HomeMy WebLinkAboutOrdinance No. 2010-31 v \ �
(Title: An ordinance Authorizing the issuance and sale of City of Fricndswood,Texas Public
Improvement Bonds.)
ORDINANCE 2010-31
AUTHORIZING THE ISSUANCE AND SALE OF CITY OF
FRIENDSWOOD, TEXAS PUBLIC IMPROVEMENT
BONDS, SERIES 2010A; LEVYING AN ANNUAL AD
VALOREM TAX FOR THE PAYMENT OF SAID BONDS;
APPROVING AN OFFICIAL STATEMENT; AND
ENACTING OTHER PROVISIONS RELATING TO THE
SUBJECT.
THE STATE OF TEXAS §
COUNTIES OF HARRIS AND GALVESTON §
CITY OF FRIENDSWOOD §
WHEREAS, by virtue of an election held within the City of Friendswood, Texas ("the.
Issuer") on February 1, 2003, this City Council became authorized to issue, sell and deliver the'
general obligation bonds of the Issuer,of which there have been issued heretofore and are authorized
to be issued by this Ordinance,the bonds described in Schedule I attached hereto and incorporated-
herein;
WHEREAS,this City Council finds and determines that it is necessary and proper to order
the issuance, sale and delivery of such voted bonds;
WHEREAS,the Bonds hereinafter authorized are to be issued,sold and delivered pursuant
to the general laws of the State of Texas,including Tex.Gov't Code Ann.Chapter 1331,as amended;'
and
WHEREAS,It is officially found, determined, and declared that the meeting at which this
Ordinance has been adopted was open to the public and public notice of the time,place and subject
matter of the public business to be considered and acted upon at said meeting, including this
Ordinance,was given,all as required by the applicable provisions of Tex.Gov't Code Ann.ch.551;
Now,Therefore
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD
TEXAS:
Section 1. RECITALS, AMOUNT AND PURPOSE OF THE BONDS. The recitals set
forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set
forth in this Section. The bonds of the Issuer are hereby authorized to be issued and delivered in the
aggregate principal amount of $3,460,000 for the construction of improvements to streets and
}
thoroughfares,including Friendswood Link Road,Brittany Bay Boulevard Extension,various local
streets and the acquisition of any necessary rights-of-way,and to pay the costs incurred in connection
with the issuance of the Bonds (the "Project").
Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND
MATURITIES AND INTEREST RATES OF BONDS. Each bond issued pursuant to this Ordinance
shall be designated: "CITY OF FRIENDSWOOD, TEXAS, PUBLIC IMPROVEMENT BOND,
SERIES 2010A," and initially there shall be issued, sold, and delivered hereunder one fully
registered bond,without interest coupons, dated November 1,2010,in the principal amount stated
above and in the denominations hereinafter stated,numbered T-1,with bonds issued in replacement
thereof being in the denominations and principal amounts hereinafter stated and numbered
consecutively from R-1 upward,payable to the respective Registered Owners thereof(with the initial
bond being made payable to the initial purchaser as described in Section 10 hereof), or to the
registered assignee or assignees of said bonds or any portion or portions thereof(in each case, the
"Registered Owner"),and said bonds shall mature and be payable serially on March lin each of the
years and in the principal amounts,respectively,and shall bear interest from the dates set forth in the
FORM OF BOND set forth in Section 4 of this Ordinance to their respective dates of maturity or
redemption prior to maturity at the rates per annum, as set forth in the following schedule:
Years of Principal Interest Years of Principal Interest
Maturity Amount Rates Maturity Amount Rates
2011 $ 75,000 1.00% ***
2012 95,000 1.00 2023 $285,000 4.00%
2013 100,000 2.00 ***
2014 110,000 2.00 2025 310,000 4.00
2015 1.10,000 2.00 ***
2016 115,000 2.00 2027 305,000 4.00
2017 120,000 3.00 ***
2018 125,000 3.00 2029 285,000 4.00
2019 130,000 3.00 ***
{
*** 2031 310,000 4.00
2021 275,000 4.00 ***
2035 710,000 4.75
Ord 2010-31
Section 3. CHARACTERISTICS OF THE BONDS.
(a) Registration.Transfer. Conversion and Exchange. The Issuer shall keep or cause to be
kept at the designated corporate trust office of The Bank of New York Mellon Trust Company,N.A.,
in Dallas,Texas(the"Paying Agent/Registrar"),books or records for the registration of the transfer,
conversion and exchange of the Bonds(the"Registration Books"),and the Issuer hereby appoints the
Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make
such registrations of transfers,conversions and exchanges under such reasonable regulations as the
Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such
registrations,transfers,conversions and exchanges as herein provided. The Paying Agent/Registrar
shall obtain and record in the Registration Books the address of the registered owner of each Bond to
which payments with respect to the Bonds shall be mailed,as herein provided;but it shall be the duty
of each registered owner to notify the Paying Agent/Registrar in writing of the address to which
payments shall be mailed,and such interest payments shall not be mailed unless such notice has been
given. The Issuer shall have the right to inspect the Registration Books during regular business hours
of the Paying Agent/Registrar,but otherwise the Paying Agent/Registrar shall keep the Registration
Books confidential and, unless otherwise required by law, shall not permit their inspection by any
other entity. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and
charges for making such registration, transfer, conversion, exchange and delivery of a substitute
Bond or Bonds. Registration of assignments,transfers,conversions and exchanges of Bonds shall be
made in the manner provided and with the effect stated in the FORM OF BOND set forth in this
Ordinance. Each substitute Bond shall bear a letter and/or number to distinguish it from each other
Bond.
Except as provided in Section 3(c) of this Ordinance, an authorized representative of the
Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign said
Bond, and no such Bond shall be deemed to be issued or outstanding unless such Bond is so
executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered
for conversion and exchange. No additional ordinances, orders, or resolutions need be passed or
adopted by the governing body of the Issuer or any other body or person so as to accomplish the
foregoing conversion and exchange of any Bond or portion thereof,and the Paying Agent/Registrar
shall provide for the printing, execution, and delivery of the substitute Bonds in the manner
prescribed herein, and said Bonds shall be printed or typed on paper of customary weight and
strength. Pursuant to Chapter 1201, Government Code, as amended, the duty of conversion and
exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and,upon the
execution of said Bond, the converted and exchanged Bond shall be valid, incontestable, and
enforceable in the same manner and with the same effect as the Bonds that initially were issued and
delivered pursuant to this Ordinance, approved by the Attorney General and registered by the
Comptroller of Public Accounts.
(b) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds,all as
Ord 2010-31
provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments
made by the Issuer and the Paying Agent/Registrar with respect to the Bonds,and of all conversions
and exchanges of Bonds,and all replacements of Bonds,as provided in this Ordinance. However,in
the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days
thereafter,a new record date for such interest payment(a"Special Record Date")will be established
by the Paying Agent/Registrar,if and when funds for the payment of such interest have been received
from the Issuer. Notice of the past due interest shall be sent at least five(5)business days prior to
the Special Record Date by United States mail, first-class postage prepaid, to the address of each
registered owner appearing on the Registration Books at the close of business on the last business
day next preceding the date of mailing of such notice.
(c) In General. The Bonds (i) shall be issued in fully registered form, without interest
coupons,with the principal of and interest on such Bonds to be payable only to the registered owners
thereof, (ii)may be redeemed prior to their scheduled maturities (notice of which shall be given to
the Paying Agent/Registrar by the Issuer at least 50 days prior to any such redemption date),(iii)may
be converted and exchanged for other Bonds,(iv)may be transferred and assigned,(v)shall have the
characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and
interest on the Bonds shall be payable, and (viii) shall be administered and the Paying
Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the;
Bonds,all as provided,and in the manner and to the effect as required or indicated,in the FORM OR
BOND set forth in this Ordinance. The Bond initially issued and delivered pursuant to this
Ordinance is not required to be,and shall not be,authenticated by the Paying Agent/Registrar,but on
each substitute Bond issued in conversion of and exchange for any Bond or Bonds issued under this
Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S
AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF BOND.
(d) Paving Agent/Registrar for the Bonds. The Issuer covenants with the registered owners
of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent
and legally qualified bank,trust company,financial institution,or other entity to act as and perform
the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying
Agent/Registrar will be one entity. The Issuer reserves the right to,and may,at its option,change the
Paying Agent/Registrar upon not less than 75 days written notice to the Paying Agent/Registrar,to be
effective not later than 60 days prior to the next principal or interest payment date after such notice;
In the event that the entity at any time acting as Paying Agent/Registrar(or its successor by merger,
acquisition, or other method) should resign or otherwise cease to act as such,the Issuer covenants
that promptly it will appoint a competent and legally qualified bank, trust company, financial
institution,or other entity to act as Paying Agent/Registrar under this Ordinance. Upon any change
in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and
deliver the Registration Books(or a copy thereof), along with all other pertinent books and records
relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer.
Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice
thereof to be sent by the new Paying Agent/Registrar to each Registered Owner of the Bonds, by
United States mail, first-class postage prepaid,which notice also shall give the address of the new
Paying Agent/Registrar. By accepting the position and performing as such, each Paying
Ord 2010-31
Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified
copy of this Ordinance shall be delivered to each Paying Agent/Registrar.
