HomeMy WebLinkAboutORD 98-69 ORDINANCE NO. 9f-�9
ORDINANCE AUTHORIZING THE ISSUANCE OF THE CITY OF
BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM
REVENUE REFUNDING BONDS, SERIES 1998; AUTHORIZING
THE EXECUTION AND DELIVERY OF AN ESCROW
AGREEMENT AND THE SUBSCRIPTION FOR AND PURCHASE
OF CERTAIN ESCROWED SECURITIES; AND CONTAINING
OTHER MATTERS RELATED THERETO
THE STATE OF TEXAS §
COUNTY OF JEFFERSON §
THE CITY OF BEAUMONT §
WHEREAS, The City of Beaumont, Texas (the "City") is authorized,
pursuant to Articles 1111 et seq., Vernon's Texas Civil Statutes, as amended, to
issue bonds payable from the net revenues of its waterworks and sewer system
and to issue such bonds, without an election, for money for acquisitions,
extensions, construction, improvement or repair of such system; and
WHEREAS, the City has heretofore issued The City of Beaumont,
Texas, Waterworks and Sewer System Junior Lien Revenue Bonds, Series
1992 (the "Series 1992 Refunded Bonds"); and
WHEREAS, the City has also heretofore issued The City of Beaumont,
Texas, Waterworks and Sewer System Revenue and Refunding Bonds,
Series 1989 (the "Series 1989 Prior Lien Bonds");
WHEREAS, the City now desires to refund all of the Series 1992
Refunded Bonds and a portion of the Series 1989 Prior Lien Bonds (hereinafter
such bonds to be refunded referred to collectively as the "Refunded Bonds") in
advance of their maturities in order to achieve an interest cost savings; and
WHEREAS, Article 717k and Articles 1111 et seq., Vernon's Texas Civil
Statutes, as amended, authorize the City to issue refunding bonds for the
purpose of refunding the Refunded Bonds in advance of their maturities, and to
accomplish such refunding by depositing directly with any paying agent for the
Refunded Bonds the proceeds of such refunding bonds, together with other
available funds, in an amount sufficient to provide for the payment or redemption
of the Refunded Bonds, and provides that such deposit shall constitute the
making of firm banking and financial arrangements for the discharge and final
payment or redemption of the Refunded Bonds; and
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WHEREAS, the City desires to call all of the outstanding Refunded Bonds
for redemption prior to their maturities; and
WHEREAS, the City desires to authorize the execution of an escrow
agreement and provide for the deposit of proceeds of the refunding bonds
authorized herein to pay and redeem the Refunded Bonds; and
WHEREAS, upon the issuance of the refunding bonds herein authorized
and the deposit of funds referred to above, the Refunded Bonds shall no longer
be regarded as being outstanding, except for the purpose of being paid pursuant
to such deposit, and the pledges, liens, trusts and all other covenants,
provisions, terms and conditions of the ordinances authorizing the issuance of
the Refunded Bonds shall be discharged, terminated and defeased;
Now, Therefore
BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS:
1. Findings and Determinations. It is hereby found and determined
that the transactions contemplated in this Ordinance will benefit the City by
providing a savings in debt service, and that such benefit is sufficient
consideration for the refunding of the Refunded Bonds.
2. Definitions. Throughout this ordinance the following terms and
expressions as used herein shall have the meanings set forth below:
The term "Act" shall mean Articles 1111 through 1118, Vernon's Texas
Civil Statutes, as amended.
The term "Additional Parity Bonds" shall mean the additional parity
revenue bonds permitted to be issued by the City pursuant to Sections 20 and
21 of this Ordinance.
The term "Annual Principal and Interest Requirements" shall mean, with
respect to Parity Bonds, Junior Lien Bonds, or any one or more series thereof,
and with respect to any Fiscal Year, all payments of principal and interest
scheduled to become due during such Fiscal Year by reason of an interest
payment date or a maturity date or mandatory redemption date occurring after
the date of calculation.
The term "Average Annual Principal and Interest Requirements" shall
mean, with respect to any series of Parity Bonds and/or Junior Lien Bonds, an
amount calculated by dividing the total Annual Principal and Interest
Requirements on such bonds by the number of Fiscal Years remaining until the
last maturity of such bonds.
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The term "Blanket Issuer Letter of Representations" means the Blanket
Issuer Letter of Representations between the City, the Registrar and DTC.
The term "Bond Insurance Policy" shall mean the insurance policy issued
by the Bond Insurer guaranteeing the scheduled payment of principal of and
interest on the Bonds when due.
The term "Bond Insurer" shall mean Financial Security Assurance Inc.,
a New York stock insurance company, or any successor thereto or assignee
thereof.
The term "Bond Register" shall mean the books of registration kept by the
Registrar in which are maintained the names and addresses of, and the principal
amounts of the Bonds registered to, each Owner.
The term "Bonds" shall mean the $22,260,000 The City of Beaumont,
Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series
1998 authorized in this Ordinance, unless the context clearly indicates otherwise.
The term "Business Day" shall mean any day which is not a Saturday,
Sunday, a day on which banking institutions in the city where the principal
corporate trust office of the Registrar is located are authorized by law or
executive order to close, or a legal holiday.
The term "City" shall mean The City of Beaumont, Texas.
The term "Closing Date" means the date of the initial delivery of and
payment for the Bonds.
The term "Code" means the Internal Revenue Code of 1986, as amended.
The term "Comptroller" means the Comptroller of Public Accounts of the
State of Texas.
The term "DTC' means The Depository Trust Company of New York,
New York, or any successor securities depository.
The term "DTC Participant" means brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations on whose
behalf DTC was created to hold securities to facilitate the clearance and
settlement of securities transactions among DTC Participants.
The term "Financial Guaranty Agreement" shall mean a financial guaranty
agreement between the City and a Qualified Insurer providing for issuance of a
Qualified Surety Bond, payment of any premiums therefor, and reimbursement of
any amounts advanced thereunder.
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The term "Gross Revenues" shall mean all revenues, income and receipts
of every nature derived or received by the City from the operation and ownership
of the System (but excluding any utility deposits) and the interest income from
the investment or deposit of money in the Revenue Fund, the Debt Service
Fund, and the Reserve Fund.
The term "Interest Payment Date", when used in connection with any
Bond, shall mean September 1, 1999, and each March 1 and September 1
thereafter until maturity or earlier redemption of such Bond.
The term "Junior Lien Bonds" shall mean all junior lien bonds issued and
outstanding by the City that are secured by a junior lien on the Net Revenues of
the System.
The term "Maintenance and Operation Expenses" shall mean the
reasonable and necessary expenses of operation and maintenance of the
System, including all salaries, labor, materials, repairs and extensions necessary
to render efficient service, and all payments under contracts now or hereafter
defined as operating expenses by the Legislature of the State of Texas.
Depreciation shall never be considered as a Maintenance and Operation
Expense.
The term "MSRB" shall mean the Municipal Securities Rulemaking Board.
The term "Net Revenues" shall mean all Gross Revenues remaining after
deducting the Maintenance and Operation Expenses.
The term "NRMSIR" means each person whom the SEC or its staff has
determined to be a nationally recognized municipal securities information
repository within the meaning of the Rule from time to time.
The term "Ordinance" as used herein and in the Bonds shall mean this
ordinance authorizing the Bonds and all amendments and supplements hereto.
The term "Owner" shall mean any person who shall be the registered
owner of any outstanding Bonds.
The term "Parity Bonds" shall mean the Bonds, the Series 1989 Prior Lien
Bonds, and each series of Additional Parity Bonds from time to time hereafter
issued, but only to the extent such Parity Bonds remain outstanding within the
meaning of this Ordinance.
