Zone") pursuant to Chapter 311, Texas Tax Code (the "TIRZ Act"); and WHEREAS, by Resolution No. 2004-107 adopted by the City Council of the City on June 28, 2004, the City authorized the creation of the Development Authority of Pearland (the "Authority") as a local government corporation pursuant to Subchapter D of Chapter 431, Texas Transportation Code (the "LGC Act"), to aid, assist and act on behalf of the City in the performance of the City's governmental and proprietary functions with respect to the common good and general welfare of the Zone; and WHEREAS, by City Ordinance No. R2004-170, the City authorized an agreement with the Zone and the Authority (the "Tri-Party Agreement"), which sets forth, among other things, the duties and responsibilities of the Authority, the City and the Zone as they relate to reimbursements for Project Costs (as defined in the Indenture) in the Zone, and pursuant to which the City and the Zone have agreed to pay the Authority on an annual basis certain of the Tax Increments (as defined in the Indenture) then available in the Tax Increment Fund (as defined in the Indenture); and WHEREAS, the Tri-Party Agreement authorizes the Authority to issue bonds secured by payments made to the Authority under the Tri-Party Agreement and further authorizes the Authority to issue such bonds for the purpose of making developer reimbursements for Project Costs only with the approval of the City; and WHEREAS, the Authority has previously issued its $13,995,000 Tax Increment Contract Revenue Bonds, Series 2004, (the "Series 2004 Bonds"), its $9,775,000 Tax Increment Contract Revenue Bonds, Series 2005 (the "Series 2005 Bonds"), its $9,970,000 Tax Increment Contract Revenue Bonds, Series 2006 (the "Series 2006 Bonds"), its $15,950,000 Tax Increment Contract Revenue Bonds, Series 2007 (the "Series 2007 Bonds"); its $8,815,000 Tax Increment Contract Revenue Bonds, Series 2009 (the "Series 2009 Bonds") (collectively, the "Refunded Bonds"); HOU:3364762.2 and its $56,915,000 Tax Increment Contract Revenue and Refunding Bonds (the "Series 2012 Bonds"); and WHEREAS, the Authority desires to issue its Tax Increment Contract Revenue Bonds, Series 2013 in the aggregate principal amount of $9,150,000 (the "Bonds") pursuant to a resolution authorizing the issuance of the Bonds (the "Bond Resolution") adopted by the Authority on November 11, 2013, and the Authority desires to use the proceeds from the sale of such Bonds for the purposes of (1) paying Project Costs (which includes amounts owed to developers under certain development agreements and the acquisition and the construction of certain public works and public improvements within the Zone) and (2) paying costs of issuance of the Bonds, all under and pursuant to the authority of the Act and all other applicable law; and WHEREAS none of the proceeds of the Bonds shall be used for the purpose of paying or otherwise providing for educational facilities, and WHEREAS the City Council desires to approve the issuance of the Authority's Tax Increment Contract Revenue Bonds, Series 2013; Now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS THAT: Section 1. Preamble. The facts and recitations set out in the preamble of this Resolution are found to be true and correct and are hereby adopted and made a part hereof for all purposes. Section 2. Approval of Bonds; Authorization of Agreements; Approval of Reimbursements. City Council hereby approves the issuance of the Bonds by the Authority and all reasonable agreements necessary in connection with the issuance of the Bonds, including without limitation the following: the Private Placement Letter with Compass Mortgage Corporation (attached hereto as Exhibit A) and any and all other documents and agreements reasonable and necessary for the Authority to issue the Bonds (collectively, the "Agreements"). City Council hereby reconfirms its prior approval of certain developer reimbursements and acknowledges that a portion of the proceeds from the sale of the Bonds will be used to make such reimbursements. Section 3. Approval of Bond Resolution. City Council hereby approves the Authority's Bond Resolution authorizing the issuance of the Authority's $9,150,000 Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013, a copy of which is attached hereto as Exhibit B. Section 4. Authorization of Other Matters Relating Thereto. The Mayor, City Secretary and other officers and agents of the City are hereby authorized and directed to do any and all things necessary or desirable to carry out the provisions of this Resolution. Section 5. Effective Date. This Resolution shall take effect immediately upon passage. Section 6. Public Meeting. It is officially found, determined and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, 2 I-IOU:3364762.2 place and subject matter of the public business to be considered at such meeting, including this Resolution, was given all as required by the Texas Government Code, Chapter 551, as amended. HOU:3364762.2 PASSED AND APPROVED this j\4-day of November, 2013. h /1 Mayor City of Pearland ATTEST: V Secre of Pe and, Texl r41 HOU:3364762.2 Private Placement Letter See Transcript Tab 2 A-1 HOU:3364762.2 Bond Resolution See Transcript Tab 5 B-1 HOU:3364762.2 CERTIFICATE FOR RESOLUTION THE STATE OF TEXAS COUNTIES OF BRAZORIA, FORT BEND AND HARRIS CITY OF PEARLAND I, the undersigned officer of the Board of Directors of the Development Authority of Pearland (the "Authority"), hereby certify as follows: 1. The Board of Directors of the Authority convened in a special meeting on November 11, 2013, at the special meeting place of the Authority; and the roll was called of the duly constituted officers and members of the Authority, to wit: Tom Reid Chair Bill Sloan Vice-Chair Ed Baker Secretary Tom Pool Director Anthony D. Carbone Director and all of such persons were present, except Bill Sloan, thus constituting a quorum. Whereupon, among other business, the following was transacted at said meeting: a written RESOLUTION AUTHORIZING THE ISSUANCE OF $9,150,000 DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS SERIES 2013; APPROVING DOCUMENTS RELATING TO THE SERIES 2013 BONDS; AND CONTAINING OTHER PROVISIONS RELATED THERETO (the "Resolution") was duly introduced for the consideration of the City Council and read in full. It was then duly moved and seconded that the Resolution be adopted; and, after due discussion, such motion, carrying with it the adoption of the Resolution, prevailed and carried by the following vote: AYES: 4 NAYS: 0 ABSTENTIONS: 0 2. That a true, full and correct copy of the Resolution adopted at the meeting described in the above and foregoing paragraph is attached to and follows this certificate; that the Resolution has been duly recorded in the City Council's minutes of such meeting; that the above 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 Resolution; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of the City Council as indicated therein; that each of the officers and members of the City Council was duly and sufficiently notified officially and personally, in advance, of the date, hour, place and subject of the aforesaid meeting, and that the Resolution 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. I-IOU:3372586.I SIGNED this November Li , 2013. Secretary Chair Board of Directors Board of Directors I-IOU:3372586.I RESOLUTION AUTHORIZING THE ISSUANCE OF $9,150,000 DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013; APPROVING DOCUMENTS RELATING TO THE SERIES 2013 BONDS; AND CONTAINING OTHER PROVISIONS RELATED THERETO BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE DEVELOPMENT AUTHORITY OF PEARLAND: ARTICLE I RFCTTAT.S WHEREAS, by Ordinance No. 891, adopted on December 21, 1998, the City of Pearland (the "City") created Reinvestment Zone Number Two, City of Pearland, Texas (the "TIRZ") pursuant to Chapter 311, Texas Tax Code, and by Ordinance No. 1276, adopted on July 10, 2006, the City approved an annexation of land into the TIRZ; and WHEREAS, by Ordinance No. 918, adopted on August 23, 1999, the City approved a preliminary project plan for the TIRZ and a preliminary reinvestment zone financing plan for the TIRZ, which it amended by Ordinance No. 1276, adopted on July 10, 2006, by Ordinance No. 1312 adopted on November 13, 2006, and by Ordinance No. 1314, adopted on November 13, 2006; and WHEREAS, by Resolution No. 2004-107, adopted on June 28, 2004, the City authorized the creation of the Development Authority of Pearland (the "Authority") to aid, assist and act on behalf of the City in the performance of the City's governmental and proprietary functions with respect to, and to provide financing for the TIRZ; and WHEREAS, by Ordinance No. R2004-17, adopted on October 11, 2004, the City approved and on October 5, 2004, the Boards of Directors of the TIRZ and the Authority approved that certain Agreement by and between the City, the TIRZ, and the Authority, as amended by Amendment No. 1 to the Tri-Party Agreement, dated September 17, 2007 (collectively, the "Tri-Party Agreement"), pursuant to which the City delegated to the Authority the power and authority to issue, sell or deliver its bonds, notes or other obligations in accordance with the terms of the Tri-Party Agreement; and WHEREAS, the Authority has previously issued its $13,995,000 Tax Increment Contract Revenue Bonds, Series 2004, (the "Series 2004 Bonds"), its $9,775,000 Tax Increment Contract Revenue Bonds, Series 2005 (the "Series 2005 Bonds"), its $9,970,000 Tax Increment Contract Revenue Bonds, Series 2006 (the "Series 2006 Bonds"), its $15,950,000 Tax Increment Contract Revenue Bonds, Series 2007 (the "Series 2007 Bonds"); its $8,815,000 Tax Increment Contract Revenue Bonds, Series 2009 (the "Series 1 HOU:3364408.3 2009 Bonds"), (collectively, the "Refunded Bonds"); and its $56,915,000 Tax Increment Contract Revenue and Refunding Bonds, Series 2012 (the "Series 2012 Bonds"); and WHEREAS, the Authority refunded the Refunded Bonds with a portion of the proceeds of the Series 2012 Bonds; and WHEREAS by the Resolution adopted on November 11, 2013, the City authorized the Authority to issue, sell, or deliver its Tax Increment Contract Revenue Bonds, Series 2013; and WHEREAS, as permitted by the Act, the Authority desires to issue its Tax Increment Contract Revenue Bonds, Series 2013 upon the terms and conditions and for the purposes herein provided. ARTICLE II DEFINITIONS AND INTERPRETATIONS Section 2.1: Definitions. In this Resolution, the following terms shall have the following meanings, unless the context clearly indicates otherwise. Terms not defined herein shall have the meanings assigned to such terms in the Indenture: The term "Business Day" shall mean any day which is not a Saturday, Sunday, or a day on which banking institutions in the city where the designated payment office of the Paying Agent/Registrar is located are authorized by law or executive order to close, or a legal holiday. The "Code" means the Internal Revenue Code of 1986, as amended. The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Highest Lawful Rate" shall mean with respect to the Series 2013 Bonds the maximum net effective interest rate permitted by law to be paid thereon as provided by Chapter 1204, Texas Government Code, as amended, or any successor thereto. The term "Indenture" shall mean the Indenture of Trust dated as of May 1, 2012, between the Authority and Regions Bank, as Trustee. The term "Initial Series 2013 Bond" shall mean the Initial Series 2013 Bond authorized by Section 3.4(d). The term "Interest Payment Date" shall mean, with respect to the Series 2013 Bonds, March 1, 2014 and each September 1 and March 1 thereafter until maturity or redemption.. 