(e) Authentication. Except as provided below,no Bond shall be valid or obligatory for any
purpose or be entitled to any security or benefit of this Ordinance unless and until there appears
thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this
Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar. It shall not be
required that the same authorized representative of the Paying Agent/Registrar sign the Certificate of
Paying Agent/Registrar on all of the Bonds. In lieu of the executed Certificate of Paying
Agent/Registrar described above,the Initial Bond delivered on the closing date shall have attached
thereto the Comptroller's Registration Certificate substantially in the form provided in this
Ordinance,manually executed by the Comptroller of Public Accounts of the State of Texas or by his
duly authorized agent, which certificate shall be evidence that the Initial 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 Issuer, and has been registered by the Comptroller.
(f) Book-Entry Only System. The Bonds issued in exchange for the Bond initially issued to
the initial purchaser specified herein shall be initially issued in the form of a separate single fully j
registered Bond for each of the maturities thereof. Upon initial issuance,the ownership of each such
Bond shall be registered in the name of Cede&Co.,as nominee of The Depository Trust Company,
New York, New York ("DTC"), and except as provided in subsection (f) hereof, all of the,
outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC.
With respect to Bonds registered in the name of Cede&Co.,as nominee of DTC,the Issuer
and the Paying Agent/Registrar shall have no responsibility or obligation to any securities brokers
and dealers,banks,trust companies,clearing corporations and certain other organizations on whose
behalf DTC was created ("DTC Participant") to hold securities to facilitate the clearance and
settlement of securities transactions among DTC Participants or to any person on behalf of whom
such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding
sentence,the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with
respect to(i)the accuracy of the records of DTC,Cede&Co.or any DTC Participant with respect to
any ownership interest in the Bonds, (ii)the delivery to any DTC Participant or any other person,
other than a Registered Owner of Bonds, as shown on the Registration Books, of any notice with
respect to the Bonds, or(iii)the payment to any DTC Participant or any other person, other than a
Registered Owner of Bonds, as shown in the Registration Books of any amount with respect to
principal of or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the
contrary,the Issuer and the Paying Agent/Registrar shall be entitled to treat and consider the person
in whose name each Bond is registered in the Registration Books as the absolute owner of such Bond
for the purpose of payment of principal and interest with respect to such Bond, for the purpose of
registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying
Agent/Registrar shall pay all principal of and interest on the Bonds only to or upon the order of the
Registered Owners, as shown in the Registration Books as provided in this Ordinance, or their
respective attorneys duly authorized in writing,and all such payments shall be valid and effective to
fully satisfy and discharge the Issuer's obligations with respect to payment ofprincipal of and interest
Ord 2010-31
on the Bonds to the extent of the sum or sums so paid. No person other than a Registered Owner,as
shown in the Registration Books, shall receive a Bond evidencing the obligation of the Issuer to
make payments of principal and interest pursuant to this Ordinance. Upon delivery by DTC to the
Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions in this Ordinance with respect to
interest checks being mailed to the Registered Owner at the close of business on the Record date,the
words "Cede & Co." in this Ordinance shall refer to such new nominee of DTC.
The previous execution and delivery of the Blanket Letter of Representations with respect to
obligations of the Issuer is hereby ratified and confirmed; and the provisions thereof shall be fully
applicable to the Bonds.
(g) Successor Securities Depository; Transfers Outside Book-Entry Only System. In the
event that the Issuer determines that DTC is incapable of discharging its responsibilities described
herein and in the representations letter of the Issuer to DTC or that it is in the best interest of the
beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Issuer shall (i)
appoint a successor securities depository,qualified to act as such under Section 17A of the Securities
and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of
such successor securities depository and transfer one or more separate Bonds to such successor'
securities depository or (ii) notify DTC and DTC Participants of the availability through DTC ofl
Bonds and transfer one or more separate certificated Bonds to DTC Participants having Bonds
credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being!
registered in the Registration Books in the name of Cede & Co., as nominee of DTC, but may be
registered in the name of the successor securities depository,or its nominee,or in whatever name or;
names Registered Owners transferring or exchanging Bonds shall designate,in accordance with the
provisions of this Ordinance.
(h) Payments to Cede&Co. Notwithstanding any other provision of this Ordinance to the
contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all
payments with respect to principal of and interest on such Bond and all notices with respect to such
Bond shall be made and given,respectively,in the manner provided in the representations letter of
the Issuer to DTC.
(i) Cancellation of Initial Bond. On the closing date,one initial Bond representing the entire
principal amount of the Bonds,payable in stated installments to the purchaser designated in Section
10 or its designee,executed by manual or facsimile signature of the Mayor and City Secretary of the
Issuer, approved by the Attorney General of Texas, and registered and manually signed by the
Comptroller of Public Accounts of the State of Texas, will be delivered to such purchaser or its
designee. Upon payment for the initial Bond, the Paying Agent/Registrar shall cancel the initial
Bond and deliver to the Depository Trust Company on behalf of such purchaser one registered
definitive Bond for each year of maturity of the Bonds,in the aggregate principal amount of all of the
Bonds for such maturity.
Ord 2010-31
(j) Conditional Notice of Redemption. With respect to any optional redemption of the
Bonds,unless certain prerequisites to such redemption required by this Ordinance have been met and
moneys sufficient to pay the principal of and premium, if any, and interest on the Bonds to be
redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice
of redemption, such notice shall state that said redemption may, at the option of the Issuer, be
conditional upon the satisfaction of such prerequisites and receipt of such moneys by the Paying
Agent/Registrar on or prior to the date fixed for such redemption, or upon any prerequisite set forth
in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to
the redemption and sufficient moneys are not received, such notice shall be of no force and effect,
the Issuer shall not redeem such Bonds and the Paying Agent/Registrar shall give notice, in the
manner in which the notice of redemption was given, to the effect that the Bonds have not been
redeemed.
Section 4. FORM OF BONDS. The form of the Bonds, including the form of Paying
Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration
Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Bonds
initially issued and delivered pursuant to this Ordinance, shall be, respectively, substantially as
follows,with such appropriate variations,omissions or insertions as are permitted or required by this
Ordinance. i
(a) Form of Bond.
NO. R- UNITED STATES OF AMERICA PRINCIPAL
STATE OF TEXAS AMOUNT
CITY OF FRIENDSWOOD,TEXAS
PUBLIC IMPROVEMENT BOND
SERIES 2010A
Interest Rate Dated Date Maturity Date CUSIP No.
November 1, 2010 March 1, 2011
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
I
ON THE MATURITY DATE specified above, the City of Friendswood, in Galveston and
Harris Counties,Texas(the"Issuer"),being apolitical subdivision and municipal corporation of the
State of Texas, hereby promises to pay to the Registered Owner specified above, or registered
assigns (hereinafter called the "Registered Owner"), on the Maturity Date specified above, the
Principal Amount specified above. The Issuer promises to pay interest on the unpaid principal
amount hereof(calculated on the basis of a 360-day year of twelve 30-day months)from November
1, 2010 at the Interest Rate per annum specified above. Interest is payable on March 1, 2011 and
Ord 2010-31
semiannually on each September 1 and March 1 thereafter to the Maturity Date specified above,or
the date of redemption prior to maturity;except, if this Bond is required to be authenticated and the
date of its authentication is later than the first Record Date (hereinafter defined), such Principal
Amount shall bear interest from the interest payment date next preceding the date of authentication,
unless such date of authentication is after any Record Date but on or before the next following
interest payment date, in which case such principal amount shall bear interest from such next ,
following interest payment date;provided,however,that if on the date of authentication hereof the
interest on the Bond or Bonds,if any,for which this Bond is being exchanged is due but has not been;
paid, then this Bond shall bear interest from the date to which such interest has been paid in full.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the
United States of America,without exchange or collection charges. The principal of this Bond shall
be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity,or
upon the date fixed for its redemption prior to maturity, at the designated corporate trust office of
The Bank of New York Mellon Trust Company, N.A., in Dallas, Texas, which is the 'Paying
Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying
Agent/Registrar to the registered owner hereof on each interest payment date by check or draft,dated
as of such interest payment date,drawn by the Paying Agent/Registrar on,and payable solely from,
funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the 'Bond;
Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter
provided;and such check or draft shall be sent by the Paying Agent/Registrar by United States mail,
first-class postage prepaid, on each such interest payment date,to the registered owner hereof,at its
address as it appeared on the last business day of the month preceding each such date(the "Record
Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. In
addition, interest may be paid by such other method, acceptable to the Paying Agent/Registrar,
requested by,and at the risk and expense of,the registered owner. In the event of a non-payment of
interest on a scheduled payment date,and for 30 days thereafter,a new record date for such interest
payment(a "Special Record Date")will be established by the Paying Agent/Registrar, if and when
funds for the payment of such interest have been received from the Issuer. Notice of the Special
Record Date and of the scheduled payment date of the past due interest(which shall be 15 days after
the Special Record Date)shall be sent at least five business days prior to the Special Record Date by
United States mail,first-class postage prepaid,to the address of each owner of a Bond appearing on
the Registration Books at the close of business on the last business day next preceding the date of
mailing of such notice.
ANY ACCRUED INTEREST due at maturity or upon the redemption of this Bond prior to
maturity as provided herein shall be paid to the registered owner upon presentation and surrender of
this Bond for redemption and payment at the designated corporate trust office of the Paying
Agent/Registrar. The Issuer covenants with the registered owner of this Bond that on or before each
principal payment date,interest payment date,and accrued interest payment date for this Bond it will
make available to the Paying Agent/Registrar,from the "Interest and Sinking Fund" created by the
Bond Ordinance,the amounts required to provide for the payment,in immediately available funds,of
all principal of and interest on the Bonds,when due.