The term "Paying Agent" shall mean the Registrar.
The term "Qualified Insurer" shall mean any insurance company which
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issues a Qualified Surety Bond and which has been rated in the highest category
rating by A.M. Best & Company, Standard & Poor's Rating Services or Moody's
Investors Services, Inc.
The term "Qualified Surety Bond" shall mean any surety bond which is
issued by an Insurer and which provides that if insufficient amounts are on
deposit in the Reserve Fund for transfer to the Interest and Sinking Fund in order
to pay when due principal of and interest on the Bonds with respect to which the
surety bond has been issued, the Insurer shall deposit in the Reserve Fund an
amount equal to the face amount of the surety bond less any unreimbursed
deposits previously made by the Insurer thereunder.
The term "Record Date" shall mean, for any Interest Payment Date, the
fifteenth (15th) calendar day of the month next preceding each Interest Payment
Date.
The term "Refunded Bonds" shall mean all of the outstanding The City of
Beaumont, Texas, Waterworks and Sewer System Junior Lien Revenue
Bonds, Series 1992, and $2,060,000 of The City of Beaumont, Texas,
Waterworks and Sewer System Revenue and Refunding Bonds, Series
1989.
The term "Registrar" shall mean Chase Bank of Texas, National
Association, and its successors in that capacity.
The term "Reserve Fund Requirement" shall mean an amount equal to
the average annual principal and interest requirement on the Parity Bonds, which
may be determined and redetermined each year by the City but in no event less
frequently than upon the issuance of each series of Parity Bonds.
The term "Rule" shall mean SEC Rule 15c-12, as amended from time to
tome.
The term "SEC" shall mean the United States Securities and Exchange
Commission.
The term "Series 1989 Prior Lien Bonds" shall mean The City of
Beaumont, Texas, Waterworks and Sewer System Revenue and Refunding
Bonds, Series 1989.
The term "Series 1989 Prior Lien Bond Ordinance" shall mean the Bond
Ordinance dated August 22, 1989, passed by the City Council of the City
authorizing the issuance of the Series 1989 Prior Lien Bonds.
The term "SID" shall mean the Municipal Advisory Council of Texas, which
has been designated by the State of Texas as, and determined by the SEC staff
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to be, a state information depository within the meaning of the Rule.
The term "Special Project" shall mean, to the extent permitted by law, any
property, improvement or facility declared by the City not to be part of the
System and substantially all of the costs of the acquisition, construction and
installation of which is paid from proceeds of a financing transaction other than
the issuance of bonds payable from ad valorem taxes or Net Revenues of the
System, and for which all maintenance and operation expenses are payable from
sources other than revenues of the System, but only to the extent that and for so
long as all or any part of the revenues or proceeds of which are or will be
pledged to secure the payment or repayment of such costs of acquisition,
construction and installation under such financing transaction.
The term "System" shall mean all properties, facilities, improvements,
equipment, interests and rights constituting the waterworks and sewer system of
the City, including all future extensions, replacements, betterments, additions,
improvements, enlargements, acquisitions, purchases and repairs to the System,
but excluding all Special Projects.
The term "Underwriters" shall mean PAINEWEBBER INCORPORATED,
ESTRADA, HINOJOSA & COMPANY, INC., FIRST SOUTHWEST COMPANY
and MORGAN KEEGAN & CO., INC.
3. Authorization. The Bonds shall be issued in fully registered form in
the total authorized aggregate amount of TWENTY-TWO MILLION TWO
HUNDRED SIXTY THOUSAND DOLLARS ($22,260,000) for the purpose of
(i) advance refunding the Refunded Bonds, and (ii) paying all costs of issuance
of the Bonds.
4. Designation, Date, and Interest Payment Dates. The Bonds shall
be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND
SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 1998" and shall
be dated November 1, 1998. The Bonds shall bear interest at the rates set forth
in Section 5 below from the later of the date of initial delivery or the most recent
Interest Payment Date to which such interest has been paid or duly provided for,
calculated on the basis of a 360 day year of twelve 30 day months, payable on
September 1, 1999, and semiannually thereafter on September 1 and March 1 of
each year until maturity or prior redemption.
5. Initial Bonds, Numbers and Denominations. The Bonds shall be
initially issued bearing the numbers, in the principal amounts, and bearing
interest at the rates set forth in the following schedule, and may be transferred
and exchanged as set out in this Ordinance. The Bonds shall mature, in
accordance with this Ordinance, on September 1 in each of the years and in the
amounts set out in such schedule. Bonds delivered on transfer of or in
exchange for other Bonds shall be numbered (with appropriate prefix) in order of
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their authentication by the Registrar, shall be in the denomination of $5,000 or
integral multiples thereof, and shall mature on the same date and bear interest at
the same rate as the Bond or Bonds in lieu of which they are delivered.
BONDS
Bond Principal Interest
Number Year Amount Rate
R-1 1999 $ 520,000 %
R-2 2000 $ 650,000 %
R-3 2001 $ 675,000 %
R-4 2002 $ 685,000 %
R-5 2003 $ 950,000 %
R-6 2004 $ 990,000
R-7 2005 $1,920,000
R-8 2006 $2,000,000
R-9 2007 $2,075,000 %
R-10 2008 $2,165,000 %
R-11 2009 $2,255,000 %
R-12 2010 $2,350,000 %
R-13 2011 $2,455,000 %
R-14 2012 $2,570,000 %
6. Execution of Bonds; Seal. The Bonds shall be signed by the Mayor
and countersigned by the City Clerk or Deputy City Clerk, by their manual,
lithographed, or facsimile signatures, and the official seal of the City shall be
impressed or placed in facsimile thereon. Such facsimile signatures on the
Bonds shall have the same effect as if each of the Bonds had been signed
manually and in person by each of said officers, and such facsimile seal on the
Bonds shall have the same effect as if the official seal of the City had been
manually impressed upon each of the Bonds. If any officer of the City whose
manual or facsimile signature shall appear on the Bonds shall cease to be such
officer before the authentication of such Bonds or before the delivery of such
Bonds, such manual or facsimile signature shall nevertheless be valid and
sufficient for all purposes as if such officer had remained in such office.
7. Approval by Attorney General; Registration by Comptroller. The
Bonds to be initially issued shall be delivered to the Attorney General of Texas
for approval and shall be registered by the Comptroller of Public Accounts of the
State of Texas. The manually executed registration certificate of the Comptroller
of Public Accounts substantially in the form provided in Section 18 of this
Ordinance shall be attached or affixed to the Bonds to be initially issued.
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8. Authentication. Except for the Bonds to be initially issued, which
need not be authenticated by the Registrar, only such Bonds which bear thereon
a certificate of authentication, substantially in the form provided in Section 18 of
this Ordinance, manually executed by an authorized representative of the
Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or
obligatory for any purpose. Such duly executed certificate of authentication shall
be conclusive evidence that the Bonds so authenticated were delivered by the
Registrar hereunder.
9. Payment of Principal and Interest. The Registrar is hereby
appointed as the paying agent for the Bonds. The principal of and premium, if
any, on the Bonds shall be payable, without exchange or collection charges, in
any coin or currency of the United States of America which, on the date of
payment, is legal tender for the payment of debts due the United States of
America, upon their presentation and surrender as they respectively become due
and payable, whether at maturity or by prior redemption, at the principal
corporate trust office of the Registrar. The interest on each Bond shall be
payable by check 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 Bond Register. Any
accrued interest payable at maturity on a Bond shall be paid upon presentation
and surrender of such Bond at the principal corporate trust office of the
Registrar.
