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HomeMy WebLinkAboutOrdinance No. 86-13 ' � � _�_ __. � � a , , � . . . o�� .��s� � � 3 CERTIFICATE FOR ORDINANCE We, the undersigned officers of the City Council of the City of Friendswood, Texas (the "City") , hereby certify as follows : l . The City Council of the City (the "Council") convened in REGULAR MEETING ON THE 24TH DAY OF JULY, 1986 , at the regular designated meeting place (the "Meeting") , and the roll was called of the duly constituted officers and members of the Council, to-wit: Ralph L. Lowe, Mayor Jan Jordan, Mayor Pro-Tem Jim Harrell Robert Wicklander Evelyn Newman Joe Prihoda Phyllis J. Lee and all of said persons were present, except the following absentees : Jan Jordan, Robert Wicklander, Joe Prihoda thus constituting a quorum. Whereupon, among other business the following was transacted at said Meeting: a written ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF CITY OF FRIENDSWOOD, TEXAS, REFUNDING BONDS, SERIES 1986; AUTHORIZING THE EXECUTION OF A BOND PURCHASE CONTRACT, AN ESCROW AGREEMENT, AND A BOND REGISTRAR/PAYING AGENT AGREEMENT; AND APPROVING AN OFFICIAL STATEMENT (the "Ordinance") was duly introduced for the consideration of the Council and read in full. It was then duly moved and seconded that the Ordinance be passed; and, after due discussion, said motion, carrying with it the passage of the Ordinance, prevailed and carried by the following vote: AYES: 4 NOES: 0 2 . A true, full, and correct copy of the Ordinance passed at the Meeting is attached to and follows this Certificate; that the Ordinance has been duly recorded in the Council ' s minutes of the Meeting; the above and foregoing paragraph is a true, full, and correct excerpt from the Council ' s minutes of the Meeting pertaining to the passage of the Ordinance; the persons named in the above and foregoing paragraph are the duly chosen, qualified, and acting officers and members of the Council as indicated therein; that each of the officers and members of the Council was duly and sufficiently notified officially and personally, in advance, of the time, place, and purpose of the Meeting, and that the Ordinance would be introduced and considered for passage at the Meeting, and each of said officers and members consented, in advance, to the holding of the Meeting for such purpose; and that the Meeting was open to the public, and public notice of the time, place, _. ... . , �, , , � and purpose of said Meeting was given all as required by Vernon' s Ann. Civ. St. Article 6252-17. S NED AND S AL D the �t Ti6l day of July, 1986. s ' �� City Secretary Mayor (SEAL) - 2 - , ' . �_ _ N �, . ,. � , . � , � . Ordinance No. 86-13 ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF CITY OE FRIENDSWOOD, TEXAS, REFUNDING BONDS, SERIES 1986; AUTHORIZING THE EXECUTION OF A BOND PURCHASE CONTRACT, AN ESCROW AGREEMENT, AND A BOND REGISTRAR/PAYING AGENT AGREEMENT; AND APPROVING AN OFFICIAL STATEMENT WHEREAS, there are presently outstanding the following bonds of the following series of bonds and other obligations of the City of Eriendswood (the "Issuer" ) , or which have been assumed by the Issuer, which are secured by a pledge by the Issuer to levy ad valorem taxes sufficient to pay principal of and interest on such obligations as they become due: City of Friendswood Sewer Improvement Bonds, Series 1967, dated March l, 1967, currently outstanding in the aggregate principal amount of $30, 000; City of Friendswood General Obligation Refunding Bonds, Series 1969, dated March 1, 1969, currently outstanding in the aggregate principal amount of $109,000; City of Friendswood General Obligation Refunding Bonds, Series 1973, dated July 1, 1973, currently outstanding in the aggregate principal amount of $30, 000; City of Friendswood Drainage Improvement Bonds, Series 1973, dated November 1, 1973, currently outstanding in the aggregate principal amount of $100, 000; City of Friendswood General Obligation Bonds, Series 1974, dated September 1, 1974, currently outstanding in the aggregate principal amount of $625, 000; City of Friendswood Street Improvement Bonds, Series 1977, dated October 1, 1977, currently outstanding in the aggregate principal amount of $1, 195, 000; City of Friendswood General Obligation Bonds, Series 1979, dated August 1, 1979, currently outstanding in the aggregate principal amount of $270, 000; City of Friendswood Road, Bridge and Street Improvement Bonds, Series 1982, dated February 1, 1982, currently outstanding in the aggregate principal amount of $1, 400, 000; City of Friendswood Certificates of Obligation, Series 1982, dated November 1, 1982, currently outstanding in the aggregate principal amount of $24, 000; , , - � �... Pv.,.. . ., , . . � � , City of Friendswood Certificates of Obligation, Series 1983, dated March 1, 1983, currently outstanding in the aggregate principal amount of $20, 000; Galveston County Water Control and Improvement District No. 15 Waterworks and Sewer System Unlimited Tax Bonds, Series 1962, dated October l, 1962, currently outstanding in the aggregate principal amount of $150, 000; Galveston County Water Control and Improvement District No. 15 Waterworks and Sewer System Bonds, Series 1963, dated October l, 1963, currently outstanding in the aggregate principal amount of 557, 000; Galveston County Water Control and Improvement District No. 21 Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1964, dated November 1, 1964, currently outstanding in the aggregate principal amount of $375, 000; Clear Woods Improvement District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1967, dated February 1, 1967, currently outstanding in the aggregate principal amount of $100, 000; Clear Woods Improvement District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1967-A, dated August 1, 1967, currently outstanding in the aggregate principal amount of $610, 000; Sunmeadow Municipal Utility District Waterworks and Sewer System Combination Tax and Revenue Refunding Bonds, Series 1970, dated April 1, 1970, currently outstanding in the aggregate principal amount of $180, 000; Sunmeadow Municipal Utility District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1970-A, dated July 1, 1970, currently outstanding in the aggregate principal amount of $540, 000; Clear Woods Improvement District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1972, dated April 1, 1972, currently outstanding in the aggregate principal amount of $510, 000; Sunmeadow Municipal Utility District Waterworks and Sewer System Combination Tax and Revenue Refunding Bonds, Series 1972, dated October 1, 1972, currently outstanding in the aggregate principal amount of $660, 000; Clear Woods Improvement District Waterworks and Sewer System