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HomeMy WebLinkAbout025823 ORD - 07/13/2004 RESOLUTION APPROVING THE RESOLUTION BY THE NORTH PADRE ISLAND DEVELOPMENT CORPORATION AUTHORiZING THE ISSUANCE OF SERIES 2004 BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $4.5 MILLION WHEREAS, North Padre Island Development Corporation (the "Corporation") was created under the auspices of the City o£Corpus Christi, Texas (the "City"); and WHEREAS, the Corporation was created in part for the purpose of assisting the Reinvestment Zone Number Two, City of Corpus Christi, Texas (the "Zone") in implementing the "Project and Financing Plan" with respect to the economic development of property within the Zone; and WHEREAS, the Corporation by resolution adopted July 13, 2004 authorized the issuance of the hereinafter described bonds for the purposes described in said resolution; and WItEREAS, it is deemed necessary and advisable that tlus Resolution be adopted. THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI THAT: Section 1. The resolution (the "Resolution") adopted by the Corporation, in substantially the form and substance as attached to this Resolution and made a part hereof for all purposes, is hereby approved, and tax increment contract revenue bonds in a principal amount not to exceed $4,500,000 (the "Bonds"), may be issued for the purpose of providing all or a portion of the cost of the project as specified in the Resolution (the "Project"); and said Resolution, Bonds and Project are hereby approved. Section 2. This Resolution shall be effective inwnediately from and after its passage. SIGNED AND SEALED THIS 13THE DAY OF JULY, 2004. City of Corpus Christi, Texas City S~ (SEAL) ~P~OVED TI-nS /: "~^Y OV 3/,, 20O4: MARY KAY FISCHER, CITY ATI~OKNEY Corpus Christi, Texas / '2) of ~ ,2004 The above resolution was passed by the following vote: Samuel L. Neal, Jr. Brent Chesney Javier D. Colmenero Melody Cooper Henry Garret[ Bill Kelly Rex A. Kinnison Jesse Noyola Mark Scott RESOLUTION AUTHORIZING THE ISSUANCE OF NORTH PADRE ISLAND DEVELOPMENT CORPORATION TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2004, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $4,500,000; APPROVING A BOND PURCHASE AGREEMENT AND OTHER CONTRACT DOCUMENTS RELATING TO THE SERIES 2004 BONDS; AND CONTAINING OTHER PROVISIONS RELATED THERETO BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE NORTH PADRE ISLAND DEVELOPMENT CORPORATION: ARTICLE I RECITALS WHEREAS, by Ordinance No. 024270, adopted on November 14, 2000 (the "Creation Ordinance"), the City of Corpus Christi, Texas (the "City"), created a tax increment reinvestment zone known as "Remvestment Zone Number Two, City of Corpus Christi, Texas" CTIRZ Two"), pursuant to the provisions oi'Chapter 31 l, Texas Tax Code, and approved a preliminary reinvestment zone financing plan for TIRZ Two; and WHEREAS, by Resolution No. 025040, adopted on October 8, 2002, the City authorized the creation of the North Padre lsland Development Corporation (thc "Corporation") to aid, assist and act on behalf of the City in the performance of the City's governmental and proprietary functions with respect to the common good and general welfare of the City, as described in the Creation Ordinance; and WHEREAS, on February 25, 2003, the Corporation adopted a "RESOLUTION AUTHORIZING THE ISSUANCE OF NORTH PADRE ISLAND DEVELOPMENT CORPORATION TAX INCREMENT CONTRACT REVENUE BONDS, SERIES 2003, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $3 MILLION; APPROVING AN INDENTURE OF TRUST AND OTHER CONTRACT DOCUMENTS RELATING TO THE BONDS; AND CONTAINING OTHER PROVISIONS RELATED THERETO (the "Initial Bond Resolution"); and WHEREAS, pursuant to thc terms oftbe Iintial Bond Resolution, the Corporation approved that certain Indenture of Trust by and between the Corporation and JPMorgan Chase Bank dated as of Febraary 1, 2003 (the "Indenture"), pursuant to which the Corporation set forth the terms and conditions by which it could issue, sell or deliver its bonds, notes or other obligations in accordance with thc temps of the Indenture to fund Project Costs for the benefit of TIRZ Two, established various Funds and Accounts for the benefit of the owners of such bonds, notes or other obligations, and assigned and pledged to the Trustee such Funds and Accounts for the benefit of such owners; and WHEREAS, pursuant to the terms of the Initial Bond Resolution, the Corporation approved that certain Tri-Party Agreement by and between the City, TIRZ Two, and the Corporation dated as of February 1,2003 (the "Tri-Party Agreement"), pursuant to which the Corporation was delegated the power and authority to issue, sell or deliver its bonds, notes or other obligations in accordance with the temps of the Tri-Party Agreement; and %fflEREAS, on February 25, 2003, the City approved the terms of the Initial Bond Resolution. the sale of bonds in an amount not to exceed $3,000,000, and approved the Indenture and the Tri-Party Agreement; and WHEREAS, pursuant to the terms of the Initial Bond Resolution and the Indenture, on April 30, 2003, the Corporation issued and delivered its North Padre Island Development Corporation Tax Increment Contract Revenue Bonds, Series 2003, issued in the aggregate principal amount of $2,500,000 (the "Series 2003 Bonds"); and WHEREAS, the Corporation reserved the right m the Indenture to issue "Additional Parity Bonds" (as defined in the Indenture) on a parity with the Series 2003 Bonds; and WHEREAS, on November 11,2003, the City approved the terms of a resolution authorizing the sale of bonds in an amount not to exceed $2,500,000 (the "Series 2003A Resolution); and 9ZHEREAS, pursuant to the terms of the Series 2003A Resolution and the Indenture, on December 18, 2003, the Corporation issued and delivered its North Padre Island Development Corporation Tax Increment Contract Revenue Bonds, Series 2003A, issued in the aggregate principal amount of $2,500,000 (the "Sehes 2003A Bonds") on a pariW with the Series 2003 Bonds; and WHEREAS, the bonds heremaflcr authorized are the third series of bonds to be issued under the terms of thc Indenture, shall constitute "Additional Parity Bonds", and upon the delivery of the bonds hereinafter authorized, the aggregate principal amount of the Series 2003 Bonds, the Series 2003A Bonds and the bonds hereinafter authorized will not exceed $12,000,000; and WHEREAS, thc City is not located in a county with a population of 2.1 million or more residents; and WHEREAS, as permitted by Chapter 431, Texas Transportation Code, as amended, the Corporation desires to issue bonds hereinafter authorized upon the terms and conditions and for the purposes herein provided. ARTICLE II DEFiNITIONS AND iNTERPRETATIONS Section 2. l: Definitions. In this Resolution, the following terms shall have the following meanings, unless the context clearly indicates otherwtse. Terms not defined herein shall have the meanings assigned to such terms in the Indenture: The term "Audit" shall mean the audited annual financial statements of the Corporation prepared by an independent auditor. The tern~ "Authorized Denominations" shall mean $100,000 or anyintegrahnultiple o f$5,000 in excess of $100.000. -2- The term "Authorized Representative" shall mean the President or any Vice President of the Corporation, the Executive Director of the Corporation, or any other person designated by the Board of Directors oftbe Corporation to act in such capacity. The term "Bond Resolution" shall mean, collectively, the resolutions authorizing the rssuance of the Series 2003 Bonds and the Series 2003A Bonds, and this Resolution. The term "Comptroller" shall mean the Comptroller o fPubhc Accounts of the State of Texas. The term "Designated Trust Office" shall mean the designated corporate trust office of the Registrar, which, as of the date of adoption of this Resolution, ks located in Dallas, Texas. The term "Indenture" shall mean the Indenture of Trust dated as o fFebruary 1, 2003 between the Corporation and JPMorgan Chase Bank, and its successors tn that capacity. The term "Issuance Date" shall mean the date on which the Series 2004 Bonds are authenticated by the Registrar and delivered to and paid for by the Underwriter. The term "MSRB" shall mean the Municipal Securities Rulemaking Board. Thc term "NRMSIR" shall mean each person whom the SEC or its staffhas determined to be a nationally recognized municipal securities reformation repository within the meaning of the Rule from time to time. The term "Paying Agent" shall mean the Registrar. The term "Project" shall mean the improvements described in the Project and Financing Plan to be financed with the proceeds of the Series 2004 Bonds. The term "Purchase Contract" shall mean the Bond Purchase Agreement between the Corporation and the Underwriter, executed under authority of this Resolution. The term "Record Date" shall mean, for any Interest Payment Date, the last Business Day of thc month next preceding each Interest Payment Date. The term "Registrar" shall mean JPMorgan Chase Bank, and its successors in that capacity. The term"Resolution" shall mcan this resolution, and all amendments hereof and supplements hereto. The ter~n "Rule" shall mean SEC Rule 15c2-12, as amended from time to time. The tertn "SEC" shall mean the United States Securities and Exchange Commission. -3- The term "Series 2003 Bonds" shall mean the Corporation's Tax Increment Contract Revenue Bonds, Series 2003, originally issued tn the aggregate principal amount of $2,500,000. The term "Series 2003A Bonds" shall mean the Corporation's Tax Incren~nt Contract Revenue Bonds, Series 2003A, origtnally issued in the aggregate principal amount of $2,500,000. The term "Series 2004 Bonds" or "Bonds" shall mean the Corporation's Tax Increment Contract Revenue Bonds, Series 2004, authorized by this Resolution. Thc term "SID" shall mean any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and detemfined by the SEC or its staff to be, a state information depository within the meamng of the Rule fi.om time to time. The term "Underwriter" shall mean M.E. Allison & Co., Inc. Section 2.2: Interpretations. All terms defined herein and all pronouns used in this Resolution shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the articles and sections of this Resolution have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the ter~ns or provmions hereo£ This Resolution and all the terms and provisions hereofshallbe hberally construed to effectuate the purposes set forth herein and to sustain the validity of the Parity Bonds and the validity of the lien on and pledge of the Pledged Revenues to secure the payment of the Parity Bonds. ARTICLE III TERMS OF THE BONDS Section 3. l: MaXm~um Amount, Purpose, Authorization. The Series 2004 Bonds shall be issued in fully registered form, without coupons, numbered consecutively fi.om R-1 upward, in the aggregate principal amount not to exceed $4,500,000 for the purpose of(l) paying Project Costs and (2) paying Costs of Issuance, all under and pursuant to the authority of the Act and all other apphcable law. None of the proceeds of the Series 2004 Bonds shall be used for the purpose of paying or otherwise providing for educational facilities. Section 3.2: Sale of the Series 2004 Bonds. The Authorized Representative is hereby authorized to act for and on behalf of the Corporation in connection with the issuance and sale of the Series 2004 Bonds. In that capacity, the Authorized Representative, acting for and on behalf of the Corporation, shall determme the date for issuance and sale of the Series 2004 Bonds and shall approve, execute and deliver the Purchase Contract with the UnderWriter. Interest on the Series 2004 Bonds shall be payable on the date or dates described m the Purchase Contract (the "Interest Payment Dates"). The Series 2004 Bonds shall bear interest at the fixed rate or rates per annum calculated on the basis of a 360-day year of twelve 30-day months, as set forth in the Purchase Contract. There -4- shall be set forth in the Purchase Contract the principal amount oftbe Series 2004 Bonds to be sold (in no event, however, to exceed the maxm~um principal amount authorized in Section 3.1 hereof), the price at which thc Series 2004 Bonds shall be sold, the principal amortization schedule for the Series 2004 Bonds (including, without limitation, the maturity date or dates for the Series 2004 Bonds (the "Principal Installment Payment Dates") and the designation of any of the maturities of the Series 2004 Bonds as term bonds and any smking fund payments to be deposited to the credit of the Debt Service Fund relating to any term bond so designated), the redemption features of the Series 2004 Bonds, the rate or rates of interest to bo borne by the Series 2004 Bonds, the dated date of the Series 2004 Bonds (the "Dated Date"), and other matters relating to the issuance, sale and delivery of the Series 2004 Bonds, including, without limitation, the designation given to the Series 2004 Bonds and the obtaining of insurance or other forms of credit enhancement with respect to the Series 2004 Bonds; provided, that the Purchase Contract must provide for the Series 2004 Bonds to be sold on terms that produce (i) interest rate or rates for the Series 2004 Bonds in a multiple of I/8 of 1% or 1/20 of 1% or 1/100 of 1%, (ii) a "net effective interest rate" not m excess of 10.00%, (iii) a final maturity date of the Series 2004 Bonds that shall not extend beyond December 15, 2022, and (tv) interest rates such that the highest interest rate on any Series 2004 Bond does not exceed the lowest interest rate on such Series 2004 Bonds by more than 4.00%. The Authorized Representative's approval of the Purchase Contract shall be conclusively evidenced by the execution thereof. Section 3.3: Execution of Series 2004 Bonds. The Series 2004 Bonds shall be signed on behalf of the Corporation by an Authorized Representative and countersigned by the Secretary by their manual, lithographed, or facsimile signatures. Such facsimile signatures on the Series 2004 Bonds shall have the same effect as if each of the Series 2004 Bonds had been signed manually and in person by each of said officers. If any officer of the Corporation whose manual or facsimile signature shall appear on the Series 2004 Bonds shall cease to be such officer before the authentication of such Series 2004 Bonds or before the delivery of such Series 2004 Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office Section 3.4: Approval By Attorney General; Registration by Comptroller. The Series 2004 Bonds to be imtially issued shall be delivered to the Attorney General of Texas for examination and approval and shall be registered by the Comptroller. The manually executed registration certificate of the Comptroller substantially in the form provided in Exhibtt A to tkis Resolution shallbe affixed or attached to the Series 2004 Bonds to be mitially issued and delivered to the Underwriter. Section 3.5: Authentication. Except for the Series 2004 Bonds to be initially issued, which need not be authenticated by an authorized signatory of the Registrar, only such Series 2004 Bonds as shall bear thereon a certificate of authentication substantially in the form provided in Exhll>it A to this Resolution, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Resolution or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Series 2004 Bond so authenticated was delivered by the Registrar hereunder. The Registrar, when it authenticates a Series 2004 Bond, shall cause the Dated Date to be stamped, typed or imprinted on such Series 2004 Bond. Series 2004 Bonds issued on transfer of or -5- in exchange for other Series 2004 Bonds shall bear the stone Dated Date as the Series 2004 Bond or Series 2004 Bonds presented for transfer or exchange. Section 3.6. Payment of Principal and Interest. The Registrar is hereby appointed as the registrar and paying agent for the Series 2004 Bonds. The principal of the Series 2004 Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the Designated Trust Office. The interest on each Series 2004 Bond shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register, or by such other method, acceptable to the Registrar, requested by and at the risk and expense o15 the Owner. Ir'the date for the payment of principal or interest on any Series 2004 Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as il'made on the origmal date such payment was due. Section 3.7. Successor Registrars. The Corporation covenants that at all times wlfile any Series 2004 Bonds are Outstandtng it will provide a commercial bank or trust company organized under the laws of the State of Tcxas or other entity duly quarried and legally authorized to act as Registrar for the Series 2004 Bonds. The Corporation reserves the right to change the Registrar for the Series 2004 Bonds on not less than s~xty (60) days written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding Principal Installment Payment Date or Interest Payment Date on the Series 2004 Bonds. Promptly upon the appointment of any successor Registrar, the previous Regtstrar shall deliver the Register or a copy thereof to the new Registrar, and the new Registrar 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 3.8. Special Record Date. If interest on any Series 2004 Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall estabhsh 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 ~om or on behalf of the Corporation. 