Ord 2010-31
IF THE DATE for the payment of the principal of or interest on this Bond shall be a
Saturday, Sunday, a legal holiday or a day on which banking institutions in the city where the
designated corporate trust office of the Paying Agent/Registrar is located are authorized by law or
executive order to close,then the date for such payment shall be the next succeeding day that is not ;
such a Saturday, Sunday,legal holiday or day on which banking institutions are authorized to close; ,
and payment on such date shall have the same force and effect as if made on the original date I
payment was due.
THIS BOND is one of a series of Bonds dated November 1,2010,authorized in accordance;
with the Constitution and laws of the State of Texas in the principal amount of$3,460,000 for the
public purposes of for constructing improvements to streets and thoroughfares, including
Friendswood Link Road,Brittany Bay Boulevard Extension,various local streets and the acquisition
of any necessary rights-of-way, and to pay the costs incurred in connection with the issuance of the
Bonds.
THE BONDS OF THIS SERIES scheduled to mature in the years2021, 2023, 2025,2027,
2029, 2031 and 2035 (the "Term Bonds") are subject to scheduled mandatory redemption by the
Paying Agent/Registrar by lot,or by any other customary method that results in a random selection,;
at a price equal to the principal amount thereof,plus accrued interest to the redemption date,out of
moneys available for such purpose in the interest and sinking fund for the Bonds,on the dates and in
the respective principal amounts, set forth in the following schedule:
Bonds Maturing Bonds Maturing Bonds Maturing
March 1, 2021 March 1,2023 March 1,2025
Principal Principal Principal
Year Amount Year Amount Year Amount
2020 $135,000 2022 $145,000 2024 $155,000
2021 140,000 2023(') 140,000 2025(') 155,000
Bonds Maturing Bonds Maturing Bonds Maturing Bonds Maturing
March 1,2027 March 1,2029 March 1,2031 March 1,2035
Principal Principal Principal Principal
Year Amount Year Amount Year Amount Year Amount
2026 $170,000 2028 $140,000 2030 $150,000 2032 $165,000
2027(') 135,000 20291'1 145,000 2031(') 160,000 2033 175,000
2034 180,000
2035111 190,000
Final maturity of Bond.
Ord 2010-31
The principal amount of Term Bond of a stated maturity required to be redeemed on any mandatory
redemption date pursuant to the operation of the mandatory sinking fund redemption provisions shall
be reduced, at the option of the Issuer, by the principal amount of any Term Bond of the same
maturity which,at least 45 days prior to a mandatory redemption date(1)shall have been acquired by
the Issuer and delivered to the Paying Agent/Registrar for cancellation or (2) shall have been
redeemed pursuant to the optional redemption provisions and not theretofore credited against a
mandatory redemption requirement.
IN ADDITION TO THE MANDATORY REDEMPTION provided above, on March 1,
2019, or on any date thereafter,the outstanding Bonds of this series that mature on and after March
1,2021 may be redeemed prior to their scheduled maturities, at the option of the Issuer,with funds
derived from any available and lawful source, as a whole, or in part, and, if in part, the particular
Bonds, or portions thereof,to be redeemed shall be selected and designated by the Issuer(provided
that a portion of a Bond may be redeemed only in an integral multiple of$5,000), at a redemption
price equal to the principal amount to be redeemed plus accrued interest to the date fixed for
redemption.
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof
prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by
United States mail,first-class postage prepaid to the registered owner of each Bond to be redeemed
at its address as it appeared on the registration books of the Paying Agent/Registrar at the close of
business on the business day next preceding the date of mailing such notice;provided,however,that
the failure of the registered owner to receive such notice, or any defect therein or in the sending or
mailing thereof,shall not affect the validity or effectiveness of the proceedings for the redemption of
any Bond. By the date fixed for any such redemption due provision shall be made with the Paying
Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof
that are to be so redeemed. If such written notice of redemption is sent and if due provision for such
payment is made, all as provided above, the Bonds or portions thereof that are to be so redeemed
thereby automatically shall be treated as redeemed prior to their scheduled maturities,and they shall
not bear interest after the date fixed for redemption, and they shall not be regarded as being
outstanding except for the right of the registered owner to receive the redemption price from the
Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall
be redeemed,a substitute Bond or Bonds having the same maturity date,bearing interest at the same
rate,in any denomination or denominations in any integral multiple of$5,000,at the written request
of the registered owner,and in aggregate principal amount equal to the unredeemed portion thereof,
will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of
the Issuer, all as provided in the Bond Ordinance.
ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds,without intere It
coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond
Ordinance,this Bond may,at the request of the registered owner or the assignee or assignees hereof,
be assigned,transferred,converted into and exchanged for a like aggregate principal amount of fully
registered Bonds,without interest coupons,payable to the appropriate registered owner,assignee or
Ord 2010-31
assignees, as the case may be, having the same denomination or denominations in any integral
multiple of$5,000 as requested in writing by the appropriate registered owner,assignee or assignees,
as the case may be,upon surrender of this Bond to the Paying Agent/Registrar for cancellation,all in
accordance with the form and procedures set forth in the Bond Ordinance. Among other
requirements for such assignment and transfer,this Bond must be presented and surrendered to the
Paying Agent/Registrar,together with proper instruments of assignment,in form and with guarantee
of signatures satisfactory to the Paying Agent/Registrar,evidencing assignment of this Bond or any
portion or portions hereof in any integral multiple of$5,000 to the assignee or assignees in whose
name or names this Bond or any such portion or portions hereof is or are to be registered. The form
of Assignment printed or endorsed on this Bond may be executed by the registered owner to '
evidence the assignment hereof, but such method is not exclusive, and other instruments of
assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment ofthis
Bond or any portion or portions hereof from time to time by the registered owner. The Paying
Agent/Registrar's reasonable standard or customary fees and charges for assigning, transferring,
converting and exchanging any Bond or portion thereof will be paid by the Issuer. In any
circumstance, any taxes or governmental charges required to be paid with respect thereto shall be
paid by the one requesting such assignment, transfer, conversion or exchange, as a condition;
precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to
make any such transfer,conversion,or exchange(i)during the period commencing with the close of
business on any Record Date and ending with the opening of business on the next following principal
or interest payment date,or(ii)with respect to any Bond or any portion thereof called for redemption
prior to maturity, within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer,resigns,
or otherwise ceases to act as such,the Issuer has covenanted in the Bond Ordinance that it promptly
will appoint a competent and legally qualified substitute therefor,and cause written notice thereof to
be mailed to the registered owners of the Bonds.
IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly
authorized, issued and delivered; that all acts, conditions and things required or proper to be
performed,exist and be done precedent to or in the authorization,issuance and delivery of this Bond
have been performed, existed and been done in accordance with law; and that annual ad valorem
taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such
interest comes due and such principal matures,have been levied and ordered to be levied against all
taxable property in said Issuer,and have been pledged for such payment,within the limit prescribed
by law.
THE ISSUER HAS RESERVED THE RIGHT to amend the Bond Ordinance as provided
therein, and under some (but not all) circumstances amendments thereto must be approved by the
registered owners of a majority in aggregate principal amount of the outstanding Bonds.
BY BECOMING the registered owner of this Bond, the registered owner thereby
acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such
terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for
Ord 2010-31
inspection in the official minutes and records of the governing body of the Issuer,and agrees that the
terms and provisions of this Bond and the Bond Ordinance constitute a contract between each
registered owner hereof and the Issuer.
IN WITNESS WHEREOF,the Issuer has caused this Bond to be signed with the manual or
facsimile signature of the Mayor of the Issuer(or in the Mayor's absence, by the Mayor Pro-Tern)
and countersigned with the manual or facsimile signature of the City Secretary of the Issuer,and has
caused the official seal of the Issue impressed, or placed in facsimile, on this Bond.
o
City Secret ar * * Mayor
(SEAL) OF
(b) Form of Paying Aeent/Registrar's Authentication Certificate.
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Bond is not accompanied by an executed Registration
Certificate of the Comptroller of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond
Ordinance described in the text of this Bond; and that this Bond has been issued in conversion or
replacement of, or in exchange for, a Bond,Bonds, or a portion of a Bond or Bonds of a series that
originally was approved by the Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas.
Dated: The Bank ofNew York Mellon Trust Company,N.A.
Dallas, Texas
Paying Agent/Registrar
By:
Authorized Representative
(c) Form of Assignment.
ASSIGNMENT
For value received,the undersigned hereby sells, assigns and transfers unto
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Please insert Social Security or Taxpayer Identification Number of Transferee:
Ord 2010-31
Please print or typewrite name and address, including zip code of Transferee:
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the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney, to register the transfer
of the
within 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 NOTICE:The signature above must correspond
an eligible guarantor institution participating in with the name of the Registered Owner as it
a securities transfer association recognized appears upon the front of this Bond in every
signature guarantee program. particular, without alteration or enlargement or
any change whatsoever.
(d) Form of Registration Certificate of the Comptroller of Public Accounts.
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Bond has been examined,certified as to validity and approved by the
Attorney General of the State of Texas,and that this Bond has been registered by the Comptroller of
Public Accounts of the State of Texas.