Combination Unlimited Tax and Revenue Bonds, Series 1974, dated December 1, 1974, currently outstanding in the aggregate principal amount of $690, 000; 2 ' i ' �. K..». ,� � _ • � i r t . ' 1 / Harris County Water Control and Improvement District No. 108 Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1970-A, dated October l, 1970, currently outstanding in the aggregate principal amount of $250, 000; Harris County Water Control and Improvement District No. 108 Waterworks and Sewer System Combination Tax and Revenue Refunding Bonds, Series 1971, dated April 1, 1971, currently outstanding in the aggregate principal amount of $495, 000; Harris County Water Control and Improvement District No. 108 Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1971-A, dated July 1, 1971, currently outstanding in the aggregate principal amount of $995, 000; Harris County Water Control and Improvement District No. 108 Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1972, dated May 1, 1972, currently outstanding in the aggregate principal amount of $435, 000; and Harris County Water Control and Improvement District No. 108 Waterworks and Sewer System Combination Unlimited Tax and Revenue Bonds, Series 1981, dated April 1, 1981, currently outstanding in the aggregate principal amount of $175, 000; WHEREAS, the Issuer now desires to refund all of aforelisted obligations currently outstanding in the aggregate principal amount of $10, 025, 000 (the "Refunded Bonds" ) ; WHEREAS, Article 717k, Vernon' s Texas Civil Statutes, as amended (the "Act" ) , authorizes the Issuer to issue refunding bonds and to deposit the proceeds from the sale thereof together with any other available funds or resources, directly with a place of payment (paying agent) for any of the Refunded Bonds, and such deposit, if made before such payment dates, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Bonds; WHEREAS, the Act further authorizes the Issuer to enter into an escrow agreement with any paying agent for the Refunded Bonds with respect to the safekeeping, investment, reinvestment, administration, and disposition of any such deposit, upon such terms and conditions as the Issuer and such paying agent may agree, provided that such deposits may be invested and reinvested including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which sha11 mature and bear interest payable at such times and in such amounts as will be 3 � ' . . � _m. _.. ' . , � . , . sufficient to provide for the scheduled payment or prepayment of the Refunded Bonds; WHEREAS, the City Council of the Issuer (the "Council" ) deems it advisable to refund the Refunded Bonds in order to lower the annual debt service requirements of the Issuer and to restructure the Issuer' s debt service in a manner which will permit the issuance of additional general obligation bonds without a tax rate increase or with a smaller increase than would otherwise be required; WHEREAS, Texas Commerce Bank National Association, Houston, Texas, is a paying agent for a series of the Refunded Bonds, and the Escrow Agreement hereinafter authorized consti- tutes an escrow agreement of the kind authorized and permitted by the Act; WHEREAS, all the Refunded Bonds mature or are subject to redemption prior to maturity within 20 years of the date of the bonds hereinafter authorized; WHEREAS, it is now deemed necessary and advisable that said bonds be issued at this time, in the amounts, and for the purpose as herein shown; and WHEREAS, the bonds hereinafter authorized are to be issued and delivered pursuant to the Act and the Charter of the City. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD, STATE OF TEXAS: Section 1 . AMOUNT AND PURPOSE OF THE BONDS. The bonds of City of Friendswood (the "Issuer" ) are hereby authorized to be issued and delivered in the aggregate principal amount of $ , FOR THE PURPOSE OF PROVIDING FUNDS TO REFUND THE ISSUER' S OUTSTANDING TAX BONDS AND OTHER OBLIGATIONS (all as described in the preamble hereto) Section 2 . DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND MATURITIES OF BONDS. (a) General . Each bond issued pursuant to this Ordinance shall be designated: "CITY OF FRIENDSWOOD, TEXAS, REFUNDING BOND, SERIES 1986" , and initially there shall be issued, sold, and delivered hereunder fully registered bonds, without interest coupons, dated August 15, 1986, in the respective denominations and principal amounts hereinafter stated, payable to the respective initial registered owners thereof (as designated in Section 11 hereof) , or to the registered assignee or assignees of said bonds or any portion or portions thereof ( in each case, the "Registered Owner" ) . The term "Bonds" as used in this Ordinance shall mean and include collectively the bonds initially issued and delivered pursuant to this Ordinance and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement 4 I � . ... A / bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds. (b) Current Interest Bonds. A portion of the Bonds in the aggregate principal amount of $ shall be issued as bonds the interest upon which is paid currently (the "Current Interest Bonds" ) . The C-1 Bonds shall be numbered R-1 upward, shall be in the denomination of $5, 000 each or any integral multiple thereof, and shall mature and be payable serially on March 1 in each of the years and in the principal amounts, respectively as set forth in the following schedule: YEARS AMOUNTS YEARS AMOUNTS 1987 $560, 000 1994 $880, 000 1988 640, 000 1995 850, 000 1989 635, 000 1996 930, 000 1990 650, 000 1997 990, 000 1991 700, 000 1998 795, 000 1992 775, 000 1999 840, 000 1993 825, 000 (c) Compound Interest Bonds. A portion of the Bonds in the original amount of $ shall be issued as bonds the interest upon which is compounded semiannually and paid at maturity (the "Compound Interest Bonds" ) . The Compound Interest Bonds shall be numbered CR-1 upward, shall be dated August 15, 1986, shall bear interest from the date of delivery thereof, and shall mature on March 1 in each of the years as follows: ORIGINAL PRINCIPAL YEARS AMOUNT 2000 $ 2001 2002 2003 2004 Section 3 . INTEREST. (a) The Current Interest Bonds scheduled to mature during the years, respectively, set forth below shall bear interest from the dates specified in the FORM OF CURRENT INTEREST BOND set forth in this Ordinance to their respective dates of maturity or redemption prior to maturity at the following rates per annum: 5 . w.. , , maturities 1987 ---------------- % 0 maturities 1988 ---------------- % 0 maturities 1989 ---------------- % 0 maturities 1990 ---------------- % 0 maturities 1991 ---------------- % 0 maturities 1992 ---------------- % 0 maturities 1993 ---------------- % 0 maturities 1994 ---------------- % a maturities 1995 ---------------- % 0 maturities 1996 ---------------- % 0 maturities 1997 ---------------- % 0 maturities 1998 ---------------- % maturities 1999 ---------------- % 0 Said interest shall be payable in the manner provided and on the dates stated in the FORM OF CURRENT INTEREST BOND set forth in this Ordinance. (b) Compound Interest Bonds. Interest on the Compound Interest Bonds shall be payable at maturity as follows: Total Year of Approximate Payment at Maturity Yield to Maturity Maturity 2000 $857,000 2001 175,000 2002 95, 000 2003 90, 000 2004 90, 000 A table setting forth compound amounts (which includes the principal, premium, if any, and accrued interest) as of each August 15 and February 15 per $5,000 of maturity amount is attached hereto as Exhibit "A" and incorporated by reference herein as if copied in full. Section 4. CHARACTERISTICS OE THE BONDS. (a) Registra- tion, Transfer, and Exchange; Authentication. The Issuer shall keep or cause to be kept at the principal corporate trust office of Texas Commerce Bank National Association, Houston, Texas (the "Paying Agent/Registrar" ) books or records for the registration of the transfer 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 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, 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 6 " ' � � - , �.., �. - � 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. To the extent possible and under reasonable circumstances, all transfers of Bonds shall be made within three business days after request and presentation thereof. 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 Paying Agent/Registrar' s standard or customary fees and charges for making such registration, transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided in the FORMS OE BOND set forth in this Ordinance. Registration of assignments, transfers, and exchanges of Bonds sha11 be made in the manner provided and with the effect stated in the FORMS 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 (c) below, an authorized representa- tive of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the Paying Agent/Reg- istrar' s Authentication Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly sha11 cancel all paid Bonds and Bonds surrendered for transfer 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 transfer 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 of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Vernon' s Ann. Tex. Civ. St. Art. 717k-6, and particularly Section 6 thereof, the duty of transfer and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said certificate, the transferred and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which 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 provided in this Ordinance. The Paying Agent/ Registrar shall keep proper records of all payments made by the Tssuer and the Paying Agent/Registrar with respect to the Bonds. The Mayor and City Secretary are hereby authorized to 7 execute an agreement with the Paying Agent/Registrar substantially in the form presented at this meeting. (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 regis- tered owners thereof, (ii) the Current Interest Bonds only 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 ) transferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi ) shall be signed, sealed, executed, and authenticated, (vii) the princi- pal 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 FORMS OF BOND set forth in this Ordinance. The Current Interest Bonds initially issued and delivered pursuant to this Ordinance numbered R-1 through R-13 and the Compound Interest Bonds initially issued and delivered pursuant to this Ordinance numbered CR-1 through CR-5 ( collectively, the "Initial Bonds" ) shall be delivered to the initial purchaser and are not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in exchange for the Initial Bonds or any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR' S AUTHENTICATION CERTIEICATE, in the form set forth in the FORMS OF BOND. (d) Substitute Paying Agent/Registrar. 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 agency 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 120 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 other- wise 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 agency to act as Paying Agent/Registrar under this Ordinance . Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Regis- trar 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/Regis- trar designated and appointed by the Issuer. Upon any change 8 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 Agent/Registrar shall be deemed to have agreed to the provi- sions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. Section 5 . FORMS OF BONDS. The forms of the Bonds, including the form of Paying Agent/Registrar' s Authentication Certificate, the form of Assignment, and the form of Registra- tion 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. [EORM OF CURRENT INTEREST BONDS) 9 , , t � (FORM OF FRONT PANEL OF BONDS] NO. R- United States of America PRINCIPAL State of Texas AMOUNT CITY OF FRIENDSWOOD, TEXAS REFUNDING BOND SERIES 1986 (Current Interest Bond) INT�REST RATE MATURITY DATE DATE OF SERIES CUSIP NO. August 15, 1986 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS ON THE MATURITY DATE specified above, THE CITY OF FRIENDSWOOD, a home rule city and municipal corporation located in Galveston and Harris Counties, Texas (the "Issuer" ) , hereby promises to pay to the Registered Owner set forth above, or registered assigns (hereinafter called the "registered owner" ) the principal amount set forth above, and to pay interest thereon from August 15, 1986, on March 1, 1987 and semiannually on each September 1 and March 1 thereafter to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above; 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; pro- vided, 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 principal corporate trust office of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Houston, Texas, or its successor, 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, 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 10 . � , t this Bond adopted on July 24, 1986 (the "Bond Ordinance" ) to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check 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 fifteenth calendar day of the month next 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. THIS BOND is one of a Series of Bonds dated August 15, 1986, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $ FOR THE PURPOSE OF PROVIDING FUNDS TO REFUND THE ISSUER' S OUT- STANDING TAX BONDS AND OTHER OBLIGATIONS (all as described in the preamble to the Bond Ordinance) . The Bonds are issued as (i ) Bonds which pay interest semiannually until maturity or earlier redemption (the "Current Interest Bonds" ) in the aggregate principal amount of $ , and (ii ) Bonds which pay interest only at maturity (the "Compound Interest Bonds" ) in the aggregate principal amount of $ REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THE BOND SET FORTH ON THE REVISION HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS SET FORTH IN THI S SPACE. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the facsimile signature of the Mayor of the Issuer and countersigned with the facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. (facsimile signature) (facsimile signature) City Secretary, Mayor, City of Friendswood City of Friendswood, Texas [Form of Back Panel of Current Interest Bonds] THE BONDS are issued pursuant to the Bond Ordinance whereunder the City covenants to levy a continuing direct annual ad valorem tax on taxable property within the City, not to exceed $2 . 50 per assessed $100 valuation, as provided in Article XI , Section 5 of the Texas Constitution, for each year while any part of the Bonds are considered outstanding under the provisions of the Bond Ordinance, in sufficient amount to pay interest on each Bond as it becomes due, to provide a sinking fund for the payment of the principal of the Bonds when due, and to pay the expenses of assessing and collecting such tax, all as more specifically provided in the Bond Ordinance. Reference is hereby made to the Bond Ordinance for provisions 11 with respect to the custody and application of the City' s funds, remedies in the event of a default hereunder or thereunder, and the other rights of the Registered Owner. THIS BOND IS TRANSFERABLE OR EXCHANGEABLE only upon presentation and surrender at the principal corporate office of the Paying Agent/Registrar. If this Bond is being transferred, it shall be 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 Bond Ordinance. ANY ACCRUED INTEREST DUE at maturity or upon the redemp- tion 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 principal corporate trust office of the Paying Agent/Registrar. The Issuer cove- nants 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. IF THE DATE for the payment of the principal of or inter- est on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the principal corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive order to close, or the United States Postal Service is not open for business, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close, or the United States Postal Service is not open for business; and payment on such date shall have the same force and effect as if made on the original date payment was due. ON MARCH 1, 1996, or on any date thereafter, the Current Interest Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, �vith funds derived from any available and lawful source, as a whole, or in part (provided that a portion of a Bond may be redeemed only in an integral multiple of $5, 000) at the redemption price of the principal amount of Bonds called for redemption, plus accrued interest thereon to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the Issuer shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof, within such maturity or maturities and in such principal amounts, for redemption. AT LEAST 30 days prior to the date fixed for any redemp- tion of Bonds or portions thereof prior to maturity, a written 12 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 day such redemption notice is mailed; provided, however, that the failure to send, mail or 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 which are to be so redeemed. If such written notice of redemption is mailed and if due provision for such payment is made, all as provided above, the Bonds or portions thereof which 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 substi- tute Bond or Bonds having the same maturity date, bearing interest at the same rate, being in any denomination or denominations in any integral multiple of $5, 000 (at the written request of the registered owner) , and being in an 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 CURRENT INTEREST BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest coupons, in the denomination of any integral multiple of $5, 000. As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred, and exchanged for a like aggregate principal amount of fully registered Bonds, without interest coupons, payable to the appropriate registered owner, assignee, or 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 satis- factory 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 13 . . r 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 assign- ment of this Bond or any portion or portions hereof from time to time by the registered owner. The person requesting such transfer and exchange shall pay the Paying Agent/Registrar' s reasonable standard or customary fees and charges for transfer- ring and exchanging any Bond or portion thereof. In any circumstance, any taxes or governmental charges required to be paid with respect thereto shall be paid by the person request- ing such assignment, transfer, or exchange, as a condition precedent to the exercise of such privilege. The foregoing notwithstanding, in the case of the exchange of a portion of a Bond which has been redeemed prior to maturity, as provided herein, and in the case of the exchange of an assigned and transferred Bond or Bonds or any portion or portions thereof, such fees and charges of the Paying Agent/Registrar will be paid by the Issuer. The Paying Agent/Registrar shall not be required to make any such transfer 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 substi- tute therefor, and cause written notice thereof to be mailed to the regi stered owners of the Bonds. BY BECOMING the registered owner of this Bond, the regis- tered owner thereby acknowledges all of the terms and provi- sions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for 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 Ordi- nance constitute a contract between each registered owner hereof and the Issuer. IT IS HEREBY CERTIFIED, RECITED AND COVENANTED that this Bond has been duly and validly authorized, issued, and de- livered; 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 ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due, and as such principal matures, have been levied and ordered to be levied against all taxable property in the 14 I � � Issuer, and have been pledged for such payment, within the limit prescribed by law. [END OF FORM OF CURRENT INTEREST BOND] [FORM OF PAYING AGENT/REGISTRAR' S AUTHENTICATION CERTIFICATE]* PAYING AGENT/REGISTRAR' S AUTHENTICATION CERTIFICATE 