If the date for payment of the principal of or interest on any Bond is not a
Business Day, then the date for such payment shall be the next succeeding
Business Day, and payment on such date shall have the same force and effect
as if made on the original date such payment was due.
10. Successor Registrars. The City covenants that at all times while
any Bonds are outstanding it will provide a legally qualified bank, trust company,
financial institution or other agency to act as Registrar for the Bonds. The City
reserves the right to change the Registrar for the Bonds on not less than 60 days
written notice to the Registrar, so long as any such notice is effective not less
than 60 days prior to the next succeeding principal or interest payment date on
the Bonds. Promptly upon the appointment of any successor Registrar, the
previous Registrar shall deliver the Bond Register or copies 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.
11. Special Record Date. If interest on any Bond is not paid on any
Interest Payment Date and continues unpaid for thirty (30) days thereafter, the
Registrar shall establish a new record date for the payment of such interest, to
be known as a Special Record Date. The Registrar shall establish a Special
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Record Date when funds to make such interest payment are received from or on
behalf of the City. Such Special Record Date shall be fifteen (15) days prior to
the date fixed for payment of such past due interest, and notice of the date of
payment and the Special. Record Date shall be sent by United States mail, first
class, postage prepaid, not later than five (5) days prior to the Special Record
Date, to each affected Owner of record as of the close of business on the day
prior to the mailing of such notice.
12. Ownership; Unclaimed Principal and Interest. The City, the
Registrar and any other person may treat the person in whose name any Bond is
registered as the absolute owner of such Bond for the purpose of making and
receiving payment of principal of and premium, if any, or interest on such Bond,
and for all other purposes, whether or not such Bond is overdue, and neither the
City nor the Registrar shall be bound by any notice or knowledge to the contrary.
All payments made to the person deemed to be the owner of any Bond in
accordance with this Section 12 shall be valid and effectual and shall discharge
the liability of the City and the Registrar upon such Bond to the extent of the
sums paid.
Amounts held by the Registrar which represent principal of and interest on
the Bonds remaining unclaimed by the Owner after the expiration of three years
from the date such amounts have become due and payable shall be reported
and disposed of by the Registrar in accordance with the applicable provisions of
Texas law, including Title 6 of the Texas Property Code, as amended.
13. Registration, Transfer, and Exchange. So long as any Bonds
remain outstanding, the Registrar shall keep the Bond Register at its principal
corporate trust office and, subject to such reasonable regulations as it may
prescribe, the Registrar shall provide for the registration and transfer of Bonds in
accordance with the terms of this Ordinance. If the Registrar does not maintain
its principal offices in the State of Texas, the City agrees to keep a Bond
Register at its offices which is identical to the Bond Register maintained by the
Registrar and the Registrar will notify the City as to any changes in the Bond
Register within 1 business day.
Each Bond shall be transferable only upon the presentation and surrender
thereof at the principal corporate 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 Bond in proper form for transfer, the Registrar
shall authenticate and deliver in exchange therefor, within 72 hours after such
presentation, a new Bond or Bonds, registered in the name of the transferee or
transferees, in authorized denominations and of the same maturity and
aggregate principal amount and bearing interest at the same rate as the Bond or
Bonds so presented.
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All Bonds shall be exchangeable upon presentation and surrender thereof
at the principal corporate trust office of the Registrar for a Bond or Bonds of the
same type, maturity and interest rate and in any authorized denomination, in an
aggregate amount equal to the unpaid principal amount of the Bond or Bonds
presented for exchange. The Registrar shall be and is hereby authorized to
authenticate and deliver exchange Bonds in accordance with the provisions of
this Section 13. Each Bond delivered in accordance with this Section 13 shall be
entitled to the benefits and security of this Ordinance to the same extent as the
Bond or Bonds in lieu of which such Bond is delivered.
The City or the Registrar may require the Owner of any Bond to pay a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with the transfer or exchange of such Bond. Any fee or
charge of the Registrar for such transfer or exchange shall be paid by the City.
14. Mutilated Lost, or Stolen Bonds. Upon the presentation and
surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate
and deliver in exchange therefor a replacement Bond of like maturity, interest
rate, and principal amount, bearing a number not contemporaneously
outstanding. If any Bond is lost, apparently destroyed, or wrongfully taken, the
City, pursuant to the applicable laws of the State of Texas and in the absence of
notice or knowledge that such Bond has been acquired by a bona fide
purchaser, shall execute and the Registrar shall authenticate and deliver a
replacement Bond of like maturity, interest rate and principal amount or Maturity
Amount, bearing a number not contemporaneously outstanding.
The City or the Registrar may require the Owner of a mutilated Bond to
pay a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith and any other expenses connected therewith,
including the fees and expenses of the Registrar. The City or the Registrar may
require the Owner of a lost, apparently destroyed or wrongfully taken Bond,
before any replacement Bond is issued, to:
(1) furnish to the City and the Registrar satisfactory evidence of
the ownership of and the circumstances of the loss, destruction or theft of
such Bond;
(2) furnish such security or indemnity as may be required by the
Registrar and the City to save them harmless;
(3) pay all expenses and charges in 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) meet any other reasonable requirements of the City and the
Registrar.
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If, after the delivery of such replacement Bond, a bona fide purchaser of the
original Bond in lieu of which such replacement Bond was issued presents for
payment such original Bond, the City and the Registrar shall be entitled to
recover such replacement Bond from the person to whom it was delivered or any
person taking therefrom, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the City or the Registrar in connection
therewith.
If any such mutilated, lost, apparently destroyed or wrongfully taken Bond
has become or is about to become due and payable, the City in its discretion
may, instead of issuing a replacement Bond, authorize the Registrar to pay such
Bond.
Each replacement Bond delivered in accordance with this Section 14 shall
be entitled to the benefits and security of this Ordinance to the same extent as
the Bond or Bonds in lieu of which such replacement Bond is delivered.
15. Cancellation of Bonds. All Bonds paid in accordance with this
Ordinance, and all Bonds in lieu of which exchange Bonds or replacement
Bonds are authenticated and delivered in accordance herewith, shall be
cancelled and destroyed upon the making of proper records regarding such
payment. The Registrar shall furnish the City with appropriate certificates of
destruction of such Bonds.
16. Book-Enty System. (a) The Initial Bonds shall be registered in the
name of the Underwriters. Except as provided in subparagraph (c) below, all
other Bonds shall be registered in the name of Cede & Co., as nominee of DTC.
(b) With respect to Bonds registered in the name of Cede & Co., as
nominee of DTC, the City and the Registrar shall have no responsibility or
obligation to any DTC Participant or to any person on behalf of whom such a DTC
Participant holds an interest in the Bonds. Without limiting the immediately
preceding sentence, the City and the Registrar shall have no responsibility or
obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or
any DTC Participant with respect to any ownership interest in the Bonds, (ii) the
delivery to any DTC Participant or any other person, other than an Owner of a
Bond, as shown on the Register, of any notice with respect to the Bonds, including
any notice of redemption, or (iii) the payment to any DTC Participant or any other
person, other than an Owner of a Bond, as shown in the Register, of any amount
with respect to principal of, premium, if any, or interest on the Bonds.