Witness my signature and seal this
I
Comptroller of Public Accounts of the State of Texas'
(COMPTROLLER'S SEAL)
(e) Initial Bond Insertions.
(i) The initial Bond shall be in the form set forth is paragraph (a) of this Section,
except that:
A. immediately under the name of the Bond,the headings"Interest Rate"and
"Maturity Date" shall both be completed with the words "As shown below" and
"CUSIP No. " shall be deleted.
Ord 2010-31
B. the first paragraph shall be deleted and the following will be inserted:
"THE CITY OF FRIENDSWOOD, TEXAS, in Galveston and Harris Counties, Texas (the
"Issuer"), being a political subdivision and municipal corporation of the State of Texas, hereby
promises to pay to the Registered Owner specified above,or registered assigns(hereinafter called the
"Registered Owner"), on March 1 in each of the years, in the principal installments and bearing
interest at the per annum rates set forth in the following schedule:
Principal Interest Rates
Years Installments
(Information from Section 2 to be inserted)
The Issuer promises to pay interest on the unpaid principal amount hereof(calculated on the basis of
a 360-day year of twelve 30-day months) from October 1, 2010 at the respective Interest Rate per
annum specified above. Interest is payable on March 1,2011,and semiannually on each September
1 and March 1 thereafter to the date of payment of the principal installment specified above, or the;
date of redemption prior to maturity;except,that if this Bond is required to be authenticated and the
date of its authentication is later than the first Record Date (hereinafter defined), such Principal;
Amount shall bear interest from the interest payment date next preceding the date of authentication,
unless such date of authentication is after any Record Date but on or before the next following!
interest payment date, in which case such principal amount shall bear interest from such next,
following interest payment date;provided,however,that if on the date of authentication hereof the
interest on the Bond or Bonds,if any,for which this Bond is being exchanged is due but has not been-
paid,then this Bond shall bear interest from the date to which such interest has been paid in full."
C. The Initial Bond shall be numbered "T-1."
Ord 2010-31
Section 5. INTEREST AND SINKING FUND.
(a) A special "Interest and Sinking Fund" is hereby created and shall be established and
maintained by the Issuer at an official depository bank of said Issuer. Said Interest and Sinking Fund
shall be kept separate and apart from all other funds and accounts of said Issuer, and shall be used
only for paying the interest on and principal of said Bonds. All amounts received from the sale of j
the Bonds as accrued interest shall be deposited upon receipt to the Interest and Sinking Fund,and all
ad valorem taxes levied and collected for and on account of said Bonds shall be deposited, as
collected,to the credit of said Interest and Sinking Fund. During each year while any of said Bonds
are outstanding and unpaid,the governing body of said Issuer shall compute and ascertain a rate and
amount of ad valorem tax that will be sufficient to raise and produce the money required to pay the
interest on said Bonds as such interest comes due, and to provide and maintain a sinking fund
adequate to pay the principal of said Bonds as such principal matures(but never less than 2%of the
original amount of said Bonds as a sinking fund each year);and said tax shall be based on the latest
approved tax rolls of said Issuer,with full allowances being made for tax delinquencies and the cost
of tax collection. Said rate and amount of ad valorem tax is hereby levied,and is hereby ordered to
be levied, against all taxable property in said Issuer, for each year while any of said Bonds are
outstanding and unpaid,and said tax shall be assessed and collected each such year and deposited to
the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for
the payment of the interest on and principal of said Bonds, as such interest comes due and such
principal matures, are hereby pledged for such payment, within the limit prescribed by law.
Notwithstanding the requirements of this subsection, if lawfully available moneys of the Issuer are
actually on deposit in the Interest and Sinking Fund in advance of the time when ad valorem taxes'
are scheduled to be levied for any year, then the amount of taxes that otherwise would have been
required to be levied pursuant to this Section may be reduced to the extent and by the amount of the
lawfully available funds then on deposit in the Interest and Sinking Fund.
(b) Article 1208, Government Code, applies to the issuance of the Bonds and the pledge of
the taxes granted by the Issuer under this Section, and is therefore valid, effective, and perfected.
Should Texas law be amended at any time while the Bonds are outstanding and unpaid,the result of
such amendment being that the pledge of the taxes granted by the Issuer under this Section is to be
subject to the filing requirements of Chapter 9,Business&Commerce Code,in order to preserve to
the registered owners of the Bonds a security interest in said pledge, the Issuer agrees to take such
measures as it determines are reasonable and necessary under.Texas law to comply with the
applicable provisions of Chapter 9, Business & Commerce Code and enable a filing of a security,
interest in said pledge to occur.
Section 6. DEFEASANCE OF BONDS.
(a) Any Bond and the interest thereon shall be deemed to be paid, retired and no longer
outstanding(a"Defeased Bond")within the meaning of this Ordinance,except to the extent provided
in subsection(d)of this Section,when payment of the principal of such Bond,plus interest thereon
to the due date (whether such due date be by reason of maturity or otherwise) either (i) shall have
been made or caused to be made in accordance with the terms thereof, or (ii) shall have been
Ord 2010-31
provided for on or before such due date by irrevocably depositing with or making available to the
Paying Agent/Registrar in accordance with an escrow agreement or other instrument(the "Future
Escrow Agreement")for such payment(1)lawful money of the United States of America sufficient
to make such payment or(2)Defeasance Securities that mature as to principal and interest in such
amounts and at such times as will insure the availability,without reinvestment,of sufficient money
to provide for such payment,and when proper arrangements have been made by the Issuer with the
Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become
due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as
aforesaid,such Bond and the interest thereon shall no longer be secured by,payable from,or entitled
to the benefits of,the ad valorem taxes herein levied and pledged as provided in this Ordinance,and
such principal and interest shall be payable solely from such money or Defeasance Securities.
Notwithstanding any other provision of this Ordinance to the contrary,it is hereby provided that any
determination not to redeem Defeased Bonds that is made in conjunction with the payment
arrangements specified in Subsection(a)(i)or(ii)of this Section shall not be irrevocable,provided
that: (1)in the proceedings providing for such payment arrangements,the Issuer expressly reserves
the right to call the Defeased Bonds for redemption;(2)gives notice of the reservation of that right to
the owners of the Defeased Bonds immediately following the making of the payment arrangements;
and(3)directs that notice of the reservation be included in any redemption notices that it authorizes.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of
the Issuer be invested in Defeasance Securities,maturing in the amounts and times as hereinbefore
set forth, and all income from such Defeasance Securities received by the Paying Agent/Registrar
that is not required for the payment of the Bonds and interest thereon, with respect to which such
money has been so deposited,shall be turned over to the Issuer,or deposited as directed in writing by
the Issuer. Any Future Escrow Agreement pursuant to which the money and/or Defeasance
Securities are held for the payment of Defeased Bonds may contain provisions permitting the
investment or reinvestment of such moneys in Defeasance Securities or the substitution of other
Defeasance Securities upon the satisfaction of the requirements specified in Subsection(a)(i)or(ii)
of this Section. All income from such Defeasance Securities received by the Paying Agent/Registrar
which is not required for the payment of the Defeased Bonds,with respect to which such money has
been so deposited, shall be remitted to the Issuer or deposited as directed in writing by the Issuer.
(c) The term"Defeasance Securities"means any securities and obligations now or hereafter
authorized by State law that are eligible to refund,retire or otherwise discharge obligations such as
the Bonds.
(d) Until all Defeased Bonds shall have become due and payable,the Paying Agent/Registra'
shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they
had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such
services as required by this Ordinance.
(e) In the event that the Issuer elects to defease less than all of the principal amount of
Bonds of a maturity,the Paying Agent/Registrar shall select,or cause to be selected,such amount of
Bonds by such random method as it deems fair and appropriate.
Ord 2010-31
Section 7. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS.
(a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost,
stolen or destroyed,the Paying Agent/Registrar shall cause to be printed,executed and delivered,a
new Bond of the same principal amount,maturity and interest rate,as the damaged,mutilated,lost,
stolen or destroyed Bond, in replacement for such Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged,mutilated,
lost, stolen or destroyed Bonds shall be made by the registered owner thereof to the Paying
Agent/Registrar. In every case of loss,theft or destruction of a Bond,the registered owner applying
for a replacement Bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or
indemnity as may be required by them to save each of them harmless from any loss or damage with
respect thereto. Also,in every case of loss,theft or destruction of a Bond,the registered owner shall
furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss,theft
or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond,
the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so
damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the
event any such Bond shall have matured, and no default has occurred that is then continuing in the
payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may
authorize the payment of the same (without surrender thereof except in the case of a damaged or,
mutilated Bond)instead of issuing a replacement Bond,provided security or indemnity is furnished
as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement Bond,
the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal,printing,
and other expenses in connection therewith. Every replacement Bond issued pursuant to the
provisions of this Section by virtue of the fact that any Bond is lost, stolen or destroyed shall
constitute a contractual obligation of the Issuer whether or not the lost, stolen or destroyed Bond
shall be found at any time,or be enforceable by anyone,and shall be entitled to all the benefits of this
Ordinance equally and proportionately with any and all other Bonds duly issued under this
Ordinance.
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(e) Authority for Issuing Replacement Bonds. In accordance with Sec. 1206.022,
Government Code,this Section 7 of this Ordinance shall constitute authority for the issuance of any
such replacement Bond without necessity of further action by the governing body of the Issuer or any
other body or person, and the duty of the replacement of such Bonds is hereby authorized and
imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and
deliver such Bonds in the form and manner and with the effect, as provided in Section 3(a) of this
Ordinance for Bonds issued in conversion and exchange for other Bonds.