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 exchange for, a bond, bonds, or a portion of a bond or bonds of a Series which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated TEXAS COMMERCE BANK NATIONAL ASSOCIATION, HOUSTON, TEXAS Paying Agent/Registrar By Authorized Signature * Printer - Do not print on Initial Bonds [FORM OF ASSIGNMENT FOR ALL BONDS] ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this bond or duly authorized representative or attorney there- of, hereby assigns this bond to / / (Assignee' s Social (print or typewrite Assignee' s name Security or Taxpayer and address, including zip code) Identification Number) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this bond on the Bond Registration Books with full power of substitution in the premises. Dated: 15 Signature Guaranteed: NOTICE: The signature of the Registered Owner Registered Owner must be gua- NOTICE: This signature ranteed by a member of the must correspond with the New York Stock Exchange or a name of the Registered commercial bank or trust Owner appearing on the face company. of this bond in every particular way without alter ation or enlargement or any change whatsoever The following abbreviations, when used in the assignment above or on the face of the within Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - . . . Custodian . . . (Cust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the list above. [FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS] * COMPTROLLER' S REGISTRATION CERTIFICATE: REGISTER N0. I hereby certify that this Bond has been examined, cer- tified 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. 16 Witness my signature and seal this COMPTROLLER' S SEAL Comptroller of Public Accounts of the State of Texas *Printer - Print on Initial Bonds only [FORM OF COMPOUND INTEREST BONDS] United States of America State of Texas CITY OF FRIENDSWOOD REFUNDING BOND SERIES 1986 (Compound Interest Bond) NUMBER MATURITY AMOUNT CR- $ REGISTERED REGISTERED INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP: August 15, 1986 REGISTERED OWNER: PAYMENT AT MATURITY: $ THE CITY OF FRIENDSWOOD (the "City" ) , a home rule city of the State of Texas, located in Galveston and Harris Counties, promises to pay 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 corporate trust office of Texas Commerce Bank National Association, Houston, Texas, or its successor (the "Paying Agent/Registrar" ) , the amount representing the Payment at Maturity identified above (the "Maturity Amount" ) , in lawful money of the United States of America, representing the principal amount hereof and accrued and compounded interest at the rate shown above, calculated on the basis of a 360-day year of twelve 30-day months, from the date of the initial delivery of this Bond to the initial purchasers hereof (the "Delivery Date" ) . The value (per $5, 000 of Maturity Amount) of the principal hereof plus accrued interest thereon (the "Compounded Amount" ) as of the Delivery Date and as of each March 1 and September 1 thereafter are as set forth in the Bond Ordinance (hereinafter defined) . Such value as of any other date shall be determined by a straight line interpolation between such values. THIS BOND is one of a series of Bonds (the "Bonds" ) dated as of August 15, 1986, of like designation, date, and tenor, 17 except as to number, denomination, and maturity issued pursuant to the Ordinance adopted by the City Council of the City (the "Council" ) on July 24, 1986 (the "Bond Ordinance" ) in accordance with the Constitution and laws of the State of Texas. The Bonds are issued as (i ) Bonds which pay interest semiannually until maturity or earlier redemption (the "Current Interest Bonds" ) in the aggregate principal amount of $ and (ii ) Bonds which pay interest only at maturity (the "Compound Interest Bonds" ) in the aggregate principal amount of $ REEERENCE IS HEREBY MADE TO THE EURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH IN THIS SPACE. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Secretary of the City, and the manual official seal of the City has been duly impressed, or placed in facsimile, on this Bond. CITY OF FRIENDSWOOD xxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxx City Secretary, City of Mayor, City of Friendswood Friendswood (CITY SEAL) (Back Panel of Compound Interest Bonds) THE BONDS are issued pursuant to the Bond Ordinance whereunder the City covenants to levy a continuing direct annual ad valorem tax on taxable property within the City, not to exceed $2 . 50 per assessed $100 valuation, as provided in Article XI , Section 5 of the Texas Constitution, for each year while any part of the Bonds are considered outstanding under the provisions of the Bond Ordinance, in sufficient amount to pay interest on each Bond as it becomes due, to provide a sinking fund for the payment of the principal of the Bonds when due, and to pay the expenses of assessing and collecting such tax, all as more specifically provided in the Bond Ordinance. Reference is hereby made to the Bond Ordinance for provisions with respect to the custody and application of the City' s funds, remedies in the event of a default hereunder or thereunder, and the other rights of the Registered Owner. By acceptance of this Bond, the Registered Owner consents to all of the provisions of the Bond Ordinance, a certified copy of which is on file in the office of the City. 18 THIS BOND IS TRANSFERABLE OR EXCHANGEABLE only upon presentation and surrender at the principal corporate office of the Paying Agent/Registrar. If this Bond is being transferred, it shall be 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 Bond Ordinance. IT IS HEREBY CERTIFIED, COVENANTED, AND REPRESENTED that all acts, conditions, and things necessary to be done precedent to the issuance of the Bonds in order to render the same legal, valid, and binding obligations of the City have happened and have been accomplished and performed in regular and due 'time, form, and manner, as required by law; that provision has been made for the payment of the principal of and interest on the Bonds by the levy of a continuing, direct annual ad valorem tax upon taxable property within the City, within the legal limitation; and that issuance of the Bonds does not exceed any constitutional or statutory limitation. For the faithful performance of all covenants, recitals, and stipulations herein contained, the full faith, and resources of the City are hereby irrevocably pledged. [END OF FORM OF COMPOUND INTEREST BONDS] [END OF ALL FORMS� Section 6. TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund" ) is hereby created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an offi- cial depository bank of the Issuer. The Interest and Sinking