Notwithstanding any other provision of this Ordinance to the contrary, the City and
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the Registrar shall be entitled to treat and consider the person in whose name
each Bond is registered in the Register as the absolute Owner of such Bond for
the purpose of payment of principal of, premium, if any, and interest on the Bonds,
for the purpose of all matters with respect to such Bond, for the purpose of
registering transfers with respect to such Bond, and for all other purposes
whatsoever. The Registrar shall pay all principal of, premium, if any, and interest
on the Bonds only to or upon the order of the respective Owners, as shown in the
Register as provided in this Order, or their respective attorneys duly authorized in
writing, and all such payments shall be valid and effective to fully satisfy and
discharge the City's obligations with respect to payment of principal of, premium, if
any, and interest on the Bonds to the extent of the sum or sums so paid. No
person other than an Owner as shown in the Register, shall receive a Bond
certificate evidencing the obligation of the District to make payments of amounts
due pursuant to this Ordinance. Upon delivery by DTC to the Registrar of written
notice to the effect that DTC has determined to substitute a new nominee in place
of Cede & Co., the word "Cede & Co." in this Order shall refer to such new
nominee of DTC.
(c) In the event that the City in its sole discretion determines that the
beneficial owners of the Bonds be able to obtain certificated Bonds, or in the event
DTC discontinues the services described herein, the City shall (i) appoint a
successor securities depository, qualified to act as such under Section 17(a) of the
Securities and Exchange Act of 1934, as amended, and notify DTC and DTC
Participants,as identified by DTC, of the appointment of such successor securities
depository and transfer one or more separate Bonds to such successor securities
depository or (ii) notify DTC and DTC Participants, as identified by DTC, of the
availability through DTC of Bonds and transfer one or more separate Bonds to
DTC Participants having Bonds credited to their DTC , as identified by DTC. In
such event, the Bonds shall no longer be restricted to being registered in the
Register in the name of Cede & Co., as nominee of DTC, but may be registered in
the name of the successor securities depository, or its nominee, or in whatever
name or names Owners transferring or exchanging Bonds shall designate, in
accordance with the provisions of this Ordinance.
(d) The execution and delivery of the Blanket Letter of Representations is
hereby approved with such changes as may be approved by the Mayor or City
Manager of the City and the Mayor is hereby authorized and directed to execute
such Blanket Letter of Representations.
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(e) Notwithstanding any other provision of this Ordinance to the contrary,
so long as any Bonds are registered in the name of Cede & Co., as nominee of
DTC, all payments with respect to principal of, premium, if any, and interest on
such Bonds, and all notices with respect to such Bonds, shall be made and given,
respectively,in the manner provided in the Blanket Letter of Representations.
17. Optional Redemption. The City reserves the right, at its option, to
redeem Bonds maturing September 1, 2009, and thereafter prior to maturity, in
whole or in part, in such manner as the City may select, on September 1, 2008,
or on any date thereafter, at a price of par plus accrued interest on the amounts
called for redemption to the date fixed for redemption.
Principal amounts may be redeemed only in integral multiples of $5,000.
If a Bond subject to redemption is in a denomination larger than $5,000, a
portion of such Bond may be redeemed, but only in integral multiples of $5,000.
Upon surrender of any Bond for redemption in part, the Registrar, in accordance
with Section 13 hereof, shall authenticate and deliver in exchange therefor a
Bond or Bonds of like maturity and interest rate in an aggregate principal amount
equal to the unredeemed portion of the Bond so surrendered.
Notice of any redemption identifying the Bonds to be redeemed in whole
or in part shall be given by the Registrar at least thirty days prior to the date fixed
for redemption by sending written notice by first class mail to the Owner of each
Bond to be redeemed in whole or in part at the address shown on the Register.
Such notices shall state the redemption date, the redemption price, the place at
which Bonds are to be surrendered for payment and, if less than all Bonds
outstanding are to be redeemed, the numbers of the Bonds or portions thereof to
be redeemed. Any notice given as provided in this Section 17 shall be
conclusively presumed to have been duly given, whether or not the Owner
receives such notice. By the date fixed for redemption, due provision shall be
made with the Registrar for payment of the redemption price of the Bonds or
portions thereof to be redeemed, plus accrued interest to the date fixed for
redemption. When the 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 Bonds or portions thereof so redeemed shall no longer be regarded as
outstanding except for the purpose of receiving payment solely from the funds so
provided for redemption, and the rights of the Owners to collect interest which
would otherwise accrue after the redemption date on any Bond or portion thereof
called for redemption shall terminate on the date fixed for redemption.
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18. Form. The form of the Bonds, including the form of the Registrar's
Authentication Certificate, the form of Assignment, the form of Statement of
Insurance, and the form of Registration Certificate of the Comptroller of Public
Accounts of the State of Texas which shall be attached or affixed to the Bonds
initially issued shall be, respectively, substantially as follows, with such additions,
deletions and variations as may be necessary or desirable and not prohibited by
this Ordinance:
FORM OF BOND
United States of America
State of Texas
NUMBER DENOMINATION
R-
REGISTERED REGISTERED
THE CITY OF BEAUMONT, TEXAS,
WATERWORKS AND SEWER SYSTEM
REVENUE REFUNDING BONDS, SERIES 1998
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
November 1, 1998
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Beaumont, Texas (the "City") promises to pay, but solely from
certain Net Revenues as hereinafter provided, to the Registered Owner identified
above, or registered assigns, on the maturity date specified above, upon
presentation and surrender of this bond at the principal corporate trust office of
Chase Bank of Texas, National Association (the "Registrar"), the principal
amount identified above, payable in any coin or currency of the United States of
America which on the date of payment of such principal is legal tender for the
payment of debts due the United States of America, and to pay, solely from such
Net Revenues, interest thereon at the rate shown above, calculated on the basis
of a 360 day year of twelve 30 day months, from the later of the initial date of
delivery, or the most recent interest payment date to which interest has been
paid or duly provided for. Interest on this bond is payable by check on March 1
and September 1, beginning on September 1, 1999, mailed to the registered
owner of record as shown on the books of registration kept by the Registrar as of
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the fifteenth day of the month next preceding each interest payment date. Any
accrued interest due at maturity shall be paid upon presentation and surrender of
this Bond at the principal corporate trust office of the Registrar.
THIS BOND is one of a duly authorized issue of Bonds, aggregating
$22,260,000 (the "Bonds"), issued for the purpose of (i) refunding prior to
maturity all of the City's outstanding Waterworks and Sewer System Junior Lien
Revenue Bonds, Series 1992, and $2,060,000 of the City's outstanding
Waterworks and Sewer System Revenue and Refunding Bonds, Series 1989,
pursuant to an ordinance adopted by the City Council on November 10, 1998
(the "Ordinance"), and in accordance with the authority of Article 717k and
Articles 1111 et seq., Vernon's Texas Civil Statutes, as amended, and all other
applicable law.
THIS BOND AND ALL OF THE BONDS OF THIS SERIES are special
obligations of the City, and together with the City's outstanding Waterworks and
Sewer System Revenue and Refunding Bonds, Series 1989, are equally and
ratably payable from and secured by a first lien on the "Net Revenues" collected
and received by the City from the operation and ownership of those properties,
facilities, improvements, equipment, interests, rights and powers constituting the
waterworks and sewer system of the City which are defined in the Ordinance as
the "System", which Net Revenues are required to be set aside for and pledged
to the payment of this series of bonds, the outstanding bonds and all additional
bonds issued on a parity therewith, in the Debt Service Fund and the Reserve
Fund required to be maintained for the payment of all such bonds, all as more
fully described and provided for in and subject to the restrictions and limitations
imposed by the Ordinance. This Bond and the series of which it is a part,
together with the interest thereon, are payable solely from such Net Revenues
and do not constitute an indebtedness or general obligation of the City. The
owner hereof shall never have the right to demand payment of this obligation out
of any funds raised or to be raised by taxation.
THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL
PARITY REVENUE BONDS, subject to the restrictions and limitations contained
in the Ordinance, which shall be equally and ratably payable from, and secured
by a first lien on and pledge of, the aforesaid Net Revenues in the same manner
and to the same extent as this Bond and the series of which it is a part.