Ord 2010-31
Section 8. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND
COUNSEL'S OPINION;CUSIP NUMBERS AND CONTINGENT INSURANCE PROVISION,IF
OBTAINED; ENGAGEMENT OF BOND COUNSEL.
(a) The Mayor of the Issuer is hereby authorized to have control of the Bonds initially issued
and delivered hereunder and all necessary records and proceedings pertaining to the Bonds pending
their delivery and their investigation,examination,and approval by the Attorney General of the State
of Texas, and their registration by the Comptroller of Public Accounts of the State of Texas. Upon
registration of the Bonds said Comptroller of Public Accounts(or a deputy designated in writing to
act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to
such Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such
Bond. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers
may,at the option of the Issuer,be printed on the Bonds issued and delivered under this Ordinance,
but neither shall have any legal effect,and shall be solely for the convenience and information of the
registered owners of the Bonds. In addition, if bond insurance is obtained,the Bonds may bear an
appropriate legend as provided by the insurer.
(b) The obligation of the initial purchaser to accept delivery of the Bonds is subject to the
initial purchaser being furnished with the final, approving opinion of McCall, Parkhurst&Horton
L.L.P., bond counsel to the Issuer, which opinion shall be dated as of and delivered on the date of
initial delivery of the Bonds to the initial purchaser. The engagement of such firm as bond counsel
to the Issuer in connection with issuance, sale and delivery of the Bonds is hereby approved and'
confirmed. The execution and delivery of an engagement letter between the Issuer and such firm,
with respect to such services as bond counsel,is hereby authorized in such form as may be approved
by the Mayor or the City Manager, and the Mayor or the City Manager is hereby authorized to
execute such engagement letter.
Section 9. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE
BONDS.
(a) Covenants. The Issuer covenants to take any action necessary to assure, or refrain from,
any action that would adversely affect,the treatment of the Bonds as obligations described in section
103 of the Code, the interest on which is not includable in the "gross income" of the holder for,
purposes of federal income taxation. In furtherance thereof,the Issuer covenants as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds of the
Bonds (less amounts deposited to a reserve fund, if any) are used for any "private business]
use," as defined in section 141(b)(6)of the Code or,if more than 10 percent of the proceeds
or the Project are so used,such amounts,whether or not received by the Issuer,with respect
to such private business use, do not, under the terms of this Ordinance or any underlying!
arrangement,directly or indirectly,secure or provide for the payment of more than 10 percent,
of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code;
Ord 2010-31
(2) to take any action to assure that in the event that the "private business use"
described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" that is "related" and not
"disproportionate,"within the meaning of section 141(b)(3)of the Code,to the governmental
use;
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(3) to take any action to assure that no amount that is greater than the lesser of
$5,000,000,or 5 percent of the proceeds of the Bonds(less amounts deposited into a reserve
fund,if any)is directly or indirectly used to finance loans to persons,other than state or local
governmental units, in contravention of section 141(c) of the Code;
(4) to refrain from taking any action that would otherwise result in the Bonds being
treated as "private activity bonds" within the meaning of section 141(b) of the Code;
(5) to refrain from taking any action that would result in the Bonds being"federally
guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds that were used, directly or indirectly, to acquire
investment property(as defined in section 148(b)(2)of the Code)that produces a materially !
higher yield over the term of the Bonds, other than investment property acquired with B
(A) proceeds of the Bonds invested for a reasonable temporary period until..
such proceeds are needed for the purpose for which the bonds are issued,
(B) amounts invested in a bona fide debt service fund,within the meaning of
section 1.148-1(b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or replacement'
fund to the extent such amounts do not exceed 10 percent of the proceeds of the,
Bonds;
(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as
proceeds of the Bonds, as may be necessary,so that the Bonds do not otherwise contravene I
the requirements of section 148 of the Code (relating to arbitrage) and, to the extent;
applicable, section 149(d) of the Code (relating to advance refundings);
(8) to pay to the United States of America at least once during each five-year period
(beginning on the date of delivery of the Bonds)an amount that is at least equal to 90 percent
of the 'Excess Earnings,"within the meaning of section 148(f)of the Code and to pay to the
United States of America,not later than 60 days after the Bonds have been paid in full, 100
percent of the amount then required to be paid as a result of Excess Earnings under section
148(f) of the Code; and
Ord 2010-31
(9) to assure that the proceeds of the Bonds will be used solely for new money
pr 'ects.
(b Rebate Fund. In order to facilitate compliance with the above covenant(a)(8),a"Rebate
Fund" is h reby established by the Issuer for the sole benefit of the United States of America, and
such Fund shall not be subject to the claim of any other person, including without limitation the
Bondhold rs. The Rebate Fund is established for the additional purpose of compliance with section
148 of the Code.
(c) Use of Proceeds. For purposes of the foregoing covenants (a)(1) and (a)(2),the Issuer
understan s that the term "proceeds" includes "disposition proceeds" as defined in the Treasury
Regulations. It is the understanding of the Issuer that the covenants contained herein are intended to
assure con pliance with the Code and any regulations or rulings promulgated by the U.S.Department
of the Tre sury pursuant thereto. In the event that regulations or rulings are hereafter promulgated
that modil y or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be
required tc comply with any covenant contained herein to the extent that such failure to comply, in
the opinio i of nationally recognized bond counsel, will not adversely affect the exemption from
federal income taxation of interest on the Bonds under section 103 of the Code. In the event that
regulation or rulings are hereafter promulgated that impose additional requirements applicable to the
Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the i
opinion o nationally recognized bond counsel, to preserve the exemption from federal income ;
taxation o interest on the Bonds under section 103 of the Code. In furtherance of such intention,the'
Issuer,her by authorizes and directs the Mayor, the City Manager or an Assistant City Manager to
execute ar.y documents, certificates or reports required by the Code and to make such elections,on
behalf of I he Issuer, that may be permitted by the Code as are consistent with the purpose for the
issuance of the Bonds.
(d Disposition of Projects. The Issuer covenants that the Projects will not be sold or
otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other
compensation,unless the Issuer obtains an opinion of nationally-recognized bond counsel that such
sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes
of the foregoing, the portion of the property comprising personal property and disposed in the'
ordinary course shall not be treated as a transaction resulting in the receipt of cash or other
compensation. For purposes hereof,the Issuer shall not be obligated to comply with this covenant if
it obtains a legal opinion that such failure to comply will not adversely affect the excludability for
federal income tax proposes from gross income of the interest.
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Ord 2010-31
Section 10. SALE OF BONDS AND APPROVAL OF OFFICIAL STATEMENT;
FURTHER PROCEDURES.
(a) The Bonds are hereby sold and shall be delivered to Coastal Securities, Inc. and Stifel
Nicolaus & Company, Inc. (the "Underwriters") for the purchase price of $3,549,580.95
(representing the par amount of the Bonds of$3,460,000.00, plus a net original issue premium of
$117,260.95 and less an Underwriters' discount on the Bonds of$27,680.00)plus accrued interest
(accrued interest to be deposited into the Interest and Sinking Fund) thereon to date of delivery
pursuant to the terms and provisions of a Purchase Agreement with the Underwriters. It is hereby
officially found,determined, and declared that the Bonds have been sold pursuant to the terms and
provisions of a Purchase Agreement in substantially the form presented at this meeting, which the
Mayor of the Issuer is hereby authorized and directed to execute. It is hereby officially found,
determined,and declared that the terms of this sale are the most advantageous reasonably obtainable.
The Initial Bond shall be registered in the name of Coastal Securities, Inc. or its designee.
(b) The Issuer hereby approves the form and content of the Official Statement relating to the
Bonds and any addenda, supplement or amendment thereto, and approves the distribution of such
Official Statement in the reoffering of the Bonds by the Underwriters in final form, with such
changes therein or additions thereto as the officer executing the same may deem advisable, such
determination to be conclusively evidenced by his execution thereof. The distribution and use of the
Preliminary Official Statement posted and disseminated October 12,2010,prior to the date hereof is!
hereby ratified and confirmed.
(c) The Mayor and Mayor Pro-Tem, the City Manager and City Secretary and all other,
officers,employees and agents of the Issuer,and each of them,shall be and they are hereby expressly
authorized, empowered and directed from time to time and at any time to do and perform all such
acts and things and to execute, acknowledge and deliver in the name and on behalf of the Issuer a
Paying Agent/Registrar Agreement with the Paying Agent/Registrar,the bond insurance commitment
for the Bonds with Assured Guaranty Municipal Corp. and all other instruments, whether or not
herein mentioned,as may be necessary or desirable in order to carry out the terms and provisions of
this Ordinance, the Bonds, the sale of the Bonds and the Official Statement. In case any officer
whose signature shall appear on any Bond shall cease to be such officer before the delivery of such;
Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such'
officer had remained in office until such delivery.
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Section 11. DEFAULT AND REMEDIES
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(a) Events of Default. Each of the following occurrences or events for the purpose of this)
Ordinance is hereby declared to be an Event of Default: I
(i) the failure to make payment of the principal of or interest on any of the Bonds
when the same becomes due and payable; or
Ord 2010-31
(ii) default in the performance or observance of any other covenant, agreement or
obligation of the Issuer,the failure to perform which materially, adversely affects the rights
of the registered owners of the Bonds, including,but not limited to,their prospect or ability
to be repaid in accordance with this Ordinance,and the continuation thereof for a period of
60 days after notice of such default is given by any Registered Owner to the Issuer. !