2 HOU:3364408.3 The term "Issuance Date" shall mean the date on which each such Series 2013 Bond is authenticated by the Paying Agent/ Registrar and delivered to and paid for by the Purchaser. The term "Purchaser" shall mean the Compass Mortgage Corporation as initial purchaser of the Series 2013 Bonds. The term "Paying Agent/Registrar" shall mean Compass Bank, and its successors in that capacity. The term "Record Date" shall mean, for any Interest Payment Date, the fifteenth (15th) calendar day of the month next preceding each Interest Payment Date. The term "Resolution" or "Bond Resolution" shall mean this Resolution Authorizing the Issuance of $9,150,000 Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013, and all amendments hereof and supplements hereto. The term "Series 2013 Bond" or "Series 2013 Bonds" shall mean the Authority's Tax Increment Contract Revenue Bonds, Series 2013 authorized by this Resolution. Section 2.2: Interpretations. All terms defined herein and all pronouns used in this Resolution 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 Resolution 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 Resolution 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 Parity Bonds and the validity of the lien on and pledge of the Pledged Revenues to secure the payment of the Parity Bonds. ARTICLE III TERMS OF THE SERIES 2013 BONDS Section 3.1: Amount, Purpose, Authorization. The Series 2013 Bonds shall be issued in the aggregate principal amount of $9,150,000 for the purpose of (1) paying Project Costs and (2) paying costs of issuance, all under and pursuant to the authority of the Act and all other applicable law. None of the proceeds of the Series 2013 Bonds shall be used for the purpose of paying or otherwise providing for educational facilities. Section 3.2: Name, Designation, Date, and Interest Payment Dates. The Series 2013 Bonds shall be designated as the "DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2013," shall 3 HOU:3364408.3 be issued in fully registered form, without coupons and shall be dated November 15, 2013(the "Dated Date"). The Series 2013 Bonds shall bear interest at the rates set forth in Section 3.3 from the later of the date of delivery, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30-day months, payable, semiannually on March 1 and September 1, commencing March 1, 2014, until maturity or earlier redemption. Section 3.3: Principal Amounts and Interest Rates; Numbers and Denomination. The Series 2013 Bonds shall be initially issued in the principal amounts and bearing interest at the rates set forth below, and may be transferred and exchanged as set out in this Resolution. The Series 2013 Bonds shall mature, subject to prior redemption in accordance with this Resolution, on September 1 ,2029. The Series 2013 Bonds shall accrue interest from the date of delivery at an interest rate of 3.77% per annum. The Initial Bond shall be numbered I-1 and the definitive Series 2013 Bonds shall be numbered with R-1. Series 2013 Bonds delivered on transfer of or in exchange for other Series 2013 Bonds shall be numbered in the order of their authentication by the Paying Agent/Registrar, shall be in the denomination of $100,000 or $5,000 increments thereof, and shall mature on the same date and bear interest at the same rate as the Series 2013 Bond or Series 2013 Bonds in lieu of which they are delivered. The Bonds will be subject to mandatory sinking fund redemption in installments according to the following schedule: Principal Maturity Date Interest Rate Amount September 1 $430,000 2014 3.77% 365,000 2015 3.77 380,000 2016 3.77 385,000 2017 3.77 405,000 2018 3.77 420,000 2019 3.77 445,000 2020 3.77 465,000 2021 3.77 735,000 2022 3.77 560,000 2023 3.77 615,000 2024 3.77 670,000 2025 3.77 725,000 2026 3.77 785,000 2027 3.77 850,000 2028 3.77 915,000 2029 3.77 Section 3.4: Execution and Registration of Series 2013 Bonds. (a) The Series 2013 Bonds shall be signed by the Chair or Vice Chair or Director of the Board and countersigned by the Secretary or Director of the Board, by their manual, lithographed, 4 HOU:3364408.3 or facsimile signatures. Such facsimile signatures on the Series 2013 Bonds shall have the same effect as if each of the Series 2013 Bonds had been signed manually and in person by each of said Directors or officers. (b) If any Director or officer of the Authority whose manual or facsimile signature shall appear on the Series 2013 Bonds shall cease to be such Director or officer before the authentication of such Series 2013 Bonds or before the delivery of such Series 2013 Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such Director or officer had remained in such office. (c) Except as provided below, no Series 2013 Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Resolution unless and until there appears thereon the Paying Agent/ Registrar's Authentication Certificate substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Paying Agent/Registrar. In lieu of the executed Paying Agent/ Registrar's Authentication Certificate described above, the Initial Series 2013 Bond delivered at the Issuance Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided herein, manually executed by the Comptroller, or by his duly authorized agent, which certificate shall be evidence that the Initial Series 2013 Bond has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the Authority, and has been registered by the Comptroller. (d) On the Issuance Date, the Initial Series 2013 Bond, being a single bond representing the entire principal amount of the Series 2013 Bonds, payable in stated installments to the Purchaser or their designee, executed by manual or facsimile signature of the Chair or Vice Chair and Secretary or Director of the Board, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts, shall be delivered to the Purchaser or their designee. Upon payment for the Initial Series 2013 Bond, the Paying Agent/Registrar shall cancel the Initial Series 2013 Bond and deliver the definitive Series 2013 Bonds to the Purchaser in accordance with Section 3.12. Section 3.5: Payment of Principal and Interest. The Paying Agent/ Registrar is hereby appointed as the registrar and paying agent for the Series 2013 Bonds. The principal of the Series 2013 Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the designated office of the Paying Agent/Registrar. The interest on each Series 2013 Bond shall be payable by check on the Interest Payment Date, mailed by the Paying Agent/Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of 5 I-IOU:3364408.3 such Owner as shown on the Register, or by such other method, acceptable to the Paying Agent/Registrar, requested by and at the risk and expense of the Owner. If the date for the payment of principal or interest on any Series 2013 Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date such payment was due. Section 3.6: Successor Paying Agent/Registrars. The Authority covenants that at all times while any Series 2013 Bonds are Outstanding it will provide a commercial bank, or trust company or other entity duly qualified and legally authorized to act as Paying Agent/Registrar for the Series 2013 Bonds. The Authority reserves the right to change the Paying Agent/Registrar for the Series 2013 Bonds on not less than sixty (60) days written notice to the Paying Agent/ Registrar, so 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 2013 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 Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Paying Agent/ Registrar. Each Paying Agent/Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. Section 3.7: Special Record Date. If interest on any Series 2013 Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Paying Agent/Registrar shall establish a new record date for the payment of such interest, to be known as a "Special Record Date." The Paying Agent/Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the Authority. 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 Owner of record of an affected Series 2013 Bond as of the close of business on the day prior to the mailing of such notice. Section 3.8: Ownership; Unclaimed Principal and Interest. Subject to the further provisions of this Section, the Authority, the Paying Agent/Registrar and any other person may treat the person in whose name any Series 2013 Bond is registered as the absolute Owner of such Series 2013 Bond for the purpose of making and receiving payment of the principal of or interest on such Series 2013 Bond, and for all other purposes, whether or not such Series 2013 Bond is overdue, and neither the Authority 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 2013 Bond in accordance with this Section 3.8 shall be valid and effectual and shall discharge HOU:3364408.3 the liability of the Authority and the Paying Agent/Registrar upon such Series 2013 Bond to the extent of the sums paid. Amounts held by the Paying Agent/ Registrar which represent principal of and interest on the Series 2013 Bonds remaining unclaimed by the Owner after the expiration of three (3) years from the date such amounts have become due and payable shall be remitted to the Authority, except to the extent that they are required by law to be reported and disposed of by the Paying Agent/Registrar in accordance with the applicable provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. Section 3.9: Registration of Bonds. (a) The Series 2013 Bonds shall be registered in the name of Compass Mortgage Corporation. (b) Notwithstanding any other provision of this Resolution to the contrary, the Authority and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Series 2013 Bond is registered in the Register as the absolute Owner of such Series 2013 Bond for the purpose of payment of principal of and interest on the Series 2013 Bonds, for the purpose of giving notices of redemption and other matters with respect to such Series 2013 Bond, for the purpose of registering transfer with respect to such Series 2013 Bond, and for all other purposes whatsoever. The Paying Agent/ Registrar shall pay all principal of, premium, if any, and interest on the Series 2013 Bonds only to or upon the order of the respective Owners, as shown in the Register as provided in this Resolution, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to payments of principal, premium, if any, and interest on the Series 2013 Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Register, shall receive a Series 2013 Bond certificate evidencing the obligation of the Authority to make payments of amounts due pursuant to this Resolution. Section 3.10: Reserved. Section 3.11: Reserved. Section 3.12: Registration, Transfer, and Exchange . So long as any Series 2013 Bonds remain Outstanding, the Paying Agent/Registrar shall keep the Register at its designated office and, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Series 2013 Bonds in accordance with the terms of this Resolution. Each Series 2013 Bond shall be transferable only upon the presentation and surrender thereof at the designated office of the Paying Agent/Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the Registered Owner 7 HOU:3364408.3 or his authorized representative in form satisfactory to the Paying Agent/ Registrar. Upon due presentation of any Series 2013 Bond in proper form for transfer, the Paying Agent/ Registrar shall authenticate and deliver in exchange therefor, a new Series 2013 Bond or Series 2013 Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity, aggregate principal amount, and Dated Date, and bearing interest at the same rate as the Series 2013 Bond or Series 2013 Bonds so presented. All Series 2013 Bonds shall be exchangeable upon presentation and surrender thereof at the designated office of the Paying Agent/Registrar for a Series 2013 Bond or Series 2013 Bonds of the same maturity, Dated Date, and interest rate and in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Series 2013 Bond or Series 2013 Bonds presented for exchange. The Paying Agent/ Registrar shall be and is hereby authorized to authenticate, deliver and exchange Series 2013 Bonds in accordance with the provisions of this Section 3.12. Each Series 2013 Bond delivered in accordance with this Section 3.12 shall be entitled to the benefits and security of this Resolution to the same extent as the Series 2013 Bond or Series 2013 Bonds in lieu of which such Series 2013 Bond is delivered. The Authority or the Paying Agent/Registrar may require the Owner of any Series 2013 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 2013 Bond. Any fee or charge of the Paying Agent/Registrar for such transfer or exchange shall be paid by the Authority. The Paying Agent/Registrar shall not be required to transfer or exchange any Series 2013 Bond during the period beginning on a Record Date or a Special Record Date and ending on the next succeeding Interest Payment Date or to transfer or exchange any Series 2013 Bond called for redemption during the period beginning thirty days prior to the date fixed for redemption and ending on the date fixed for redemption; provided, however, that this limitation shall not apply to the exchange by the Owner of the unredeemed portion of a Series 2013 Bond called for redemption in part. The Bonds are transferable pursuant to this Resolution and the terms of the Private Placement Letter between the Authority and the Purchaser. _I l _ _.. a Section 4.1: Cancellation of Series 2013 Bonds . All Series 2013 Bonds paid or redeemed in accordance with this Resolution, and all Series 2013 Bonds in lieu of which 8 HOU:3364408.3 exchange Series 2013 Bonds or replacement Series 2013 Bonds are authenticated and delivered in accordance herewith, shall be cancelled upon the making of proper records regarding such payment or redemption and retained in accordance with the Paying Agent/Registrar's document retention policy. Upon request of the Authority therefore, the Paying Agent/Registrar shall furnish the Authority with appropriate certificates of cancellation of such Series 2013 Bonds. Section 4.2: Mutilated, Lost, or Stolen Series 2013 Bonds . Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Series 2013 Bond, the Paying Agent/ Registrar shall authenticate and deliver in exchange therefor a replacement Series 2013 Bond of like maturity, Dated Date, interest rate and principal amount, bearing a number not contemporaneously Outstanding. The Authority or the Paying Agent/ Registrar may require the Owner of such Series 2013 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 2013 Bond is lost, apparently destroyed, or wrongfully taken, the Authority, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Series 2013 Bond has been acquired by a bona fide purchaser, shall execute and the Paying Agent/Registrar shall authenticate and deliver a replacement Series 2013 Bond of like maturity, Dated Date, interest rate and principal amount, bearing a number not contemporaneously Outstanding, provided that the Owner thereof shall have: (1) furnished to the Authority and the Paying Agent/Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Series 2013 Bond; (2) furnished such security or indemnity as may be required by the Paying Agent/ Registrar and the Authority to save them harmless; (3) 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 (4) met any other reasonable requirements of the Authority and the Paying Agent/ Registrar. If, after the delivery of such replacement Series 2013 Bond, a bona fide purchaser of the original Series 2013 Bond in lieu of which such replacement Series 2013 Bond was issued presents for payment such original Series 2013 Bond, the Authority and the Paying Agent/Registrar shall be entitled to recover such replacement Series 2013 Bond from the person to whom it was delivered or any person taking therefrom, except a 9 HOU:3364408.3 bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Authority or the Paying Agent/ Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Series 2013 Bond has become or is about to become due and payable, the Authority in its discretion may, instead of issuing a replacement Series 2013 Bond, authorize the Paying Agent/Registrar to pay such Series 2013 Bond. Each replacement Series 2013 Bond delivered in accordance with this Section 3.14 shall be entitled to the benefits and security of this Resolution to the same extent as the Series 2013 Bond or Series 2013 Bonds in lieu of which such replacement Series 2013 Bond is delivered. Section 4.3: Redemption. The Series 2013 Bonds are subject to optional and mandatory sinking fund redemption on the dates and for the redemption prices set forth in the form of the Series 2013 Bond in this Resolution. Principal amounts may be redeemed only in integrals of $100,000. If a Series 2013 Bond subject to redemption is in a denomination larger than $100,000, a portion of such Series 2013 Bond may be redeemed, but only in integral multiples of $5,000. In selecting portions of Series 2013 Bonds for redemption, the Paying Agent/ Registrar shall treat each Series 2013 Bond as representing that number of Series 2013 Bonds of $100,000 denomination or any integral multiple of $5,000 in excess thereof. The Paying Agent/ Registrar shall select the particular Series 2013 Bonds to be redeemed within any given maturity by lot or other random selection method. Upon surrender of any Series 2013 Bond for redemption in part, the Paying Agent/ Registrar, in accordance with this Resolution, shall authenticate and deliver in exchange therefor a Series 2013 Bond or Series 2013 Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Series 2013 Bond so surrendered. Unless waived by the Owner, notice of any redemption identifying the Series 2013 Bonds to be redeemed shall be given as provided in the form of Series 2013 Bond in this Resolution. Any notice given as provided in this Section 3.15 shall 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 Paying Agent/Registrar for payment of the redemption price of the Series 2013 Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Series 2013 Bonds have been called for redemption in whole or in part and due provision has been made to redeem the same as herein provided, the Series 2013 Bonds or portions thereof so redeemed shall no longer be regarded as Outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would 10 HOU:3364408.3 otherwise accrue after the redemption date on any Series 2013 Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. Section 4.4: Limited Obligations . THE SERIES 2013 BONDS AND ALL PARITY BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE PLEDGED REVENUES, WHICH IS THE SOLE ASSET OF THE AUTHORITY PLEDGED THEREFOR. THE SERIES 2013 BONDS ARE OBLIGATIONS SOLELY OF THE AUTHORITY AND DO NOT CONSTITUTE, WITHIN THE MEANING OF ANY STATUTORY OR CONSTITUTIONAL PROVISION, AN INDEBTEDNESS, AN OBLIGATION OR A LOAN OF CREDIT OF THE CITY OF PEARLAND, THE STATE OF TEXAS, ALVIN INDEPENDENT SCHOOL DISTRICT, BRAZORIA COUNTY, FORT BEND COUNTY OR ANY OTHER MUNICIPALITY, COUNTY, OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF TEXAS. NEITHER THE CITY OF PEARLAND, ALVIN INDEPENDENT SCHOOL DISTRICT, BRAZORIA COUNTY NOR FORT BEND COUNTY IS OBLIGATED TO MAKE PAYMENTS ON THE SERIES 2013 BONDS. ARTICLE V FORM OF SERIES 2013 BONDS AND CERTIFICATES Section 5.1: Forms . The form of the Series 2013 Bonds, including the form of the Paying Agent/ Registrar's authentication certificate, the form of assignment, and the form of the Comptroller's Registration Certificate for the Series 2013 Bonds to be initially issued, shall be substantially as follows, with such additions, deletions and variations, as may be necessary or desirable and not prohibited by this Resolution: (a) Form of Bond United States of America State of Texas Number Registered DEVELOPMENT AUTHORITY OF PEARLAND TAX INCREMENT CONTRACT REVENUE BOND SERIES 2013 INTEREST RATE: 3.77% MATURITY DATE: September 1, 2029 DATED DATE: November 15, 2013 11 HOU:3364408.3 REGISTERED OWNER: COMPASS MORTGAGE CORPORATION PRINCIPAL AMOUNT: NINE MILLION ONE HUNDRED FIFTY THOUSAND AND NO/ 100 DOLLARS The DEVELOPMENT AUTHORITY OF PEARLAND (the "Authority"), a not- for-profit local government corporation created by the City of Pearland (the "City"), in the Counties of Brazoria, Fort Bend and Harris, in the State of Texas, for value received, promises to pay, but solely from certain Pledged 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 2013 Bond at the designated office of the Paying Agent/Registrar (the "Paying Agent/Registrar"), initially, Compass Bank, the principal amount identified above, such principal is legal tender for the payment of debts due the United States of America, and to pay, solely from such Pledged Revenues, interest thereon to be paid as described herein, calculated on the basis of a 360-day year of twelve 30-day months, from the later of the date of delivery to the Purchaser, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Series 2013 Bond is payable by check on March 1 and September 1, beginning on March 1, 2014, mailed to the Registered Owner as shown on the books of registration kept by the Paying Agent/ Registrar as of the fifteenth (15th) calendar day of the month next preceding each interest payment date, or by such other method, acceptable to the Paying Agent/ Registrar, requested by and at the risk and expense of the Registered Owner. THIS SERIES 2013 BOND shall be subject to mandatory sinking fund redemption in installments according the following schedule (insert schedule from Section 3.3): THE SERIES 2013 BONDS AND ALL PARITY BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE PLEDGED REVENUES, WHICH IS THE SOLE ASSET OF THE AUTHORITY PLEDGED THEREFOR. THE SERIES 2013 BONDS ARE OBLIGATIONS SOLELY OF THE AUTHORITY AND DO NOT CONSTITUTE, WITHIN THE MEANING OF ANY STATUTORY OR CONSTITUTIONAL PROVISION, AN INDEBTEDNESS, AN OBLIGATION OR A LOAN OF CREDIT OF THE CITY OF PEARLAND, THE STATE OF TEXAS, ALVIN INDEPENDENT SCHOOL DISTRICT, BRAZORIA COUNTY, FORT BEND COUNTY, HARRIS COUNTY OR ANY OTHER MUNICIPALITY, COUNTY, OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF TEXAS. NEITHER THE CITY OF PEARLAND, ALVIN INDEPENDENT SCHOOL DISTRICT, BRAZORIA COUNTY, FORT BEND COUNTY NOR HARRIS COUNTY IS OBLIGATED TO MAKE PAYMENTS ON THE SERIES 2013 BONDS. THIS SERIES 2013 BOND IS ONE OF A DULY AUTHORIZED SERIES OF SERIES 2013 BONDS aggregating $9,150,000 issued for the purpose of (1) paying Project 12 HOU:3364408.3 Costs and (2) paying costs of issuance, all under and pursuant to the authority of the Act and all other applicable laws, and a resolution adopted by the Authority on November 11, 2013 (the "Resolution"). None of the proceeds of the Series 2013 Bonds shall be used for the purpose of paying or otherwise providing for educational facilities. Terms not otherwise defined herein shall have the meaning ascribed thereto in the Resolution. THIS SERIES 2013 BOND AND THE SERIES OF WHICH IT IS A PART are limited obligations of the Authority that are together with all other Parity Bonds heretofore or hereafter issued under the Indenture described below, payable from, and are equally and ratably secured by a lien on the Pledged Revenues, which include the Contract Tax Increments, moneys on deposit in the Pledged Revenue Fund, the Debt Service Fund, and interest earned on moneys deposited therein, as defined and more fully provided in the Indenture of Trust dated as of May 1, 2012, between the Authority and Regions Bank, as Trustee (the "Indenture"). This Series 2013 Bond and the series of which it is a part and all other Parity Bonds, together with the interest thereon, are payable solely from such Pledged Revenues. THE AUTHORITY RESERVES THE RIGHT at its option, to redeem in whole or in part the Series 2013 Bonds on and after September 1, 2023, at par plus accrued interest on the amounts called for redemption to the date fixed for redemption. UNLESS WAIVED BY THE OWNER, NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the Registered Owners of each Series 2013 Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Paying Agent/ Registrar. Such notices shall state the redemption date, the redemption price, the place at which Series 2013 Bonds are to be surrendered for payment and, if less than all Series 2013 Bonds Outstanding of a particular maturity are to be redeemed, the numbers of the Series 2013 Bonds or portions thereof of such maturity to be redeemed. When Series 2013 Bonds or portions thereof have been called for redemption, and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS SERIES 2013 BOND IS TRANSFERABLE only upon presentation and surrender at the designated 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 Resolution. THIS SERIES 2013 BOND IS EXCHANGEABLE at the designated office of the Paying Agent/Registrar for Series 2013 Bonds in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Resolution. 13 HOU:3364408.3 NEITHER THE AUTHORITY NOR THE PAYING AGENT/ REGISTRAR shall be required to transfer or exchange any Series 2013 Bond during the period beginning on the fifteenth calendar day of the month next preceding any interest payment date and ending on such interest payment date or to transfer any Series 2013 Bond called for redemption during the 30 day period prior to the redemption date. THIS SERIES 2013 BOND shall not be valid or obligatory for any purpose or be entitled to any benefit under the Resolution unless this Series 2013 Bond is either (i) registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Paying Agent/Registrar by due execution of the authentication certificate endorsed hereon. THE AUTHORITY HAS RESERVED THE RIGHT to issue Additional Parity Bonds, subject to the restrictions contained in the Resolution and the Indenture, which may be equally and ratably payable from, and secured by a lien on and pledge of, the Pledged Revenues in the same manner and to the same extent as the Parity Bonds and this Series 2013 Bond and the series of which it is a part. IT IS HEREBY DECLARED AND REPRESENTED that this Series 2013 Bond has been duly and validly issued and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the issuance and delivery of this Series 2013 Bond have been performed, existed, and been done in accordance with law; that the Series 2013 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 2013 Bond and all of the Parity Bonds by the creation of the aforesaid lien on and pledge of the Pledged Revenues as provided in the Indenture. IN WITNESS WHEREOF, the Authority has caused this Series 2013 Bond to be executed by the manual or facsimile signatures of the Chair and Director. DEVELOPMENT AUTHORITY OF PEARLAND Chair, Board of Directors Director, Board of Directors 14 HOU:3364408.3 (b) Form of Registration Certificate of Comptroller of Public Accounts. COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Series 2013 Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Series 2013 Bond has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this Comptroller of Public Accounts of the State of Texas (SEAL) (c) Form of Paying Agent/ Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Series 2013 Bond has been delivered pursuant to the Bond Resolution described in the text of this Series 2013 Bond. Compass Bank, an Alabama banking corporation By: Authorized Signature Date of Authentication: 15 HOU:3364408.3 (d) Form of Assignment Assignment For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within Series 2013 Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said Series 2013 Bond on the books kept for registration thereof, with full power of substitution in the premises. 17711i1I Signature Guaranteed: Registered Owner NOTICE: Signature(s) must be guaranteed NOTICE: The signature above must by an institution which is a participant in correspond to the name of the Registered the Securities Transfer Agent Medallion Owner as shown on the face of this Bond Program ("STAMP") or similar program. in every particular, without any alteration, enlargement or change whatsoever. (e) The Initial Series 2013 Bond shall be in the form set forth in paragraphs (a), (b) and (d) of this Section, except for the following alterations: (i) the Initial Series 2013 Bond shall be numbered I-1 Section 5.2: Legal Opinion. The approving opinion of Bond Counsel may be printed on the Series 2013 Bonds, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Series 2013 Bonds. 