THE CITY RESERVES THE RIGHT, at its option, to redeem Bonds
maturing September 1, 2009, and thereafter prior to their scheduled maturities, in
whole or from time to time in part, in integral multiples of $5,000, on
September 1, 1998, or on any date thereafter, at a price equal to par plus
accrued interest on the principal amounts called for redemption to the date fixed
for redemption. Reference is made to the Ordinance for complete details
concerning the manner of redeeming Bonds.
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NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days
prior to the date fixed for redemption by first class mail, addressed to the
registered owners of each Bond to be redeemed in whole or in part at the
address shown on the books of registration kept by the Registrar. When Bonds
or portions thereof have been called for redemption, and due provision has been
made to redeem the same, the principal amounts so redeemed shall be payable
solely from the funds provided for redemption, and interest which would
otherwise accrue on the amounts called for redemption shall terminate on the
date fixed for redemption.
THIS BOND IS TRANSFERABLE only upon presentation and surrender
at the principal corporate 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 Ordinance.
THE BONDS ARE EXCHANGEABLE at the principal corporate trust office
of the Registrar for bonds in the principal amount of $5,000 or any integral
multiple thereof, subject to the terms and conditions of the Ordinance.
THIS BOND shall not be valid or obligatory for any purpose or be entitled
to any benefit under the Ordinance unless this Bond either (i) is registered by the
Comptroller of Public Accounts of the State of Texas by registration certificate
attached or affixed hereto or (ii) is authenticated by the Registrar by due
execution of the authentication certificate endorsed hereon.
THE REGISTERED OWNER of this Bond, by acceptance hereof,
acknowledges and agrees to be bound by all the terms and conditions of the
Ordinance.
THE CITY has covenanted in the Ordinance that it will at all times provide
a legally qualified registrar for the Bonds and will cause notice of any change of
registrar to be mailed to each registered owner.
IT IS HEREBY certified, recited and covenanted that this Bond has been
duly and validly issued and delivered; that all acts, conditions and things required
or proper to be performed, to exist and to be done precedent to or in the
issuance and delivery of this Bond have been performed, exist and have been
done in accordance with law; that the bonds of this series do not exceed any
statutory limitation; and that provision has been made for the payment of
principal and interest on this bond and all of the bonds of this series by the
aforesaid lien on and pledge of the Net Revenues of the System.
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IN WITNESS WHEREOF, this bond has been signed with the manual or
facsimile signature of the Mayor and countersigned with the manual or facsimile
signature of the City Clerk, and the official seal of the City has been duly
impressed, or placed in facsimile, on this bond.
THE INITIAL DATE OF DELIVERY of this Bond is December , 1998.
(AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT
(SEAL)
Mayor
City Clerk
The following form of Statement of Insurance shall be printed on the back
of or attached to each Bond:
Statement of Insurance
Financial Security Assurance Inc. ("Financial Security"), New York, New
York, has delivered its municipal bond insurance policy with respect to the
scheduled payments due or principal of and interest on this Bond to Chase Bank
of Texas, National Association, Houston, Texas, or its successor, as paying
agent for the Bonds (the "Paying Agent"). Said Policy is on file and available for
inspection at the principal office of the Paying Agent and a copy thereof may be
obtained from Financial Security or the Paying Agent.
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Form of Registration Certificate
of Comptroller of Public Accounts
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this bond has been examined, certified as to validity,
and approved by the Attorney General of the State of Texas, and that this bond
has been registered by the Comptroller of Public Accounts of the State of Texas.
WITNESS MY SIGNATURE AND SEAL this
Comptroller of Public Accounts
(SEAL) 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
Bond Ordinance described in the text of this Bond.
Chase Bank of Texas, National Association
By:
Authorized Signature
Date of Authentication:
Form of Assignment
ASSIGNMENT
For value received, the undersigned hereby sells, assigns, and transfers
unto
(Please print or type name, address, and zip code of Transferee)
(Please insert Social Security or Taxpayer Identification Number of Transferee)
the within bond and all rights thereunder, and hereby irrevocably constitutes and
appoints attorney
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to transfer said bond on the books kept for registration thereof, with full power of
substitution in the premises.
DATED
Signature Guaranteed:
Registered Owner
NOTICE: The signature above
must correspond to the name of
the registered owner as shown
NOTICE: Signature must be on the face of this bond in
guaranteed by a member firm every particular, without
of the New York Stock any alteration, enlargement
Exchange or a commercial or change whatsoever.
bank or trust company.
19. Legal Opinion; Cusip. The approving opinions of Orgain, Bell &
Tucker, Beaumont, Texas, Bond Counsel, and Vinson & Elkins, L.L.P., Houston,
Texas, Special Tax Counsel, and CUSIP Numbers may be printed on the Bonds,
but errors or omissions in the printing of such opinion or such numbers shall
have no effect on the validity of the Bonds.
20. Bond Covenants While the Series 1989 Prior Lien Bonds are
Outstanding. While the Series 1989 Prior Lien Bonds are outstanding, the
following covenants, terms, conditions and obligations shall exist with respect to
all Parity Bonds:
(a) Pledge and Source of Payment. The City hereby covenants and
agrees that all Gross Revenues of the System shall, as collected and received
by the City, be deposited and paid into the special funds hereinbelow provided,
and shall be applied in the manner hereinafter set forth, in order to provide for
the payment of all Maintenance and Operation Expenses and to provide for the
payment of principal, interest and any redemption premiums on the Parity Bonds,
and all expenses of paying same (including premiums for any Qualified Surety
Bond and any amounts to be reimbursed under a Financial Guaranty Agreement
in respect thereof). The Parity Bonds shall constitute special obligations of the
City that shall be payable solely from, and shall be equally and ratably secured
by a first lien on, the Net Revenues, as collected and received by the City from
the operation and ownership of the System, which Net Revenues shall, in the
manner hereinafter provided, be set aside for and are hereby pledged by the City
to the payment of the Parity Bonds in the Interest and Sinking Fund and the
Reserve Fund as hereinafter provided, and except as otherwise expressly
provided herein, the Parity Bonds shall be in all respects on a parity with and of
equal dignity with one another. The holders of the Parity Bonds shall never have
the right to demand payment of either the principal of or interest on the Parity
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Bonds out of any funds raised or to be raised by taxation.
(b) Rates and Charges. So long as any Parity Bonds remain
outstanding, there shall be fixed, charged and collected rates and charges for
the use and services of the System, which may be fully sufficient at all times:
(1) to pay all Maintenance and Operation Expenses; and
(2) to produce Net Revenues in each fiscal year at least equal
to 125 percent of the Average Annual Principal and Interest Requirements
on all Parity Bonds and Junior Lien Bonds, but in no event less than the
amount required to establish and maintain the Interest and Sinking Fund,
the Reserve Fund as hereinafter provided, the Junior Lien Bond Interest
and Sinking Fund and the Junior Lien Bond Reserve Fund for the Junior
Lien Bonds, and to pay all outstanding obligations payable from the Net
Revenues of the System, other than Parity Bonds and Junior Lien Bonds,
as and when the same become due, and to pay all premiums for any
Qualified Surety Bonds and any amounts to be reimbursed under a
Financial Guaranty Agreement in respect thereof.
The City covenants that it will not grant or permit any free service from the
System except for public buildings and institutions operated by the City.
(c) Special Funds. The following special funds shall be maintained
and accounted for as hereinafter provided so long as any of the Parity Bonds
remain outstanding:
(1) Waterworks and Sewer System Revenue Fund (the
'Revenue Fund");
(2) Waterworks and Sewer System Revenue Bond Interest and
Sinking Fund (the "Interest and Sinking Fund"); and
(3) Waterworks and Sewer System Revenue Bond Reserve
Fund (the "Reserve Fund").