(b) Remedies for Default.
(i) Upon the happening of any Event of Default, then and in every case, any
Registered Owner or an authorized representative thereof, including, but not limited to, a
trustee or trustees therefor,may proceed against the Issuer for the purpose of protecting and
enforcing the rights of the Registered Owners under this Ordinance,by mandamus or other
suit, action or special proceeding in equity or at law,in any court of competent jurisdiction,
for any relief permitted by law, including the specific performance of any covenant or
agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in
violation of any right of the Registered Owners hereunder or any combination of such
remedies.
(ii) It is provided that all such proceedings shall be instituted and maintained for the
equal benefit of all Registered Owners of Bonds then outstanding.
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(c) Remedies Not Exclusive.
(i) No remedy herein conferred or reserved 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 Bonds or now or hereafter
existing at law or in equity;provided,however,that notwithstanding any other provision of
this Ordinance,the right to accelerate the debt evidenced by the Bonds shall not be available
as a remedy under this Ordinance.
(ii) The exercise of any remedy herein conferred or reserved shall not be deemed ai
waiver of any other available remedy.
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(iii) By accepting the delivery of a Bond authorized under this Ordinance, such!
Registered Owner agrees that the certifications required to effectuate any covenants or,
representations contained in this Ordinance do not and shall never constitute or give rise to a
personal or pecuniary liability or charge against the officers,employees or councilmembers,
of the Issuer.
Section 12. COMPLIANCE WITH RULE 15c2-12.
(a) Definitions. As used in this Section,the following terms have the meanings ascribed to
such terms below:
Ord 2016-31
"MSRB" means the Municipal Securities Rulemaking Board.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission. j
(b) Annual Reports.
(i) The Issuer shall provide annually to the MSRB, in an electronic format as
prescribed by the MSRB, within six months after the end of each fiscal year ending in or :
after 2010,financial information and operating data with respect to the Issuer of the general
type included'in the final Official Statement authorized by Section 10 of this Ordinance, '
being the information described in Exhibit A hereto. Any financial statements so to be
provided shall be (1) prepared in accordance with the accounting principles described in
Exhibit A hereto,or such other accounting principles as the Issuer may be required to employ
from time to time pursuant to state law or regulation, and (2) audited, if the Issuer
commissions an audit of such statements and the audit is completed within the period during
which they must be provided. If the audit of such financial statements is not complete within
such period,then the Issuer shall provide unaudited financial statements by the required time,
and shall provide audited financial statements for the applicable fiscal year to the MSRB,
when and if the audit report on such statements become available. f
(ii) If the Issuer changes its fiscal year,it will notify the MSRB of the change(and of
the date of the new fiscal year end)prior to the next date by which the Issuer otherwise would
be required to provide financial information and operating data pursuant to this Section. The
financial information and operating data to be provided pursuant to this Section may be set
forth in full in one or more documents or may be included by specific reference to any
document that is available to the public on the MSRB's internet website or filed with the
SEC. All documents provided to the MSRB pursuant to this Section shall be accompanied
by identifying information as prescribed by the MSRB.
(c) Material Event Notices. The Issuer shall notify the MSRB in an electronic format as
prescribed by the MSRB, in a timely manner, of any of the following events with respect to the
Bonds, if such event is material within the meaning of the federal securities laws: j
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
Ord 2010-31
10. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The Issuer shall notify the MSRB, in a timely manner, of any failure by the Issuer to provide
financial information or operating data in accordance with subsection(b)of this Section by the time
required by such subsection.
(d) Limitations. Disclaimers. and Amendments.
(i) The Issuer shall be obligated to observe and perform the covenants specified in
this Section for so long as, but only for so long as,the Issuer remains an "obligated person"
with respect to the Bonds within the meaning of the Rule,except that the Issuer in any event
will give notice of any deposit made in accordance with this Ordinance or applicable law that
causes Bonds no longer to be outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners
and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall
give any benefit or any legal or equitable right, remedy, or claim hereunder to any other;
person. The Issuer undertakes to provide only the financial information, operating data,
financial statements, and notices which it has expressly agreed to provide pursuant to this
Section and does not hereby undertake to provide any other information that may be relevant'
or material to a complete presentation of the Issuer's financial results,condition,or prospects,
or hereby undertake to update any information provided in accordance with this Section or;
otherwise,except as expressly provided herein. The Issuer does not make any representation'
or warranty concerning such information or its usefulness to a decision to invest in or sell
Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON,IN CONTRACT OR TORT,FOR DAMAGES RESULTING IN WHOLE OR IN
PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR
WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS,
SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN'
CONTRACT OR TORT,FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BEI
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
(iv) No default by the Issuer in observing or performing its obligations under this',
Section shall comprise a breach of or default under this Ordinance for purposes of any other
provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim,
waive,or otherwise limit the duties of the Issuer under federal and state securities laws. j
i
(v) Should the Rule be amended to obligate the Issuer to make filings with or provide
notices to entities other than the MSRB,the Issuer hereby agrees to undertake such obligation
with respect to the Bonds in accordance with the Rule as amended. The provisions of this
Section may be amended by the Issuer from time to time to adapt to changed circumstances
Ord 2010-31 -
that arise from a change in legal requirements, a change in law, or a change in the identity,
nature, status, or type of operations of the Issuer, but only if (1) the provisions of this
Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in
the primary offering of the Bonds in compliance with the Rule, taking into account any ,
amendments or interpretations of the Rule since such offering as well as such changed j
circumstances and (2) either (a) the registered owners of a majority in aggregate principal
amount (or any greater amount required by any other provision of this Ordinance that
authorizes such an amendment)of the outstanding Bonds consent to such amendment or(b)a
person that is unaffiliated with the Issuer (such as nationally recognized bond counsel)
determined that such amendment will not materially impair the interest of the registered
owners and beneficial owners of the Bonds. The Issuer may also amend or repeal the
provisions of this continuing disclosure agreement if the SEC amends or repeals the
applicable provision of the Rule or a court of final jurisdiction enters judgment that such
provisions of the Rule are invalid, but only if and to the extent that the provisions of this
sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the
primary offering of the Bonds. If the Issuer so amends the provisions of this Section,it shall
include with any amended financial information or operating data next provided in
accordance with subsection (b) of this Section an explanation, in narrative form, of the
reason for the amendment and of the impact of any change in the type of financial
information or operating data so provided.
Section 13. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend,
this Ordinance subject to the-following terms and conditions,to-wit:
(a) The Issuer may from time to time,without the consent of any holder,except as otherwise i
required by paragraph (b) below, amend or supplement this Ordinance in order to (i) cure any
ambiguity,defect or omission in this Ordinance that does not materially adversely affect the interests
of the holders,(ii)grant additional rights or security for the benefit of the holders,(iii)add events of
default as shall not be inconsistent with the provisions of this Ordinance and that shall not materially
adversely affect the interests of the holders,(iv)qualify this Ordinance under the Trust Indenture Act
of 1939,as amended,or corresponding provisions of federal laws from time to time in effect,or(v)
make such other provisions in regard to matters or questions arising under this Ordinance as shall not
be inconsistent with the provisions of this Ordinance and that shall not in the opinion of the Issuer's
Bond Counsel materially adversely affect the interests of the holders.
(b) Except as provided in paragraph(a)above,the holders of Bonds aggregating in principal
amount 51% of the aggregate principal amount of then outstanding Bonds that are the subject of aj
proposed amendment shall have the right from time to time to approve any amendment hereto that
may.be deemed necessary or desirable by the Issuer;provided,however,that without the consent ofl
100% of the holders in aggregate principal amount of the then outstanding Bonds, nothing herein)
contained shall permit or be construed to permit amendment of the terms and conditions of this);
Ordinance or in any of the Bonds so as to:
(1) Make any change in the maturity of any of the outstanding Bonds;
Ord 2010-31
(2) Reduce the rate of interest borne by any of the outstanding Bonds;
(3) Reduce the amount of the principal of, or redemption premium,if any,payable '
on any outstanding Bonds;
(4) Modify the terms of payment of principal or of interest or redemption premium
on outstanding Bonds or any of them or impose any condition with respect to such
payment; or
(5) Change the minimum percentage of the principal amount of any series of Bonds
necessary for consent to such amendment.
(c) If at any time the Issuer shall desire to amend this Ordinance under this Section, the
Issuer shall send by U.S.mail to each registered owner of the affected Bonds a copy of the proposed
amendment and cause notice of the proposed amendment to be published at least once in a financial
publication published in The City of New York,New York or in the State of Texas. Such published
notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof
is on file at the office of the Issuer for inspection by all holders of such Bonds.
(d) Whenever at any time within one year from the date of publication of such notice the
Issuer shall receive an instrument or instruments executed by the holders of at least 51%in aggregate
principal amount of all of the Bonds then outstanding that are required for the amendment, which
instrument or instruments shall refer to the proposed amendment and that shall specifically consent'
to and approve such amendment, the Issuer may adopt the amendment in substantially the same,
form.
