HomeMy WebLinkAboutOrdinance No. 2000-13 . . - , . : ,
ORDINANCE N0. 2000-13
AN ORDINANCE OF THE CITY OF FRIENDS WOOD,TEXAS,AUTHORIZING
THE ISSUANCE AND SALE OF $3,515,000 WATERWORKS AND SEWER
SYSTEM REVENUE BONDS,SERIES 2000;AND PROVIDING THE DETAILS
RELATING THERETO
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD,
TEXAS:
ARTICLE I
FINDINGS AND DETERMINATIONS
Section 1: Finding,s and Determinations. It is hereby officially found and determined
that,the City is authorized by Chapter 1502,Texas Government Code, as amended, to issue bonds
payable from the net revenues of its waterworks and sanitary sewer system to provide funds to
acquire, purchase, construct, improve, renovate, enlarge or equip such system.
ARTICLE II
DEFINITIONS AND INTERPRETATIONS
Section 2.1: Definitions. In this Ordinance,the following terms shall have the following
meanings, unless the context clearly indicates otherwise:
"Act" means Chapter 1502, Texas Government Code, as amended.
"Additional Parity Bonds" mean the additional parity revenue bonds permitted to be issued
by the City pursuant to Section 6.1 of this Ordinance.
"Bonds" mean the City of Friendswood, Texas, Waterworks and Sewer System Revenue
Bonds, Series 2000, authorized by this Ordinance.
"Business Day" means any day which is not a Saturday, Sunday, or a day on which the
Registrar is authorizrd by law or executive order to close.
"City" means the City of Friendswood, Texas, and where appropriate, the City Council
thereof and any successor to the City as ow:ier of the System.
"Closing Date" means the date of the initial delivery of and payment for the Bonds.
"Code" means the Internal Revenue Code of 1986, as amended.
"Comptroller" means the Comptroller of Public Accounts of the State of Texas.
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"Gross Revenues" mean all revenues, income and receipts of every nature derived or
received by the City from the operation and ownership of the System and the interest income from
the investment or deposit of maney in the Revenue Fund, the Interest and Sinking Fund, and the
Reserve Fund.
"Initial Bqnd" means the Initial Bond authorized by Section 5(d).
"Interest Payment Date", when used in connection with any Bond, means March 1, 2001,
and each September 1 and March 1 thereafter until maturity or earlier redemption.
"Maintenance and Operation Expenses" mean the reasonable and necessary expenses of
operation and maintenance of the System, including all salaries, labor, materials, repairs and
extensions necessary to render efficient service (but only such repairs and extensions as, in the
judgment of the governing body of the City,are necessary to keep the System in operation and render
adequate service to the City and the inhabitants thereof,or such as might be necessary to meet some
physical accident or condition which would otherwise impair the System),and all payments under
contracts now or hereafter defined as operating expenses by the Legislature of Texas. Depreciation
shall never be considered as a Maintenance and Operation Expense.
"MSRB"means the Municipal Securities Rulemaking Board.
"Net Revenues" mean all Gross Revenues remaining after deducting the Maintenance and
Operation Expenses.
"NRMSIR"means each person whom the SEC or its staff has determined to be a nationally
recognized ml:nicipal se�urities information repository within the meaning of the Rule from time to
time.
"Ordinance"means this bond ordinance and all amendments hereof and supplements hereto.
"Outstanding Bonds" means the City's Waterworks and Sewer System Revenue Bonds,
Series 1999, dated October 1, 1999.
"Owner", when used with respect to any Bond means the person or entity in whose name
such Bond is registered in the Register. Any reference to a particular percentage or proportion of the
Owners mean the Owners at a particular time of the specified percentage or proportion in aggregate
principal amount of all Bonds then outstanding under this Ordinance, exclusive of Bonds held by
the City.
"Parity Bonds"mean the Bonds,the Outstanding Bonds,and each series of Additional Parity
Bonds from time to time hereafter issued, but only to the extent such Parity Bonds remain
outstanding within the meaning of this Ordinance.
"Record Date" means, for any Interest Payment Date, the fifteenth day of the month next
preceding each Interest Payment Date.
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"Register"means the books of registration kept by the Registrar in which are maintained the
names and addresses of, and the principal amounts of the Bonds registered to, each Owner.
"Registrar"means The Bank of New York,New York,New York,and its successors in that
capacity.
"Reserve Fund Requirement"means the average annual principal and interest requirements
on the Parity Bonds, which may be determined and redetermined each year by the City but in no
event less frequently than upon the issuance of each series of Parity Bonds.
"Reserve Fund Surety Policy" means an insurance policy or other credit agreement as
provided in Section 5.6 of this Ordinance.
"Rule"means SEC Rule 15c2-12, as amended from time to time.
"SEC"means the United States Securities and Exchange Commission. '
"SID"means the Municipal Advisory Council of Texas, which has been designated by the
State of Texas as,and determined by the SEC staff to be,a state information depository within the
mear.ing of the Rule.
"Special Project" means,to the extent permitted by law, any waterworks or sanitary sewer
system property, improvement or facility declared by the City not to be part of the System and
substantially all of the costs of acquisition, construction, and installation of which is paid from
proceeds of a financing transaction other than the issuance of bonds payable from ad valorem taxes
or Gross Revenues or Net Revenues of the System, and for which all maintenance and operation
expenses are payable from sources other than revenues of the System,but only to the extent that and
for so long as all or any part of the revenues or proceeds of which are or will be pledged to secure
the payment or repayment of such costs of acquisition, construction and installation under such
financing transaction.
"System" means all properties, facilities, improvements, equipment, interests, and rights
constituting the waterworks and sanitary sewer system of the City, including all future extensions,
replacements,betterments,additions,and improvements to the System. The System shall not include
any Special Project.
Section 2.2: Interpretations. All terms defined herein and all pronouns used in this
Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and
headings of tt:e articies and sections of tr.is Ordinance have been inserted for convenience of
reference only and are not to be considered a part hereof and shall not in any way modify or restrict
any of the terms or provisions hereof. This Ordinance and all the terms and provisions hereof shall
be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the
Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment
of the Parity Bonds.
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ARTICLE III
TERMS OF THE BONDS
Section 3.1: Authorization and Authorized Amount. The Bonds shall be issued,pursuant
to the Act, in fully registered form in the principal amount of Three Million Five Hundred Fifteen
Thousand Dollazs ($3,515,000) for the purpose of constructing improvements to the City's
waterwor�s and sanitary sewer system.
Section 3.2: Desi�nation. Date, and Interest Pavment Dates. The Bonds shall be
designated as"City of Friendswood,Texas,Waterworks and Sewer System Revenue Bonds,Series
2000," and shall be dated May 1,2000. The Bonds shall bear interest at the rates set out in Section
3.3 of this Ordinance from the later of the Issuance Date, or the most recent Interest Payment Date
to which interest has been paid or duly provided for, calculated on the basis of a 360 day year of
twelve 30 day months,payable on March 1,2001,and semiannually thereafter on September 1 and
Mazch 1 of each year until maturity or earlier redemption. '
Section 3.3: Initial Bonds:Numbers and Denominations. The Bonds shall be issued in the
principal amounts and bearing interest at the rates set forth in the following schedule, and may be
transferred and exchanged as set out in this Ordinance. The Bonds shall mature on Mazch 1 in each
of the years and in the amounts set out in such schedule. The Initial Bond shall be numbered I-1 and
all other Bonds shall be numbered in sequence beginning with R-1. Bonds delivered on transfer of
or in exchange for other Bonds shall be numbered in order of their authentication by the Registrar,
shall be in the denomination of$5,000 or integral multiples thereof, and shall mature on the same
date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered.