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 o£payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each Owner or record of an affected Series 2004 Bond as ol'the close of business on the day prior to the mailing of such notice. Section 3.9. Ownership; Unclaimed Principal and Interest. Subject to the further provisions of this Section, the Corporation, the Registrar and any other person may treat the person in whose name any Series 2004 Bond is registered as the absolute Owner of such Series 2004 Bond for the purpose of making and receiving payment oi' the pnncipal of or interest on such Series 2004 Bond, and for all other purposes, whether or not such Series 2004 Bond is overdue, and neither the Corporation nor the Registrar shall be bound by any notice or knowledge to the contrary. All -6- payments made to the person deemed to be the Owner of any Series 2004 Bond in accordance with this Section 3.9 shall be valid and effectual and shall discharge the liability of the Corporation and the Registrar upon such Series 2004 Bond to the extent of thc sums paid. Amounts held by the Registrar which represent principal of and interest on the Series 2004 Bonds remaining unclaimed by the Owner after the expiration of three (3) years fi.om the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the apphcable provisions of the Paying Agent Agreement. Section 3.10. Registration, Transfer, and Exchange. So long as any Series 2004 Bonds remain Outstanding, the Registrar shall keep the Register at the Designated Trust Office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Series 2004 Bonds in accordance with the terms of this Resolution. Each Series 2004 Bond shall be transferable only upon the presentation and surrender thereof at the Designated Trust 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 Registrar. Upon due presentation of any Series 2004 Bond in proper form for transfer, the Registrar shall authenticate and deliver tn exchange therefor, within three (3) Business Days after such presentation, a new Series 2004 Bond or Series 2004 Bonds, registered in the name of the transferee or transferees, in Authorized Denominations and of the same maturity, aggregate principal amount, and Dated Date, and bearing interest at the same rote as the Series 2004 Bond or Series 2004 Bonds so presented. Anything to the contrary herein notwithstanding, no Series 2004 Bond shall be issued in a denomination of less than $100,000. All Series 2004 Bonds shall be exchangeable upon presentation and surrender thereof at the Designated Trust Office of the Registrar for a Series 2004 Bond or Series 2004 Bonds of the same maturity, Dated Date, and interest rate and in any Authorized Denomination, in an aggregate amount equal to the unpaid principal amount of the Series 2004 Bond or Series 2004 Bonds presented for exchange The Registrar shallbe and is hereby authorized to authenticate and deliver exchange Series 2004 Bonds in accordance with the provisions o fthis Section 3.10. Each Series 2004 Bond delivered in accordance with this Section 3.10 shall be entitled to the benefits and security of this Resolution to the same extent as the Series 2004 Bond or Series 2004 Bonds m lieu of which such Series 2004 Bond is delivered. The Corporation or the Registrar may require thc Owner of any Series 2004 Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Series 2004 Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the Corporation. The Registrar shall not be required to transfer or exchange any Series 2004 Bond during the period beginning on a Record Date or a Special Record Date and ending on the next succeeding Interest Payment Date or to transfer or exchange any Series 2004 Bond called for redemption during the period beginning thirty days prior to the date fixed for redemption and ending on the date fixed for redemption; provided, however, that this hmitation shall not apply to the exchange by the Owner of the unredeemed portion ora Series 2004 Bond called for redemption in part. -7- Section 3.11. Cancellation of Series 2004 Bonds. All Series 2004 Bonds paid or redeemed m accordance w~th this Resolution, and all Series 2004 Bonds in lieu of which exchange Series 2004 Bonds or replacement Series 2004 Bonds are authenticated and delivered in accordance herewith, shall be canceled and thereafter treated in accordance with the Reglstrar's document retention pohcies. Section 3.12. Mutilated, Lost, or Stolen Series 2004 Bonds. Upon the presentation and surrender to the Registrar of a mutilated Series 2004 Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Series 2004 Bond of like maturity, Dated Date, interest rate and principal amount, bearing a number not contemporaneously Outstanding. The Corporation or the Registrar may require the Owner of such Series 2004 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. If any Series 2004 Bond is lost, apparently destroyed, or wrongfully taken, the Corporation, pursuant to the applicable laws of the State of Texas and in the absence ofnoti6e or knowledge that such Series 2004 Bond has been acqmred by a bona fide purchaser, shall execute and the Registrar shall authenticate and dehver a replacement Series 2004 Bond of like maturity, Dated Date, interest rate and pnncipal amount, bearing a number not contemporaneously Outstanding, provided that the Owner thereof shall have: (1) furnished to the Registrar satisfactory evidence of the ownership of and the ctrcumstances of the loss, destruction or theft of such Series 2004 Bond; (2) furnished such security or mdemmty as may be required by the Registrar to save it and the Corporation harmless; (3) paid all expenses and charges m connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) met any other reasonable requirements of the Corporation and the Regtstrar. If, after the delivery of such replacement Series 2004 Bond, a bona fide purchaser of the original Series 2004 Bond in heu of which such replacement Series 2004 Bond was issued presents for payment such original Series 2004 Bond, the Corporation and the Registrar shall be entitled to recover such replacement Series 2004 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 Corporation or the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Series 2004 Bond has become or is about to become due and payable, the Corporation in its discretion may, instead of issuing a replacement Series 2004 Bond, authorize the Registrar to pay such Series 2004 Bond. -8- Each replacement Series 2004 Bond delivered in accordance with this Section 3.12 shall be entitled to the benefits and security of this Resolution to the same extent as the Series 2004 Bond or Series 2004 Bonds in lieu of which such replacement Series 2004 Bond is delivered. Section 3 13: Redemption. The Series 2004 Bonds are subject to redemption under the conditions, on the dates, and for the redemption prices set forth in the Purchase Contract, which shall be incorporated into the Form of Bond set forth in Exhibit A hereto. If less than all of the Series 2004 Bonds are to be redeemed, the Corporation shall determine the particular Series 2004 Bonds or portions thereof to be redeemed. Principal amounts may be redeemed only in integral multiples of $5,000. Ifa Series 2004 Bond subject to redemption is in a denomination larger than $100,000, a portion of such Series 2004 Bond may be redeemed, but only in integral multiples of $5,000 and so long as the unredeemed portion of any Series 2004 Bonds so redeemed in part is not less than $100,000. Upon surrender of any Series 2004 Bond for redemption m part, the Registrar, in accordance with Section 3.10 hereof, shall authenticate and deliver in exchange therefor a Series 2004 Bond or Series 2004 Bonds of like maturity, Dated Date, and interest rate in an aggregate principal amount equal to the unredeemed portion of the Series 2004 Bond so surrendered. Unless waived by the Owner, notice of any redemption identifying the Series 2004 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, postage prepaid, to the Owner of each Series 2004 Bond to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, thc redemption price, the place at wkich Series 2004 Bonds are to be surrendered for payment and, if less than all Series 2004 Bonds Outstanding of a particular maturity are to be redeemed, the numbers of the Series 2004 Bonds or portions thereof of such maturity to be redeemed. Any notice given as pro vided in this Section 3.13 shallbe conclusively presumed to have been duly given, whether or not the Owner receives such no rice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Series 2004 Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Series 2004 Bonds have been called for redemption in whole or in part and due provision has been made to redeem the same as herein provided, the Series 2004 Bonds or portions thereof so redeemed shall no longer be regarded as Outstanding except for the purpose of receiving payment so lely fi.om the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Series 2004 Bond or portion thereo£called for redemption shall terminate on the date fixed for redemption. Should ownership of the Series 2004 Bonds be established in accordance with the book-entry- only system of The Depository Trust Company ("DTC"), the Paying Agent for the Series 2004 Bonds shall notify DTC that in the exercise by DTC of the selection of Series 2004 Bonds for redemption, the Series 2004 Bonds shall be so selected by DTC in such a manner that no beneficial owner of -9- Series 2004 Bonds shall own less than $100,000 in principal amount of any Series 2004 Bonds of any one maturity. Section 3.14: Lirmted Obligations. THE SERIES 2004 BONDS ARE A LIMITED OBLIGATION OF THE CORPORATION, PAYABLE SOLELY, TOGETHER WITH THE CURRENTLY OUTSTANDING PARITY BONDS, OUT OF THE TRUST ESTATE, WHICH IS THE SOLE ASSET OF THE CORPORATION PLEDGED THEREFOR. THE SERIES 2004 BONDS ARE OBLIGATIONS SOLELY OF THE CORPORATION AND DO NOT CONSTITUTE, WITHIN THE MEANING OF ANY STATUTORY OR CONSTITUTIONAL PROVISION, AN INDEBTEDNESS, AN OBLIGATION OR A LOAN OF CREDIT OF THE CITY OF CORPUS CHRISTI, THE STATE OF TEXAS, NUECES COUNTY, TEXAS, DEL MAR COLLEGE, NUECES COUNTY HOSPITAL DISTRICT, REINVESTMENT ZONE NUMBER TWO, CITY OF CORPUS CHRISTI, TEXAS, OR ANY OTHER MUNICIPALITY, COUNTY, OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF TEXAS. NEITHER THE CITY OF CORPUS CHRISTI, NUECES COUNTY, TEXAS, DEL MAR COLLEGE, NUECES COUNTY HOSPITAL DISTRICT NOR REINVESTMENT ZONE NUMBER TWO, CITY OF CORPUS CHRISTI, TEXAS ARE OBLIGATED TO MAKE PAYMENTS ON THE SERIES 2004 BONDS OR THE OUTSTANDING PARITY BONDS. ARTICLE IV FORM OF SERIES 2004 BONDS AND CERTIFICATES Section 4.1: Forms. The fom~ of the Series 2004 Bonds, including the form of the Registrar's authentication certificate, the form of assignment, and the form of the Comptroller's Registration Certificate for the Series 2004 Bonds to be initially issued, shall be in substantially the form as set forth m Exkibit A to this Resolution. Section 4.2: Legal Opinion; Cusip Numbers; Bond Insurance. The approving opimon of Bond Counsel and CUSIP Nnmbers may be printed on the Series 2004 Bonds, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Series 2004 Bonds. If bond insurance is obtained by the Underwriter, the Series 2004 Bonds may bear an appropriate legend as provided by the tnsurer. ARTICLE V ADDITIONAL BONDS Sectton 5.1: Additional Parity Bonds. The Corporation reserves the right to issue, for any lawful purpose (including the refunding of any previously issued Parity Bonds), one or more seres of Additional Parity Bonds payable fi.om and secured by a first hen on the Pledged Revenues, on a panty with the Seres 2003 Bonds, thc Series 2003A Bonds and the Series 2004 Bonds; provided, -10- however, that Additional Panty Bonds may be issued only in accordance with the provisions of Article III of the Indenture. Section 5.2: Subordinate Lien Obhl~ations. The Corporation reserves the right to issue, for any lawful purpose, Subordinate Lien Obligations secured in whole or in part by liens on the Pledged Revenues that are junior and subordinate to the lien on Pledged Revenues securing payment of the Parity Bonds. Such Subordinate Lien Obligations may be further secured by any other source of payment lawfully available for such purposes Section 5 3: Reserve Fund. No Reserve Fund has been establ/shed for the benefit of the Series 2004 Bonds. The Corporation reserves the right to establish a Reserve Fund for the benefit of the Series 2003 Bonds, the Series 2003A Bonds, the Series 2004 Bonds or any Additional Parity Bonds. Section 5.4: Representations regardmg Series 2004 Bonds Issued as Additional Parity Bonds. The Corporation hereby represents that: (a) The Series 2004 Bonds mature on, and interest is payable on, the Principal Installment Payment Dates and Interest Payment Dates, respectively; and (b) The Corporation is not in material default with the terms of the Indenture, any Bond Resolution, the Th-Party Agreement or any other agreement to which ~t is a party. The Corporation further represents that upon the issuance of the Series 2004 Bonds, the aggregate principal amount of Parity Obligations issued by the Corporation to fund Project Costs is less than $12,000,000, and therefore the Corporation is not required to satisfy the requirements of subsections (c) or (d) of Section 3.2 of the Indenture with respect to the issuance of the Series 2004 Bonds. ARTICLE VI GENERAL COVENANTS Section 6.1: Punctual Payment of Parity Bonds. The Corporation will punctually pay or cause to be paid the interest on and principal of all Panty 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 proxasions contained m this Resolution and in any resolution authorizing the issuance of Additional Panty Bonds. Section 6.2: Maintenance of TIRZ Two. So long as any Parity Bonds remain Outstanding, the Corporation covenants that it will, within thc limits of its authority, comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or orders o fany governmental, administrative, or judicial body promulgating same, noncompl/ance with wkich would materially and adversely affect the operation of TIRZ Two. -11- Section 6.3: Accounts, Records, and Audits. So long as any Parity Bonds remain Outstanding, the Corporation covenants and agrees that it will maintain a proper and complete system of records and accounts pertaining to the operation of TIRZ Two and the Corporation in which full, tree and proper entries will be made of all dealings, transactions, business and affairs wltich in any way affect or pertain to TIRZ Two, the Corporation or the Pledged Revenues. The Corporation shall