(e) Upon the adoption of any amendatory Ordinance pursuant to the provisions of this
Section, this Ordinance shall be deemed to be modified and amended in accordance with such
amendatory Ordinance,and the respective rights,duties,and obligations of the Issuer and all holders
of such affected Bonds shall thereafter be determined,exercised,and enforced,subject in all respects
to such amendment.
i
(f) Any consent given by the holder of a Bond pursuant to the provisions of this Section shall
be irrevocable for a period of six months from the date of the publication of the notice provided for
in this Section,and shall be conclusive and binding upon all future holders of the same Bond during
such period. Such consent may be revoked at any time after six months from the date of the
publication of said notice by the holder who gave such consent, or by a successor in title,by filing!
notice with the Issuer,but such revocation shall not be effective if the holders of 51%in aggregate)
principal amount of the affected Bonds then outstanding, have, prior to the attempted revocation,',
consented to and approved the amendment.
For the purposes of establishing ownership of the Bonds,the Issuer shall rely solely upon the
registration of the ownership of such Bonds on the registration books kept by the Paying
Agent/Registrar.
Ord 2010-31
Section 14. DESIGNATION AS QUALIFIED TAX-EXEMPT OBLIGATIONS. The Issuer
hereby designates the Bonds as"qualified tax-exempt obligations"as defined in section 265(b)(3)of
the Code. In furtherance of such designation, the Issuer represents, covenants and warrants the
following: (a)that during the calendar year in which the Bonds are issued,the Issuer(including any
subordinate entities) has not designated nor will designate tax-exempt obligations, which when
aggregated with the Bonds, will result in more than $10,000,000 ($30,000,000 for taxable years i
beginning after December 31, 2008 and ending prior to January 1, 2011) of"qualified tax-exempt
obligations" being issued; (b)that the Issuer reasonably anticipates that the amount of tax-exempt ;
obligations issued, during the calendar year in which the Bonds are issued, by the Issuer (or any :
subordinate entities) will not exceed $10,000,000 ($30,000,000 for taxable years beginning after
December 31,2008 and ending prior to January 1,2011);and,(c)that the Issuer will take such action
or refrain from such action as necessary, and as more particularly set forth in this Section, in order
that the Bonds will not be considered "private activity bonds" within the meaning of section 141 of
the Code.
Section 15. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE
PROJECT. The Issuer covenants to account for the expenditure of sale proceeds and investment
earnings to be used for the construction and acquisition of the Project on its books and records by
allocating proceeds to expenditures within 18 months of the later of the date that(1)the expenditure '
is made,or(2)the Project is completed. The foregoing notwithstanding,the Issuer shall not expend ,
proceeds of the sale of the Bonds or investment earnings thereon more than 60 days after the earlier ,
of(1)the fifth anniversary of the delivery of the Bonds, or(2)the date the Bonds are retired,unless I
the Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will not
adversely affect the status,for federal income tax purposes,of the Bonds or the interest thereon. For
purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an
opinion that such failure to comply will not adversely affect the excludability for federal income tax
purposes from gross income of the interest.
Section 16. INTEREST EARNINGS ON BOND PROCEEDS. Interest earnings derived
from the investment of proceeds from the sale of the Bonds shall be used along with other Bond:
proceeds for the Project; provided that after completion of such purpose, if any of such interest
earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund.
It is further provided,however,that any interest earnings on Bond proceeds that are required to be
rebated to the United States of America pursuant to Section 9 hereof in order to prevent the Bonds
from being arbitrage bonds shall be so rebated and not considered as interest earnings for the
purposes of this Section.
Section 17. CONSTRUCTION FUND.
(a) The Issuer hereby creates and establishes and shall maintain on the books of the Issuer a
separate fund to be entitled the"Series 2010A General Obligation Bonds Construction Fund"for use
by the Issuer for payment of all lawful costs associated with the acquisition and construction of the
Project as hereinbefore provided. Upon payment of all such costs,any moneys remaining on deposit
in said fund shall be transferred to the Interest and Sinking fund. Amounts so deposited to the
Interest and Sinking Fund shall be used in the manner described in Section 5 of this Ordinance.
Ord 2010-31
(b) The Issuer may invest proceeds of the Bonds (including investment earnings thereon)
issued for Improvement Projects and amounts deposited into the Interest and Sinking Fund in
investments authorized by the Public Funds Investment Act,Chapter 2256,Texas Government Code,
as amended;provided,however,that the Issuer hereby covenants that the proceeds of the sale of the
Bonds will be used as soon as practicable for the purposes for which the Bonds are issued.
(c) All deposits authorized or required by this Ordinance shall be secured to the fullest extent
required by law for the security of public funds.
Section 18. NET PREMIUM. The Bonds are being sold at a net premium equal to
$117,260.95. Premium in the amount of(i) $27,680.00 shall be allocated to pay the underwriting
discount for the Bonds, (h) $39,955.00 to pay costs of issuance, (iii) $21,626.68 to pay the bond
insurance premium of Assured Guaranty Municipal Corp.,(iv)$25,000.00 shall be allocated to and
applied against the voted authorization as set forth on Schedule I, and shall be deposited to the
Issuer's construction fund used for such purpose and(v)premium in the amount of$2,999.27 shall
be deposited into the Interest and Sinking Fund.
Section 19. APPROPRIATION. To pay the debt service coming due on the Bonds,if any,
prior to receipt of the taxes levied to pay such debt service,there is hereby appropriated from current
funds on hand,which are hereby certified to be on hand and available for such purpose, an amount
sufficient to pay such debt service, and such amount shall be used for no other purpose.
I
Section 20. SEVERABILITY. If any section,article,paragraph,sentence,clause,phrase or
word in this Ordinance, or application thereof to any persons or circumstances is held invalid or
unconstitutional by a court of competent jurisdiction,such holding shall not affect the validity of the i
remaining portion of this Ordinance,despite such invalidity,which remaining portions shall remain j
in full force and effect.
Section 21. EFFECTIVE DATE. In accordance with the provisions of Texas Government;
Code,Section 1201.028,this Ordinance shall be effective immediately upon its adoption by the City'
Council.
PASSED,APPROVED,AND ADOPTED on second and final reading this 18th day of
October,2010.
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Ord 2010-31
PAYING AGENT/REGISTRAR AGREEMENT
THIS AGREEMENT is entered into as of October 1,2010(this"Agreement"),by and between
the City ofFriendswood,Texas(the"Issuer"),and The Bank ofNew York Mellon Trust Company,
N.A., in Dallas,Texas,a national banking association duly organized and existing under the laws
of the United States of America (the "Bank").
RECITALS
WHEREAS, the Issuer has duly authorized and provided for the issuance of its Permanent
Improvement Bonds, Series 2010A (the "Securities") in the aggregate principal amount of
$3,485,000,such Securities to be issued in fully-registered form only as to the payment of principal
and interest thereon; and
WHEREAS,the Securities are scheduled to be delivered to the initial purchasers thereof on
or about November 18,2010; and
WHEREAS,the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection
with the payment of the principal of, premium, if any, and interest on said Securities and with
respect to the registration,transfer and exchange thereof by the registered owners thereof; and
WHEREAS,the Bank has agreed to serve in such capacities for and on behalf ofthe Issuer and
has full power and authority to perform and serve as Paying Agent/Registrar for the Securities;
{
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE ONE
APPOINTMENT OF BANK AS
PAYING AGENT AND REGISTRAR
Section 1.01. Appointment.
The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities.
As Paying Agent for the Securities,the Bank shall be responsible for paying on behalf of the Issuer
the principal,premium(if any), and interest on the Securities as the same become due and payable
to the registered owners thereof,all in accordance with this Agreement and the"Order"(hereinafter
defined).
i
The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar
for the Securities,the Bank shall keep and maintain for and on behalf ofthe Issuer books and records
as to the ownership of said Securities and with respect to the transfer and exchange thereof as
provided herein and in the "Order."
The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and
Registrar for the Securities.
Section 1.02. Compensation.
As compensation for the BanVs services as Paying Agent/Registrar,the Issuer hereby agrees
to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this
Agreement and thereafter the fees and amounts set forth in the BanVs current fee schedule then in
effect for services as Paying Agent/Registrar for municipalities,which shall be supplied to the Issuer
on or before 90 days prior to the close of the Fiscal Year of the Issuer,and shall be effective upon
the first day of the following Fiscal Year.
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 TWO
DEFINITIONS
Section 2.01. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
"Acceleration Date" on any Security means the date on and after which the principal or any
or all installments of interest, or both, are due and payable on any Security which has become
accelerated pursuant to the terms of the Security.
"Bank Office" means the principal corporate trust office of the Bank as indicated on the
signature page hereof. The Bank will notify the Issuer in writing of any change in location of the
Bank Office.
"Fiscal Year" means the fiscal year of the Issuer, ending September 30.
"Holder"and"Security Holder"each means the Person in whose name a Security is registered
in the Security Register.
"Issuer Request"and"Issuer Order"means a written request or order signed in the name ofthe
Issuer by the Mayor or Mayor Pro-tem of the Issuer,any one or more of said officials, delivered to
the Bank.
"Legal Holiday" means a day on which the Bank is required or authorized to be closed.
"Order"means the order,ordinance or resolution of the governing body of the Issuer pursuant
to which the Securities are issued, certified by the Secretary of the Board of Trustees or any other
officer of the Issuer and delivered to the Bank.
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2
"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.
"Predecessor Securities"of any particular Security means every previous Security evidencing
all or a portion of the same obligation as that evidenced by such particular Security (and, for the
purposes ofthis definition,any mutilated,lost,destroyed,or stolen Security forwhich a replacement
Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the
Order).