Principal Interest
Year Amount Rate
2005 $ 40,Q00 %
2006 50,000 %
2007 60,000 %
2008 60,000 %
2009 60,000 %
2010 60,000 %
� 2011 275,000 %
2012 290,000 %
2013 310,000 %
2014 330,000 %
2015 350,000 %
2016 370,000 %
2017 395,000 %
2018 420,000 %
2019 445,000 %
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Section 3.4: Execution of Bonds: Seal. (a) The Bonds shall be signed by the Mayor and
countersigned by the City Secretary,by their manual, lithographed,or facsimile signatures,and the
official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures
on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in
person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as
if the official seal of the City had been manually impressed upon each of the Bonds.
(b) If any officer of the City whose manual or facsimile signature shall appear on the
Bonds sha11 cease to be such officer before the authentication of such Bonds or before the delivery
of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all
purposes as if such officer had remained in such office.
(c) 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 appeazs thereon the
Registrar's Authentication Certificate substantially in the form provided herein,duly authenticated
by manual execution by an officer or duly authorized signatory of the Registrar. In lieu of fhe
executed Registraz's Authentication Certificate described above, the Initial Bond delivered at the
Closing Date shall have attached hereto the Cc,mptroller's Registration Certificate substantially in
the form provided herein, n�anually executed by the Comptroller, or by his duly authorized agent,
which certificate shall be evidence that the Initial Bond has been duly approved by the Attorney
General and that it is a valid and binding obligation of the City, and has been registered by the
Comptroller.
(d) On the Closin� Date, the Initial Bond, being a single bond representing the entire
principal amount of the Bonds, payable in stated installments to the Underwriter or its designee,
executed by manual or facsimile signature of the Mayor and City Secretary of the City,approved by
the Attorney General,and registered and manually signed by the Comptroller, shall be delivered to
the Underwriter or its designee. Upon payment for the Initial Bond,the Registrar shall cancel the
Initial Bond and deliver Bonds to the Registraz.
Section 3.5: Pavment of Principal and Interest. The Registrar is hereby appointed as the
paying agent and registraz for the Bonds. The principal of the Bonds shall be payable, without
exchange or collection charges, in any coin or currency of the United States of America which on
the date of payment is legal tender for the payment of debts due the United States of America,upon
their presentation and surrender as they respectively become due and payable, whether at maturity
or eazlier redemption, at the principal payment office of the Registrar. The interest on each Bond
shall be payable on each Interest Payment Date, by check mailed by the Registrar on or before the
Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner
as shown on the Register.
If the date for payment of the principal of or interest on any Bond is not a Business Day,then
the date for such payment shall be the next succeeding Business Day with the same force and effect
as if made on the date payment was originally due.
Section 3.6: Successor Re istrars. The City covenants that at all times while any Bonds
are outstanding it will provide a commercial bank or trust company,organized under the laws of the
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United States or any state, authorized under such laws to exercise trust powers, and subject to
supervision or examination by federal or state authority, to serve as and perform the duties and
services of Registrar for the Bonds. The City reserves the right to change the Registraz on not less
than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60
days prior to the next succeeding principal or interest payment date on the Bonds. Promptly upon
the appointment of any successor Registrar, the previous Registrar shall deliver the Register or
copies thereof to the new Registraz,and the new Registraz shall notify each Owner,by United States
mail, first class postage prepaid, of such change and of the address of the new Registrar. Each
Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of
this Section.
Section 3.7: Special Record Date. If interest on any Bond is not paid on any Interest
Payment Date and continues unpaid for thirty(30)days thereafter,the Registrar shall establish a new
record date for the payment of such interest,to be known as a Special Record Date. The Registrar
shall establish a Special Record Date when funds to make such interest payment are received from
or on behalf of the City. Such Special Record Date shall be fifteen(15)days prior to the date fixed
for payment of such past due interest,and notice of the date of payment and the Special Record Date
shall be sent by United States mail, first class,postage prepaid, not later than five (5)days prior to
the Special Record Date,to each affected Owner of record as of the close of business on the day prior
to the mailing of such notice.
Section 3.8: Ownership;Unclaimed Principal and Interest. T'he City,the Registrar and any
other person may treat the person in whose name any Bond is registered as the absolute owner of
such Bond for the purpose of making and receiving payment of the principal of or interest on such
Bond, and for all other purposes, whether or not such Bond is overdue,and neither the City nor the
Registraz shall be bound by any notice or knowledge to the contrary. All payments made to the
person deemed to be the Owner of any Bond in accordance with this Section shall be valid and
effectual and shall dischazge the liability of the City and the Registrar upon such Bond to the extent
of the sums paid.
Amounts held by the Registrar which represent principal of and interest on the Bonds
remaining unciaimed by the Owner after the expiration of three years from the date such amounts
have become due and payable shall be reported and disposed of by the Registrar in accordance with
the applicable provisions of Texas law including, to the extent applicable, Title 6 of the Texas
Property Code, as amended.
Section 3.9: Re�istration, Transfer, and Exchange. So long as any Bonds remain
outstanding,the Registrar shall keep the Register at its principal payment office and,if such principal
payment office is not in the State of Texas,the Registrar shall maintain a copy of the Register within
the State of Texas. Subject to such reasonable regulations as it may prescribe, the Registraz shall
provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance.
Each Bond shall be transferable only upon the presentation and surrender thereof at the
principal payment office of the Registrar, duly endorsed for transfer, or accompanied by an
assignment duly executed by the registered Owner or his authorized representative in form
satisfactory to the Registraz. Upon due presentation of any Bond in proper form for transfer, the
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Registrar shall authent:cate and deliver in exchange therefor,within three Business Days after such
presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in
authorized denominations and of the same maturity and aggregate principal amount and bearing
interest at the same rate as the Bond or Bon�s so presented.
All Bonds shall be exchangeable upon presentation and surrender at the principal payment
office of the Registrar, for a Bond or Bonds of like maturity and interest rate and in any authorized
denomination, in an aggregate amount equal to the unpaid principal amount of the Bond or Bonds
presented for exchange. The Registraz shall be and is hereby authorized to authenticate and deliver
exchange Bonds in accordance with the provisions of this Section. Each Bond delivered in
accordance with this Section shall be entitled to the benefits and security of this Ordinance to the
same extent as the Bond or Bonds in lieu of which such Bond is delivered.
The City or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover
any ta�c or other governmental charge that may be imposed in connection with the transfer or
exchange of such Bond. Any fee or chazge of the Registrar for such transfer or exchange shall be
paid by the City.