after the close of each Fiscal Year cause an Audit to be prepared by an independent certified public accountant or independent firm of certified public accountants. All expenses incurred m preparing Audits shall be maintenance and operation expenses. Section 6.4: Pledge and Encumbrance of Pledged Revenues. (a) The Corporation covenants and represents that it has the lawful power to create a lien on and to pledge the Pledged Revenues to secure the payment of the Parity Bonds and has lawfully exercised such power under the Constitution and laws of the State o fTexas. The Corporation further covenants and represents that, other than to the payment of the Parity Bonds, the Pledged 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 Corporation, unless such lien, pledge or encumbrance is jumor and subordinate to the lien and pledge securing payment of the Parity Bonds. (b) The provisions of subsection (a) of this Section 6.4 notwithstanding, the hen on, pledge of, and rights in and to the Pledged Tax Increments established, made, and granted in the Indenture and pursuant to subsection (a) of tiffs Section 6.4 shall constitute a first and senior lien thereon, subject only to the rights, if any, of the holders of bonds or other obligations that have been heretofore or are hereafter issued by a Participant that are payable fi.om and secured by a general levy of ad valorem taxes throughout the taxing jurisdiction of the Participant. (c) Each of the Participants has agreed to contribute its Contract Tax Increment to the Tax Increment Fund, m accordance with the Act and its Participant Contract, and that each of the Participants, other than the District, has agreed to contribute and is currently contributing as its Contract Tax Increment 100% of its Tax Increment. Each of the Participants, other than the District, has agreed to contribute its Contract Tax Increment to the Fund for the term of the Zone, which is scheduled to expire on December 31, 2022. In the District Agreement, the Dtstrict has agreed to contribute 100% of its Contract Tax Increment to the Fund in the first five years of the District Agreement, 80% of its Contract Tax Increment to the Fund in the sixth year of the District Agreement, 60% of its Contract Tax Increment to the Fund in the seventh year of the District Agreement, 40% of its Contract Tax Increment to the Fund in the eighth year of the District Agreement, 20% of its Contract Tax Increment to the Fund in the ninth year of the District Agreement, with such obligation of the District ending after the ninth year of the District Agreement. The Corporation will use reasonable efforts to cause the Participants to levy and annually assess and collect ad valorem taxes at such rates and amounts as may be necessary and required to pay in full and on a timely basis all debt service requirements on each Participant's respective outstanding bonds or other obligations that are payable in whole or in part fi.om and secured by a general levy of ad valorem taxes throughout such Participant without resort to the use of any portion of the Contract Tax Increment derived fi'om the tax collections of such Participants for such purpose, and to cause thc portion of such taxes representing Contract Tax h~cremcnts to be paid to the Tax Increment Fund. -12- Section 6.5: Owners' Remedies. This Resolution shall constitute a contract between the Corporation and the Owners of the Parity Bonds from time to time Outstanding and this Resolution shall be and remain irrepealable until the Parity Bonds and the interest thereon shall be fully paid or discharged or provision therefor shall have been made as provided herein. In the event of a default in the payment of the principal of or interest on any of the Parity Bonds or a default in the performance of any duty or covenant provided by law or in tkis Resolution, 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 Corporation to remedy such default and to prevent further default or defaults. Without in any way limiting the generality of the foregoing, it is expresslyprovided that any Owner of any of the Parity Bonds may at law or m equity, by suit, action, mandamus, or other proceedings, enforce and compel performance of all duties required to be performed by the Corporation under this Resolution, the deposit of the Pledged Revenues into the special funds herein provided, and the application of such Pledged Revenues in the manner required in this Resolution. The foregoing notwahstanding, acceleration of the Parity Bonds is not an available remedy. The sole source of the Corporation available for the payment of debt service on the Bonds is and shall be the Pledged Revenues. Section 6.6: Discharge by Deposit. The Corporation may discharge its obligation to the Owners of any or all of the Parity Bonds to pay principal, interest and redemption premium (ff any) thereon in any manner then permitted by law, including, but not lmmted to, by depositing with any paying agent for such Parity Bonds either: (i) cash in an amount equal to the principal amount and redemption premium, if any, of such Parity Bonds plus interest thereon to the date of maturity or redemption, or (ii) pursuant to an escrow or trust agreement, cash and/or direct noncallable, nonprepayable obligations of the Urfited States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal mount and redemption premium, 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 resolution authorizing such ParityBonds. Upon such deposit, such Parity Bonds shall no longer be regarded to be Outstanding or unpaid. Section 6.7: Registrar and Trustee May Own Parity Bonds. The Registrar and Trustee for the Parity Bonds, in their individual or any other capacity, may become holders or pledges of the Parity Bonds with the same rights they would have if they were not the Registrar or Trustee. Section 6.8: No Recourse Against Corporation 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 Resolution against any official of the Corporation or any person executing any Parity Bonds. No member of the Board of Directors of the Corporation or any officer, agent, employee or representative of the Corporation in kis individual capacity, nor the officers, agents, employees or representatives of the Corporation nor any person executing the Series 2004 Bonds shall be personally liable thereon or be subject to any personal liability or accountability by reason of the -13- issuance thereol~ whether by vtrtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability being expressly released and waived as a condition of and m consideration for the adoption of this Resolution and the issuance of the Series 2004 Bonds. Section 6.9: Punctual Payment of Contractual Obh~ations. The Corporation will punctually pay or cause to be paid any payment obhgations made by the Corporation under the terms of a contract hereafter executed and delivered by the Corporation of thc nature described in Section 5.2. ARTICLE VII PROVISIONS CONCERNING SALE AND APPLICATION OF PROCEEDS OF SERIES 2004 BONDS Section 7.1: Execution of Documents to Effect Sale of Series 2004 Bonds. Each Authorized Representative and other appropriate officers, agents and representatives of the Corporation are hereby authorized to do any and all things necessary or desirable to provide for the issuance and delivery of the Series 2004 Bonds. Section 7.2: Application of Proceeds. Proceeds fi-om the sale o£the Series 2004 Bonds shall, promptly upon receipt by the Trustee, be applied in the manner provided for in a certificate executed by an Authorized Representative. ARTICLE VIII TAX EXEMPTION Section 8.1: General Tax Covenants. The Corporation covenants to refrain fi-om any action which would adversely affect, or to take any action to assure, the treatment of the Series 2004 Bonds as obligations descn3oed in section 103 of the Code, the interest on wlfich is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Corporation covenants as follows: (a) to take any action to assure that no more than 10 percent of the proceeds of the Series 2004 Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use", as defined in section 141(b)(6) of the Code or, if mere than 10 percent of the proceeds are so used, that amounts, whether or not received by the Corporation, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Series 2004 Bonds, in contravention of section 141(b)(2) of the Code; -14- (b) to take any action to assure that in the event that the "private business use" described in subsection (a) hereof exceeds 5 percent of the proceeds of the Series 2004 Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which ~s "related" and not "disproportionate", within the meaning of section 141 (b)(3) of the Code, to the governmental use; (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Series 2004 Bonds (less amounts deposited into a reserve fund, if any), is directly or indkectly used to finance Bans to persons, other than state or local governmental umts, in contravention of section 141 (c) of the Code; (d) to reft-am fi-om taking any action which would otherwise result in the Series 2004 Bonds being treated as "private activity bonds" within the meaning of section 141(a) of the Code; (e) to refi'ain fi-om taking any action that would result in the Series 2004 Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (f) to refrain fi-om using any portion of the proceeds of the Series 2004 Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Series 2004 Bonds, other than investment property acquired with -- (1) proceeds of the Series 2004 Bonds invested for a reasonable temporary period of three years or less until such proceeds are needed for the purpose for which the Series 2004 Bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning ofsectmn 1.148-1(b) of the Regulations, and (3) amounts deposited tn any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Series 2004 Bonds; (g) to otherwise restrict the use of the proceeds of the Series 2004 Bonds or amounts treated as proceeds of the Series 2004 Bonds, as may be necessary, so that the Series 2004 Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (h) to pay to the United States of America at least once during each five-year period (begmmng on the date of delivery of the Series 2004 Bonds) an amount that ts at least equal to 90 percent of the "Excess Earnings", witkin the meaning of section 148(f) of the -15- Code and to pay to the United States of America, not later than 60 days after the Series 2004 Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(0 of the Code. The Corporation understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in thc case of a refunding bond, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date oftbe issuance of the Series 2004 Bonds. It is the understanding of the Corporation that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which n~dify or expand provisions of the Code, as applicable to the Seres 2004 Bonds, the Corporation will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion ofnationally-recogmZed bond counsel, will not adversely affect the exemption fi.om federal inconm taxation of interest on the Series 2004 Bonds under section 103 of the Code. In the event that regulations or rulings are hereaRer promulgated winch trnpOse additional requirements which are applicable to the Series 2004 Bonds, the Corporation agrees to comply with the additional requirements to the extent necessary, in the opinion ofnationally-recogmZed bond counsel, to preserve the exemption fi.om federalincome taxation of interest on the Series 2004 Bonds under section 103 of the Code. In furtherance of the foregoing, any Authorized Representative may execute any certificates or other reports required by the Code and to make such elections, on behalf oftbe Corporation, which may be pemutted by the Code as are consistent with the purpose for the issuance of the Series 2004 Bonds. In order to facilitate compliance with the above clause (h), there has been established in the Indenture a "Rebate Fund" for the sole benefit of the United States of America, and such Rebate Fund shall not be subject to the claim of any other person, including without limitation the Registered Owners of the Series 2004 Bonds. The Rebate Fund ts estabhshed for the additional purpose ofcomphance with section 148 of the Code Section 8.2: Allocation of, and Linfitation on, Expenditures for the Project. The Corporation covenants to account for on its books and records the expenditure of proceeds fi-om the sale of the Series 2004 Bonds and any investment earnings thereon to be used for the payment of Project Costs by allocating proceeds to expenditures within 18 months of the later of the date that (a) the expenditure on a Project is made or (b) each such Project is completed. The foregoing notwithstanding, the Corporation shall not expend such proceeds or investment earnings more than 60 days after the later of(a) the fifth anniversary of the date of delivery of the Series 2004 Bonds or (b) the date the Series 2004 Bonds are retu'ed, unless the Corporation obtains an opinion of nationally-reco gntzed bond counsel substantially to the e ft~ct that such expenditure will not adversely affect the tax-exempt status of the Series 2004 Bonds. For purposes of this Section, the Corporation shall not be obligated to comply with this covenant if it obtams an opinion of nationally-recognized bond counsel to the effect that such failure to comply will not adversely affect the excludability for federal income tax purposes fi-om gross tncorne of the interest. Section 8.3: Disposition of Proiect. The Corporation covenants that the property constituting a ProJect will not be sold or otherwise dtsposed in a transaction resulting in the receipt by the Corporation of cash or other compensation, unless the Corporation obtains an opinion o fnationally- recognized bond counsel substantially to the effect that such sale or other disposition will not adversely affect thc tax-exempt status of the Series 2004 Bonds. For purposes of this Section, the -16- portion of the property comprising personal property and disposed of m the ordinary course of business shall not be treated as a transaction resulting in the receipt of cash or other compensation For purposes of this Section. the Corporation shall not be obligated to comply with this covenant if it obtains an opinion of nationally-recognized bond counsel to the effect that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest on the Series 2004 Bonds. ARTICLE IX CONTINUING DISCLOSURE UNDERTAKING Section 9.1: Annual Reports. (a) That the Corporation shall provide annually, within six months al?ret the end of each Fiscal Year ending in or al]er 2004, financial information and operating data with respect to the Corporation of the general type described in Exhibit B hereto provided that such information and data is customarily prepared by the Corporation. Such information shall be provided to any person upon request made to the Corporation provided that the Corporation reserves the right at any time to commence making such annual filings with the SID (if any, and if none, to each NRMSIR) in heu of providing such reformation upon request. Any financial statements so to be provided shall be (1) prepared in acco rdance with the accounting principles described in Exhibit B hereto, or such other accounting principles as the Corporation may be required to employ fi.om time to time pursuant to state law or regulation, and (2) audited, if the Corporation commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the Corporation shall provide unaudited financial statements by the required time and shall provide audited financial statements for the applicable Fiscal Year to each NRMSIR and any SID, when and if the audit report on such statements become available. (b) If the Corporation changes its Fiscal Year, it will notify the SID of the change (and of the date of the new Fiscal Year end) prior to the next date by which the Corporation otherwise would be reqmred 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 ts available fi.om the MSRB) that theretofore has been provided to the SID or filed with the SEC. Section 9.2: Material Event Notices. The Corporation shall notify any SID and the MSRB, in a timely manner, of any of the following events with respect to the Series 2004 Bonds, if such event is lnaterial within the meaning o f the federal securities laws: 2. 