Fund shall be kept separate and apart from a11 other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on account of the Bonds shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds or interest thereon are outstanding and unpaid, the Council shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Bonds as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of its Bonds as such principal matures (but never less than 2% of the original principal amount of said Bonds as a sinking fund each year) ; and said tax shall be based on the latest approved tax rolls of the Issuer, with full allowance 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 the Issuer for each year while any of the Bonds or interest thereon 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 19 valorem taxes sufficient to provide for the payment of the interest on and principal of the Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. Section 7 . DISPOSITION OF BOND PROCEEDS. The proceeds of the Bonds shall be placed into the Interest and Sinking Fund and the Escrow Fund of the City as follows: A. Interest and Sinking Fund. An amount equal to the accrued interest on the Current Interest Bonds from the date of the Bonds to the date of delivery to the Initial Purchaser. B. Escrow Fund. An amount necessary to establish that portion of the Escrow Eund, not funded from other sources, for the purpose of refunding the Refunded Bonds, and, to the extent not otherwise provided for, to pay a portion of all expenses arising in connection with the issuance of the Bonds, the establishment of the Escrow Fund, and the refunding of the Refunded Bonds, as more fully provided in Escrow Agreement. Section 8. USE OF CERTAIN FUNDS MAINTAINED FOR REFUNDED BONDS. In order to maximize the present value savings of the refunding program authorized by this Ordinance, it is the intention of the City to use amounts on deposit in the funds maintained for the payment of the Refunded Bonds and in all other funds (other than construction funds) maintained pursuant to the Refunded Bonds, and to apply such amounts to purchase Open Market Securities (as defined in the Escrow Agreement) for deposit pursuant to the Escrow Agreement, the proceeds of which shall be applied to the payment of principal of, premium, if any, and interest on the Refunded Bonds at the time, in the amounts, and in the manner prescribed in the Report attached as to the Escrow Agreement and to make any other transfers as may be set forth in the Report. The Mayor is hereby authorized and directed to withdraw and apply, to the extent necessary, all proceeds of the debt service funds, reserve funds, surplus funds, and all other funds and accounts (other than construction funds) presently maintained pursuant to the documents authorizing the Refunded Bonds for the purpose of purchasing such Open Market Securities to be deposited pursuant to the Escrow Agreement and to establish the balances in the aforesaid funds created pursuant to this Ordinance. Section 9 . PURCHASE OF UNITED STATES TREASURY OBLIGATIONS. In order to assure the purchase of the Escrowed Securities referred to in the Escrow Agreement, the Mayor is hereby authorized to subscribe for, agree to purchase, and purchase such obligations of the United States of America, in such amounts, maturities, and bearing interest at such rates as may be provided for in the Report, and to execute any and all subscriptions, purchase agreements, commitments, letters of authorization, and other documents necessary to effectuate the 20 may thereafter object to the adoption of such amendment, addition, or rescission, or to any of the provisions thereof, and such amendment, addition, or rescission shall be fully effective for all purposes. Section 23 . MISCELLANEOUS. (a) Emergency. It is hereby officially found and determined: that a case of emergency or urgent public necessity exists which requires the holding of the meeting at which this Ordinance is passed, such emergency or urgent public necessity being that it is necessary that the Refunded Bonds be refunded and that the proceeds from the sale of said bonds are required as soon as possible and without delay; and that said meeting was open to the public, and public notice of the time, place, and purpose of said meeting was given, all as required by Vernon' s Ann. Civ. St. Article 6252-17 . (b) Immediate Effect. It is hereby specifically found pursuant to Section 3 . 11 of the City Charter that this Ordinance is an ordinance relative to borrowing for capital improvements and a tax ordinance, and, therfor, the requirement of the City Charter requiring that this Ordinance be read at three regular council meetings with at least two weeks elapsing between such reading shall not apply. Accordingly, this Ordinance shall be effective upon date of this reading, and shall take effect and be in force immediately upon and after its passage in accordance with the provisions of the Charter of the City, and it is accordingly so ordained. (c) Titles Not Restrictive. The titles assigned to the various sections of this Ordinance are for convenience only and shall not be considered restrictive of the subject matter of any section or of any part of this Ordinance. (d) Inconsistent Provisions. All ordinances, orders, and resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed and declared to be inapplicable, and the provisions of this Ordinance shall be and remain controlling as to the matters prescribed herein. (e) Severability. If any word, phrase, clause, paragraph, sentence, part, portion, or provision of this Ordinance or the application thereof to any person or circumstances shall be held to be invalid, the remainder of this Ordinance shall nevertheless be valid and the Council hereby declares that this Ordinance would have been enacted without such invalid word, phrase, clause, paragraph, sentence, part, portion, or provisions. ( f) Governing Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas. 27 ------------------------ 28 EXHIBIT A COMPOUND INTEREST BONDS MATURITY AND INTEREST RATE 29 NOTICE OF BOND REDEMPTION NOTICE IS HEREBY GIVEN that the City of Friendswood, Texas (the "City") through its City Council and by ordinance duly passed, has called for redemption the following described outstanding obligations of the City: THE DATE FIXED FOR REDEMPTION of said obligations is , 19 , and you are hereby notified that such obligations should be presented for redemption at on or immediately before that date, and that interest on such obligations shall cease to accrue from and after such redemption date, and on said date the said obligations will become due and payable at the redemption price of par and accrued interest to such date. THIS NOTICE IS ISSUED AND GIVEN pursuant to the option of redemption to the City in the proceedings authorized in the issuance of the above described obligations and in accordance with the provisions thereof. WITNESS my hand and the seal of the City this day of , 1986. Mayor City of Friendswood, Texas , Paying Agent for the above described obligations, hereby acknowledges receipt of the foregoing Notice of Bond Redemption, the same having been received on the date shown below, which is more than thirty days prior to the date fixed for redemption. EXECUTED this � By Tit e: EXHIBIT B-1 h ....