Section 3.10: Mutilated,Lost,or Stolen Bonds. Upon the presentation and surrender to the
Registraz of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a
replacement Bond of like maturity, interest rate, and principal amount, bearing a number not
contemporaneously outstanding. If any Bond is lost,appazently destroyed,or wrongfully taken,the
City,pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge
that such Bond has been acquired by a bona fide purchaser, shall authorize and the Registrar sha11
authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount,
bearing a number not contemporaneously outstanding.
The City or the Registraz may require the Owner of a mutilated Bond to pay a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection therewith and any
other expenses connected therewith, including the fees and expenses of the Registrar. The City or
the Registrar may require the Owner of a lost,apparently destroyed or wrongfully taken Bond,before
any replacement Bond is issued,to:
(1) furnish to the City and the Registrar satisfactory evidence of the ownership
of and the circumstances of the loss, destruction or theft of such Bond;
(2) furnish such security or indemnity as may be required by the Registrar and
the City to save them harmless;
(3) pay all expenses and chazges in connection therewith, including, but not
limited to,printing costs,legal fees,fees of the Registrar and any ta�c or other
governmenta.l chazge that may be imposed; and
(4) meet any other reasonable requirements of the City and the Registrar.
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If,after the delivery of such replacement Bond,a bona fide purchaser of the original Bond in lieu of
which such replacement Bond was issued presents for payment such original Bond,the City and the
Registraz shall be entitled to recover such replacement Bond from the person to whom it was
delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or
expense incurred by the City or the Registrar in connection therewith.
If any such mutilated,lost,apparently destroyed or wrongfully taken Bond has become or is
about to become due and payable, the City in its discretion may, instead of issuing a replacement
Bond, authorize the Registrar to pay such Bond.
Each replacement Bond delivered in accordance with this Section shall be entitled to the
benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such
replacement Bond is delivered.
Section 3.12: Cancellation of Bonds. All Bonds paid in accordance with this Ordinance,
and all Bonds in lieu of which exchange Bonds or replacement Bonds aze authenticated and
delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper
records regarding such payment. The Registrar shall furnish the City with appropriate certificates
of destruction of such Bonds.
Section 3.13: Optional Redemption. The Bonds are subject to optional redemption as set
forth in the Form of Bonds in this Ordinance.
Principal amounts may be redeemed only in integral multiples of$5,000. If a Bond subject
to redemption is in a denomination larger than$5,000,a portion of such Bond may be redeemed,but
only in integral multiples of$5,000. Upon surrender of any Bond for redemption in part, the
Registrar,in accordance with Section 3.10 hereof,shall authenticate and deliver in exchange therefor
a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the
unredeemed portion of the Bond so surrendered.
Notice of any redemption identifying the Bonds to be redeemed in whole or in part shall be
given by the Registrar at least thirty days prior to the date fixed for redemption by sending written
notice by first class mail to the Owner of each Bond to be redeemed in whole or in part at the address
shown on the Register. Such notices shall state the redemption date,the redemption price,the place
at w�ich Bonds are to be surrendered for payment and, if less than all Bonds outstanding of a
particular maturity aze to be redeemed,the numbers of the Bonds or portions thereof of such maturity
to be redeemed. Any notice given as provided in this Section shall be conclusively presumed to have
been duly given,whether or not the Owner receives such notice. By the date fixed for redemption,
due provision shall be made with the Registrar for payment of the redemption price of the Bonds or
portions thereof to be redeemed,plus accrued interest to the date fixed for redemption. When Bonds
have been called for redemption in whole or in part and due provision has been made to redeem same
as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as
outstanding except for the purpose of receiving payment solely from the funds so provided for
redemption,and the rights of the Owners to collect interest which would otherwise accrue after the
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redemption date on any Bond or portion thereof called for redemption shall terminate on the date
fixed for redemption.
Section 3.14: Forms. The form of the Bonds, including the form of the Registrar's
Authentication Certificate,the form of Assignment, and the form of Registration Certificate of the
Comptroller,which shall be attached or�xed to the Bonds initially issued,shall be,respectively,
substantially as follows, with such additions, deletions and variations as may be necessary or
desirable and not prohibited by this Ordinance, including any legend regarding bond insurance if
such insurance is obtained by the Undervvriter:
(a) Form of Bonds.
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF GALVESTON
REGISTERED REGISTERED
NUMBER DENOMINATION
R- $
CITY OF FRIENDSWOOD, TEXAS
WATERV�'ORKS AND SEWER SYSTEM REVENUE BOND
SERIES 2000
INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP:
May 1, 2000
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Friendswood,Texas,a municipal corporation duly incorporated under the laws
of the State of Texas(herein the"City")for value received,promises to pay,but solely from certain
Net Revenues as hereinafter provided,to the registered owner identified above or registered assigns,
on the maturity date specified above, upon presentation and surrender of this Bond at the principal
payment office of The Bank of New York, New York, New York (the "Registrar), the principal
amount identified above,in any coin or currency of the United States of America which on the date
of paym�nt of such principal is legal tender for the payment of debts due the United States of
America, and to pay, solely from such Net Revenues, interest thereon at the rate shown above,
calculated on the basis of a 360 day year of twelve 30 day months, from the later of May l, 2000,
or the most recent interest payment date to which interest has been paid or duly provided for.Interest
on this Bond is payable by check on March 1 and September l,beginning on Mazch 1,2001,mailed
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to the registered owner as shown on the books of registration kept by the Registrar as of the fifteenth
day of the month next preceding each interest payment date.
THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS aggregating
$3,515,000, issued for the purpose of improving the City's waterworks and sanitary sewer system,
under and in strict conformity with the Constitution and laws of the State of Texas, particulazly
Chapter 1502, Texas Government Code, as amended,and pursuant to an ordinance adopted by the
City Council (the "Ordinance"), which Ordinance is of record in the City's official minutes.
THE CITY RESERVES THE RIGHT to redeem the Bonds scheduled to mature on or after
Mazch 1,201 l,prior to their scheduled maturities,in whole or from time to time in part, in integral
multiples of$5,000, on March 1, 2010, or any date thereafter at a price of paz plus accrued interest
on the princip�.l amounts called for redemption to the date fixed for redemption. Reference is made
to the Ordinance for complete details concerning the manner of redeeming the Bonds.
NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the d'ate
fixed for redemption by first class mail, addressed to the registered owners of each Bond to be
redeemed in whole or in part at the address shown on the books of registration kept by the Registrar.
When Bonds or portions thereof have been called for redemption,and due provision has been made
to redeem the same, the principal amounts so redeemed shall be payable solely from the funds
provided for redemption, and interest which would otherwise accrue on the amounts called for
redemption shall terminate on the date fixed for redemption.
THIS BOND IS TRANSFERABLE only upon presentation and surrender at the principal
payment office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly
executed by the registered owner or his authorized representative,subject to the terms and conditions
of the Ordinance.
THE BONDS ARE EXCHANGEABLE at the principal payment office of the Registrar,for
bonds in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and
conditions of the Ordinance.