The Revenue Fund shall be maintained as a separate account on the books of
the City. The Interest and Sinking Fund and the Reserve Fund shall be
maintained at an official depository bank of the City, separate and apart from all
other funds and accounts of the City, and shall constitute trust funds which shall
be held in trust for the benefit of the holders of the Parity Bonds, and the
proceeds of which (except for interest income, which shall be transferred to the
Revenue Fund) shall be and are hereby pledged to the payment of the Parity
Bonds. Notwithstanding the foregoing, it is expressly stipulated that a separate
subaccount shall be established and maintained in the Reserve Fund for each
series of Parity Bonds pursuant to Subsection (f) below, and each subaccount
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shall provide a separate source of payment solely for the respective series of
Parity Bonds as to which the subaccount has been established and maintained.
All of the Funds named above shall be used solely as provided in this Ordinance
so long as any Parity Bonds remain outstanding.
(d) Flow of Funds. All Gross Revenues of the System shall be
deposited as collected into the Revenue Fund. Moneys from time to time on
deposit to the credit of the Revenue Fund shall be applied as follows in the
following order of priority:
(1) First, to pay Maintenance and Operation Expenses and to
provide by encumbrance for the payment of all obligations incurred by the
City for Maintenance and Operation Expenses which may include an
operating reserve equal to one month's estimated Maintenance and
Operation Expenses.
(2) Second, to make all deposits into the Interest and Sinking
Fund required by this Ordinance and any ordinance authorizing the
issuance of Additional Parity Bonds.
(3) Third, to reimburse Qualified Insurers for any amounts
advanced from time to time under any Qualified Surety Bonds and any
accompanying Financial Guaranty Agreements.
(4) Fourth, to make all deposits into the Reserve Fund required
by this Ordinance and any ordinance authorizing the issuance of
Additional Parity Bonds as provided in Subsection (f) hereof.
(5) Fifth, to pay Qualified Insurers interest on amounts
advanced from time to time under any Qualified Surety Bonds and any
accompanying Financial Guaranty Agreements.
(6) Sixth, to make all deposits required by any ordinances
authorizing the issuance of Junior Lien Bonds and subordinate lien
obligations.
(7) Seventh, for any lawful purpose.
Whenever the total amounts on deposit to the credit of the Interest and Sinking
Fund and the Reserve Fund shall be equivalent to the sum of the aggregate
principal amount of all outstanding Parity Bonds plus the aggregate amount of all
interest accrued and to accrue thereon, no further payments need be made into
the Interest and Sinking Fund or the Reserve Fund, and such Parity Bonds shall
not be regarded as being outstanding except for the purpose of being paid with
the moneys on deposit in such Funds.
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(e) Interest and Sinking Fund. On or before the last business day of
each month so long as any Parity Bonds remain outstanding, there shall be
transferred into the Interest and Sinking Fund from the Revenue Fund the
following amounts:
(1) Such amounts, in approximately equal monthly installments,
as will be sufficient to pay the interest scheduled to become due on the
Parity Bonds on the next interest payment date; and
(2) Such amounts, in approximately equal monthly installments,
as will be sufficient to pay the next maturing principal of the Parity Bonds,
including the principal amounts of, and any redemption premiums on, any
Parity Bonds payable as a result of the exercise or operation of any
redemption provision contained in this Ordinance or in any ordinance
authorizing the issuance of Additional Parity Bonds.
Moneys deposited to the credit of the Interest and Sinking Fund (except for
interest income, which shall be transferred to the Revenue Fund) shall be used
solely for the purpose of paying principal (either at maturity or prior redemption or
to purchase Parity Bonds in the open market to be credited against mandatory
redemption requirements), interest and redemption premiums on the Parity
Bonds, plus all bank charges and other costs and expenses relating to such
payment, on a pro rata basis among all series of Parity Bonds. On or before
each principal and/or interest payment date for the Parity Bonds, the City shall
transfer from the Interest and Sinking Fund to the paying agents for the Parity
Bonds an amount equal to the principal, interest and redemption premiums
payable on the Parity Bonds on such date, together with an amount equal to all
bank charges and other costs and expenses relating to such payment. The
paying agents for the Parity Bonds shall totally destroy all paid Parity Bonds and
coupons (if any) and shall provide the City with an appropriate certificate of
destruction.
(f) Reserve Fund. After making the transfers into the Interest and
Sinking Fund required in the preceding Subsection (e), the City shall deposit and
maintain, or cause to be deposited and maintained, in a separate subaccount of
the Reserve Fund established for each respective series of Parity Bonds either
(i) an amount equal to the Reserve Fund Requirement for that respective series
or (ii) a Qualified Surety Bond issued by a Qualified Insurer in an amount which,
when added to the sums on deposit pursuant to clause (i) above, equals the
Reserve Fund Requirement for that respective series. After the Reserve Fund
Requirement has been satisfied in the Reserve Fund as provided in the
immediately preceding sentence for a series of Parity Bonds, and so long
thereafter as such requirement remains satisfied, no further deposits into the
subaccount of the Reserve Fund for that series shall be required, either in the
form of cash, a Qualified Surety Bond, or any combination thereof for that series;
but if and whenever the Reserve Fund Requirement is not satisfied for any
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reason with respect to that series, then the City shall deposit or cause to be
deposited into the subaccount of the Reserve Fund for that series either
(i) amounts on a monthly basis at least equal to one-sixtieth (1/60th) of the
Reserve Fund Requirement for that series until such requirement is satisfied or
(ii) a Qualified Surety Bond issued by a Qualified Insurer in an amount which,
when added to the sums on deposit in the subaccount of the Reserve Fund for
that series, equals the Reserve Fund Requirement for that series. Whenever
the subaccount of the Reserve Fund for a series of Parity Bonds contains more
than the Reserve Fund Requirement, the City may transfer any excess cash
amounts to the Interest and Sinking Fund for payment of that series of Parity
Bonds and all other series of Parity Bonds on a pro rata basis. The subaccount
of the Reserve Fund for a series of Parity Bonds shall be used to pay the
principal of and interest on that series at any time when there is not sufficient
money available in the Interest and Sinking Fund for such purpose and it may be
used finally to pay and retire the last Parity Bonds of that series to mature or be
redeemed; provided that all cash and other amounts on deposit in the Reserve
Fund for that series shall first be transferred to the Interest and Sinking Fund for
the purpose of making such payments prior to making any demand for payment
under any Qualified Surety Bond.
(g) Deficiencies in Funds. If there shall not be deposited into the
Interest and Sinking Fund and the Reserve Fund the full amounts required
herein, amounts equivalent to such deficiency shall be set apart and paid into
such Fund or Funds on a pro rata basis for each series of Parity Bonds from the
first available and unallocated moneys in the Revenue Fund, and such payment
shall be in addition to the amounts otherwise required to be paid into such
Funds. To the extent necessary, the rates and charges for the System shall be
increased to make up for any such deficiencies.