16 HOU:3364408.3 ARTICLE VI ADDITIONAL BONDS Section 6.1: Additional Parity Bonds. The Authority reserves the right to issue, for any lawful purpose (including the refunding of any previously issued Parity Bonds), one or more series of Additional Parity Bonds payable from and secured by a lien on the Pledged Revenues, on a parity with the Series 2013 Bonds, and any previously issued Parity Bonds; provided, however, that Additional Parity Bonds may be issued only in accordance with the provisions of Article III of the Indenture. Section 6.2: Subordinate Lien Obligations. The Authority reserves the right to issue, for any lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on the Pledged Revenues that are junior and subordinate to the lien on Pledged Revenues securing payment of the Parity Bonds. Such subordinate lien obligations may be further secured by any other source of payment lawfully available for such purposes. ARTICLE VII COVENANTS AND PROVISIONS RELATING TO ALL PARITY BONDS Reference is made to Article V of the Indenture. All covenants made by the Authority therein are hereby incorporated into this Resolution. ARTICLE VIII PROVISIONS CONCERNING SALE AND APPLICATION OF PROCEEDS OF SERIES 2013 BONDS Section 8.1: Sale. The Series 2013 Bonds are hereby sold to the Purchaser by means of a private placement, and the price at the par value thereof, is hereby approved and delivery of the Series 2013 Bonds to the Purchaser shall be made upon payment therefor in accordance with the terms of sale and the terms and conditions of the Private Placement Letter, which is attached hereto as Exhibit A, and is hereby approved, and such price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the Authority. The Chair and other appropriate officers, agents and representatives of the Authority are hereby authorized to do any and all things necessary or desirable to provide for the issuance and delivery of the Series 2013 Bonds. Section 8.2: Application of Proceeds. Proceeds from the sale of the Series 2013 Bonds shall, promptly upon receipt by the Trustee, be applied as follows: 17 I-IOU:3364408.3 (a) $8,975,000.00 from proceeds shall be deposited in the Project Fund. (b) $173,464.00 from proceeds shall be used to pay Cost of Issuance. (c) All remaining proceeds from the sale of the Series 2013 Bonds shall be deposited into the Debt Service Fund. ARTICLE IX TAX EXEMPTION Section 9.1: Federal Income Tax Exclusion. (a) General. The Authority intends that the interest on the Series 2013 Bonds shall be excludable from gross income 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 the applicable Income Tax Regulations (the "Regulations"). The Authority covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Series 2013 Bonds to be includable in gross income, as defined in section 61 of the Code, for federal income tax purposes. In particular, the Authority covenants and agrees to comply with each requirement of this Section 8.1; provided, however, that the Authority shall not be required to comply with any particular requirement of this Section 8.1 if the Authority has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series 2013 Bonds or if the Authority has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 8.1 will satisfy the applicable requirements of the Code and the Regulations, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Section 8.1. (b) No Private Use or Payment and No Private Loan Financing. The Authority shall certify, through an authorized officer, employee or agent that based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 2013 Bonds are delivered, that proceeds of the Series 2013 Bonds will not be used, in a manner that would cause the Series 2013 Bonds to be "private activity bonds" within the meaning of section 141 of the Code and the Regulations promulgated thereunder. Moreover, the Authority covenants and agrees that it will make such use of the proceeds of the Series 2013 Bonds including interest or other investment income derived from Bond proceeds, regulate the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Series 2013 Bonds will not be "private activity bonds" within the meaning of section 141 of the Code and the Regulations promulgated thereunder. 18 HOU:3364408.3 (c) No Federal Guarantee . The Authority covenants and agrees that it has not and will not take any action, and has not knowingly omitted and will not knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Series 2013 Bonds to be federally guaranteed within the meaning of section 149(b) of the Code and the applicable Regulations thereunder, except as permitted by section 149(b)(3) of the Code and such Regulations. (d) No Hedge Bonds . The Authority covenants and agrees that it has not and will not take any action, and has not knowingly omitted and will not knowingly omit to take any action, within its control, that, if taken or omitted, respectively, would cause the Series 2013 Bonds to be hedge bonds within the meaning of section 149(g) of the Code and the applicable Regulations thereunder. (e) No Arbitrage . The Authority shall certify, through an authorized officer, employee or agent that based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 2013 Bonds are delivered, the Authority will reasonably expect that the proceeds of the Series 2013 Bonds will not be used in a manner that would cause the Series 2013 Bonds to be "arbitrage bonds" within the meaning of section 148(a) of the Code and the applicable Regulations promulgated thereunder. Moreover, the Authority covenants and agrees that it will make such use of the proceeds of the Series 2013 Bonds including interest or other investment income derived from Bond proceeds, regulate investments of proceeds of the Series 2013 Bonds, and take such other and further action as may be required so that the Series 2013 Bonds will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and the applicable Regulations promulgated thereunder. (f) Arbitrage Rebate . If the Authority does not qualify for an exception to the requirements of Section 148(f) of the Code relating to the required rebate to the United States, the Authority will take all necessary steps to comply with the requirement that certain amounts earned by the Authority on the investment of the "gross proceeds" of the Series 2013 Bonds (within the meaning of section 148(f)(6)(B) of the Code), be rebated to the federal government. Specifically, the Authority will (i) maintain records regarding the investment of the gross proceeds of the Series 2013 Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Series 2013 Bonds separately from records of amounts on deposit in the funds and accounts of the Authority allocable to other bond issues of the Authority or moneys which do not represent gross proceeds of any bonds of the Authority, (ii) calculate at such times as are required by applicable Regulations, the amount earned from the investment of the gross proceeds of the Series 2013 Bonds which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Series 2013 Bonds or on such other dates as may be permitted under applicable Regulations, all amounts required to be rebated to the federal government. Further, the Authority will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to 19 HOU:3364408.3 any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Series 2013 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 the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (g) Information Reporting. The Authority covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Series 2013 Bonds are issued, an information statement concerning the Series 2013 Bonds, all under and in accordance with section 149(e) of the Code and the applicable Regulations promulgated thereunder. (h) Continuing Obligation. Notwithstanding any other provision of this Resolution, the Authority's obligations under the covenants and provisions of this Section 8.1 shall survive the defeasance and discharge of the Series 2013 Bonds. Section 9.2: Continuing Obligation. Notwithstanding any other provision of this Resolution, the Authority's representations and obligations under the covenants and provisions of this Article VIII shall survive the defeasance and discharge of the Series 2013 Bonds for as long as such matters are relevant to the exclusion of interest on the Bonds from the gross income of the owners for federal income tax purposes. Section 9.3: Qualified Tax-Exempt Obligations. The Series 2013 Bonds are NOT Qualified Tax-Exempt Obligations for financial institutions. ARTICLE X AUTHORIZATION AND CONFIRMATION OF AGREEMENTS Section 10.1: Agreements. The Board hereby approves issuance of the Series 2013 Bonds and all reasonable agreements necessary or convenient in connection with the issuance of the Series 2013 Bonds, including without limitation the following: Private Placement Letter by and between the Authority and Compass Mortgage Corporation, the Purchaser, in the form attached hereto as Exhibit A; the Paying/Agent Agreement attached hereto as Exhibit B; the Indenture attached hereto as Exhibit C; and any and all other documents and agreements reasonable and necessary to issue the Series 2013 Bonds (collectively, the "Agreements"). The Board, by a majority vote of its members, at a regular meeting, hereby approves the form, terms, and provisions of the Agreements and authorizes the execution and delivery of the Agreements. 20 HOU:3364408.3 ARTICLE XI MISCELLANEOUS Section 11.1: Further Proceedings . The Chair, Vice Chair, Secretary, Directors, and other appropriate officials of the Authority are hereby authorized and directed to do any and all things necessary and/or convenient to carry out the intent, purposes and terms of this Resolution, including the execution and delivery of such certificates, documents or papers necessary and advisable. Section 11.2: Severability . If any Section, paragraph, clause or provision of this Resolution 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 Resolution. Section 11.3: Open Meeting . It is hereby officially found and determined that the meeting at which this Resolution was adopted was open to the public, and that public notice of the time, place and purpose of said meeting was given, all as required by the Texas Open Meetings Act. Section 11.4: Parties Interested . Nothing in this Resolution expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Authority, the Paying Agent/Registrar, the Trustee and the Owners of the Series 2013 Bonds, any right, remedy or claim under or by reason of this Resolution or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Resolution shall be for the sole and exclusive benefit of the Authority, the Paying Agent/ Registrar, the Trustee and the Owners of the Series 2013 Bonds. Section 11.5: Repealer . All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. Section 11.6: Effective Date . This Resolution shall become effective immediately upon passage by this Authority and signature of the Chair, Vice Chair, or Director of the Authority. [Execution Page Follows] 21 HOU:3364408.3 PASSED AND APPROVED this 11th day of November, 2013. / s/ Tom Reid Chair, Board of Directors ATTEST: /s/ Ed Baker Secretary, Board of Directors HOU:3364408.3 Exhibits A. Private Placement Letter (Tab 2) Paying Agent Agreement (Tab 12) HOU:3364408.3 GENERAL CERTIFICATE STATE OF TEXAS COUNTIES OF BRAZORIA, FORT BEND AND HARRIS CITY OF PEARLAND We, the undersigned, Chair and Secretary of the Development Authority of Pearland (the "Authority"), hereby make and execute this certificate for the benefit of all persons interested in the Authority's $9,150,000 Tax Increment Contract Revenue Bonds, Series 2013 (the "Bonds"), now in the process of issuance. Capitalized terms not defined herein are those defined in the Resolution authorizing the issuance of the Bonds. We certify that: 1. WHEREAS, by Ordinance No. 891, adopted on December 21, 1998, the City of Pearland (the "City") created Reinvestment Zone Number Two, City of Pearland, Texas (the "TIRZ") pursuant to Chapter 311, Texas Tax Code, and approved a preliminary project plan for the TIRZ and a preliminary reinvestment zone financing plan for the TIRZ; and 2. The City, by Resolution No. 2004-107, duly adopted on June 28, 2004, authorized the creation of the Authority to aid, assist and act on behalf of the City in the performance of the City's governmental and proprietary functions with respect to, and to provide financing for, the TIRZ. 3. WHEREAS, by Ordinance No. R2004-170, adopted on October 11, 2004, the City approved that certain Agreement by and between the City, the TIRZ, and the Authority (the "Tri- Party Agreement"), pursuant to which the City delegated to the Authority the power and authority to issue, sell or deliver its bonds, notes or other obligations in accordance with the terms of the Tri-Party Agreement; and 4. Attached hereto as Exhibit A and Exhibit B, respectively, is a true, correct, and complete copy of the Certificate of Incorporation of the Authority, together with the Articles of Incorporation of the Authority, which were filed with the Secretary of State of Texas on July 14, 2004, and a complete copy of the Bylaws of the Authority. The Authority's Articles of Incorporation and Bylaws have not been amended, repealed, changed, or altered since the Authority was created. 