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THIS BOND AND THE SERIES OF WHICH IT IS A PART are special obligations of the
City that,along with the City's outstanding Waterworks and Sewer System Revenue Bonds, Series
1999(the"Outstanding Bonds"),are payable from and are equally and ratably secured by a first lien
on the revenues of the City's waterworks and sewer system remaining after deduction of the
operation and maintenance expenses of that system(the "Net Revenues"),as defined and provided
in the Ordinance,which Net Revenues aze required to be set aside and pledged to the payment of the
Bonds,the Outstanding Bonds,and all additional bonds issued on a parity therewith,in the Interest
and Sinking Fund and the Reserve Fund maintained for the payment of all such bonds,all as more
fully described and provided for in the Ordinance. This Bond and the series of which it is a part,
together with the interest thereon,are payable solely from such Net Revenues and do not constitute
an indebtedness or general obligation of the City. The holder of this obligation is not entitled to
demand payment of this obligation out of any money raised by taxation.
THE CITY HAS RESERVED THE RIGHT to issue additional parity revenue bonds,subj ect
to the restrictions contained in the Ordinance,which may be equally and ratably payable from,and
secured by a first lien on and pledge of,the Net Revenues in the same manner and to the same extent
as this Bond and the series of which it is a part.
IT IS HEREBY DECLARED AND REPRESENTED that this Bond has been duly and
validly issued and delivered;that all acts,conditions,and things required or proper to be performed,
exist, and be done precedent to or in the issuance and delivery of this Bond have been performed,
existed,and been done in accordance with law;that the Bonds do not exceed any statutory limitation;
and that provision has been made for the payment of the principal of and interest on this Bond and
all of the Bonds by the creation of the aforesaid lien on and pledge of the Net Revenues.
IN WITNESS WHEREOF,this Bond has been signed with the manual or facsimile signature
of the Mayor and countersigned with the manual or facsimile signature of the City Secretary,and the
official seal of the City has been duly impressed, or placed in facsimile, on this Bond.
(AUTHENTICATION (SEAL) CITY OF FRIENDSWOOD, TEXAS
CERTIFICATE)
Mayor
' City Secretary
(b) Form of Re istration Certificate.
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.
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WITNESS MY SIGNATURE AND SEAL this
x�cx7cxxxxacx
Comptroller of Public Accounts
(SEAL) of the State of Texas
(c) Form of Authentication Certificate.
AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been delivered pursuant to the Bond
Ordinance described in the text of this Bond.
T'he Bank of New York,
New York,New York
BY
Agent
Date of Authentication
(d) Form of Assi�nt.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns, and transfers unto
(Please print or type name, address, and zip code of Transferee)
(Please insert Social Security or T�payer ldentification Number of Transferee)
the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer said Bond on the books kept for registration thereof, with full power of
substitution in the premises.
DAT�D:
Signature Guazanteed:
Registered Owner
NOT'ICE: The signature above must
correspond to the name of the registered
owner as shown on the face of this Bond in
NOTICE: Signature must be guaranteed every particulaz,without any alteration,
by a member firm of the New York Stock enlazgement or change whatsoever.
Exchange or a commercial bank or trust
company.
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(e) The Initial Bond shall be in the form set forth in pazagraphs (a), (b) and (d) of this
Section, except for the following alterations:
(i) 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 the word"CUSIP"
deleted;
(ii) in the first paragraph of the Bond, the words "on the maturity
date specified above" and "at the rate shown above" shall be deleted
and the following shall be inserted at the end of the first sentence "...,
with such principal to be paid in installments on March 1 in each of
the years and in the principal amounts identified in the following
schedule and with such installments bearing interest at the per annum
rates set forth in the following schedule:
[Information to be inserted from schedule in Section 3.3]
(iii) the Initial Bond shall be numbered I-1.
Section 3.15: Le�al Opinion; Cusip Numbers;Bond Insurance. The approving opinion of
Vinson & Elkins L.L.P., Houston, Texas, and CUSIP Numbers may be printed on the Bonds, but
errors or omissions in the printing of such opinion or such numbers shall have no effect on the
validity of the Bonds. If bond insurance is obtained by the Underwriter, the Bonds may beaz an
appropriate legend as provided by the insurer.
ARTICLE IV
SECURITY AND SOURCE OF
PAYMENT FOR ALL PARITY BONDS
Section 4.1: Pled�e and Source of Pa, ment. The City hereby covenants and agrees that
all Gross Revenues of the System shall be deposited and paid into the special funds established for
Parity Bonds, as provided in this Ordinance, and shall be applied in the manner set out herein, to
provide for the payment of all Maintenance and Operation Expenses and to provide for the payment
of principal, interest and any redemption premium of the Parity Bonds and all expenses of paying,
securing and insuring the same. The Parity Bonds shall constitute special obligations of the City that
shall be payable solely from, and shall be equally and ratably secured by a first lien on, the Net
Revenues, as collected and received by the City, from the operation and ownership of the System,
which Net Revenues shall, in the manner herein provided, be set aside for and pledged to the
payment of the Parity Bonds in the Interest and Sinking Fund and Reserve Fund as hereinafter
provided,and the Parity Bonds shall be in all respects on a parity with and of equal dignity with one
another. The owners of the Parity Bonds shall never have the right to demand payment out of any
funds raised or to be raised by taxation.
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Section 4.2: Rates and Char�es. So long as any Parity Bonds remain outstanding,the City
shall fix,charge and collect rates and charges for the use and services of the System which aze fully
sufficient to produce Net Revenues in each fiscal year at least equal to 125% of the principal and
interest requirements scheduled to occur in such fiscal year on all Parity Bonds then outstanding
plus an amount equal to the sum of all deposits required to be made to the Reserve Fund in such
fiscal yeaz,but in no event shall Net Revenues ever be less than the amount required to maintain the
Interest and Sinking Fund and the Reserve Fund as hereinafter provided,and,to the extent that funds
for such purpose are not otherwise available,to pay all other outstanding obligations payable from
the Net Revenues of the System, as and when the same become due.
The City will not grant or permit any free service from the System except for public buildings
and institutions operated by the City.
Section 4.3: Special Funds. The following special Funds created pursuant to the ordinance
authorizing the Outstanding Bonds are hereby confirmed, and such Funds shall be maintained and
accounted for as hereinafter provided, so long as any Parity Bonds remain outstanding: �
(a) Waterworks and Sewer System Revenue Fund(the "Revenue Fund");
(b) Waterworks and Sewer System Revenue Bonds Interest and Sinking Fund
(the "Interest and Sinking Fund"); and
(c) Waterworks and Sewer System Revenue Bonds Reserve Fund(the"Reserve
Fund").
The Revenue Fund shall be maintained as a separate account on the books of the City. The Interest
and Sinking Fund and the Reserve Fund shall be maintained at an official depository bank ofthe City
separate and apart from all other funds and accounts of the City and shall constitute trust funds which
shall be held in trust for the benefit of the Owners of the Parity Bonds and the proceeds of which
shall be and are hereby pledged to the payment of the Parity Bonds. All of the Funds named above
shall be used solely as provided in this Ordinance so long as any Parity Bonds remain outstanding.