�. ...r.,,.. ' -, Y �. 1 ` , s � BONDS BEING CALLED FOR REDEMPTION City of Friendswood, Series 1974 March 1 , 1993 City of Friendswood, Series 1982 March 1, 1991 Sunmeadow Municipal Utility District, October l , 1986 Series 1970 Sunmeadow Municipal Utility District, October 1 , 1986 Series 1970A Clearwoods Improvement District, September l , 1989 Series 1974 Harris County Water Control and October 1 , 1986 Improvement District No. 108, Series 1970A Harris County Water Control and October 1 , 1986 Improvement District No. 108 , Series 1971 Harris County Water Control and October l , 1986 Improvement District No. 108 , Series 1971A EXHIBIT B-2 . .. , foregoing, and any actions heretofore taken by the Mayor for such purpose are hereby ratified and approved. Section 10. MATTERS RELATED TO REFUNDING. In order that the City shall satisfy in a timely manner all of its obligations under this Ordinance and the Escrow Agreement, the Mayor and all other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the refunding of the Refunded Bonds, including without limitation, executing and delivering on behalf of the City all certificates, consents, receipts, requests, notices, and other documents as may be reasonably necessary to satisfy the City' s obligations under the Escrow Agreement and this Ordinance and to direct the transfer and application of funds of the City consistent with the provisions of the Escrow Agreement and this Ordinance. Section 11 . REMEDIES OF OWNERS. In addition to all rights and remedies of any Owner of the Bonds provided by the laws of the State of Texas, the City and the Council covenant and agree that in the event the City defaults in the payment of the principal of or interest on any of the Bonds when due fails to make the payments required by this Ordinance to be made into the Interest and Sinking Fund, or defaults in the observance or performance of any of the covenants, conditions, or obligations set forth in this Ordinance, the owner of any of the Bonds shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the Council and other officers of the City to observe and perform any covenant, obligation, or condition prescribed in this Ordinance. No delay or omission by any owner to exercise any right or power accruing to such owner upon default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right or power may be exercised from time to time and as often as may be deemed expedient. The specific remedies mentioned in this Ordinance shall be available to any owner of any of the Bonds and shall be cumulative of all other existing remedies. Section 12 . 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 12, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either ( i ) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption) or (ii ) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (A) lawful money of the United States of America sufficient to make such payment or (B) Government Obligations (hereinafter defined) which mature as to principal and interest in such 21 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 Government Obligations. (b) Any money so deposited with the Paying Agent/Regis- trar may at the written direction of the Issuer also be in- vested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so depos- ited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. (c) The term "Government Obligations" as used in this Section, shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, which may be in book-entry form. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar 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. Section 13 . DAMAGED, MUTILATED, LOST, STOLEN, OR DES- TROYED 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 damaqed, 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 22 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 muti- lated. (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 which is then con- tinuing 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 a11 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. (e) Authority for Issuing Replacement Bonds. In accor- dance with Section 6 of Vernon' s Ann. Tex. Civ. St. Art. 717k-6, this Section 12 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 authen- ticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 4( a) of this Ordinance for Bonds issued in exchange for other Bonds. Section 14. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL' S OPINION, AND CUSIP NUMBERS. 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 registra- tion by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Bonds said Comptroller of 23 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 Certificate. 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. Section 15 . NO ARBITRAGE. The Issuer covenants to and with the registered owners of the Bonds that it will make no use of the proceeds of the Bonds at any time throughout the term of this issue of Bonds which, if such use had been reason- ably expected on the date of delivery of the Bonds to and payment for the Bonds by the purchasers, would have caused the Bonds to be arbitrage bonds within the meaning of Section 103 (c) of the Internal Revenue Code of 1954, as amended, or any regulations or rulings pertaining thereto; and by this covenant the Issuer is obligated to comply with the requirements of the aforesaid Section 103 (c) and all applicable and pertinent Department of the Treasury regulations relating to arbitrage bonds. The Issuer further covenants that the proceeds of the Bonds will not otherwise be used directly or indirectly so as to cause all or any part of the Bonds to be or become arbitrage bonds within the meaning of the aforesaid Section 103 (c ) , or any regulations or rulings pertaining thereto. The Mayor of the City is hereby authorized and directed to execute a No-Arbitrage Certificate as shall be approved by the City' s Bond Counsel and the Mayor of the City. After execution and delivery, the provisions of said Certificate shall constitute covenants of the City to the extent set forth therein, and shall evidence the expectations of the City the same as if set forth at this place. Section 16. SALE OF BONDS. The Bonds are hereby sold and shall be delivered to Underwood, Neuhaus & Co. Incorporated and (the "Underwriters" ) at a price of $ and accrued interest thereon to date of delivery, pursuant to the terms and provisions of a Purchase Contract presented at this meeting) which the Mayor of the Issuer is hereby authorized and directed to execute and deliver and which the City Secretary of the Issuer is hereby authorized and directed to attest. It is hereby officially found, determined, and declared that the terms of this sale are the most advanta- geous reasonably obtainable. The Bonds shall initially be registered in the name of Underwood, Neuhaus & Co. Incorporated. The officers of the Issuer are hereby authorized and directed to execute and deliver such certificates, instructions, or other instruments as are required or necessary to accomplish the purposes of this Ordinance, the Purchase Contract, the Official Statement, or the Escrow Agreement. 