5. Attached hereto as Exhibit C is a true, correct, and complete copy of a Certificate of Continued Fact from the Secretary of State of Texas. Attached hereto as Exhibit D is a true, correct, and complete copy of a Franchise Tax Account Status from the Comptroller of Public Accounts of the State of Texas. 6. On November 11, 2013, the Board of Directors of the Authority consisted of the following persons: Tom Reid Chair Bill Sloan Vice-Chair Ed Baker Secretary Tom Pool Director Anthony D. Carbone Director I-IOU:3364841.4 7. No litigation is pending or, to the best of our knowledge, threatened against the Authority with respect to the issuance of the Bonds, or the title or authority of the officers and directors of the Authority. 8. Due notice of all meetings relating to the sale, issuance, and delivery of the Bonds has been given to the directors of the Authority in accordance with the Authority's Bylaws and State law. 9. Attached hereto as Exhibit E is a true and correct copy of the combined debt service schedule for the Bonds. 10. The resolution authorizing the issuance of the Bonds and other documents relating to the issuance of the Bonds (the "Bond Documents") (a) have been properly executed by the Authority and due performance thereof has been authorized by the Authority, (b) are in substantially the form as approved by or on behalf of the Authority and (c) are in full force and effect and have not been amended or rescinded except as may have been approved by the Chairman of the Authority with the advice of Bond Counsel. 11. The Authority has taken no action that, if finally concluded, would constitute a breach or violation of any of the covenants and provisions of the Bond Documents. 12. The terms and performance of the Bond Documents by the Authority are not in conflict with the Articles of Incorporation or Bylaws of the Authority or any other instrument or restriction to which the Authority is a part or subject. 13. The Authority has determined that the Project will promote and develop new and expanded business enterprises that create or retain "primary jobs," as such term is defined in Section 501.002(12) of the Texas Local Government Code, as amended. 14. For any twelve (12) consecutive months of the preceding 18-month period immediately preceding the month in which the Resolution authorizing the Bonds was adopted (the "Base Period"), the Pledged Revenues were equal to at least 1.25% of the average annual principal and interest requirements on all Parity Bonds that will be outstanding after the issuance of the Bonds. 15. Attached as Exhibit F is a schedule showing a history of pledged revenue collections for the past three years. [Signature page follows.] 2 HOU:3364841.4 WITNESS OUR HANDS this jjday of November, 2013. DEVELOPMENT AUTHORITY OF PEARLAND Chair Secretary S-1 HOU:3364841.2 EXHIBIT A Articles of Incorporation Corpora$os S 19C tioa ~ .~ O Geoffrey S. Connor -P.O.$ox 13697 -, Secretary of State A Texas 7871 i-3697. & ustin+ - Office of the Secretary • of State r.• CERT1EECATE OF INCORPORAT. ON DEVELOPMENT AUTHORITY OF PEARLAND Filing .Number: 800364974 r• The undersigned, as Secretary of State of Texas, hereby certifies That Articles of Incorporation for 'the 'above named corporation have been received in ibis office and have been found to conform to law. Accordingly, the undersigned, as Secretary of State, and by virtue of the'aii6onity vested in the Secretary `~ fit.•bylaw, bereby issues this Certificate ofliicopt•ation. - ' . -• , fir Issuance of this Certificate' of Incorporation does not autbtixize the usc'of a name in this slate in violation of ihe'rigbts of another under the federal Trademark.Act of 1946, the Texas tradernatt law, the Assiuned Business -or Professional Name Act, or the common law. • . : Dated: 07/14/2004 ' Effective: 07/14/2004 . • • Geoffr S. Connor Secretary of State • . • . . . Come-visit us on the intemet at bttP:lfwww.soS.state.tx.USI ' PHONP(512) 463-5555 • FAX(532)463-5709 TiY7-1-1 '. Prepared by: Rosa MTen,no - . FILED In the Office of the Secretary of State of Texas ARTICLES OF INCORPORATION JUL 14 2004 OF Corporations Section DEVELOPMENT AUTHORITY OF PEARLAND We, the undersigned natural persons, each of whom is at least eighteen (18) years of age or more and a qualified voter of the City ofPearland, Texas (the "City") and a citizen of the State of Texas, acting as incorporators of a corporation under the provisions of Subchapter D of Chapter 431, Texas Transportation Code (the "Act"), and Chapter 394, Texas Local Government Code (the "Local Government Code"), do hereby adopt the following Articles of Incorporation for such corporation: ARTICLE I The name of the corporation is DEVELOPMENT AUTHORITY OF PEARLAND (the "Authority"). ARTICLE I( The Authority is a public non-profit corporation. ARTICLE III The period of duration of the Authority shall be perpetual. ARTICLE IV The Authority is organized for the purpose of aiding, assisting, and acting on behalf of the City in the performance of its governmental functions to promote the common good and general welfare and, particularly, to promote, develop, encourage and maintain housing, educational facilities, employment, commerce, industrial and economic development in the City_ The Authority is further organized to aid, assist and act on behalf of the City: (a) in the development of a policy to finance development and redevelopment of residential, educational facilities, commercial, industrial, and parklopen space properties in the City; and (b) in the development and implementation of development and redevelopment policies for the City, including the acquisition of land for development and redevelopment purposes. The Authority is formed pursuant to and shall have all corporate powers provided by the provisions of the Act as it now or may hereafter be amended, and Chapter 394, Texas Local Government Code, which authorizes the Authority to assist and act on behalf of the City and to engage in activities in the furtherance of the purposes for its creation. aHOU:2289237.4 The Authority shall have and exercise all of the rights, powers, privileges, authority, and functions given by the general laws of Texas to non-profit corporations incorporated under the Act including, without limitation, Article 1396, Vernon's Texas Civil Statutes. The Authority shall have all other powers of a like or different nature not prohibited by law which are available to non-profit corporations in Texas and which are necessary or useful to enable the Authority to perform the purposes for which it is created, including the power to issue bonds, notes or other obligations, and otherwise exercise its borrowing power to accomplish the purposes for which it was created, provided that the Authority shall not issue bonds without the consent of the City Council of the City. The Authority is created as a local government corporation pursuant to the Act and shall be a governmental unit within the meaning of Subdivision (2), Section 101.001, Texas Civil Practice and Remedies Code. The operations of the Authority are governmental and not proprietary functions for purposes of the Texas Tort Claims Act, Section 101.001 et seq., Texas Civil Practice and Remedies Code. The Authority shall have the power to acquire land in accordance with the Act as amended from time to time. ARTICLE V The Authority shall have no members and shall have no stock. ARTICLE VI All powers of the Authority shall be vested in a Board consisting of five (5) persons. The initial directors of the Authority ("Director" or "Directors") shall be those persons named in Article VIII. Persons serving as Directors to the Authority may simultaneously be members of the City Council of the City; provided, however that at no time shall more than two Directors of the Board also be members of the City Council of the City. Each initial Director and all subsequent Directors shall be residents of the City. Each initial Director named in Article VIII hereof shall serve for the tern prescribed in the Bylaws. Subsequent Directors shall be appointed by position to the Board by the City Council of the City as prescribed in the Bylaws. Except as provided in the Articles of Incorporation, each Director shall serve for the term provided in the Bylaws. Any Director may be removed from office at any time, with or without cause, by the City Council of the City. The initial Chair shall be Tom Reid. Mayor , and the City Council of the City shall designate each subsequent Chair of the Board. If any of the following persons is not serving as a member of the Board, he or she or their designee shall serve as an ex-officio, non-voting member of the Board: (1) City Manager; (2) City Attorney; and (3) Deputy City Manager. N rrov22a9237.4 In addition, the Board of Directors of the Authority may designate one or more representatives of the Alvin Independent School District, Pearland Independent School District, Harris County, Brazoria County, Fort Bend County or other political subdivisions as ex officio, non-voting members of the Board of Directors. Ex-officio members of the Board are non-voting members and are not required to be residents of the City. All other matters pertaining to the internal affairs of the Authority shall be governed by the Bylaws of the Authority, so long as such Bylaws are not inconsistent with these Articles of Incorporation, or the laws of the State of Texas. ARTICLE VII The street address of the initial registered office of the Authority is 3519 Liberty Drive, Pearland, Texas 77581, and the name of its initial registered agent at such address is Darrin Coker, City Attorney, 3519 Liberty Drive, Pearland, Texas 77581. ARTICLE VIII The number of Directors initially constituting the Board is five (5). The names, addresses, and positions of the five (5) initial Directors, each of whom resides within the City are as follows: Name and Address Tom Pool Position One 2120 Country Club Drive Pearland, Texas 77581 Bill Sloan Position Two 1935 Timbercreek Pearland, Texas 77581 Henry Stanaland Position Three 5108 Carmona Pearland, Texas 77584 Ed Baker Position Four 2405 Londonderry Drive Pearland, Texas 77581 Tom Reid Position Five 2716 Stratford Pearland, Texas 77581 ARTICLE IX The names and street addresses of the incorporators, each of whom resides within the City are as follows: I'IOU2289237.1 Name and Address Bill Eisen 3519 Liberty Drive Pearland, Texas, 77581 Alan Mueller 3519 Liberty Drive Pearland, Texas, 77581 Fred Welch 3519 Liberty Drive Pearland, Texas, 77581 ARTICLE X Resolution No. 2004-107 approving the form of these Articles of Incorporation has been adopted by the City Council of the City on June 28, 2004. ARTICLE XI No Director shall be liable to the Authority for monetary damages for an act or omission in the director's capacity as a Director, except for liability (i) for any breach of the Director's duty of loyalty to the Authority, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the Director received an improper benefit, whether or not the benefit resulted from an act taken within the scope of the Director's office, or (iv) for acts or omissions for which the liability of a Director is expressly provided by statute. Any repeal or amendment of this Article by the Directors shall be prospective only, and shall not adversely affect any limitation on the personal liability of a Director existing at the time of such repeal or amendment. In addition to the circumstances in which a Director is not personally liable as set forth in the preceding sentences, a Director shall not be liable to the fullest extent permitted by any amendment to the Texas statutes hereafter enacted that further limits the liability of a Director. ARTICLE X111 In accordance with the provisions of Section 501(c)(3) of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), and regardless of any other provisions of these Articles of Incorporation or the laws of the State of Texas, the Authority: (a) shall not permit any part of the net earnings of the Authority to inure to the benefit of any private individual (except that reasonable compensation may be paid for personal services rendered to or for the Authority in effecting one or more of its purposes); (b) shall not devote more than an insubstantial part of its activities to attempting to influence legislation by propaganda or otherwise; (c) shall not participate in, or intervene in (including the publication or distribution of statements), any political campaign on behalf of any candidate for public office; and (d) shall not attempt to influence the outcome of any election for public office or to carry on, directly or indirectly, any voter registration drives. Any income earned by the Authority after payment of reasonable expenses, debt and establishing a reserve shall accrue to the City. 4 F IOU.2289237.4 The City shall, at all times, have an unrestricted right to receive any income earned by the Authority, exclusive of amounts needed to cover reasonable expenditures and reasonable reserves for future activities. Unless otherwise directed by the City, any income of the Authority received by the City shall be deposited into the City's General Fund, or a successor fund. No part of the Authority's income shall inure to the benefit of any private interests. If the Board of Directors determines by resolution that the purposes for which the Authority was formed have been substantially met and all bonds issued by and all obligations incurred by the Authority have been fully paid, the