Section 4.4: Flow of Funds. All Gross Revenues of the System (except for interest and
earnings on investments in the Reserve Fund and the Interest and Sinking Fund)shall be deposited
as collected in�o the Revenu�Fund. Money from time to time on deposit in the Revenue Fund shall
be applied as follows in the following order of priority:
(a) First, to pay Maintenance and Operation Expenses.
(b) Second, to make all deposits into the Interest and Sinking Fund required by
this Ordinance, the ordinance authorizing the issuance of the Outstanding
Bonds, and any ordinance authorizing the issuance of Additional Parity
Bonds.
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(c) Third,to make all deposits into the Reserve Fund required by this Ordinance,
the Ordinance authorizing the issuance of the Outstanding Bonds, and any
ordinance authorizing the issuance of Additional Parity Bonds.
(d) Fourth, to pay any amounts due to any bond insurer of Parity Bonds
not paid pursuant to subsections (b) or(c)above.
(e) Fifth,to pay any amounts due to any issuer of a Reserve Fund Surety
Policy not paid pursuant to subsections(b) or(c)above.
(� Sixth, for any lawful purpose.
Whenever the total amounts on deposit to the credit of the Interest and Sinking Fund and the Reserve
Fund shall be equivalent to the sum of the aggregate principal amount of all outstanding Parity
Bonds plus the aggregate amount of all interest accrued and to accrue thereon,no further payments
need be made into the Interest and Sinking Fund or the Reserve Fund. �
Section 4.5: Interest and Sinking Fund. On or before the last Business Day of each month
so long as any Parity Bonds remain outstanding, after making all required payments and provision
for payment of Maintenance and Operation Expenses,there shall be transferred into the Interest and
Sinking Fund from the Revenue Fund:
(i) such amounts, in approximately equal monthly installments,
as will be sufficient to accumulate the amount required to pay
the interest scheduled to become due on the Parity Bonds on
t�:e next interest payment date; and
(ii) such amounts, in approximately equal monthly insta.11ments,
as will be sufficient to accumulate the amount required to pay
the next maturing principal of the Parity Bonds,including the
principal amounts of, and any redemption premium on, any
Parity Bonds payable as a result of the exercise or operation
of any optional or mandatory redemption provision contained
in any ordinance authorizing the issuance of Parity Bonds.
Money deposited to the credit of the Interest and Sinking Fund shall be used solely for the purpose
of paying principal(at maturity or prior redemption or to purchase Parity Bonds issued as term bonds
in the open market to be credited against mandatory redemption requirements), interest and any
redemption premium on the Parity Bonds,plus all bank charges and other costs and expenses relating
to such payment. The paying agent shall destroy all paid Parity Bonds and shall provide the City
with appropriate certificates of destruction.
Section 4.6: Reserve Fund. On or before the last Business Day of each month so long as
any Parity Bonds remain outstanding,after making all required payments and provision for payment
of Maintenance an�Operation Expenses,and after making the transfers into the Interest and Sinking
Fund required in the preceding Section, there shall be transferred into the Reserve Fund from the
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Revenue Fund, in approximately equal monthly installments, amounts sufficient to accumulate
within sixty (60) months the Reserve Fund Requirement. Each increase in the Reserve Fund
Requirement resulting from the issuance of Additional Parity Bonds shall be accumulated within
sixty(60)months of the issuance of such bonds by making transfers from the Revenue Fund into the
Reserve Fund in approximately equal monthly installments of amounts sufficient for such purpose.
After the Reserve Fund Requirement has accumulated in the Reserve Fund and so long thereafter
as such Fund contains the Reserve Fund Requirement, no further deposits shall be required to be
made into the Reserve Fund,and any excess amounts may be transferred to the Revenue Fund. But
if and whenever the balance in the Reserve Fund is reduced below the Reserve Fund Requirement,
either due to a draw on the funds or reduction or cancellation of a Reserve Fund Surety Policy,
monthly deposits into such Fund shall be resumed and continued in amounts at least equal to
one-twenty-fourth (1/24th) of the deficiency in the Reserve Fund Requirement until the Reserve
Fund again equals the Reserve Fund Requirement. The Reserve Fund shall be used to pay the
principal of and interest on the Parity Bonds at any time when there is not sufficient money available
in the Interest and Sinking Fund for such purpose and to pay and retire the last Parity Bonds to
mature or be redeemed. '
The City expressly reserves the right at any time to satisfy all or any part of the Reserve Fund
Requirement by obtaining for the benefit of the Reserve Fund a Reserve Fund Surety Policy (as
defined below). In the event the City elects to substitute at any time a Reserve Fund Surety Policy
for any funded amounts in the Reserve Fund, it may apply any bond proceeds thereby released,
including investment earnings on bond proceeds,to any purposes for which the bonds were issued
and any other funds thereby released to any purposes for which such funds may lawfully be used,
including the payment of debt service on the Parity Bonds. A Reserve Fund Surety Policy shall be
an insurance policy or other credit agreement (as such term is defined by Section 1371.001,
Government Code)in a principal amount equal to the portion of the Reserve Fund Requirement to
be satisfied and issued by a financial institution or insurance company with a rating for its long term
unsecured debt or claims paying ability in the highest letter category by two major municipal
securities evaluation sources. A Reserve Fund Surety Policy shall be for the pro rata benefit of all
Parity Bonds. The premium for any such policy shall be paid from bond proceeds or other funds of
the City lawfully available for such purpose. Any Reserve Fund Surety Policy shall be authorized
by resolution or ordinance and submitted to the Attorney General for examination and approval.
Section 4.7: Deficiencies in Funds. If in any month there shall not be deposited into any
Fund maintained pursuant to this Article the full amounts required herein, amounts equivalent to
such�deficiency shall be set apart and paid into such Fund or Funds from the first available and
unallocated money in the Revenue Fund, and such payment shall be in addition to the amounts
otherwise required to be paid into such Funds during the succeeding month or months. To the extent
necessary, the rates and charges for the �ystem shall be increased to make up for any such
deficiencies.
Section 4.8: Investment of Funds; Transfer of Investment Income. (a) Money in the
Revenue Fund,the Interest and Sinking Fund and the Reserve Fund may,at the option of the City,
be invested as permitted by law; provided that all such deposits and investments shall be made in
such manner that the money required to be expended from any Fund will be available at the proper
time or times,and provided further that in no event shall such deposits or investments of money in
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the Reserve Fund mature later than the final maturity date of the Parity Bonds. Any obligation in
which money is so invested shall be kept and held in the Fund from which the investment was made.
All such investments shall be promptly sold when necessary to prevent any default in connection
with the Parity Bonds.
(b) All interest and income derived from such deposits and investments shall be credited
as received to the Fund from which the investment was made.