3. 4. 5. Prtncipal and interest payment delinquencies; Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements reflecting ffmancial difficulties; Substitution of credit or liquidity providers, or their failure to perform; -17- 8. 9. 10. 11. Adverse tax opinions or events affecting thc tax-exempt status of the Series 2004 Bonds; Modifications to rights of holders of the Series 2004 Bonds; Series 2004 Bond calls; Defeasances; Release, substitution, or sale of property securing repayment of the Series 2004 Bonds; and Rating changes. The Corporation shall notify any SID and the MSRB, in a timely manner, of any failure by the Corporation to provide financial information or operating data m accordance with Section 9.1 by the time required by such Section. Section 9.3: Ltmitations, Disclaimers, and Amendments. (a) The Corporation shall be obligated to observe and perform the covenants specified in this Article for so long as, but only for so long as, the Corporation remains an "obligated person" with respect to the Series 2004 Bonds within the meaning of the Rule, except that the Corporation in any event will give notice of any deposit made in accordance with tkis Resolution or applicable law that causes Series 2004 Bonds no longer to be Outstanding. (b) The provisions of this Article are for the sole benefit of the holders and beneficial owners of the Series 2004 Bonds, and nothing in this Article, express or implied, shall give any benefit or any legalor equitable right, remedy, or claim hereunder to any other person. The Corporation undertakes to provide only the financial infom~ation, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Article and does not hereby undertake to prowde any other information that may be relevant or material to a complete presentation of the Corporation's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with tfus Article or otherwise, except as expressly provided herein. The Corporation does not make any representation or warranty concerning such information or its usefulness to a decision to revest in or sell Series 2004 Bonds at any future date. (c) UNDER NO CIRCUMSTANCES SHALL THE CORPORATION BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY SERIES 2004 BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CORPORATION, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED 1N THIS ARTICLE, 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. (d) No default by the Corporation in observing or performing its obligations under this Amcle shall comprise a breach of or default under this Resolution for purposes of any other provision of this -18- Resolution. Nothing in this Article is intended or shah act to disclaim, waive, or otherwise l/mit the duties of the Corporation under federal and state securities laws. (e) The provisions of this Article lrmy be ainended by the Corporation from time to time to adapt to changed ctrcumstances that arise fi.om a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Corporation, but only fi(l) the provisions of this Article, as so amended, would have permitted an underwriter to purchase or sell Series 2004 Bonds in the primary offering of the Series 2004 Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (A) the holders of a majority m aggregate principal amount (or any greater amount required by any other provision of th.is Resolution that authorizes such an amendment) of the outstanding Series 2004 Bonds consent to such amendment or (B) a person that is unaffiliated with the Corporation (such as nationallyrecognized bond counsel) determines that such amendment will not materially unpair the interest of the holders and beneficial owners of the Series 2004 Bonds. If the Corporation so amends the provisions of this Article, it shall include with any amended financial information or operating data next provided m accordance with Section 9.1 an explanation, in narrative form, of the reason for the amendment and of the nmPact of any change in the type o f financial inforrnation or operating data so provided. The Corporation may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such promsions of the Rule are tnvalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Series 2004 Bonds in the primary offering of the Series 2004 Bonds. ARTICLE X APPROVAL AND AFFIRMATION OF AGREEMENTS The Board hereby approves issuance of the Series 2004 Bonds. The Board heretofore has approved the indenture of Trust by and between the Corporation and JPMorgan Chase Bank, as Trustee, and the Tri-Party Agreement, and does agree that the Indenture and the Tri-Party Agreement each apply to the Series 2004 Bonds. The Board hereby represents that no amendments or supplements have been made to either the Indenture or the Th-Party Agreement since the date of delivery of the Series 2003A Bonds. In connection with the issuance of the Seres 2004 Bonds, the Board hereby approves the following: the Paying Agent Agreement by and between the Corporation and JPMorgan Chase Bank, in substantially the form attached hereto as Exl'u'oit C; and the Purchase Contract, m substantially the form attached hereto as Exhibit D; and any and all other documents and agreements reasonable and necessary to issue the Bonds (collectively, the ~Agreements"). The Board, by a majority vote of its members, at a meeting duly held for such purpose, hereby approves the form, terms, and provisions of thc Agreements and authorizes the execution and delivery of the Agreements. -19- ARTICLE XI MISCELLANEOUS Section 11.1: Further Proceedings. Thc President, any Vice President, the Executive Director, the Secretary, the Assistant Secretary and other appropriate officials oftbe Corporation are hereby authorized and directed to do any and all things necessary and/or convenient to carry out the intent, purposes and terms o fthis Resolution, including the execution and delivery of such certificates, documents or papers necessary and adv/sable. Section 11.2: Severabihty. If any Section, paragraph, clause or provision of this Resolution shall for any reason be held to be invalid or unenforceable, the tnvalidJlty or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution. Section 11.3: Open Meeting. It is hereby officially found and determined that the meeting at which th~s Resolution was adopted was open to the public, and that public notice of the time, place and purpose of said meeting was given, all as required by the Texas Open Meetings Act, Chapter 55 l, Texas Government Code. Section 11.4: Parties Interested. Nothing in this Resolution expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Corporation, the Registrar, and the Owners of the Series 2004 Bonds, any right, remedy or claim under or by reason of this Resolution or any covenant, condition or stipulation hereof; and all covenants, stipulations, promises and agreements m tiffs Resolution shall be for the sole and exclusive benefit of the Corporation, thc Registrar, and the Owners of the Series 2004 Bonds. Section I 1.5: Repealer. All orders, resolutions and ordinances, or parts thereof~ inconsistent herewith are hereby repealed to the extent of such inconsistency Section l 1.6: Effective Date. This Resolution shall become effective mediately upon passage by this Corporation and signature of the President of the Corporation. PASSED AND APPROVED this 13th day of July, 2004. By: Name: Samuet L. Neal, Jr. Title: President -20- ATTEST: By: Name: Armando Chapa Title: Secretary (SEAL) -21- LIST OF EXHIBITS EXHIBIT A EXHI~ITB EXHIBIT C EXHIBIT D FORM OF BOND CONTINUING DISCLOSURE INFORMATION PAYING AGENT AGREEMENT BOND PURCHASE AGREEMENT EXHIBIT A: FORM OF BOND United States of America State of Texas Registered Registered NORTH PADRE ISLAND DEVELOPMENT CORPORATION TAX INCREMENT CONTRACT REVENUE BOND SERIES 2004 INTEREST RATE: MATURITY DATE: DATED DATE: CUSP: REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS: The NORTH PADRE ISLAND DEVELOPMENT CORPORATION (the "Issuer"), a not- for-pro fit local government corporation created under authoriW o fChapter 431, Subchapter D, Texas Transportation Code (the "Act") by the City o fCorpus Christi, Texas (the "City"), for value received, promises to pay, but solely from certain Pledged Revenues as hereinafl, er provided, to the Registered Owner identified above or registered assigns, on the Maturity Date specrlied above, upon presentation and surrender of tkis Bond at the designated corporate trust office in Dallas, Texas (the "Designated Trust Office") of JPMorgan Chase Bank, as registrar (the "Registrar"), the principal amount identified above, in any coin or cttrrency of the United States o fAmerica which on the date of payment of such principal is legal tender for the payment of debts due the United States o fAmerica, and to pay, solely from such Pledged Revenues, interest thereon at the rate shown above, calculated on the basis ora 360-day year of twelve 30-day months, fi.om the later of the Dated Date of the Bonds specified above, 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 15 and September 15, beginning on March 15, 2005, mailed to the Registered Owner as shown on the books of registration kept by the Registrar as of the last Business Day of the month next preceding each interest payment date (the "Record Date"), or by such other method, acceptable to the Registrar, requested by and at the risk and expense of the Registered Owner If interest on this Bond is not paid on any interest payment date specified above, and continues unpaid for thirty (30) days thereafl:er, the Registrar shall establish a new Record Date for the payment of such interest (a "Special Record Date"). Such Special Record Date shall be established in accordance with the terms of the hereinafter defined Resolution. THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS dated as of ,2004, aggregating $ , issued for the purpose of(l) paying Project Costs and (2) paying Costs of Issuance, all under and pursuant to the authority of the Act and all other applicable laws, and a resolution adopted by the Issuer on July 13, 2004 (the "Resolution"). None of the proceeds of the Bonds shall be used for the purpose of paying or otherwise providing for educational facdities All defined terms not herein defined shall have the meaning attrt~outed thereto in accordance with the terms of the Resolution or the Indenture of Trust dated as o fFebruary 1, 2003, between the Issuer and JPMorgan Chase Bank, as trustee (the "Indenture of Trust"). THIS BOND AND THE SERIES OF WltlCH IT IS A PART are limited obligations of the Issuer that are payable fi.om, and are equally and ratably secured, together with the currently outstanding "Parity Bonds", as defined in the Indenture of Trust, by a first lien on the "Pledged Revenues", as defined and provided in the Indenture of Trust, which Pledged Revenues are required to be set aside and pledged to the payment of the Bonds and all additional bonds and panty contractual obligations issued or entered into on a parity therewith, in the Debt Service Fund and the Reserve Fund maintained for the payment of all such Bonds, all as more fully described and provided for in the Resolution. This Bond and the series of which it is a part, together with the interest thereon, are payable solely fi.om such Pledged Revenues. THE BONDS may be redeemed only in principal amounts of $100,000 or any integral multiple of $5,000 in excess thereof, at the option of the Issuer,, on , __, or on any date thereafter, at the redemption price indicated below (expressed as a percentage of par value) plus accrued interest to the date fixed for redemption, to-wit: Redemption Dates (dates inclusive) Redemptton Price (%) If less than all of the Bonds are to be redeemed by the Issuer, the Issuer shall determine the maturity or maturities and the amounts therewith to be redeemed and shall direct the Registrar to call by lot Bonds, or portions thereof; within such maturity or maturities and in such principal amounts, for redemption;provided, that during any period in which ownership of the Bonds is deterrmned only by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity and beating the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between thc Issuer and the securities depository; and provided, further, that no Bonds shall be redeemed in a manner where the Registered Owner thereof shall own Bonds in a denomination of less than $100,000. THE BONDS are also subject to mandatory redemption in part by lot on in the following years and in the following amounts, at a price equal to the principal amount thereof and accrued and unpaid interest to the date of redemption, without premium: Year Principal Amount Year Principal Amount $ $ * Final Maturity THE BONDS to be redeemed in any year by mandatory sinking fund redemption shall be selected by lot fi.om the Bonds then subject to redemption; prov/ded, that if any Bond is selected for redemption in part it shall not be redeemed in an amount that would, upon exchange, result in a Bond in a denomination less than $100,000. THE PRINCIPAL AMOUNT OF BONDS required to be redeemed on each such redemption date pursuant to the foregoing operation of the mandatory sinking fund redemption shall be reduced, at the option of the Issuer, by the principal amount of the Bonds which, at least 45 days prior to the mandatory sinking fund redemption date, (1) shall have been acquired by the Issuer and delivered to the Registrar for cancellation or (2) shall have been acquired and canceled by the Registrar at the direction of the Issuer, in either case of(l) and (2) at a price not exceeding the par or principal amount of such Bonds, or (3) shall have been redeemed pursuant to the optional redemption provisions descn'oed above and not thereto fore credited against a mandatory sinking fund redemption. DUring any period in which ownership of the Bonds is determined by a book entry at a securities depository for the Bonds, if fewer than all of the bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity to be redeemed shall be selected in accordance with the arrangements between thc Issuer and the securities depository; provided, that if any Bond is selected for redemption in part it shall not be redeemed in an amount that would result, upon exchange, in a Bond in a denomination less than $100,000. UNLESS WAIVED BY THE OWNER, NOTICE OF ANY REDEMPTION shall be given at least tkirty (30) days prior to the date 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 redempUon, and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely fi'om the fimds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fLxed for redemption. THIS BOND IS TRANSFERABLE only upon presentation and surrender at the Designated Trust 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 Resolution. THIS BOND IS EXCHANGEABLE at the Designated Trust Office of the Registrar for Bonds in principal amounts only in Authorized Denonfinations, subject to the terms and conditions of the Resolution NEITHER THE ISSUER NOR THE REGISTRAR shall be required to transfer or exchange any Bond during the period beginning on the fifteenth calendar day of the month next preceding any interest payment date and ending on the next succeeding interest payment date or to transfer any Bond called for redemption during the 30 day period prior to the redemption date. DURING ANY PERIOD in which ownership o fthe Bonds is determined only by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity and beating the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected tn accordance with the arrangements between the Issuer and the securities depository; provided, however, that no Bonds shall be redeemed in a ma.nner where the beneficial owner thereof shall own Bonds in any Authorized Denomination. THIS BOND shall not be valid or obligatory for any purpose or be entitled to any benefit under the Resolution unless this Bond is either (i) registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE ISSUER HAS RESERVED THE RIGHT to issue additional parity Tax Increment Contract Revenue Bonds, subject to the restrictions contained in the Resolution, which may be equally and ratably payable fi.om, and secured by a first lien on and pledge of, the Pledged Revenues in the same manner and to the same extent as this Bond and the series of which it is a part. THE BONDS AND ANY OUTSTANDING TAX INCREMENT CONTRACT REVENUE BONDS ARE A LIMITED OBLIGATION OF THE CORPORATION, PAYABLE, TOGETHER WITH THE CURRENTLY OUTSTANDING PARITY BONDS, SOLELY OUT OF THE TRUST ESTATE, WHICH IS THE SOLE ASSET OF THE CORPORATION PLEDGED THEREFOR. THE BONDS AND ANY OUTSTANDING TAX INCREMENT CONTRACT REVENUE BONDS ARE OBLIGATIONS SOLELY OF THE CORPORATION AND DO NOT CONSTITUTE, WITHIN THE MEANING OF ANY STATUTORY OR CONSTITUTIONAL PROVISION, AN INDEBTEDNESS, AN OBLIGATION OR A LOAN OF CREDIT OF THE CITY, THE STATE OF TEXAS, NUECES COUNTY, TEXAS, DEL MAR COLLEGE, NUECES COUNTY HOSPITAL DISTRICT, REINVESTMENT ZONE NUMBER TWO, CITY OF CORPUS CHRISTI, TEXAS, OR ANY OTHER MUNICIPALITY, COUNTY, OR OTHER MUNICIPAL OR POLITICAL CORPORATION OR SUBDIVISION OF THE STATE OF TEXAS. NEITHER THE CITY, NUECES COUNTY, TEXAS, DEL MAR COLLEGE, NUECES COUNTY HOSPITAL DISTRICT NOR REINVESTMENT ZONE NUMBER T~VO, CITY OF CORPUS CHRISTI, TEXAS ARE OBLIGATED TO MAKE PAYMENTS ON THE BONDS AND ANY OUTSTANDING TAX INCREMENT CONTRACT REVENUE BONDS. SHOULD EACH PARTICIPANT TIMELY CONTRIBUTE ITS TAX INCREMENT TO THE TAX INCREMENT FUND, AND THE CITY TRANSFERS ALL OF THE TAX INCREMENTS FROM THE TAX INCREMENT FUND TO THE ISSUER IN ACCORDANCE WITH THE TERMS OF THE TRI-PARTY AGREEMENT, AND SUCH TAX INCREMENTS TO BE TRANSFERRED ARE NOT SUFFICIENT FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS ON THE DATE WHEN SUCH PRINCIPAL OR INTEREST BECOMES DUE AND PAYABLE, AN EVENT OF DEFAULT SHALL NOT BE DEEMED TO HAVE OCCURRED UNDER THE TERMS OF THE INDENTURE OF TRUST. 