(h) Investment of Funds; Transfer of Investment Income. Money in
each Fund maintained pursuant to this Section of this Ordinance may, at the
option of the City, be invested in time deposits or certificates of deposit secured
in the manner required by law for public funds, or be invested in direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America or any of its
agencies or instrumentalities, or in any other obligations permitted by law
provided that such obligations are rated "AX or better by Moody's or Standard &
Poor's rating agencies; provided that all such deposits and investments shall be
made in such manner that the money required to be expended from any such
Fund will be available at the proper time or times, and provided further that in no
event shall such deposits or investments of moneys in the Reserve Fund mature
later than the final maturity date of the Parity Bonds. All such investments shall
be valued in terms of current market value no less frequently than the last
business day of the Fiscal Year, except that any direct obligations of the United
States of America-State and Local Government Series shall be continuously
valued at their par value or principal face amount. Any obligation in which
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money is so invested shall be kept and held in the official depository bank of the
City at which the Fund is maintained from which such investment was made. All
such investments shall be promptly sold when necessary to prevent any default
in connection with the Parity Bonds. All interest and income derived from such
deposits and investments shall be transferred or credited as received to the
Revenue Fund, and shall constitute the Gross Revenues of the System.
(i) SecurAy for Uninvested Funds. So long as any Parity Bonds
remain outstanding, all uninvested moneys on deposit in, or credited to, Funds
maintained pursuant to this Section shall be secured by a pledge of security, as
provided by law in the State of Texas, in a principal amount not less than the
amount of such uninvested funds.
(j) Additional Bonds.
(1) Additional Parity Bonds. The City reserves the right to issue,
for any lawful purpose, including the refunding of any previously issued
Parity Bonds or any other bonds or obligations of the City issued in
connection with the System, one or more series of Additional Parity Bonds
payable from, and secured by a first lien on and pledge of, the Net
Revenues of the System, on a parity with the Series 1989 Bonds and any
other Additional Parity Bonds then outstanding; provided, however, that
no Additional Parity Bonds may be issued unless:
(i) The Additional Parity Bonds mature on September 1,
and interest is payable on March 1 and September 1;
(ii) The Interest and Sinking Fund and the Reserve Fund
each contain the amount of money then required to be on deposit
therein;
(iii) For either the preceding Fiscal Year or any
consecutive 12-month period out of the 18-month period
immediately preceding the month in which the ordinance
authorizing such Additional Parity Bonds is adopted (the "Base
Period"), either:
(A) Net Earnings (as defined below) are certified
by the Finance Officer of the City to have been equal to at
least (a) 140% of the Average Annual Principal and Interest
Requirements on all Parity Bonds, and (b) 125% of the
Average Annual Principal and Interest Requirements on all
Parity Bonds and Junior Lien Bonds, in each case after
giving effect to the issuance of the Additional Parity Bonds to
be issued; or
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(B) Net Earnings, adjusted to give effect to any
rate increase placed into effect at least 60 days prior to the
adoption of the ordinance authorizing the Additional Parity
Bonds, as if such rate increase had been placed into effect
prior to the commencement of the Base Period, would have
been equal to at least the amounts required in paragraph (A)
above, as certified by an independent firm of consulting
engineers or independent firm of certified public
accountants; provided, however, that the foregoing
requirements shall not apply to the issuance of any series of
refunding bonds that will not have the result of increasing
the average Annual Principal and Interest Requirements on
the Parity Bonds; and
(iv) Provision is made in the ordinance authorizing the
Additional Parity Bonds then proposed to be issued for additional
payments into the Interest and Sinking Fund sufficient to provide
for the payment of principal of and interest on such Additional
Parity Bonds and additional payments into a subaccount of the
Reserve Fund for such Additional Parity Bonds so that the
subaccount will in not later than 5 years from the date of issuance
of such Additional Parity Bonds contain a balance of not less than
the Reserve Fund Requirement for such Additional Parity Bonds.
For purposes hereof, the term "Net Earnings" shall mean all of the Net
Revenues, except that in calculating Net Revenues there shall not be deducted
as Maintenance and Operation Expenses any charge, disbursement or
expenditure for repairs, extensions or otherwise which, under standard
accounting practice, should be charged to capital expenditures.
(2) Subordinate Lien Obligations. The City reserves the right to
issue, for any lawful purpose, bonds, notes or other obligations secured in
whole or in part by liens on and pledges of the Net Revenues that are
junior and subordinate to the lien on and pledge of Net Revenues
securing payment of the Parity Bonds. Such subordinate lien obligations
may be further secured by any other source of payment lawfully available
for such purposes.
(3) Special Project Bonds. The City reserves the right to issue
revenue bonds secured by liens on and pledges of revenues and
proceeds derived from Special Projects.
(k) Covenants and Provisions Relating to all Parity Bonds.
(1) Punctual Payment of Parity Bonds. The City will punctually
pay or cause to be paid the interest on and principal of all Parity Bonds
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according to the terms thereof and will faithfully do and perform, and at all
times fully observe, any and all covenants, undertakings, stipulations and
provisions contained in this Ordinance and in any ordinance authorizing
the issuance of Additional Parity Bonds.
(2) Maintenance of System. So long as any Parity Bonds
remain outstanding, the City covenants that it will at all times maintain the
System, or within the limits of its authority cause the same to be
maintained, in good condition and working order and will operate the
same, or cause the same to be operated, in an efficient and economical
manner at a reasonable cost and in accordance with sound business
principles. In operating and maintaining the System, the City will comply
with all contractual provisions and agreements entered into by it and with
all valid rules, regulations, directions or order of any governmental,
administrative or judicial body promulgating same.
(3) Sale or Encumbrance of System. So long as any Parity
Bond remain outstanding, the City will not sell, dispose of or, except as
permitted in this Ordinance, further encumber the System; provided,
however, that this provision shall not prevent the City from disposing of
any portion of the System which has been declared surplus or is no longer
needed for the proper operation of the System. Any agreement pursuant
to which the City contracts with a person, corporation, municipal
corporation or political subdivision to operate the System or to lease
and/or operate all or part of the System shall not be considered as an
encumbrance of the System.
(4) Insurance. The City further covenants and agrees that it will
keep the System insured with insurers of good standing against risks,
accidents or casualties against which and to the extent insurance is
customarily carried by political subdivisions of the State of Texas
operating similar properties, to the extent that such insurance is available.
The cost of all such insurance, together with any additional insurance,
shall be a part of the Maintenance and Operation Expenses, and such
insurance shall be carried for the benefit of the holders of the Parity Bonds
and the City, as their interests may appear.
(5) Accounts, Records and Audits. So long as any Parity Bonds
remain outstanding, the City covenants and agrees that it will maintain a
proper and complete system of records and accounts pertaining to the
operation of the System in which full, true and proper entries will be made
of all dealings, transactions, business and affairs which in any way affect
or pertain to the System or the Gross Revenues or the Net Revenues
thereof. The City shall after the close of each of its Fiscal Years cause an
audit report of such records and accounts to be prepared by an
independent certified public accountant or independent firm of certified
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public accountants. Each year promptly after such audit report is
prepared, the City shall furnish a copy thereof without cost to the
Municipal Advisory Council of Texas, the major municipal rating agencies
and any holders of Parity Bonds who shall request same. All expenses
incurred in preparing such audits shall be Maintenance and Operation
Expenses.
(6) Competition. To the extent it legally may, the City will not
grant any franchise or allow for the acquisition, construction or operation
of any competing facilities which might be used as a substitute for the
System and will prohibit the operation of any such competing facilities.
(7) Pledge and Encumbrance of Net Revenues. The City
covenants and represents that it has the lawful power to pledge the Net
Revenues to the payment of the Parity Bonds and has lawfully exercised
such power under the Constitution and laws of the State of Texas. The
City further covenants and represents that, other than to the payment of
the Parity Bonds and the Junior Lien Bonds, the Net Revenues are not
and will not be pledged to the payment of any debt or obligation of the
City, or in any other manner encumbered unless such pledge or
encumbrance is junior and subordinate to the lien and pledge securing
payment of the Parity Bonds and the Junior Lien Bonds.