ARTICLE V
ADDITIONAL BONDS
Section 5.1: Additional Pari Bonds. The City reserves the right to issue,for any lawful
purpose (including the refunding of any previously issued Parity Bonds or any other bonds or
obligations of the City issued in connection with or payable from the revenues of the System), one
or more series of Additional Parity Bonds payable from and secured by a first lien on the Net
Revenues of the System on a parity with the Bonds, the Outstanding Bonds, and any previously
issued Additional Parity Bonds;provided,however,that no Additional Parity Bonds may be issued
unless:
(a) The Additional Parity Bonds mature on,and interest is payable on,the same
days of the year as the Bonds;
(b) The Interest and Sinking Fund and the Reserve Fund each contains the
amount of money then required to be on deposit therein;
(c) For either the preceding fiscal year or a 12 consecutive calendar month period
ending no more than 90 days prior to adoption of the ordinance authorizing
such Additional Parity Bonds,Net Revenues were equal to at least 140%of
the average anrn.zal principal and interest requirements on all Parity Bonds
that will be outstanding after the issuance of the series of Additional Parity
Bonds then proposed to be issued, as certified by the City's Controller or
Director of Administrative Services or by an independent certified public
accountant or firm of independent certified public accountants; and
� (d) If the City cannot meet the test described in (c) above, but a change in the
rates and charges applicable to the System becomes effective at least sixty
(60)days prior to the adoption of the ordinance authorizing Additional Parity
Bonds and the City's Controller or Director of Administrative Services
certifies that, had such change in rates and charges been effective for the
preceding fiscal yeaz or 12 consecutive calendar month period ending no
more than 90 days prior to adoption of said ordinance,the Net Revenues for
such period would have met the test described in(c) above.
Section 5.2: Subordinate Lien Bonds. The City reserves the right to issue,for any lawful
purpose,ronds,notes or other obligations secured in whole or in part by liens on the Net Revenues
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that aze j unior and subordinate to the lien on the Net Revenues securing payment of the Parity Bonds.
Such subordinate lien obligations may be further secured by any other source of payment lawfully
available for such purpose.
Section 5.3: Special Project Bonds. The City reserves the right to issue revenue bonds
secured by liens on and pledges of revenues and proceeds derived from Special Projects.
ARTICLE VI
COVENANTS AND PROVISIONS
RELATING TO ALL PARITY BONDS
Section 6.1: Punctual Pavment of Paritv Bonds. The City will punctually pay or cause to
be paid the interest on and principal of all Parity Bonds according to the terms thereof and will
faithfully do and perform, and at all times fully observe, any and all covenants, undertakings,
stipulations and provisions contained in this Ordinance and in any ordinance authorizing the issuarice
of Additional Parity Bonds.
Section 6.2: Maintenance of S, sv tem. So long as any Parity Bonds remain outstanding,the
City covenants that it will at all times maintain the System,or within the limits of its authority cause
the same to be maintained,in good condition and working order and will operate the same,or cause
the same to be operated, in an efficient and economical manner at a reasonable cost and in
accordance with sound business principles. In operating and maintaining the System,the City will
comply with all contractual provisions and agreements entered into by it and with all valid rules,
regulations,directions or orders of any governmental,administrative,or judicial body promulgating
same,noncompliance with which would materially and adversely affect the operation of the System.
Section 6.3: Sale or Encumbrance of Svstem. So long as any Parity Bonds remain
outstanding,the City will not sell,dispose of or,except as permitted in Article VI,further encumber
the System;provided,however,that this provision shall not prevent the City from disposing of any
portion of the System which is being replaced or is deemed by the City to be obsolete, worn out,
surplus or no longer needed for the proper operation of the System. Any agreement pursuant to
which the City contracts with a person,corporation,municipal corporation or political subdivision
to operate the System or to lease and/or operate all or part of the System shall not be considered as
an encumbrance of the System.
Section 6.4: Insurance. The City furtiier covenants and agrees that it will keep the System
insured with insurers of good standing against risks,accidents or casualties against which and to the
extent customarily insured against by political subdivisions of the State of Texas operating similar
systems,to the extent that such insurance is available. The cost of all such insurance together with
any additional insurance, shall be a part of the Maintenance and Operation Expenses. All net
proceeds of such insurance shall be applied to repair or replace the insured property that is damaged
or destroyed, or to make other capital improvements to the System, or to redeem Parity Bonds.
Section 6.5: Accounts. Records, and Audits. So long as any Parity Bonds remain
outstanding, the City covenants and agrees that it will maintain a proper and complete system of
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records and accounts pertaining to the operation of the System in which full,true and proper entries
will be made of all dealings,transactions,business and affairs which in any way affect or pertain to
the System or the Gross Revenues or the Net Revenues thereof. The City shall after the close of each
of its fiscal years cause an audit report of such records and accounts to be prepared by an
independent certified public accountant or independent firm of certified public accountants. Each
year promptly after such audit report is prepazed,the City shall furnish a copy thereof without cost
to the Municipal Advisory Council of Texas, the major municipal rating agencies and any Owner
of Parity Bonds who shall request same. All expenses incurred in preparing such audits shall be
Maintenance and Operation Expenses.
Section 6.6: Competition. To the extent it legally may, the City will not grant any
franchise or permit for the acquisition,construction,or operation of any competing facilities which
might be used as a substitute for the System and will prohibit the operation of any such competing
facilities.
Section 6.7: Pled�e and Encumbrance ofNet Revenues. The City covenants and represents
that it has the lawful power to create a lien on and to pledge the Net Revenues to secure the payment
of the Parity Bonds and has lawfully exercised such power under the Constitution and laws of the
State of Texas. The City further covenants and represents that, other than to the payment of the
Parity Bonds, the Net Revenues are not and will not be made subject to any other lien, pledge or
encumbrance to secure the payment of any debt or obligation of the City, unless such lien, pledge
or encumbrance is junior and subordinate to the lien and pledge securing payment of the Parity
Bonds.
Section 6.8: Bondowners'Remedies. This Ordinance shall constitute a contract between
the City and the Owners of the Parity Bonds from time to time outstanding (including any bond
insurers of Parity Bonds) and shall remain in effect until the Parity Bonds and the interest thereon
shall be fully paid or discharged or provision therefor shall have been made as provided herein
(includir�g payments of any amounts due to bond insurers of Parity Bonds). In the event of a default
in the payment of the principal of or interest on any of the Parity Bonds or a default in the
performance of any duty or covenant provided by law or in this Ordinance,the Owner or Owners of
any of the Parity Bonds may pursue all legal remedies afforded by the Constitution and laws of the
State of Texas to compel the City to remedy such default and to prevent further default or defaults.
Without in any way limiting the generality of the foregoing,it is expressly provided that any Owner
of any of the Parity Bonds may at law or in equity,by suit,action,mandamus,or other proceedings,
enforce and compel performance of all duties required to be performed by the City under this
Ordinance, including the making and collection of reasonable and sufficient rates and charges for
the use and services of the System,the deposit of the Gross Revenues into the special funds herein
provided, and the application of the Gross Revenues and the Net Revenues in the manner required
in this Ordinance.