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 princrpal of and interest on this Bond and all oftbe Bonds by the creation of the aforesaid lien on and pledge of the Pledged Revenues. IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed by the manual or facsimile signatures of the President and the Secretary. NORTH PADRE ISLAND DEVELOPMENT CORPORATION President, Board of Directors Secretary, Board of Directors (SEAL) FORM OF REGISTRATION 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 o fTexas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this Comptroller of Public Accounts of the State of Texas FORM OF REGISTRAR'S AUTHENTICATION CERTIFICATE AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been delivered pursuant to the Resolution described in the text of this Bond; and that this Bond is one of a series of Bonds approved by the Attorney Genera[ oftbe State o£Texas and registered by the Comptroller of Pubhc Accounts of the State of Texas. JPMORGAN CHASE BANK, as Regzstrar By: Authorized Signature Date of Authentication: FORM OF ASSIGNMENT AS SIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and ztp code of Transferee) (Please insert Social Security or Taxpayer Identification 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. DATED: Signature Guaranteed: NOTICE: Signature must be guaranteed by an institution which is a participant in the Securities Transfer Agent Medalhon Program ("STAMP") or similar program. Registered Owner NOTICE: The signature above must correspond to the namc of the Registered Owner as shown on the face of tkis Bond in every particular, without any akeration, enlargement or change whatsoever. Exhibit B to Resolution DESCRIPTION OF A1NNUAL FINANCIAL INFORMATION The following information is referred to in Section 9.1 ofth~s Resolution. Annual Financial Statements and Operating Data The financial infomaation and operating data with respect to the Corporation to be provided annually in accordance with such Section are as specified (and included in the AppendLx or under the headings of the Limited Offering Memorandum referred to) below: 1. The ufformation of the general type included m Tables 1 through 3 of the Limited Offering Memorandum 2. "Financial Statements of the North Padre Island Development Corporation". Accounting Principles The accounting principles referred to m such Section are the accounting principles descn]:~.d m the notes to the financial statements referred to in paragraph 2 above. PAYING AGENT AGREEMENT THIS PAYING AGENT AGREEMENT entered into as of September I, 2004 (this "Agreement"), by and between the North Padre Island Development Corporation (the "Issuer"), and JPMorgan Chase Bank, a state banking organization duly organized and existing under the laws of the State of New York, and hamg a corporate trust office m Houston, Texas (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance o fits Tax Increment Contract Revenue Bonds, Series 2004, m the aggregate principal amount of $ (the "Securities"), such Securities to be issued m fully registered form only as to the payment of principal and interest thereon; and WHEREAS, the Issuer has selected the Bank to serve as Paying AgenffRegistrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof}, and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Pay/ng Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all m accordance with this Agreement and the "Resolution" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Regtstrar for the Securities, the Bank shall keep and mamtain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the Resolution. The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts as may be agreed upon in writing. The initial fees and amounts payable for the Bank's services as PaYing Agent/Registrar are as set forth in Exhibit A attached hereto. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof(including the reasonable compensation and the expenses and disbursements o fits agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are duc and payable on any Security which has become accelerated pursuant to the terms of thc Security. "Bank Office" means the principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "FiscalYear" tneans the twelve (12) month period commencing on August 1 of a calendar year and ending July 3 1 oftbe next succeeding calendar year, or such other consecutive twelve (12) month period as determined by the Issuer. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Order" means a wr/tten request or order signed in the name of the Issuer by the President or Vice President of the Issuer, any one or more of said officials, or any other person designated by the Issuer, and delivered to the Bank. "Legal Holiday" means a day on which the Bank is requtred or authorized to be closed. "Person" means any individual, corporatton, partnership,joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision ora government. -2- "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and dehvered in lieu thereof pursuant to Section 4 06 hereof and the Resolution). "Proceedings" means the Resolution and the Trust Indenture. "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption pursuant to the terms of the Resolution. "Resolution" means the resolution, order, or ordinance of the governmg body of the Issuer pursuant to which the Securities are issued, certified by the Secretary or any other officer of the Issuer and delivered to the Bank. "Responsible Officer" when used with respect to the Bank means the officer(s) in the Institutional Trust Services department of the Bank having direct responsibility for administration of the Securities. "Security Register" means a register maintained by the Bank on behalfo fthe Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Resolution the principal of a Security is scheduled to be due and payable. "Trust Indenture" means the Indenture of Trust by and between the Issuer and the Bank, as trustee, dated as of February 1, 2003. Section 2.02. Other Defmitions. The terms "Bank," Issuer," and "Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank tn the performance of the duties and functio ns o f this Agreement. -3- ARTICLE THREE PAYING AGENT Section 3.01. Duties of Payim, Agent As Paying Agent, the Bank shall, prowded adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender oftbe Security to the Bank at the Bank Office. As Paying Agent, the Bank shall, provided adequate collected funds have been prowded to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date, to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified m the Resolution. ARTICLE FOUR REGISTRAR Section 4.01. Security Register - Transfers and Exchanges. The Bank agrees to keep and maintam for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shallbe duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re- registration, transfer or exchange of the Securities. To the extent possible and under reasonable ctrcumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days aRer the receipt of the Secunties to be cancelled in an exchange or transfer and thc written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, m form and manner satisfactory to the Paying Agent/Registrar, Thc Bank may utilize thc services of an agent, to act on behalf of the Bank, in the performance of the services ofragistrar under the terms of this Agreement. Section 4.02. Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Fora of Security Register. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange o fthe Securitms in accordance with the Bank's general practices and procedures in effect fi.om time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintamed in written form or in any other form capable o fbeing convened into written form within a reasonable time. Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained m the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the irfformation into written fom~. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt ora court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer nmy contest the court order or such release or disclosure of the contents of the Security Register. -5- Section 4.05. Return of Cancelled Certificates. With rcspect to all Securities paid or redeemed in accordance with the Resolution, and such Securities shall be canceled and thereafter treated in accordance with the Bank's document retention policies. Section 4.06. Mutilated, Destroyed, Lost or Stolen Securities. The Issuer hereby instructs thc Bank, subject to the applicable provisions of the Proceedings, to deliver and issue Securities in exchange for or in lieu o fmutilated, destroyed, lost, or stolen Securi- ties as long as the same does not result in an over-issuance_ In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion, may execute and deliver a replacement Security ofhke form and tenor, and in the same denomination and bearing a number not conteinporaneously outstanding, m exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemrfification in an amount satisfactory to save and hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and dehvery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after recetpt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has dehvered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereo£ Section 5.02. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to thc Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was neghgent in ascertaining the pertinent facts. -6- (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any o fits rights or powers, if it shall have reasonable grounds for behev/ng that repayment of such funds or adequate indernnJty satisfactory to it against such risks or hability is not assured to it. (d) The Bank may rely and shall be protected tn acting or refraining fi.om acting upon any resolution, certificate, statement, instrument, opimon, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need no t examine the ownership o fany Securities, but is pro tected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation nato the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supphed by Issuer. (e) The Bank may consuk with counsel, and the written advice of such counsel or any opimon of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (0 The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsl'oility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security fi.om its own funds. Section 5.04. May Hold Securities. The Bank, in its commercial banking or any other capacity, may become the owner or pledgee of Sectmties and may otherwise deal with the Issuer with the same hghts it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held by Bank. Money held by the Bank hereunder need not be segregated fi.om any other funds provided appropriate trust accounts are maintained in the name and for the benefit of the Issuer. The Bank shall be under no hability for interest on any money received by it hereunder. Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the Bank for the payment of the principal, premium (if any), or interest on Security and remaining unclaimed for three years after thc final maturity of the Security has become due and payable will be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Security shall hereat~er look only to the Issuer for payment thereof, and all hability of the Bank with respect to such moneys shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and dispose of the funds in comphance with Title Six of the Texas Property Code, as amended. Section 5.06. Indemnification. To thc extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, habihty, or expense incurred without neghgence or bad faith on its part, arising out of or in connection with its acceptance or admimstration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State of Texas, and agree that service of process by certified or regis- tered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Comoanv Services. It is hereby represented and warranted that, m the event the Securities are otherwise qualified and accepted for The Depository Trust Company ("DTC") services or equivalent depository trust services by other orgamzations, the Bank has the capability and, to the extent within its control, will comply with DTC's Operational Arrangements, which establish requkements for securities to be eligible for such type depository trust services, including, but not hmited to, reqmrements for the timeliness of payments and funds availabihty, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed byboth of the parties hereto other. Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the -8 Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement. All such notices shall be effective only upon receipt. Section 6.04. Effect of Headin~,s. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severabilitv. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing hereto, express or tmplied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire A~,reement. This Agreement and the Proceedings constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and ff any conflict extsts between his Agreement and the Proceedings, the Proceedings shall govern. Section 6.09. Counterl~arts. Tkis Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination Tkis Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier tern'mUted by either party upon sixty (60) days written notice; provided, however, an early termination of thks Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the -9- appointment of a successor Paying AgentiRegistrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination o ftkis Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions o£Section 1.02 and Article Five of this Agreemem shall survive and remain in full force and effect following the termination o1' thts Agreement. Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. [EXECUTION PAGE FOLLOWS] -10- iN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. JPMORGAN CHASE BANK By Title Address: 600 Travis Street, Suite 1150 Houston, Texas 77002 Attention: Institutional Trust Services [BANK SEAL] NORTH PADRE ISLAND CORPORATION Corpus Christi, Texas DEVELOPMENT Attest: By Title: Address: President 1201 Leopard Corpus Christi, Texas 78401 Secretary [ISSUER SEAL] -11- SCHEDULE A Paying Agent/Registrar Fee Schedule PAYING AGENT/REGISTRAR SERVICES Fees for paying agent services are incorporated as part o f the fees charged for trustee services. I}RAFI' NORTH PADRE ISLAND DEVELOPMENT CORPORATION (A not-for-profit local government corporation acting on behalf of the City of Corpus Christi, Texas) TAX INCREMENT CONTRACT REVENUE BONDS SERIES 2004 BOND PURCHASE AGREEMENT [Date] Board of Directors North Padre Island Development Corporation 1201 Leopard Corpus Christi, Texas 78401 Ladies and Gentlemen: The undersigned, M. E. Allison & Co., Inc. (the "Underwriter"), offers to enter into the following agreement with North Padre Island Development Corporation (the "Issuer") which, upon the Issuer's written acceptance of this offer, as evidenced by the execution of this Bond Purchase Agreement by the Chair of the board of directors of the Issuer, as the duly authorized agent of the Issuer (the "Issuer Representative"), will be binding upon the Issuer and upon the Underwriter. Capitalized terms used heroin and not otherwise defined in this Bond Pumhase Agreement shall have the respective meanings given to such terms in the Limited Offenng Memorandum (as defined heroin). 1. Background and Purpose. The Issuer is issuing its Tax Increment Contract Revenue Bonds, Series 2004 (the "Bonds"), pursuant to a resolution adopted July 13, 2004 (the "Bond Resolution") of the board of directors (the "Governing Body") of the Issuer for the purpose of providing funds to pay Project Costs. Bond proceeds will also be used to pay issuance costs associated with the Bonds. 2. Purchase and Sale of the Bonds. Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth heroin, the Underwriter agrees to purchase from the Issuer, and the Issuer agrees to sell and deliver to the Underwriter at Closing (as hereinafter defined), all, but not less than all, of the Bonds. Inasmuch as this purchase and sale represents a negotiated transaction, the Issuer understands, and hereby confirms, that the Underwriter is not acting as a fiduciary of the Issuer, but rather is acting solely in its individual capacity as an Underwriter for its own accounL The purchase price for the Bonds shall be $ (representing the par amount of the Bonds of $ , less an underwriting discount of $ 454741~3 1 The Bonds shall be issued pursuant to and in accordance with the provisions of the Bond Resolution and an Indenture of Trust, dated as of February 1, 2003 (the "Indenture"), by and between the Issuer and JPMorgan Chase Bank as trustee (the "Trustee"). 3. Limited Offering. The Underwriter agrees to make a limited offering of all of the Bonds at prices not to exceed the offering price set forth on Exhibit A and may subsequently change such offering prices (or yields) without any requirement of prior notice to the Issuer. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the offering price stated on Exhibit A (or at yields higher than such initial public offering yields). The Preliminary Limited Offering Memorandum describes vahous Risk Factors that exist in connection with the sale of the Bonds, and consistent with its duties under federal securities law the Underwriter has taken those risk factors into account in malong a limited offering of the Bonds. 4. Offering Documents. (a) Preliimnar7 Limited Offering Memorandum. The Issuer previously has delivered copies of the Preliminary Limited Offenng Memorandum to the Underwriter for its use in determining interest in the Bonds. The Issuer ratifies and approves the Preliminary Limited Offering Memorandum and its use by the Underwriter for that purpose before the Preliminary Limited Offering Memorandum described below becomes available. The Issuer confirms that it has not prepared any official statement for dissemination to potential customers prior to the availability of such Preliminary Limited Offering Memorandum, except the Preliminary Limited Offering Memorandum. The Preliminary Limited Offering Memorandum was deemed final by the Issuer as of its date for purposes of Rule 15c2-12 of the United States Securities and Exchange Commission (the "Rule"), except possibly for the omission of items specified by paragraph (b)(l) of the Rule. (b) Delivery of Preliminary Limited Offerin~ Memorandum. Not mom than seven business days after the time the Issuer accepts this offer, the Issuer will deliver copies of a final Preliminary Lirmted Offering Memorandum related to the Bonds, approved by the Governing Body or one or more duly authorized officers thereof, to the Underwriter in sufficient number to permit the Underwriter to comply with the requirements of the Rule. Such Preliminary Limited Offering Memorandum will be dated the date of this Bond Purchase Agreement, when delivered to the Underwriter will be complete within the meaning of the Rule, and will be substantially in the form of the most recent markup of the Preliminary Limited Offering Memorandum provided to the Underwriter before the execution hereof. Such Preliminary Limited Offering Memorandum, including the cover page thereto, all exhibits, appendices, maps, charts, pictures, diagrams, reports, and statements included or incorporated therein or attached thereto, and all amendments and supplements thereto that may be authorized for use with respect to the Bonds, is herein referred to as the "Prelitninary Limited Offering Memorandum". (c) Amendments and Suvolements to Preliminary Limited Offering Memorandum. From the date of this Bond Purchase Agreement to the 30th day (or such other day, not later than the 90th day, that may be specified by the Underwriter at the Closing referred to herein) following the date of such Closing, the Issuer will notify the Underwriter whenever, in the judgment of the Issuer, the Preliminary Limited Offering Memorandum should be amended or 454744~3.1 2 supplemented in order for the Official Statement not to contain any untrue statement of a material fact and not to omit to state any material fact necessary to make the statements in the Preliminary Limited Offering Memorandum, in light of the circumstances in which they are made, not misleading. The Issuer will amend or supplement the Preliminary Limited Offenng Memorandum at the expense of the Issuer and in a manner satisfactory to the Underwriter, when in the reasonable judgment of the Issuer or the Underwriter such amendment or supplementation is required. (d) Use of Preliminary Limited Offering Memorandum. The Underwriter, all members of any selling group which may be formed in connection with the distribution of the Bonds, and all dealers to whom any of the Bonds may be sold by the Underwriter or by members of any selling group may use the Prehminary Limited Offering Memorandum and the information contained therein, including any amendments or supplements thereto, in connection with the offering and sale of the Bonds. (e) Continuing Disclosure. The Issuer will agree in the Bond Resolution to provide or cause to be provided certain periodic information and notices of material events ~n accordance with the Rule, as described in the Preliminary Limited Offering Memorandum under "CONTINUING DISCLOSURE OF INFORMATION." The Underwriter's obligation to accept and pay for the Bonds is conditioned upon delivery to the Underwriter or its agent of a certified copy of the Bond Resolution containing the provisions described under such heading. (f) Substantive Requirements for Preliminary Limited Offerim,, Memorandum. To the best knowledge and belief of the Issuer, the Preliminary Limited Offering Memorandum contains information, including financial information or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Bonds. The continuing disclosure agreement made by the Issuer described in the Limited Offering Memorandum is the first such undertaking made by the Issuer. 5. Representations, Warranties, and Covenants of the Issuer. The Issuer hereby represents and warrants to and covenants with the Underwriter that: (a) Due Organization. The Issuer is a not-for-profit local government corporation acting on behalf of the City of Corpus Christi, Texas (the "City"), duly created, organized, and existing under the Constitution and laws of the State of Texas, and is authorized and empowered by the provisions of the Texas Constitution, the laws of the State of Texas, and the ordinances of the City to issue the Bonds for the purposes of providing funds for the purposes specified in Section 1 hereof. (b) Due Authorization. By all necessary official action of the Issuer prior to or concurrently with the acceptance hereof, the Issuer has duly authorized all necessary actton to be taken by it for (i) the adoption of the Bond Resolution, the Indenture and the issuance and sale of the Bonds, (ii) the approval, execution and delivery of, and the performance by the Issuer of the obligations on its part, contained in the Bonds, the Bond Resolution, the Indenture, this Bond Purchase Agreement, and the Tri-Party Agreement, (iii) the consummation by it of all other transactions contemplated by the Limited Offering Memorandum, the Bond Resolution, the Indenture, this Bond Purchase Agreement, and the Tn-Party Agreement, and any and all such 45474063. I 3 other agreements and documents as may be required to be executed, delivered and/or received by the Issuer in order to carry out, give effect to, and consummate the transactions contemplated herein and in the Limited Offering Memorandum. (c) Lel~al, Valid, and Bindin~ Obligations. The Bond Resolution has been duly adopted by the Governing Body of the Issuer, and the Bonds, when issued, delivered and paid for, in accordance with the Bond Resolution and this Bond Purchase Agreement, will constitute legal, valid and binding limited obligation of the Issuer secured solely by a valid lien on the Pledged Revenues and entitled to the benefits of the Bond Resolution; and when delivered to and paid for by the Underwriter at the Closing the Bonds will have been duly approved by the Attorney General of Texas, registered by the Comptroller of Public Accounts of the State of Texas, and duly executed and delivered by the Issuer and will constitute legal, valid, and binding limited obligations of the Issuer enforceable against the Issuer in accordance with their terms, subject to bankruptcy laws and similar laws affecting the rights of creditors of political subdivisions generally, and may be limited by general principles of equity which permit the exercise of judicial discretion. (d) Tri-Partv Agreement and Indenture. The Tri-Party Agreement and the Indenture constitute the legal, valid, and binding obligations of the Issuer enforceable against the Issuer in accordance with their respective terms, subject to bankruptcy laws and similar laws affecting the rights of creditors of political subdivisions generally, and may be limited by general principles of equity which permit the exercise of judicial discretion. (e) Default. To the best knowledge of the Issuer, it is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the City, the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or to which the Issuer is otherwise subject, and no event has occurred and is continuing which constitutes or with the passage of time or the giving of notice, or both, would constitute a default or event of default by the Issuer under any such instrument. (f) Necessary Approvals. Except for approval of the Bonds by the Attorney General of Texas and registration of the Bonds by the Comptroller of Public Accounts of the State of Texas, all approvals, permits, consents, licenses and authorizations of, registrations or filings with, and notices to any government authority which are required for the Issuers's due execution, delivery, and performance of its obligations under the Bonds, the Bond Resolution, the Indenture, and this Bond Purchase Agreement have been made or obtained. (g) No Litigation. No action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court or public board of body in which the Issuer has been served or of which it has otherwise received official notice is pending against or to the knowledge of the Issuer, is threatened against the Issuer (nor to the knowledge of the Issuer is them any basis therefor) wherein an unfavorable decision, mling, or finding would impose a material financial liability on the Issuer or in any way adversely affect (i) the creation, organization, existence, or material authority of the Issuer or the title of its officers to their respective offices, (ii) the collection of Contract Tax Increments or other revenues of the Issuer to any material extent, (iii) the transactions contemplated by this Bond Purchase Agreement or the Limited Offering 45474063 I 4 Memorandum, (iv) the validity or enforceability of the Bonds, the Bond Resolution, the Indenture, this Bond Purchase Agreement or the Tri-Party Agreement, or (v) the excludability of the interest on the Bonds from the gross income of the owners thereof. (h) Accuracy of Official Statement. The Bonds, the Tn-Party Agreement and the Indenture conform to the descriptions thereof contained in the Limited Offering Memorandum and the proceeds of the sale of the Bonds will be applied generally as described in the Limited Offering Memorandum under the caption "SOURCES AND USES OF BOND PROCEEDS." The information contained in the Limited Offering Memorandum with respect to the Bonds, the Issuer, the Zone, the Project, Development within the Zone, Land Use within the Zone, and the Issuer's other affairs is true and correct in all material respects and, as of the date of the Limited Offering Memorandum, the Limited Offering Memorandum, with respect to such information, did not, and as of the date of the Closing will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein with respect to the Bonds, the Issuer, the Zone, the Project, Development within the Zone, Land Use within the Zone, and the Issuer's affairs, in the light of the circumstances under which they were made, not misleading. With respect to information in the Limited Offering Memorandum, other than the information relating to the Bonds, the Issuer and the Issuer's affairs, the Issuer has no reason to believe that such information contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. (i) No Material Adverse Change. Prior to the Closing, there will be no adverse change of a material nature in the financial position, results of operations or condition, financial or otherwise, of the Issuer. The Issuer is not a party to any litigation or other proceeding pending or, to its knowledge, threatened which, if decided adversely to the Issuer, would have a materially adverse effect on the financial condition of the Issuer. Between the date of this Bond Purchase Agreement and the Closing, the Issuer will not, without the prior written consent of the Underwriter, issue any bond or note or incur any other obligation for borrowed money which is or may be payable from, or does or may constitute a charge on, the Pledged Revenues, and from the respective dates as of which information is given in the Limited Offering Memorandum to the Closing the Issuer has not incurred and will not incur any material liabilities. (j) Officers' Certificates. Any certificate signed by any official of the Issuer authorized to do so in connection with the transactions contemplated by this Bond Purchase Agreement shall be deemed a representation and warranty by the Issuer to the Underwriter as to the statements made therein. (k) Issuer Representative. The Issuer Representative is authorized to act on behalf of the Issuer, for the purpose of selling the Bonds to the Underwriter, fixing the terms of the Bonds as set forth in Exhibit A and taking the other actions provided for herein and in the Bond Resolution, and such actions by the Issuer Representative shall be deemed to be actions by the Issuer. The Chair and any Vice Chair of the Governing Body or the Executive Director of the Issuer each has been duly authorized to act on behalf of the Issuer, as the Issuer Representative, for the purpose of taking the actions provided for herein. 