Board shall execute a certificate of dissolution which states those facts and declares the Authority dissolved in accordance with the requirements of Section 394.026 of Texas Local Government Code, or with applicable law then in existence. In the event of dissolution or liquidation of the Authority, all assets will be turned over to the Finance Department of the City, or its successor, for deposit into the City's General Fund unless the City Council of the City shall otherwise direct. Any capital project(s) of the Authority as well as all plans and specifications of any improvements to be made by the Authority shall be approved in writing by the City Engineer. ARTICLE XI II If the Authority is a private foundation within the meaning of Section 509(a) of the Code, the Authority: (a) shall distribute its income for each taxable year at such time and in such manner as not to become subject to the tax on undistributed income imposed by Section 4942 of the Code; (b) shall not engage in any act of self-dealing as defined in Section 4941(d) of the Code; (c) shall not retain any excess business holdings as defined in Section 4943(c) of the Code; (d) shall not make any investments in such manner as to subject it to tax under Section 4944 of the Code; and (e) shall not make any taxable expenditures as defined in Section 4945(d) of the Code. ARTICLE XIV The City Council of the City may at any time consider and approve an ordinance directing the Board to proceed with the dissolution of the Authority, at which time the Board shall proceed with the dissolution of the Authority in accordance with applicable state law. The failure of the Board to proceed with the dissolution of the Authority in accordance with this Article shall be deemed a cause for the removal from office of any or all of the Directors as permitted by Article VI of these Articles of Incorporation. ARTICLE XV These Articles may not be changed or amended unless approved by the City Council of the City. f k)U.2289237.4 IN WITNESS WHEREOF, we have hereunto set our hands this 2 day of ~t1 , 2004. Bill Eisen, Incorporator Alan Mueller, Incorporator Fred Welch, Incorporator THE STATE OF TEXAS COUNTY OF BRAZORIA BEFORE ME, the undersigned authority, on this day personally appeared Bill Eisen, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of_______ 2004. ;J / Y~ Uo (" uIc, Ste W ! ~ ~ 3 V My Commsion Expires: ti}P APRIL 2, 2005 --- otary Public in and for ,,o., ,xr,•,,~r,.,,,~r The State of Texas (SEAL) I IOL:2289237.4 THE STATE OF TEXAS § COUNTY OF BRAZORIA § BEFORE ME, the undersigned authority, on this day personally appeared Alan Mueller, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the } day of .~' ~.., ) , 2004. 4 ' YP PERLA N. LEHMAN j? /, , -. Pubiie, State of Texas f~ ° /y` _ tt My Comrnl5slon Expires., otary Public in and for soF APRIL 2 , 2005 ,, The State of Texas (SEAL) THE STATE OF TEXAS § COUNTY OF BRAZORIA § BEFORE ME, the undersigned authority, on this day personally appeared Fred Welch, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. h GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ! day of 2004. /kUJ tiaa~ ig UIIIIHhIft 111 ('2a4v f ~t~"! " ~CLE c411" Notary Public in and for The State of Texas Lk 7 I IOU 22 9237.4 EXHIBIT B Amended Bylaws HOU:3364841.4 BYLAWS OF DEVELOPMENT AUTHORITY OF PEARLAND A Texas Local Government Corporation (Created by. the City of. Pearland, Texas) Date of Adoption: July 27, 2004 TABLE OF CONTENTS Page . ARTICLEI. PURPOSES ................................................................................................. ....1 ARTICLEII. BOARD OF DIRECTORS .......................................................................................1 Section 1, Appointment, Classes, Powers, Number, and Term of Office..... ...........................1 Section 2. Meetings of Directors .................................................................................. • Section 3. Annual Meetings ................................................................................... .....:........2 Section4. Regular Meetings ...........................................................................:......................2 • Section 5. Special and Emergency Meetings ..........................................................................2 • Section 6. Quorum .................................................................................................. ............3 Section 7. Conduct of Business ...................... ....................................................................3 Section8. Committees ....................... .................................................................................3 Section 9. Compensation of Directors .........................................................................:............4 Section 10: Director's Reliance on Consultant Information ......................................................4 ARTICLEIII. OFFICERS ..............................................................................................................4 Section 1. Titles and Term of Office .......................................................................................4 Section 2. Powers and Duties of the Chair ................................................... .......................4 Section 3. Powers and Duties of the Vice-Chair .....................................................................4 Section4. Execution of Documents .......................................... ................... .................5 Section5. Treasurer ................................................................................................................5 Section6. Secretary .................................................................................................................5 Section 7. Compensation ............................ .........................................................................5 Section 8. Officer's Reliance on Consultant Information ........................................................5 ARTICLE IV. INDEMNIFICATION OF DIRECTORS AND OFFICERS ..................................6 Section 1. Right to Indemnification ........................................................................................6 Section 2. Advance Payment .......... .......................................................................................6 Section 3. Indemnification of Employees and Agents ............................................................6 Section 4. Appearance as a Witness ........................................................................................7 Section 5. Non-exclusivity of Rights ................................................................... ..............7 Section6. Insurance ...................................................................................... .....7 Section7. Notification .......................................... ..............................................................7 Section8. Savings Clause ........................................................................................................7 ARTICLE V. AMENDMENTS TO BYLAWS .............................................................................8 ARTICLE VI. MISCELLANEOUS PROVISIONS ........................................................................8 Section1. Fiscal Year ...............................................................................................................8 Section2. Seal .........................................................................................................................8 Section 3. Notice and Waiver of Notice ................................:................................................8 Section4. Resignations ...........................................................................................................8 Section5. Gender ....................................................................................................................8 Section 6. Appropriations and Grants ...................................................................................8 Section 7 Legal Authorities Governing Construction of Bylaws ...........................................8 Section8 Heading .................................................................................................................9 Section9 Parties Bound ........................................................................................................9 Section10 Effective Date .........................................................................................................9 BYLAWS OF THE. DEVELOPMENT AUTHORITY •OFPEARLAND ARTICLE I. PURPOSES Development Authority of Pearland (the "Authority") is organized for the purpose of aiding, assisting, and acting on behalf of the City of Pearland, Texas (the "City"). in the performance of their governmental functions to promote the common good and general welfare of the City to promote the economic development and diversification of the City, to develop, encourage and maintain employment, and to develop and expand commerce in the City. The Authority is formed pursuant to the provisions of Chapter 431, Texas Transportation Code, as amended ("the Act") as it now or may hereafter be amended, and Chapter 394, Local Government Code, which authorizes the Authority to assist and act on behalf of the City and to engage in activities in the furtherance of the purposes for its creation. The Authority shall have and exercise all of the rights, powers, privileges, authority, and functions given by the general laws of Texas to non-profit corporations incorporated under the Act including, without limitation, Article 1396, Vernon's Texas Civil Statutes, as amended. The Authority shall have all other.powers of a like or different nature not prohibited by law which are available to non-profit corporations in Texas and which are necessary or useful to enable the Authority to perform the purposes for which it is created, including the power to issue bonds, notes or other obligations, and otherwise exercise its borrowing power to accomplish the purposes for which it was created, provided that the Authority shall not issue bonds without the consent of the City Council of the City. The Authority is created as a local government corporation pursuant to the Act and shall be a governmental unit within the meaning of Subdivision (2), Section 101.001, Civil Practice and Remedies Code. The operations' of the Authority are governmental and not proprietary functions for purposes of the Texas Tort Claims Act, Section 101.001 et seq., Civil Practice and Remedies Code. • The Authority shall have the power to acquire land in accordance with the Act as amended from time to time. ARTICLE II. 'BOARD OF DIRECTORS Section I. Appointment, Classes, Powers, Number, and Term of Office, All powers of the Authority shall be vested in the Board of Directors (the "Board of Directors"). The Board of Directors shall initially consist of five (5) persons.. At no time shall more than two (2) Directors also be members of the City Council of the City. The City Council shall appoint all of the Directors. Each Director shall serve for a term which expires on the date set forth below for the position to which such person was appointed, or until his or her successor is appointed by. the City unless such Director has been appointed to fill an unexpired term in which case the term of the Director shall expire on the expiration, date of the teen of the Director whose position he or she was appointed to fill or until his or her successor is appointed and qualifies for the position. Any Director may be removed from office at any time, with or without cause, by the • City Council. The number.of Directors may only be increased or decreased by consent of the City Council of the City. The terms of office for the Directors shall be staggered. Positions 1, 3 and 5 shall expire on September 30 of the next odd year following the' initial appointment of Directors for such positions. Positions 2 and 4 shall expire on September 30 of the next even year following the initial appointment of Directors to such positions. The Directors' term of office for all positions following initial appointment .shall be two years ending September 30 of the odd or even year indicated in this paragraph. All Directors shall hold their respective offices until their successor• is appointed and qualifies as a Director. The City Manager, Deputy City Manager and City Attorney shall serve as ex e fficio members of the Board of Directors and shall not be entitled to vote. Section 2. Meetings of Directors. The Directors may hold their meetings and may have an office and keep the books of the Authority at City Hall or such other location in the City as the Board of Directors may from time to time determine; provided, however, in the absence of any such determination, such place shall be the registered office of the Authority in the State of Texas. To the extent provided by law, the meetings of the Board of Directors and any committee of the Board of Directors shall be held in accordance with and notice of such meetings shall be filed for the same. length of time and in the same manner and location as is required of a City under Chapter 551, Government Code, as amended (the "Open Meetings Act"). To the extent provided by law, the Authority, the Board of Directors, and any committee of the Board of Directors exercising the powers of the Authority are subject to Chapter 552, Government Code, as amended (the "Public Information Act"). Section 3. Annual Meetings. The annual meeting of the Board of Directors shall be held at the time and at the location in the City designated by the resolution of the Board of Directors for the purposes of transacting such business as may be brought before the meeting. Section 4. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and places as shall be designated, from time to time, by resolution of the Board of Directors. • Section 5. Special and Emergency Meetings. 'Special and emergency meetings of the Board of Directors shall be held whenever called by the Chair of the Board of Directors or the Secretary or by a majority of the Directors who are serving duly appointed terms of office at the. time the meeting is called. The Secretary shall give notice of each special meeting in person, by telephone, facsimile, e-mail, mail or telegraph at least three (3) days before the meeting to each Director and. to the public in compliance with the Open Meetings Act. Notice of each emergency meeting shall also be given in the manner required of the City under Section 551.045 of the Open Meetings Act.. Unless otherwise indicated in the notice thereof, any and all matters pertaining to the purposes of the Authority may be considered and acted upon at a special or emergency meeting. At any meeting at which every Director shall be present, even though without any. notice, any matter pertaining to the purposes of the Authority may be considered and acted upon to the extent allowed by the Open Meetings Act. Section 6. Quorum. A majority of the Board of Directors shall constitute a quorum for the consideration of matters pertaining to the purposes of the Authority. If at any meeting of the Board of Directors there is less than a quorum present, a majority of those present may adjourn the meeting from time to time. The act of a majority of the Directors present and voting at a meeting at which a quorum is in attendance shall constitute the act of the Board of Directors, unless the act of a greater number is required by law, by the Articles of Incorporation, or by these Bylaws. A Director who is present at a meeting of the Board of Directors at which any corporate action is taken shall be presumed to have assented to such action unless his dissent or abstention shall be entered in the minutes of the meeting or unless he shall file his written dissent or abstention to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent or abstention by registered mail to the Secretary of the Board of Directors immediately after the adjournment of the meeting. Such right to dissent shall not apply to-a Director who voted in favor of the. action. Section 7. Conduct of Business. At the meetings of the Board of Directors, matters pertaining to the purposes of the Authority shall be considered in such order as from time to time the Board of Directors may determine. At all meetings of the Board of Directors, the Chair shall preside, and in the absence of the Chair, the Vice-Chair shall preside. In the absence of the Chair and the Vice-Chair, a chair shall be chosen by the Board of Directors from among the Directors present. The Secretary of the Board of Directors shall act as secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding officer may appoint, any person to act as secretary of the meeting. Section 8: Committees. The Board of Directors may, by resolution passed by a majority of the Directors, designate two (2) or more Directors to constitute.one or more committees. A committee shall act in the manner provided in the authorizing resolution. Each committee so designated shall keep regular minutes of the transactions of. its meetings and shall cause such minutes to be recorded in books kept for that purpose in the office of the Authority, and shall report the same to the Board of Directors from time to time. Section 9. Compensation of Directors. Directors, as such, shall not receive any salary or compensation for their services as Directors; unless otherwise directed by the City Council. A Director may be reimbursed for reasonable out-of-pocket expenses incurred as a Director in accordance with guidelines established by the Board of Directors which are reasonable and necessary in carrying out the Board of Directors' purposes. Section 10. Director's Reliance on Consultant Information. A Director shall not be liable if while acting in good faith and with ordinary care, he relies on information, opinions. reports, or statements, including financial statements and other financial data that were prepared or presented by: (a) one or more other officers or employees of the Authority; (b) legal counsel, public accountants, or other persons as to matters the officer• reasonably believes are within the person's professional or expert competence; or (c) ' a committee of the Board of Directors of which the Director is not a member. ARTICLE III. OFFICERS Section 1. Titles and Term of Office. The officers of the Authority shall be a chair of the Board of Directors, one or more vice chairs of the Board of Directors, a secretary, a treasurer, and such other officers as the Board of Directors may from time.to time shall elect. One person may hold more than one office, except that the Chair of the Board may not hold the office of Secretary. The term of office for each officer (other than the Treasurer) shall be coincident with the Director's term of office. All officers (other than the Treasurer) shall be subject to removal, with or without cause, at any time by a vote of a majority of the whole Board of Directors. A vacancy in the office of any officer (other than the Treasurer) shall be filled by the, Board of Directors. The designation of the Treasurer shall be governed by the provisions of Section 5 of this Article. Section 2. Powers and Duties of the Chair. The Chair shall be a member of the Board of Directors and shall preside at all meetings of the Board of Directors. He or she shall have such duties as ate assigned by the Board of Directors. The Chair may call special or emergency meetings of the Board of Directors. Section 3. Powers and Duties of the Vice-Chair. The Vice-Chair shall be a member of the Board of Directors and shall perform the duties and exercise the powers of the, Chair upon the Chair's death, absence, disability, or resignation, or upon the Chair's inability to perform the duties of his or her office. Any action taken by the Vice-Chair in the performance of the duties of the Chair shall be conclusive evidence of the absence or inability to act of the Chair, at the time such action was taken. Section 4. Execution of Documents. In furtherance of the purposes of the Board of Directors and subject to the provisions of the Articles of Incorporation and By-laws, the Board of Directors may authorize the Chair or Vice Chair to sign and execute all bonds, notes, deeds, conveyances, franchises; assignments, mortgages, notes, contracts and other obligations in the name of the Authority. -.Section S. 'Treasurer. Notwithstanding the provisions of any other Section of this Article, the City of Pearland Director of Finance shall be the Treasurer of the Authority. The Treasurer shall have custody of all the funds and securities of the Authority which come into his or her hands, When necessary or proper, he or she may endorse, on behalf of the Authority, for collection, checks, notes and other obligations and shall deposit the same to the credit of the Authority in a special Authority fund in the City's depository bank or banks. He or she may sign all. receipts and vouchers for payments made to the Authority, either alone or jointly with such other officer as is designated by 'the Board of Directors. Whenever requested by the Board of Directors, he or she shall perform all acts incident to the position of Treasurer subject to the control of the' Board of Directors and he or she shall, if required by the Board of Directors, give such bond for the faithful discharge 'of his or her duties in such form as the. Board of Directors may require. All Authority funds shall be secured in the same manner as City funds, as required by Chapter 2256, Government Code, the Public Funds Investment Act. Section 6. Secretary. The Secretary shall keep the minutes of all meetings of the Board' of Directors in books provided for that purpose. He or she shall attend to the giving and serving of all notices; in furtherance of the purposes of the Authority and subject to the limitations contained in the Articles-of Incorporation, he or she may sign with the Chair in the name of the Authority and/or attest the signatures thereof, all contracts, conveyances, franchises, bonds, deeds, assignments, mortgages, notes - and other instruments of the Authority. He or she shall have charge of the Authority's books and records, except the books• of account and financial records and securities of which the Treasurer Shall have custody and charge, and such other books and papers as the Board of Directors may direct, and, he or she shall in general perform all duties incident to the office of Secretary subject to the control of the Board of Directors Section 7. Compensation. Officers may not receive salary or compensation for personal services. Members of the Board of Directors, even in their capacity as officers, are not entitled to compensation Section 8. Officer's Reliance on Consultant Information. In the discharge of a duty imposed or power conferred on an officer of the Authority, the officer may in good faith and with ordinary care rely on information, opinions, reports, or statements, including financial statements and other financial data that were prepared or presented by' (a) one or more other officers or employees of the Authority, including members of the Board of Directors; or (b) legal counsel, public accountants, or other persons as to matters the officer reasonably believes are within the person's professional or expert competence. ARTICLE IV. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 1. Right to Indemnification. Subject to the limitations and conditions as provided in this Article IV and the Autbority's Articles of Incorporation, each person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such a proceeding or any inquiry or investigation that could lead to such a proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Authority or while a director or officer of the Authority, is or was serving at the request of the Authority as a director, officer; partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise, shall be indemnified by the Authority to the fullest extent permitted by the Texas Non-Profit Corporation Act, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Authority to provide broader indemnification rights than said law permitted the Authority to provide prior to such amendment) against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including, without limitation, attorneys' fees) actually incurred by such person in connection with such proceeding, and indemnification under this Article IV shall continue as to a person who has ceased to serve in the capacity which initially entitled such person to indemnity hereunder. The rights granted pursuant to this Article IV 'shall be deemed contract rights, and no amendment, modification or repeal of this Article IV shall have the effect of limiting or denying any such rights with respect to actions taken or proceedings arising prior to any such amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Article IV could involve indeninification' for negligence or under'theories of strict liability. Section 2. Advance Payment. The-right to indemnification conferred in this Article IV shall include the • right to be * paid in advance or reimbursed by the Authority the reasonable expenses incurred by a person of the type entitled to be indemnified under Section 1 who was, is or is threatened .to be made a named defendant or respondent in a proceeding in advance of the final - disposition of the proceeding and without any determination as to the person's ultimate entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such person in advance of the final disposition of a proceeding, shall be made only upon delivery to the Board of Directors of a written affirmation by 'such Director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification under this Article IV and a written undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under this Article IV or otherwise. Section 3. Indemnification of Employees and Agents. The Authority, by adoption of a resolution of the Board of Directors, may indemnify and advance expenses to an employee or agent of the, Authority to the same extent and subject to the same conditions under which it may indemnify and advance expenses to Directors, and officers under this Article IV; and the Authority may indemnify and advance expenses to persons who are not or were not Directors. officers, employees or agents of the Authority but who are or were serving at the request of the Authority as a Director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary - of another foreign or domestic corporation, partnership, joint venture. sole proprietorship, trust, employee benefit plan or other enterprise against-any liability asserted against