24 Section 17 . APPROVAL OF OEFICIAL STATEMENT. 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 Offi- cial Statement in the reoffering of the Bonds by the Under- writers 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 execu- tion thereof. It is further officially found determined and declared that the statements and representations contained in said Official Statement are true and correct in all material respects to the best knowledge and belief of the Council . Section 18. APPROVAL OE ESCROW AGREEMENT AND TRANSFER OF FUNDS. The Mayor of the Issuer is hereby authorized and directed to execute and deliver and the City Secretary is hereby authorized and directed to attest an Escrow Agreement in substantially the form presented at this meeting. In addition, the Mayor, City Manager, or Director of Finance of the City are authorized to execute such subscriptions for the purchase of United States Treasury Securities, State and Loca1 Government Series, as may be necessary for the Escrow Fund, and that the Issuer may also purchase from Underwood, Neuhaus & Co. Incorporated for investment in the Escrow Fund such obligations of the United States of America or any of its agencies, or such obligations fully guaranteed by the United States of America that will be appropriate open market investments for such Escrow Eund. In addition, officials of the Issuer are directed, upon delivery of the Bonds, to transfer to Texas Commerce Bank National Association, Houston, Texas, as Escrow Agent under the Escrow Agreement from the funds on hand an amount necessary to purchase such open market investments, which amount shall be deposited in the Escrow Fund and used in accordance with the provisions of the Escrow Agreement. Section 19 . CONSIDERATIONS OF REFUNDING. The Council hereby finds that by refunding the Refunded Bonds the Issuer will (i ) lower the annual debt service requirements with respect to its general tax obligations and (ii ) restructure its debt service in a manner which will allow the issuance of additional bond issues without a tax rate increase or with a smaller increase than would otherwise be required, Section 20. NOTICE OF REDEMPTION. There is attached to this Ordinance as Exhibit B and made a part hereof for all purposes a Notice of Prior Redemption of Bonds for the Refunded Bonds to be redeemed prior to stated maturity and such bonds described in said Notice of Prior Redemption are hereby called for redemption and shall be redeemed prior to maturity on the date, at the place and at the price as set forth therein. Section 21 . NOTICE TO PAYING AGENT AND REGISTERED OWNERS AND PUBLICATION. The Refunded Bonds described in Exhibit B attached hereto are so called for redemption and Texas Commerce 25 Bank National Association, Houston, Texas, is hereby directed to make appropriate arrangements so that such Refunded Bonds may be redeemed at said bank on the redemption date. A copy of such Notice of Prior Redemption shall be delivered to the paying agent bank so mentioned, and a copy of such Notice of Prior Redemption shall be published in a financial publication published in the City of New York, New York, or otherwise as provided in the appropriate order, resolution, or ordinance authorizing the called Refunded Bonds. Section 22 . ORDINANCE A CONTRACT; AMENDMENTS. This Ordinance shall constitute a contract with the Owners, from time to time, of the Bonds, binding on the City and its successors and assigns, and shall not be amended or repealed by the City as long as any Bond remains outstanding except as permitted in this Section. The City may, without the consent of or notice to any owners, amend, change, or modify this Ordinance as may be required (i ) by the provisions hereof, (ii ) in connection with the issuance of any additional bonds, (iii ) for the purpose of curing any ambiguity, inconsistency, or formal defect or omission herein, or (iv) in connection with any other change which is not to the prejudice of the Owners. The City may, with the written consent of the Owners of a majority in aggregate principal amount of Bonds then outstanding affected thereby, and the insurer of any Bonds amend, change, modify, or rescind any provisions of this Ordinance; provided that without the consent of all of the Owners affected, no such amendment, change, modification, or rescission shall (i ) extend the time or times of payment of the principal of and interest on the Bonds, reduce the principal amount thereof to the rate of interest thereon, or in any other way modify the terms of payment of the principal of or interest on Additional Bonds on a parity with the lien of the Bonds, (ii ) give any preference of any Bond over any other Bond, ( iii ) extend any waiver of default to subsequent defaults, or (iv) reduce the aggregate principal amount of Bonds required for consent to any such amendment, change, modification, or rescission. Whenever the City shall desire to make any amendment or addition to or rescission of this Ordinance requiring consent of the Owners, the City shall cause notice of the amendment, addition, or rescission to be given as described above for a notice of redemption. Whenever at any time within one year after the date of the giving of such notice, the City shall receive an instrument or instruments in writing executed by the Owners of a majority in aggregate principal amount of the Bonds then outstanding affected by any such amendment, addition, or rescission requiring the consent of Owners of Bonds, which instrument or instruments shall refer to the proposed amendment, addition, or rescission described in such notice and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice, thereupon, but not otherwise, the City may adopt such amendment, addition, or rescission in substantially such form, except as herein provided. No Owner 26