45474~63.1 5 By delivering an executed copy of the Limited Offering Memorandum to the Underwriter, the Issuer shall be deemed to have reaffirmed, with respect to such Limited Offering Memorandum, the representations, warranties and covenants set forth above. The Issuer covenants that between the date hereof and the Closing, it will take no actions that will cause the representations and warranties made in this Section to be untrue as of the Closing. 6. Closing. (a) The Issuer will deliver the Bonds to the Underwriter, and the Underwriter will pay for the Bonds, at 9:00 a.m., Texas time, on [ ] (the "Closing Date"), or at such other time and date as shall have been mutually agreed upon by the Issuer and the Underwriter. Such actions are herein referred to as the "Closing." The Closing will occur at the offices of McCall, Parkhurst & Horton L.L.P., Dallas, Texas, or at such other location as may be agreed to by both the Issuer and the Underwriter, and the Bonds will be delivered t~ough the Depository Trust Company. (b) At the Closing, the Issuer will, subject to the terms and conditions hereof, deliver one duly executed initial Bond for each maturity of the Bonds (the "Initial Bonds") in either typed or printed for, payable to Cede & Co., and beanng a registration certificate manually signed by an authorized representative of the Comptroller of Public Accounts of the State of Texas, together with the other documents hereinafter described. The Issuer will cause the Paying Agent/Registrar to exchange the Initial Bonds at Closing for definitive Bonds, duly authenticated by the Paying AgenffRegistrar and bearing CUSP numbers, immediately upon payment for and surrender for exchange of such Initial Bonds by the Underwriter, through the book-entry only system of the Depository Trust Company. (c) The Underwriter will pay the purchase price for the Bonds by wire transfer of immediately available funds to the Paying Agent/Registrar to the account of the Issuer. (d) Time is of the essence in the performance of this Bond Purchase Agreement Tender of the Initial Bonds and definitive Bonds at the time and place specified in this Bond Purchase Agreement is a condition to the Underwriter's obligations hereunder. If the Issuer is unable to perform its obligations hereunder at such time and place, the Underwriter may, at its option, either extend the time or change the place of performance or terminate its obligations hereunder. 7. Closing Conditions. The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations, warranties and agreements of the Issuer contained herein, and in reliance upon the representations, warranties and agreements to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Issuer of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriter's obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Issuer of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions including the delivery by the Issuer of such documents as are enumerated 45474063.1 6 herein, in form and substance reasonably satisfactory to the Underwriter and counsel to the Underwriter: (a) The representations and warranties of the Issuer contained herein shall be tree, complete and correct in all material respects on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing. (b) The Issuer shall have performed and complied with all agreements and conditions required by this Bond Purchase Agreement to be performed or complied with by it prior to or at the Closing. (c) At the time of the Closing, 0) the Bond Resolution, the Indenture, the Bonds, the Tn-Party Agreement and the Interlocal Agreements shall be in full force and effect and shall not have been amended, modified or supplemented, and the Limited Offering Memorandum shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriter, (ii) the net proceeds of the sale of the Bonds and any funds to be provided by the Issuer shall be deposited and applied as described in the Limited Offering Memorandum and in the Bond Resolution and (iii) all actions of the Issuer required to be taken by the Issuer shall be performed in order for Bond Counsel to deliver its opinions referred to hereafter. (d) At or prior to the Closing, the Bond Resolution and the Indenture shall have been duly executed and dehvered by the Issuer and the Issuer shall have duly executed and delivered and the Pay/ng Agent/Registrar shall have duly authenticated the definitive Bonds. (e) At the time of the Closing, the Issuer shall deliver the Bonds to the Underwriter. (f) At the time of the Closing, there shall not have occurred any change or any development involving a prospective change in the condition, financial or otherwise, or in the revenues or operations of the Issuer, from that set forth in the Lirmted Offering Memorandum that in the reasonable judgment of the Underwriter, is material and adverse and that makes it, in the judgment of the Underwriter, impracticable to market the Bonds on the terms and in the manner contemplated in the Limited Offering Memorandum. (g) All steps to be taken and all instruments and other documents to be executed, and all other legal matters in connection with the transactions contemplated by this Bond Purchase Agreement shall be reasonably satisfactory in legal form and effect to the Underwriter and to counsel for the Underwriter. (h) At or prior to the Closing, the Underwriter shall have received copies of each of the following documents: (l) The Limited Offering Memorandum, and each supplement or amendment thereto as may have been agreed to by the Underwriter, if any, executed on behalf of the Issuer by the manual or facsimile signature of the Chair of its Governing Body; (2) The Bond Resolution, having been duly adopted by the Issuer and being in full force and effect, with such supplements or amendments as may have been agreed to by the Underwriter; 45474063 I 7 (3) Copies of the Indenture certified to be in full force and effect; (4) Copies of the ordinances creating and setting the current boundaries of Reinvestment Zone Number Two, City of Corpus Christi, Texas ("Reinvestment Zone Two"), and a copy of the resolution creating the Issuer and approving its articles of incorporation and by-laws, all certified to be in full force and effect; (5) A certificate of continued existence with respect to the Issuer from the Texas Secretary of State, a copy of the Issuer's Articles of Incorporation certified by the Texas Secretary of State and a certificate of good standing with respect to the Issuer from the Texas Comptroller of Public Accounts, all dated within three days of the Closing Date; (6) A copy of the Tn-Party Agreement and the Interlocal Agreements, with all supplements or amendments enacted through the Closing Date, certified to be in full force and effect, and a copy of the Project Cooperation Agreement between the Department of the Army and the City of Corpus Christi, Texas, for Construction of the North Padre Island Storm Damage Reduction and Environmental Restoration Project, as finally executed by both parties and in full force and effect; (7) A certificate, dated as of the Closing and signed by an Issuer Representative, solely in his official capacity, to the effect that, (i) the representations, warranties, and covenants of the Issuer contained herein are true and correct in ali material respects as of the Closing, with the same effect as if made at the Closing; (ii) the Issuer has performed all of its obligations hereunder to be performed at or before the Closing and has satisfied all material conditions on its part to be satisfied hereunder at or before the Closing; (iii) none of the Bond Resolution, the Indenture or the Th-Party Agreement have been amended, modified, supplemented, or repealed since the date of this Bond Purchase Agreement, except as agreed to by the Underwriter, and each is in full force and effect; (iv) no litigation or proceeding against the Issuer is pending or, to the best of her knowledge, threatened in any court or administrative body nor, to the best of knowledge, is there a basis for litigation which would (a) contest the right of the directors or officials of the Issuer to hold and exercise their respective positions, (b) contest the due organization and valid existence of the Issuer, (c) contest the validity, due authorization and execution of the Bonds, the Bond Resolution, the Indenture, this Bond Purchase Agreement or the Tri-Party Agreement, or (d) attempt to limit, enjoin or otherwise restrict or prevent the Issuer from collecting Contract Tax Increments, (v) no event affecting the Issuer has occurred since the date of the Limited Offering Memorandum which should be disclosed in the Limited Offering Memorandum for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein, in light of the circumstances under which made, not misleading in any respect as of the time of Closing, (vi) the information contained in the Limited Offering Memorandum with respect to the Bonds, the Issuer and the Issuer's affairs is true and correct in all material respects and, as of the date of the Limited Offering Memorandum, the Limited Offering Memorandum, with respect to such information, did not, and as of the date of the Closing does not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements with respect to the Issuer and the Bonds made therein, in the light of the circumstances under which they were made, not misleading and (vii) with respect to information in the Limited Offering Memorandum other than the information relating to the 45474063.1 8 Bonds, the Issuer and the Issuer's affairs, she has no reason to believe that such information contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (8) A certificate of the Issuer signed by an appropriate official of the Issuer (a) setting forth the facts, estimates and circumstances in existence on the date of the Closing, which establish that it is not expected that the proceeds of the Bonds will be used ~n a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and any applicable regulations (whether final, temporary or proposed), issued pursuant to the Code, and (b) certifying that to the best of the knowledge and belief of the Issuer there are no other facts, estimates or circumstances that would materially change the conclusions, representations and expectations contained in such certificate; (9) The approving opinion of McCall, Parkhurst & Horton, L.L.P., as bond counsel, in substantially the form set forth in the Limited Offering Memorandum; (10) A supplemental opinion of bond counsel addressed to the Issuer and the Underwriter, substantially to the effect that; (i) the Issuer has duly approved and authorized the distribution of the Limited Offering Memorandum; (ii) the Bonds are exempted securities under the Securities Act of 1933, as amended (the "1933 Act"), and it is not necessary, in connection with the offering and sale of the Bonds, to register any securities under the 1933 Act and neither the Bond Resolution nor the Indenture need be qualified under the Trust Indenture Act of 1939 (the "Trust Indenture Act"); (iii) the information contained in the Limited Offering Memorandum under the headings "THE SERIES 2004 BONDS," PLANS OF FINANCING," "SECURITY AND SOURCE OF PAYMENT," "THE ISSUER," "THE ZONE," "LEGAL MATI'ERS," "TAX MATrERS," and "LEGAL INVESTMENT AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS" fairly summarizes the matters of law and the information purported to be shown therein and the documents included in Appendices A, B and D conform to the respective documents delivered at Closing; and (iv) stating that the Underwriter may rely on the approving Opinion of Bond Counsel described as if it were addressed to it; (11) An opinion of the City Attorney of the City, as general counsel to the Issuer, substantially to the effect set forth in Exhibit B hereto; (12) An opinion of the City Attorney of the City as general counsel to Reinvestment Zone Two, or a certificate from the City, to the effect that Reinvestment Zone Two is validly created and in full force and effect and the Tri-Party Agreement was duly authorized executed and delivered and is a valid and binding obligation of Reinvestment Zone Two, enforceable in accordance with its terms, except to the extent that its enforceability may be 45474063.1 9 limited by applicable provisions of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions generally, and except that such enforceability is subject to general principles of equity and the exercise of judicial discretion (regardless of whether such enforceability is considered in a proceeding in law or at equity); (13) Evidence satisfactory to the Underwriter, which may take the form of a legal opinion of counsel to the City, or a certificate from the City, to the effect that the Tri-Party Agreement, and the City Interlocal Agreement was duly authorized, executed and delivered are valid and binding obligations of the City enforceable in accordance with their respective terms; (14) Evidence satisfactory to the Underwriter, which may take the form of a legal opinion of counsel to the County, or a certificate from the City, to the effect that the County Interlocal Agreement was duly authorized, executed and delivered and is a valid and binding obligation of the County enforceable in accordance with its terms; (15) Evidence satisfactory to the Underwriter, which may take the form of a legal opinion of counsel to the College, or a certificate from the City, to the effect that the College Interlocal Agreement was duly authorized, executed and delivered and is a valid and binding obligation of the College, enforceable in accordance with its terms; (16) Evidence satisfactory to the Underwriter, which may take the form of a legal opinion of counsel to the Hospital District, or a certificate from the City, to the effect that the Hospital District Interlocal Agreement was duly authorized, executed and delivered and is a valid and binding obligation of the Hospital District enforceable in accordance with its terms; (17) An opinion, dated the date of the Closing and addressed to the Underwriter, of Fulbright & Jaworski L.L.P., Underwriter's counsel, to the effect that: (i) the Bonds are exempted securities under the 1933 Act and it ~s not necessary, in connection with the offering and sale of the Bonds, to register any securities under the 1933 Act and neither the Bond Resolution nor the Indenture need be qualified under the Trust Indenture Act; and (ii) based upon their participation in conferences at which the Limited Offering Memorandum was discussed, but without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Limited Offering Memorandum, such counsel has no reason to believe that the Limited Offering Memorandum contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except for any financial, forecast, technical and statistical statements and data included in the Limited Offering Memorandum, in each case as to which no view need be expressed); (18) The approving opinion of the Attomey General of the State of Texas in respect of the Bonds; (19) The registration certificate of the Comptroller of Public Accounts of the State of Texas in respect of the Bonds; and 45474063.1 l0 (20) Such additional legal opinions, certificates, instruments and other documents as the Underwriter or counsel to the underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the Issuer's representations and warranties contained herein and of the statements and the due performance or satisfaction by the Issuer on or prior to the date of the Closing of all the respective agreements then to be performed and conditions then to be satisfied by the Issuer. All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter. If the Issuer shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement. this Bond Purchase Agreement shall terminate and neither the Underwriter nor the Issuer shall be under any further obligation hereunder, except that the check referred to in Paragraph 1 shall be immediately returned to the Underwriter by the Issuer. 