"Record Date" means the last business day of the month next preceding payment.
"Redemption Date"when used with respect to any Bond to be redeemed means the date fixed
for such redemption pursuant to the terms of the Order.
"Responsible Officer" when used with respect to the Bank means the Chairman or Vice-
Chairman of the Board of Directors,the Chairman or Vice-Chairman of the Executive Committee
of the Board of Directors,the President,any Vice President,the Secretary,any Assistant Secretary,
the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or
Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar
to those performed by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Security Register"means a register maintained by the Bank on behalf of the Issuer providing
for the registration and transfer of the Securities.
"Stated Maturity"means the date specified in the Orderthe principal of Security is scheduled
to be due and payable.
i
Section 2.02. Other Definitions. i The terms "Bank," "Issuer" and "Securities (Security)" have the meanings assigned to them
in the recital paragraphs of this Agreement.
The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and
functions of this Agreement.
ARTICLE THREE
PAYING AGENT
Section 3.01. Duties of Paying Agent.
As Paying Agent,the Bank shall,provided adequate collected funds have been provided to it
for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each
Security at its Stated Maturity,Redemption Date,or Acceleration Date,to the Holder upon surrender
of the Security to the Bank at the Bank Office.
3
As Paying Agent,the Bank shall,provided adequate collected funds have been provided to it
for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each
Security when due,by computing the amount of interest to be paid each Holder and preparing and
sending checks by United States Mail, first class postage prepaid, on each payment date, to the
Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the
address appearing on the Security Register or by such other method, acceptable to the Bank,
requested in writing by the Holder at the Holder's risk and expense.
The Bank is also authorized to transfer funds relating to the closing and initial delivery of the
securities in the manner disclosed in the closing memorandum approved by the Issuer as prepared
by the Issuer's financial advisor or other agent. The Bank may act on a facsimile transmission of
the closing memorandum to be followed by an original of the closing memorandum signed by the
financial advisor or the Issuer
Section 3.02. Payment Dates.
The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on
the dates specified in the Order.
ARTICLE FOUR
REGISTRAR
Section 4.01. Security Register-Transfers and Exchanges.
The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books
and records (herein sometimes referred to as the "Security Register") and, if the Bank Office is
located outside the State of Texas, a copy of such books and records shall be kept in the State of
Texas,for recording the names and addresses ofthe Holders ofthe Securities,the transfer,exchange
and replacement of the Securities and the payment of the principal of and interest on the Securities
to the Holders and containing such other information as may be reasonably required by the Issuer
and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers,
exchanges and replacement of Securities shall be noted in the Security Register.
Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied
by a written instrument of transfer, the signature on which has been guaranteed by an officer of a
federal or state bank or a member of the National Association of Securities Dealers, in form
satisfactory to the Bank,duly executed by the Holder thereof or his agent duly authorized in writing.
The Bank may request any supporting documentation it feels necessary to effect a re-
registration,transfer or exchange of the Securities.
To the extent possible and under reasonable circumstances,the Bank agrees that, in relation
to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be
completed and new Securities delivered to the Holder or the assignee ofthe Holder in not more than
three(3)business days after the receipt of the Securities to be canceled in an exchange or transfer
and the written instrument of transfer or request for exchange duly executed by the Holder, or his
duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar.
4
Section 4.02. Certificates.
At any time that the Securities are not subject to a book-entry-only system of registration and
transfer, the Issuer shall provide an adequate inventory of printed Securities to facilitate transfers
or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in
safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining
such Securities in safekeeping,which shall be not less than the care maintained by the Bank for debt
securities of other political subdivisions or corporations for which it serves as registrar, or that is
maintained for its own securities.
Section 4.03. Form of Secures Register.
The Bank, as Registrar, will maintain the Security Register relating to the registration,
payment,transfer and exchange ofthe Securities in accordance with the Bank's general practices and
procedures in effect from time to time. The Bank shall not be obligated to maintain such Security
Register in any form other than those that the Bank has currently available and currently utilizes at
the time.
The Security Register may be maintained in written form or in any other form capable of being j
converted into written form within a reasonable time.
Section 4.04. List of Security Holders.
The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the
required fee, a copy of the information contained in the Security Register. The Issuer may also
inspect the information contained in the Security Register at any time the Bank is customarily open
for business,provided that reasonable time is allowed the Bank to provide an up-to-date listing or
to convert the information into written form.
The Bank will not release or disclose the contents of the Security Register 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 court order or as otherwise required by law. Upon receipt of a court order and prior to
the release or disclosure of the contents of the Security Register,the Bank will notify the Issuer so
that the Issuer may contest the court order or such release or disclosure of the contents of the
Security Register.
Section 4.05. Cancellation of Certificates.
All certificates surrendered to the Bank, at the designated Payment/Transfer Office, for
payment,redemption,transfer or replacement, shall be promptly canceled by the Bank. The Bank
will provide to the Issuer, at reasonable intervals determined by it, a certificate evidencing the
destruction of canceled certificates.
5
Section 4.06. Mutilated,Destroyed,Lost or Stolen Securities.
The Issuer hereby instructs the Bank, subject to the applicable provisions of the Order, to
deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost or stolen
Securities as long as the same does not result in an over-issuance.
In case any Security shall be mutilated,or destroyed,lost or stolen,the Bank,in its discretion,
may execute and deliver a replacement Security of like form and tenor, and in the same
denomination and bearing a number not contemporaneously outstanding, in exchange and
substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or
stolen Security,only after(i)the filing by the Holder thereof with the Bank of evidence satisfactory
to the Bank of the destruction,loss or theft of such Security,and ofthe authenticity ofthe ownership
thereof and(ii)the furnishing to the Bank of indemnification in an amount satisfactory to hold the
Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with
the preparation, execution and delivery of a replacement Security shall be borne by the Holder of
the Security mutilated, or destroyed, lost or stolen.
Section 4.07. Transaction Information to Issuer.
The Bank will,within a reasonable time after receipt ofwritten request from the Issuer,furnish
the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has
delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities
it has delivered in exchange for or in lieu of mutilated,destroyed,lost,or stolen Securities pursuant
to Section 4.06.
ARTICLE FIVE
THE BANK
Section 5.01. Duties of Bank.
The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care
in the performance thereof.
Section 5.02. 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.
(b) The Bank shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the
pertinent facts.
(c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or
otherwise incur any financial liability for performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not
assured to it.
6
(d) The Bank may rely and shall be protected 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 Securities, but is protected in acting
upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer
executed in accordance with Section 4.01 hereof, 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
facts 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.
(e) The Bank may consult with counsel,and the written advice of such counsel or any opinion
of counsel shall be full and complete authorization and protection with respect to any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(f) The Bank may exercise any of the powers hereunder and perform any duties hereunder
either directly or by or through agents or attorneys of the Bank.
Section 5.03. Recitals of Issuer.
The recitals contained herein with respect to the Issuer and in the Securities shall be taken as
the statements of the Issuer, and the Bank assumes no responsibility for their correctness.
The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or
any other Person for any amount due on any Security from its own funds.
Section 5.04. May Hold Securities.
The Bank, in its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Issuer with the same rights it would have if it were not
the Paying Agent/Registrar, or any other agent.
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Section 5.05. Moneys Held by Bank.
The Bank shall deposit any moneys received from the Issuer into a trust account to be held in
a fiduciary capacity for the payment of the Securities,with such moneys in the account that exceed
the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be
fully collateralized with securities or obligations that are eligible underthe laws ofthe State ofTexas
to secure and be pledged as collateral for trust accounts until the principal and interest on such
securities have been presented for payment and paid to the owner thereof. Payments made from
such trust account shall be made by check drawn on such trust account unless the owner of such
Securities shall, at its own expense and risk, request such other medium of payment. i
Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the
Bank for the payment of the principal,premium(if any), or interest on any Security and remaining
unclaimed for three years after the final maturity of the Security has become due and payable will
be paid by the Bank to the Issuer if the Issuer so.elects, and the Holder of such Security shall
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_ hereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to
such monies shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and
dispose of the funds in compliance with Title Six of the Texas Property Code, as amended.
Section 5.06. Indemnification.
TO THE EXTENT PERMITTED BY LAW,THE ISSUER AGREES TO INDEMNIFY THE BANK,ITS
DIRECTORS,OFFICERS AND EMPLOYEES,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 5.07. Interpleader.
The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim,
demand, or controversy over its person as well as funds on deposit, in either a Federal or State
District Court located in the State and County where the administrative offices of the Issuer are
located, and agree that service of process by certified or registered mail, return receipt requested,
to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The
Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court
of competent jurisdiction in the State of Texas to determine the rights of any Person claiming any
interest herein.
Section 5.08. Depository Trust Company Services.
It is hereby represented and warranted that,in the event the Securities are otherwise qualified
and accepted for "Depository Trust Company" services or equivalent depository trust services by
other organizations, the Bank has the capability and, to the extent within its control, will comply
with the"Operational Arrangements,"effective August 1, 1987,which establishes requirements for
securities to be eligible for such type depository trust services, including, but not limited to,
requirements for the timeliness of payments and funds availability, transfer turnaround time, and
notification of redemptions and calls.
ARTICLE SIX
AIISCELLANEOUS PROVISIONS
Section 6.01. Amendment.
This Agreement may be amended only by an agreement in writing signed by both ofthe parties
hereto.
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