Section 6.9: Dischazge bv Deposit. Except as provided in Section 8.2(b)(i),the City may
discharge its obligation to the Owners of any or all of the Parity Bonds to pay principal,interest and
redemption premium(if any)thereon in any manner then permitted by law,including by depositing
with any paying agent for such Parity Bonds or with the State Treasurer of the State of Texas either:
(i)cash in an amount equal to the principal amount and redemption premium, if any,of such Parity
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Bonds plus in±erest ther�on to the date of maturity or redemption, or(ii)pursuant to an escrow or
trust agreement,cash and/or securities of any type authorized by law for refunding escrow account,
in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely
payment of the principal amount and redemption premiutn,if any,of such Parity Bonds plus interest
thereon to the date of maturity or redemption;provided,however,that if any of such Parity Bonds
are to be redeemed prior to their respective dates of maturity, provision shall have been made for
giving notice of redemption as provided in the ordinance authorizing such Parity Bonds. Upon such
deposit, such Parity Bonds shall no longer be regarded as outstanding or unpaid.
Section 6.10: Pavin�gents Mav Own Parity Bonds. The paying agents for the Parity
Bonds,in their individual or any other capacity,may become holders or pledgees of the Parity Bonds
with the same rights they would have if they were not paying agents.
Section 6.11: No Recourse A�ainst City Officials. No recourse shall be had for the payment
of principal of or interest on any Parity Bonds or for any claim based thereon or on this Ordinance
against any official of the City or any person executing any Parity Bonds.
ARTICLE VII
PROVISIONS CONCERNING SALE AND
APPLICATION OF PROCEEDS OF BONDS
Sectiori 7.1: Sale.T1ie sale and delivery ofthe Bonds to
(the"Underwriter")at a price of par,plus a cash premium of$ ,plus accrued interest thereon
to date of delivery,is hereby authorized,approved,ratified and confirmed,subject to the approving
opinion as to the legality of the Bonds of the Attorney General of the State of Texas,and of Vinson
&Elkins L.L.P.,Houston,Texas,bond counsel. It is hereby found and declared that the Bonds were
sold at public sale and that the bid of the Underwriter was the best bid received by the City.
Section 7.2: Federal Income Tax Exclusion:
(a) General. The City intends that the interest on the Bonds shall be excludable from
gross income for federal income tax purposes pursuant to sections 103 and 141 through 150 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the applicable Income Tax
Regulations(the"Regulations"). The City covenants and agrees not to take any action,or knowingly
omit�to take any action within its control, that if taken or omitted, respectively, would cause the
interest on the Bonds to be includable in gross income, as defined in section 61 of the Code, for
federal income tax purposes. In particular, the City covenants and agrees to comply with each
requirement of this Section; provided, however,that the City shall not be required to comply with
any particular requirement of this Section if the City has received an opinion of nationally recognized
bond counsel("Counsel's Opinion")that such noncompliance will not adversely affect the exclusion
from gross income for federal income tax purposes of interest on the Bonds or if the City has
received a Counsel's Opinion to the effect that compliance with some other requirement set forth in
this Section will satisfy the applicable requirements of the Code and the Regulations,in which case
compliance with such other requirement specified in such Counsel's Opinion shall constitute
compliance with the corresponding requirement specified in this Section.
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(b) No Private Use or Pavment and No Private Loan Financin,g. The City shall certify,
through an authorized officer, employee or agent that based upon all facts and estimates known or
reasonably expected to be in existence on the date the Bonds are delivered,that the proceeds of the
Bonds will not be used in a manner that would cause the Bonds to be"private activity bonds"within
the meaning of section 141 of the Code and the Regulations promulgated thereunder. Moreover,the
City covenants and agrees that it will make such use of the proceeds of the Bonds including interest
or other investment income derived from Bond proceeds, regulate the use of property financed,
directly or indirectly,with such proceeds,and take such other and further action as may be required
so that the Bonds will not be"private activity bonds"within the meaning of section 141 of the Code
and the Regulations promulgated thereunder.
(c) No Federal Guarantee. The City covenants and agrees that it has not and will not to
take any action, and has not knowingly omitted and will not knowingly omit to take any action
within its control, that, if taken or omitted, respectively, would cause the Bonds to be "federally
guaranteed" within the meaning of section 149(b) of the Code and the applicable Regulations
thereunder, except as permitted by section 149(b)(3) of the Code and such Regulations.
(d) No Hedge Bonds. The City covenants and agrees that it has not and will not to take
any action, and has not knowingly omitted and will not knowingly omit to take any action, within
its control,that,if taken or omitted,respectively,would cause the Bonds to be"hedge bonds"within
the meaning of section 149(g) of the Code and the applicable Regulations thereunder.
(e) No Arbitra�e. The City shall certify,through an authorized officer,employee or agent
that based upon all facts and estimates known or reasonably expected to be in existence on the date
the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds will not be
used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of section
148(a) of the Code and the applicable Regulations promulgated thereunder. Moreover, the City
covenants and agrees that it will make such use of the proceeds of the Bonds including interest or
other investmPnt income derived from Bond proceeds, regulate investments of proceeds of the
Bonds, and take such other and further action as may be required so that the Bonds will not be
"arbitrage bonds" within the meaning of section 148(a)of the Code and the applicable Regulations
promulgated thereunder.
(fl Arbitrage Rebate. If the City does not qualify for an exception to the requirements
of section 148(fl of the Code relating to the required rebate to the United States,the City will take
all necessary steps to comply with the requirement that certain amounts earned by the City on the
investment of the "gross proceeds" of the Bonds(within the meaning of section 148(fl(6)(B)of the
Code), be rebated to the federal government. Specifically, the City will (i) maintain records
regazding the investment of the gross proceeds of the Bonds as may be required to calculate the
amount earned on the investment of the gross proceeds of the Bonds separately from records of
amounts on deposit in the funds and accounts of the City allocable to other bond issue of the City
or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such
times as are required by applicable Regulations,the amount earned from the investment of the gross
proceeds of the Bonds which is required to be rebated to the federal government,and(iii)pay, not
less often than every fifth anniversary date of the delivery of the Bonds or on such other dates as may
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be permitted under applicable Regulations, all amounts required to be rebated to the federal
government. Further,the City will not indirectly pay any amount otherwise payable to the federal
government pursuant to the foregoing requirements to any person other than the federal government
by entering into any investment arrangement with respect to the gross proceeds of the Bonds that
might result in a reduction in the amount req��ired to be paid to the federal government because such
arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement
had been at arm's length and had the yield on the issue not been relevant to either party.
(g) Information Reporting. The City covenants and agrees to file or cause to be filed with
the Secretary of the Treasury,not later than the 1 Sth day of the second calendar month after the close
of the calendar quarter in which the Bonds are issued, an information statement concerning the
Bonds,all under and in accordance with section 149(e)of the Code and the applicable Regulations
promulgated thereunder.
(h) Continuing Obli ation. Notwithstanding any other provision of this Ordinance,the
City's obligations under the covenants and provisions of this Section shall survive the defeasance and
dischazge of the Bonds.