8. Termination. The Underwriter shall have the right to cancel its obligation to purchase the Bonds if, between the date of this Bond Purchase Agreement and the Closing, the market price or marketability of the Bonds shall be materially adversely affected in the sole judgment of the Underwriter (as evidenced by a written notice to the Issuer terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by the occurrence of any of the following: (a) Adverse Affect on Income Tax Status. Legislation shall be enacted by or introduced in the Congress or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or favorably reported for passage to either House of the Congress by any comrmttee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of nottce by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to impose, directly or indirectly, federal income taxation upon interest received on obligations of the general character of the Bonds, of the interest on the Bond as described in the Limited Offenng Memorandum, or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences of any of the transactions contemplated herein, or any other action or events shall have occurred which, in the reasonable judgment of the Underwriter, materially adversely affect the market for the Bonds or the market price generally of obligations of the general character of the Bonds; Co) Adverse Affect on Securities Law Exemvtions. Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), 45474(163 1 11 press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the 1933 Act, or that the Bond Resolution is not exempt from qualification under or other requirements of the Trust Indenture Act, or that the issuance, offering, or sale of obligations of the general character of the Bonds, including any and all underlying arrangements, as contemplated hereby or by the Limited Offering Memorandum or otherwise, is or would be in violation of the federal securities law as amended and then in effect; (c) Suspension on Moratorium. A general suspension of trading in securities on the New York Stock Exchange or the American Stock Exchange, the establishment of minimum prices on either such exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, a general banking moratorium declared by federal, State of New York, or State officials authorized to do so; (d) Cham,e of Law. Any amendment to the federal or Texas Constitution or action by any federal or Texas court, legislative body, regulatory body, or other federal or Texas authority materially adversely affecting the tax status of the Issuer, its property, income securities (or interest thereon), or the validity or enforceability of the assessments or the levy of taxes generating Contract Tax Increment, or the ability of the Issuer to receive Contract Tax Increment from the City, the County, the Hospital District or College; (e) Adverse Affect on Disclosure. Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any material statement or information contained in the Limited Offering Memorandum, or has the effect that the Limited Offering Memorandum contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (f) Material Chanl~e. There shall have occurred since the date of this Bond Purchase Agreement any materially adverse change in the affairs or financial condition of the Issuer; (g) Armed Conflict. The United States shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency, or there shall have occurred any other outbreak or substantial escalation of existing hostilities or a national or international calamity or crisis, financial or otherwise, the effect of such outbreak, calamity or crisis on the financial markets of the United States being such as, in the reasonable opinion of the Underwriter, would materially and adversely affect the ability of the Underwriter to market the Bonds; (h) Amendment of Suvvlement. Any fact or event shall exist or have existed that, in the Underwriter's reasonable judgment, requires or has required an amendment of or supplement to the Limited Offering Memorandum; and 45474063 1 12 (i) Prohibition Against Resale. The purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission. 9. Expenses. (a) The Underwriter shall be under no obligation to pay, and the Issuer shall pay, the following expenses incident to the performance of the Issuer's obligations hereunder, including, but not limited to (i) the cost of preparation and printing of the Bonds; (ii) the fees and disbursements of Bond Counsel; (iii) the fees and disbursements of any other engineers, accountants, and other experts, consultants or advisors retained by the Issuer; (iv) the costs of preparing, printing and mailing the Limited Offering Memorandum; (v) fees of the Issuer's financial advisor; (vi) the transcript review fee of the Attorney General of Texas; (vu) the fees and expenses of the Paying Agent/Registrar and Trustee; (viii) the out-of-pocket, miscellaneous and closing expenses, including the cost of travel, of the officers of the Issuer; and (ix) any other expenses mutually agreed to by the Issuer and the Underwriter to be reasonably considered expenses of the Issuer which are incident to the transactions contemplated hereby. (b) The Underwriter shall pay (i) the cost of preparation and printing of this Bond Purchase Agreement; (ii) all advertising expenses in connection with the offering of the Bonds; (iii) the fees and disbursements of counsel retained by the Underwriter; and (iv) all other expenses incurred by it in connection with the offering of the Bonds. 10. Notices. Any notice or other communication to be given to the Issuer under this Bond Purchase Agreement may be given by delivering the same in writing to North Padre Island Development Corporation, 1201 Leopard, Corpus Christi, Texas 78401, Attention: Chair, and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to M.E Allison & Co., Inc., 950 East Basse Road, Second Floor, San Antonio, Texas 78209. 11. Parties in Interest. This Bond Purchase Agreement as heretofore specified shall constitute the entire agreement between us and is made solely for the benefit of the Issuer and the Underwriter (including successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. This Bond Purchase Agreement may not be assigned by the Issuer. All of the Issuer's representations, warranties and agreements contained in this Bond Purchase Agreement shall remain operative and in full force and effect, regardless of (i) any investigations made by or on behalf of the Underwriter; (ii) delivery of and payment for the Bonds pursuant to this Bond Purchase Agreement; and (iii) any terrmnation of this Bond Purchase Agreement. 12. Effectiveness. This Bond Purchase Agreement shall become effective upon the acceptance hereof by the Issuers and shall be valid and enforceable at the time of such acceptance. 13. Choice of Law. This Bond Purchase Agreement shall be governed by and construed in accordance with the law of the State of Texas. 454740631 13 14. Severability. If any provision of this Bond Purchase Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provision of any Constitution, statute, role of public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Bond Purchase Agreement invalid, inoperative or unenforceable to any extent whatever. 15. Business Day. For purposes of this Bond Purchase Agreement, "business day" means any day on which the New York Stock Exchange is open for trading. 16. Section Headings. Section headings have been inserted in this Bond Purchase Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Bond Purchase Agreement and will not be used in the interpretation of any provisions of this Bond Purchase Agreement. 17. Counterparts. This Bond Purchase Agreement may be executed in several counterparts each of which shall be regarded as an original (with the same effect as if the signatures thereto and hereto were upon the same document) and all of which shall constitute one and the same document. [EXECUTION PAGE FOLLOWS] 45474063 [ 14 If you agree with the foregoing, please sign the enclosed counterpart of this Bond Pumhase Agreement and return it to the Underwriter. This Bond Purchase Agreement shall become a binding agreement between you and the Underwriter when at least the counterpart of this letter shall have been signed by or on behalf of each of the parties hereto. Respectfully submitted, M.E. ALLISON & CO., INC. By: Title: Accepted this __ day of , 2004. NORTH PADRE ISLAND DEVELOPMENT CORPORATION By: Title: ATTEST: By: Title: 45474063.1 15 EXHIBIT A BOND TERMS Dated Date: [ Principal Amount: $[ 1 Maturity Date: September 15, 2022 Interest Rate: Coupon [ 1 (Bonds bear interest from date of delivery). Yield Interest Payment Dates: Redemption Provisions: March 15 and September 15, commencing March 15, 2005 Optional Redemption.- The Bonds are subject to redemption prior to maturity at the option of the Issuer, in whole or in part, from time to time on September 15, 2009, or any date thereafter, at a price equal to the principal amount of the Bonds to be redeemed, plus a premium on and after September 15, 2009 of 5% reducing 1% on each September 15 thereafter until September 15, 2014, when the Bonds may be redeemed at par. plus, in each case, accrued interest from the most recent interest payment date to the date fixed for redemption. If less than all of the bonds are to be redeemed, the Issuer shall determine the particular Bonds or portions thereof to be redeemed; provided, that if any Bond is selected for redemption in part it shall not be redeemed in an amount that would, upon exchange, result in a Bond in a denomination less than $100,000. Mandatory Sinkin~ Fund Redemption.-The Bonds are subject to mandatory sinking fund redemption prior to maturity in the amounts and on the dates set out tn the attached Schedule A. The Bonds to be redeemed in any year by mandatory sinking fund redemption shall be selected by lot from the Bonds then subject to redemption; provided, that if any Bond is selected for redemption in part it shall not be redeemed in an amount that would, upon exchange, result in a Bond in a denomination less than $100,000. The principal amount of Bonds required to be redeemed on each such redemption date pursuant to the foregoing operation of the mandatory sinking fund redemption shall be reduced, at the option of the Issuer, by the principal amount of the bonds which, at least 45 days prior to the mandatory sinking funds redemption date, (1) shall have been acquired by the Issuer and delivered to IP Morgan Chase Bank, as paying agenffregistrar (the "Paying Agent/Registrar") for cancellation or (2) shall have been acquired and canceled by the Paying Agent/Registrar at the direction of the Issuer, in either case of (1) or (2) at a price not exceeding the par or principal amount of such Bonds, or (3) shall have been redeemed pursuant to the optional redemption provisions described above and not theretofore credited against a mandatory sinking fund redemption. During any period in which ownership of the Bonds is determined by a book entry at a securities depository for the Bonds, if fewer than all of the bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity to be redeemed shall be selected in accordance with the arrangements between the Issuer and the 45474063.1 Exhibit A - Page 1 securities depository; provided, that if any Bond is selected for redemption in part it shall not be redeemed in an amount that would result, upon exchange, in a Bond in a denomination less than $100,000. 45474063 Exhibit A - Page 2 ATTACHMENT A TO EXHIBIT A September 15 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total ~cipal Amour * maturity 45~74063. I Attachment A to Exhibit A - Page 1 EXHIBIT B OPINION OF GENERAL COUNSEL TO THE ISSUER 1. The Issuer is validly existing as a not-for-profit local government corporation in good standing under the laws of the State of Texas. It is exempt from payment of federal income taxes on its income. 2. The Issuer has the corporate power to execute, deliver and perform its obligations under the Bond Purchase Agreement, the Bond Resolution, the Indenture, the Bonds, and the Tri- Party Agreement, and to pledge the Contract Tax Increments to be received by it and the other moneys, rights and interests pledged pursuant to the Indenture. 3. The Issuer has duly authorized, executed and dehvemd the Bond Purchase Agreement, the Bond Resolution, the Indenture, the Bonds, and the Tri-Party Agreement. 4. The Bond Resolution, the Indenture, the Purchase Agreement, and the Tri-Party Agreement constitute the legal, valid and binding obligations of the Issuer enforceable in accordance with their terms, except as the enforceability thereof may be subject to or limited by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium, and other similar laws relating to or affecting creditors' rights generally, and subject as to enforceability, to general principles of equity. 5. The execution, delivery and performance by the Issuer of the Bond Resolution, the Indenture, the Bond Purchase Agreement, and the Th-Party Agreement do not require the authorization, approval or consent of any governmental authority, except for such authorizations, approvals or consents as have already been obtained. 6. The execution and delivery of the Bond Resolution, the Indenture, the Bond Purchase Agreement, and the Th-Party Agreement, and compliance with the terms and provisions of each thereof, will not conflict with or constitute a breach of or default under, or, except with respect to the pledge of the Pledged Revenues (as such term is defined in the Indenture) under the Indenture, result in the creation of any lien, charge or encumbrance under (a) the Articles of Incorporation or Bylaws of the Issuer; (b) any material indenture, mortgage, deed of trust, agreement or other instrument known to us to which the Issuer is a party or is otherwise subject to or bound; or (c) any order, law, rule or regulation applicable to the Issuer of any court or other governmental body of which we are aware. 7. There is no action, suit, proceeding or investigation at law or in equity before or by any court, against or affecting the Issuer wherein an adverse determination would affect the corporate power of the Issuer to make or perform its obligations under the Bond Purchase Agreement, the Bond Resolution, the Indenture or the Tfi-Party Agreement, or which would impair the issuance, sale or delivery of the Bonds. 8. The Issuer has pledged, and all necessary action on the part of the Issuer has been taken as required to pledge under the Indenture, all of the Issuer's right, title and interest in the Pledged Revenues to the Trustee on behalf of the holders of the Bonds. 45474063.1 Exhibit B - Page 1 9. The Issuer's pledge of the Pledged Revenues is valid and binding in accordance with its terms without further action on its part and without any filing or recording with respect thereto except in the records of the Issuer. [0. Nothing in any statute, regulation, order or rule of law applicable to or affecting the Issuer either grants or affords to the Issuer the benefit of any claim or defense of sovereign or governmental immumty from, or otherwise operates to exempt the Issuer from service of, process or suit in an appropriate court having jurisdiction over the Issuer in connection with any contract claim which may be asserted with respect to the matters which are the subject of the Bonds, the Bond Resolution, the Indenture, the Bond Purchase Agreement or the Th-Party Agreement. 11. The information contained in the Limited Offering Memorandum under the heading "THE ISSUER" and "THE ZONE" fairly summarizes the matters of law and information purported to be shown therein. 45474063.1 Exhibit B - Page 2