him or her and incurred by him or her in such a capacity or arising out of his or her status as such a person to the same extent that it may indemnify and advance expenses to Directors under this Article IV. Section 4. Appearance as a Witness. Notwithstanding any other provision of this Article IV, the Authority may pay or reimburse expenses incurred by a Director or officer in connection with his or her appearance as a witness or other participation in a proceeding involving the Authority or its business at a time when he or she is not a named defendant or, respondent in the proceeding. Section S. Non-exclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred in this Article IV shall not be exclusive of•a'ny other right which a Director or officer or other person indemnified pursuant to Section 3 of this Article IV may have or hereafter acquire under any law (common or statutory), provision of the Articles of Incorporation of the Authority or these' Bylaws, agreement, vote of shareholders or disinterested Directors or otherwise. Section 6. Insurance. The Authority may purchase and maintain insurance, at its expense, to protect itself and any person' who is or was serving as a Director, officer, employee* or agent of the Authority or is or was serving at the request of the Authority as a Director,, officer, partner, venturer; proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, proprietorship, employee benefit plan, trust of other enterprise against any expense, liability or loss, whether or not the Authority would have the 'power to indemnify such person against such expense, liability or loss under this Article IV. Section 7. Notification. Any indemnification of or advance of expenses to a Director or officer in accordance with this Article IV shall be reported in writing to the members of the Board of Directors with or before the notice of the next regular meeting of the Board of Directors. and, in any case, within the 12-month period immediately' following the date of the indemnification or advance. Section 8. Savings Clause. If this Article IV or any portion hereof shall be invalidated on any ground by any, court of competent jurisdiction, then the Authority shall nevertheless indemnify and hold harmless each Director, officer or any other person indemnified pursuant to this Article IV as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, to the full .extent permitted by any .applicable portion of this Article IV that shall not have been invalidated and to the fullest extent permitted by applicable law. ARTICLE V. AMENDMENTS TO BYLAWS .A proposal to alter, amend, or repeal these Bylaws shall be made by the affirmative vote of a majority of the full Board of Directors at any annual or regular meeting, or at any special meeting if notice of the proposed amendment.be contained in the notice of said special meeting. However, . any proposed change or amendment to the Bylaws must be approved by the City Council of the City to be effective. ARTICLE VI. MISCELLANEOUS PROVISIONS Section 1. Fiscal Year.. The fiscal year of the Authority shall run concurrently with the' fiscal year of the City. Section 2. Seat. The seal of the Authority shall be such as from time to time may be approved by the Board of Directors. Section 3. Notice and Waiver f' Notice. Whenever any notice whatever, other than public notice of a meeting given to comply with the Open Meetings Act, is required to be given under the provisions of these Bylaws, such notice shall be deemed to be sufficient if given by depositing the same in •a post office box in a sealed postpaid wrapper addressed to the person entitled thereto at his or her post office address, as .it appears on the books of the Authority, and such notice shall be deemed to have been given on the day of such mailing. A waiver of notice, signed by the person or persons entitled to said notice, whether before or. after the time stated therein, shall be deemed equivalent thereto. Section 4. Resignations. Any Director or officer may resign at any time. Such resignations shall be made in writing and shall take effect at the time specified therein, or, if no time' be specified,. at the time of its receipt by. the Chair or Secretary. The acceptance of a resignation shall not 'be necessary to make it effective, unless expressly so provided in the resignation. Section 5. Gender. References herein to the masculine gender shall also refer to the feminine in all appropriate cases and vice versa. Section 6. Appropriations and Grants. The Authority shall have the . power to request and accept any appropriation, grant, contribution, donation, or other form of aid from the federal goverment, the State, any political subdivision, or municipality in the State, or from any other source. Section 7. Legal Authorities Governing Construction of Bylaws. The Bylaws shall be construed in accordance, with the laws of the State of Texas. All references in the Bylaws to statutes, regulations, or other sources of legal authority shall refer to the authorities cited, or their successors, as they may be arriended,from time to time. Section 8. Heading The headings used in the Bylaws are used for convenience and shall not be considered in construing the terms of the Bylaws. Section 9. Parties Bound. • The Bylaws shall be binding upon and inure to the benefit of the directors, offices and agents of the Authority and their respective heirs, executors, administrators, legal representatives, successors and assigns except as otherwise provided in the Bylaws. Section 10. Effective Date. These Bylaws, and any subsequent amendments thereto, shall be effective of and from the date upon which approval has been given both by the Board of Directors and the City Council of the City. CERTIFICATE OF SECRETARY I certify that I am the duly elected and acting secretary of the DEVELOPMENT AUTHORITY OF PEARLAND, and the foregoing Bylaws constitute the Bylaws of the Authority. These Bylaws were approved by the City Council of the City of Pearland, Texas, at a meeting held on June 28, 2004, and adopted at a meeting of the Board of Directors of the Authority held on July 27, 2004: Signed this November 15, 2004. Q. SECR TARY, DEVELOPMENT AUTHORITY.- OF PEARLAND EXHIBIT C Certificate of Fact I-IOU:3364841,4 Corporations Section ~E 0l, John Steen P.O.Box 13697 5 ~ Secretary of State Austin, Texas 78711-3697 Cn Office of the Secretary of State Certificate of Fact The undersigned, as Secretary of State of Texas, does hereby certify that the document, Articles of Incorporation for DEVELOPMENT AUTHORITY OF PEARLAND (file number 800364974), a Domestic Nonprofit Corporation, was filed in this office on July 14, 2004. It is further certified that the entity status in Texas is in existence. In testimony whereof, I have hereunto signed my name officially and caused to be impressed hereon the Seal of State at my office in Austin, Texas on November 12, 2013. AJ John Steen Secretary of State Conte visit us on the internet at http://www. sos. state. lx. us/ Phone: (512) 463-5555 Fax: (512) 463-5709 Dial: 7-1-1 for Relay Services Prepared by: SOS-WEB TID: 10264 Document: 514654140005 EXHIBIT D Franchise Tax Account Status HOU:3364841.4 r raucrose i ax Account Status Page 1 of 1 " 'fit Franchise Tax Account Status As of: 11/12/2013 12:01:21 PM This Page is Not Sufficient for Filings with the Secretary of State DEVELOPMENT AUTHORITY OF PEARLAND Texas Taxpayer Number 12016779725 Mailing Address 3519 LIBERTY DR PEARLAND, TX 77581-5416 -~ Right to Transact ACTIVE Business in Texas State of Formation TX Effective SOS 07/14/2004 Registration Date T exas SO S File Number 0800364974 Registered Agent Name DARRIN COKER Registered Office Street 3519 LIBERTY DRIVE Address PEARLAND, TX 77581 https://myepa.cpa.state.tx.us/coa/servlet/cpa.app.coa.CoaGetTp?Pg--tpid&Search Nm=D... 11/12/2013 EXHIBIT E Combined Debt Service Schedule Development Authority of Pearland, Texas Current Debt plus New Debt FINAL NUMER5 Tax Increment Contract Revenue Bonds,Series 2013 )Jatoe L)U iv2wzui3 Series 2013 OeUvny Date 11l22013 Now Interest Interest Year Current PrlicIpsl @ 3.770'3 f43.71G% Total Total New Total Debt Debt Due Due Due New Principal Service 09.130 RequIrement 00101 03101 DOM Int e rest & Interest Requirement 2014 4,301.511 430,080 9,030 172,s75 407 193,07 3551)1)0 104,772 104,372 324.744 093744 5,074,298 2010 6,375,937 30000 1574.72 157,492 31.1 034 1.954 5,lYl1$65 2017 4,0 $02 385,000 ).329 150,223 238.085 095, 5,07150 2019 4.301.557 . 405,000 143.012 1.1.5/3 2011163 o0LI2 7019 4,373.52' 220,000 139,427 l3:3/ .18 97$ 030875 5,070.418 6,14.1 11 445,1)00 127,920 12192) t..U61 120 141 4M 254 02d 495208 110132 110,'3? 273.264 72291 4,1147 ox 2022 3,017 "4 5 735,000 1 tO,397 110,257 222.734 055,734 6,743 47.1 7777 4.7.03 433 900,000 90,012 11,0'7 193.1)7.1 753,024 71)24 4,1C'3.7D3 815,300 89,004 17) 1117 - 730,012 4,3'1L112 222$ 4,I.•i 773 979,1)09 7'l,353 7'1.332 i5 /2/ 818,727 4,511,927 202)1 3,9)19.2)2 725,000 8734 0,734 :-13,143 840,450 4,840,898 33)110 III:) 780,030 10,098 611,) 911,13)1 950,135 6,947,535 2028 3330.2u2 7109.000 73.270 33,270 88,861 9)11±11 4.1149,741 2020 3,804,800 15.0 11 1)0 1,749 17,2.19 34.405 ,644208 Totals $115,429,725 $9,1580OG ,975,902 $l.G0735O $3,313,283 $12,492,253 578,491,979 N8W13: Dated Date-- 1112612013 Principal Due Dater,' 09,0112014. 09/0112029 Meturing Amount: 915tl,000.00 HOU:3364841 .4 'J: :11 IJ I a Schedule of Pledged Revenue Collections Tax Year Increment Collection 2010 $ 11,688,990 2010 10,233,939 2012 9,933,598 HOU:3364841.4 GENERAL CERTIFICATE OF THE CITY OF PEARLAND, TEXAS I, the undersigned, City Secretary of the City of Pearland, Texas (the "City"), make this certification for the benefit of the Attorney General of the State of Texas and all persons interested in the proceedings for the issuance of the Tax Increment Contract Revenue Bonds, Series 2013 (the "Bonds"), now in process of issuance by the Development Authority of Pearland. The following persons are the current members of the City Council of the City: Tom Reid Greg Hill Anthony D. Carbone Scott Sherman Susan Sherrouse Keith Ordeneaux Mayor Mayor Pro Tern Councilmember, Position 1 Councilmember, Position 2 Councilmember, Position 3 Councilmember, Position 4 2. Bill Eisen is the City Manager, Claire Bogard is the Director of Finance, Young Lorfing is the City Secretary and Darrin Coker is the City Attorney of the City. WITNESS MY HAND AND THE OFFICIAL SEAL OF THE CITY, this 1t-k day of November, 2013. CITY OF PEARLAND, TEXAS i ri -- HOU:3364867.1 CERTIFICATE REGARDING ADDITIONAL PARITY BONDS This certificate is given in connection with the issuance of $9,150,000 Development Authority of Pearland Tax Increment Contract Revenue Bonds, Series 2013 (the "Series 2005 Bonds"). All capitalized terms herein shall have the meanings assigned to such terms in the Indenture securing the Series 2013 Bonds. In compliance with Section 3.02(e) and (f) of the Indenture, the Development Authority of Pearland has received certificates from the Brazoria County Appraisal District and the Fort Bend Central Appraisal District (the "Appraisal Districts"), true and correct copies are attached hereto, showing the estimated total appraised values of real property within the TIRZ. As a tax assessor/collector registered with the State of Texas, I have been employed by the TIRZ to calculate the exemptions and losses due to protests based on historical data on the real property values estimated in the certificates provided by the Appraisal Districts. Estimated exemptions for Brazoria County and Fort Bend County were provided by the respective Appraisal Districts. I provided estimated exemptions for the City based on application of the existing exemptions available from the City. I hereby certify that the estimated total appraised values of real property within the TIRZ, adjusted for exemptions and losses due to protests based on historical data (the "Adjusted Property Values"), are those values in the calculations attached hereto. As the Financial Advisor to the Authority, I hereby certify that the Adjusted Property Values will result in Captured Appraised Values that will generate, at the current tax rates of the City, Brazoria County and Fort Bend County, Contract Tax Increments from such entities that will be at least 125 percent of the projected Average Annual Debt Service on the Series 2013 Bonds and all Outstanding previously issued Parity Bonds, as shown by the calculations attached hereto. EXECUTION PAGES FOLLOW HOU:3377699. I ASSESSMENTS OF THE SOUTHWEST, INC. By: Name: 44y1i p77:J2-j( Title: 1'cTy Mg 'J2-sj HOU:3377699.1 BOSC, INC. Name: /' (?-.3 e Title: i!~ HOU:3377699.1 City Brazoria County Fort Bend County Adjusted Property Values $1,603,976,126 1,453,474,932 $225,323,547 MINUS Base Year Values 7,172,980 4,143,160 3,029,820 EQUALS: Estimated Captured Appraised Values $1,596,803,146 $1,258,678,475 $222,293,727 Average Annual Debt Service on all Outstanding Parity Bonds, including the Series 2005 Bonds: $4,898,646.00 125% of Average Annual Debt Service on all Outstanding Parity Bonds, including the Series 2013 Bonds $6,123,307.50 Contract Tax Increment produced on Estimated Captured Appraised Values with participation based upon the existing tax rates of the City ($0.255 contribution), Brazoria County ($0.1359 contribution), and Fort Bend County $6,822,893.00 ($0.468075 contribution): HOU:3377699.1