Section 7.3: Qualified Ta�c-Exempt Obli ations. The City hereby designates the Bonds
as "qualified tax-exempt obligations" for purposes of section 265(b) of the Code. In connection
therewith,the City represents(a)that the aggregate amount of tax-exempt obligations issued by the
City during calendar year 200a, including the Bonds, which have been designated as "qualified
tax-exempt obligations" under section 265(b)(3)of the Code does not exceed$10,000,000, and(b)
that the reasonably anticipated amount of tax-exempt obligations which will be issued by the City
during calendar year 2000,including the Bonds,will not exceed$10,000,000. For purposes of this
Section, the term "tax-exempt obligation" does not include "private activity bonds" within the
meaning of section 141 of the Code, other than "qualified 501(c)(3) bonds" within the meaning of
section 145 of the Code. In addition,for purposes of this Section,the City includes all governmental
units which are aggregated with the City under the Code.
ARTICLE VIII
CONTINUING DISCLOSURE
Section 8.1: Continuin� Disclosure Undertaking. (a) Annual Reports. The City shall
prov'ide annually to each NRMSIR and the SID,within six months after the end of each fiscal year,
financial information and operating data with respect to the City of the general type included in the
Official Statement under the headings, "OFFICIAL STATEMENT SUMMARY," "CITY
REVENLJE DEBT," "THE SYSTEM," and in"APPENDIX B". The information to be provided
shall include the financial statements of the City prepared in accordance with the accounting
principles the City may be required to employ from time to time pursuant to State law or regulation
and shall be audited,if the City Commissions an audit 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 City shall provide unaudited financial statements for the applicable fiscal year
to each NRMSIR and the SID within such six month period,and audited financial statements when
and if the audit report on such statements becomes available.
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If the City changes its fiscal year,it will notify each NRMSIR and the SID of the change(and
of the date of the new fiscal year end)prior to the next date by which the City otherwise would be
required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may be
set forth in full in one or more documents or may be included by specific reference to any document
(including an official statement or other offering document, if it is available from the MSRB)that
theretofore has been provided to each NRMSIR and the SID or filed with the SEC.
(b) Material Event Notices. The City shall notify the SID and either each NRMSIR or
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:
A. Principal and interest payment delinquencies;
B. Non-payment related defaults;
C. Unscheduled draws on debt service reserves reflecting financial
difficulties;
D. Unscheduled draws on credit enhancements reflecting financial
difficulties;
E. Substitution of credit or liquidity providers, or their failure to
perform;
F. Adverse tax opinions or events affecting the ta�c-exempt sta.tus of the
Bonds;
G. Modifications to rights of holders of the Bonds;
H. Bond calls;
I. Defeasances;
J. Release, substitution, or sale of property securing repayment of the
Bonds; and
K. Rating changes.
The City,hall notify the SID and either each NRMSIR or the MSRB,in a timely manner,of
any failure by ihe City to prcvide financial information or operating data in accordance with Section
8.1(a) of this Ordinance by the time required by such Section.
(c) Limitations,Disclaimers and Amendments. The City shall be obligated to observe
and perform the covenants specified in this Section for so long as, but only for so long as,the City
remains an"obligated person"with respect to the Bonds within the meaning of the Rule,except that
the City in any event will give notice of any deposit made in accordance with Texas law that causes
Bonds no longer to be outstanding.
The provisions of this Section are for the sole benefit of the holders 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 City 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 City's financial results,
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condition,or prospects or hereby undertake to update any information provided in accordance with
this Section or otherwise, except as expressly provided herein. The City does not make any
representati�on or warranty concerning such information or its usefulness to a decision to invest in
or sell Bonds at any fut�;re date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR
BENEFICIAL O WNER OF ANY BOND OR ANY OTHER PERSON,IN CONTRACT OR TORT,
FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY,
WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS SECTION,BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
No default by the City 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 City under federal and state securities laws.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances that arise from a change in legal requirements, change in law, or change in
the identity,nature,stati:s or type of operations of the City,if(i)the agreement,as amended,would
have permitted an underwriter to purchase or sell Bonds in the original primary offering in
compliance with the Rule,taking into account any amendments or interpretations of the Rule to the
date of such amendment,as well as such changed circumstances,and(ii)either(a)the holders of a
majority in aggregate principal amount of the outstanding Bonds consent to such amendment,or(b)
any person unaffiliated with the City(such as nationally recognized bond counsel),determines that
the amendment will not materially impair the interests of the holders and beneficial owners of the
Bonds. If any such amendment is made, the City will include in its next annual update an
explanation in narrative form of the reasons for the amendment and its impact on the type of
operating data or financial information being provided.
Section 8.2: Official Statement. The City Council ratifies and confirms its prior approval
of the form and content of the Official Statement prepared in the initial offering and sale of the
Bonds and hereby authorizes the preparation of a final Official Statement reflecting the terms of the
Underwriter's bid and other relevant information. The use of such Official Statement in the
reoffering of the Bonds by the Underwriter is hereby approved and authorized. The proper officials
of the City are hereby authorized to execute and detiver a certificate pertaining to such Official
Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds.
Section 8.3: Farther Proceedines. The Mayor,the City Manager,the City Secretary, and
other appropriate officials of the City are hereby authorized and directed to do any and all things
necessary and/or convenient to carry out the terms of this Ordinance.
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Section 8.4: Severabilitv. If any Section,paragraph,clause or provision of this Ordinance
shall for any reason be held to be invalid or unenforceable,the invalidity or unenforceability of such
Section, paragraph, clause or provision shall not affect any of the remaining provisions of this
Ordinance.
Section 8.5: Open Meeting. It is hereby officially found and determined that the meeting
at which this Ordinance was adopted was open to the public,and that public notice of the time,place
and purpose of said meeting was given, all as required by the Texas Open Meetings Act.
Section 8.6: Payin� e�e ist�Agreement. The form of agreement setting forth the
duties of the Registraz is hereby approved,and an appropriate official of the City is hereby authorized
to execute such agreement for and on behalf of the City.
Section 8.7: No Personal Liabilitv. No recourse shall be had for payment of the principal
of or interest on any Bonds or for any claim based thereon,or on this Ordinance,against any official
or employee of the City or any person executing any Bonds.
Section 8.8: Parties Interested. Nothing in this Ordinance expressed or implied is intended
or shall be construed to confer upon, or to give to, any person or entity, other than the City, the
Registrar and the Owners of the Bonds, any right, remedy or claim under or by reason of this
Ordinance or any covenant,condition or stipulation hereof,and all covenants,stipulations,promises
and agreements in this Ordinance shall be for the sole and exclusive benefit of the City,the Registrar
and the Owners of the Bonds.
Section 8.9: Repealer. All orders,resolutions and ordinances,or parts thereof, inconsistent
herewith aze hereby repealed to the extent of such inconsistency.
Section 8.10: Effective Date. This Ordinance shall take effect upon its passage.
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PASSED AND APPROVED this��i day of May, 2000.
/s/Harol i
Ma or
CITY OF FRIENDSWOOD, TEXAS
ATTEST:
/s/ e McKenzie�
� . .
Ci Secretary
CITY OF FRIENDSWOOD, TEXAS
(SEAL)
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