(8) Remedies. This Ordinance shall constitute a contract
between the City, the holders of the Parity Bonds from time to time
outstanding, and the Qualified Insurers, and this Ordinance shall be and
remain irrepealable until the Parity Bonds and the interest thereon and all
amounts owing to the Qualified Insurers under any Financial Guaranty
Agreements 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
this Ordinance or a default in respect of any Financial Guaranty
Agreement in effect from time to time, the holder or holders of any of the
Parity Bonds or any Qualified Insurer, as appropriate, may pursue all legal
remedies afforded by the Constitution and laws of the State of Texas to
compel the City to remedy such default and to prevent further default or
defaults. Without in any way limiting the generality of the foregoing, it is
expressly provided that any holder of any of the Parity Bonds or any
Qualified Insurer, as appropriate, may at law or in equity, by suit, action,
mandamus, or other proceedings, enforce and compel performance of all
duties required to be performed by the City under this Ordinance,
including the making and collection of reasonable and sufficient rates and
charges for the use and services of the System, the deposit of the Gross
Revenues thereof into the special funds as herein provided, and the
application of such Gross Revenues and Net Revenues in the manner
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required in this Ordinance.
(9) Defeasance. The City may defease the provisions of this
Ordinance and discharge its obligation to the holders of any or all of the
Parity Bonds to pay principal, interest and redemption premium (if any)
thereon in any manner permitted by law, including, without limitation, by
depositing with any paying agent for such Parity Bonds or with the State
Treasurer of the State of Texas either: (i) cash in an amount equal to the
principal amount and redemption premium, if any, of such Parity Bonds
plus interest thereon to the date of maturity or redemption, or (ii) pursuant
to an escrow or trust agreement, direct obligations of, or obligations the
principal and interest of which are guaranteed by, the United States of
America, in principal amounts and maturities and bearing interest at rates
sufficient to provide for the timely payment of the principal amount 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 ordinance authorizing such Parity Bonds. Upon such
deposit, such Parity Bonds and coupons appertaining thereto shall no
longer be regarded to be outstanding or unpaid, and the lien on and
pledge of Net Revenues securing such Parity Bonds shall thereupon
cease and terminate.
(10) Legal Holidays. In any case where the date fixed for
payment of interest on or principal of the Parity Bonds or the date fixed for
redemption of any Parity Bonds shall be a legal holiday or a day on which
a paying agent for the Parity Bonds is authorized by law to close, then
payment of interest or principal by such paying agent need not be made
on such date but may be made on the next succeeding business day with
the same force and effect as if made on the date fixed for such payment
and no interest shall accrue for the period from such date to the date of
actual payment.
(11) Unavailability of Authorized Publication. If, because of the
temporary or permanent suspension of any newspaper, journal or other
publication, or, for any reason, publication of notice cannot be made
meeting any requirements herein established, any notice required to be
published by the provisions of this Ordinance shall be given in such other
manner and at such time or times as in the judgment of the City shall most
effectively approximate such required publication and the giving of such
notice in such manner shall for all purposes of this Ordinance be deemed
to be in compliance with the requirements for publication thereof.
(12) Obligations Owing to Insurers. The City stipulates and
agrees that it shall make full and timely payment of all amounts owing to
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any Insurer under any Financial Guaranty Agreements and there shall be
no termination of this Ordinance or redemption, refunding or defeasance
of the Parity Bonds unless and until all of such amounts owing under the
Financial Guaranty Agreement in respect of those Bonds shall have been
paid in full.
21. Bond Covenants After Series 1989 Prior Lien Bonds Defeased.
Effective immediately upon the defeasance and discharge of all of the Series
1989 Prior Lien Bonds, then the following covenants, terms, conditions and
obligations shall exist with respect to all Parity Bonds:
(a) Pledge and Source of Payment. The City hereby covenants
and agrees that all Gross Revenues of the System shall, as collected and
received by the City, be deposited and paid into the special funds established in
this Ordinance, and shall be applied in the manner hereinafter set forth, in order
to provide for (i) the payment of all Maintenance and Operation Expenses, (ii) the
payment of principal, interest and any redemption premiums on the Parity Bonds,
and all expenses of paying, securing and insuring the same. The Parity Bonds
shall constitute special obligations of the City that shall be payable solely from,
and shall be equally and ratably secured by a first lien on, the Net Revenues, as
collected and received by the City from the operation and ownership of the
System, which Net Revenues shall, in the manner hereinafter provided, be set
aside for and are hereby pledged by the City to the payment of the Parity Bonds
in the Interest and Sinking Fund and the Reserve Fund as hereinafter provided,
and except as otherwise expressly provided herein, the Parity Bonds shall be in
all respects on a parity with and of equal dignity with one another. The holders
of the Parity Bonds shall never have the right to demand payment of either the
principal of or interest on the Parity Bonds out of any funds raised or to be raised
by taxation.
(b) Rates and Charges. So long as any Parity Bonds remain
outstanding, there shall be fixed, charged and collected rates and charges for
the use and services of the System, which may be fully sufficient at all times:
(1) to pay all Maintenance and Operation Expenses; and
(2) to produce Net Revenues in each fiscal year at least equal
to 110 percent of the principal and interest requirements scheduled to
occur in such fiscal year on all Parity Bonds then outstanding plus an
amount equal to the sum of all deposits required to be made to the
Reserve Fund in such fiscal year, but in no event less than the amount
required to establish and maintain the Interest and Sinking Fund, the
Reserve Fund as hereinafter provided, and, to the extent that funds for
such purpose are not otherwise available, to pay all other outstanding
obligations payable from the Net Revenues of the System as and when
the same become due.
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The City covenants that it will not grant or permit any free service from the
System except for public buildings and institutions operated by the City.
(c) Special Funds. The following special funds shall be
maintained and accounted for as hereinafter provided so long as any of the
Parity Bonds remain outstanding:
(1) Waterworks and Sewer System Revenue Fund (the
"Revenue Fund");
(2) Waterworks and Sewer System Revenue Bond Interest and
Sinking Fund (the "Interest and Sinking Fund"); and
(3) Waterworks and Sewer System Revenue Bond Reserve
Fund (the "Reserve Fund").
The Revenue Fund shall be maintained as a separate account on the books of
the City. The Interest and Sinking Fund and the Reserve Fund shall be
maintained at an official depository bank of the City, separate and apart from all
other funds and accounts of the City, and shall constitute trust funds which shall
be held in trust for the benefit of the holders of the Parity Bonds, and the
proceeds of which (except for interest income, which shall be transferred to the
Revenue Fund) shall be and are hereby pledged to the payment of the Parity
Bonds. All of the Funds named above shall be used solely as provided in this
Ordinance so long as any Parity Bonds remain outstanding.
(d) Flow of Funds. All Gross Revenues of the System shall be
deposited as collected into the Revenue Fund. Moneys from time to time on
deposit to the credit of the Revenue Fund shall be applied as follows in the
following order of priority:
(1) First, to pay Maintenance and Operation Expenses and to
provide by encumbrance for the payment of all obligations incurred by the
City for Maintenance and Operation Expenses which may include an
operating reserve equal to one month's estimated Maintenance and
Operation Expenses.
(2) Second, to make all deposits into the Interest and Sinking
Fund required by this Ordinance and any ordinance authorizing the
issuance of any outstanding Parity Bonds and any ordinance authorizing
the issuance of Additional Parity Bonds.
(3) Third, to make all deposits into the Reserve Fund required
by this Ordinance and any ordinance authorizing the issuance of any
outstanding Parity Bonds and any ordinance authorizing the issuance of
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Additional Parity Bonds.
(4) Fourth, to pay any amounts due to any bond insurer of
Parity Bonds not paid pursuant to subsections (2) or (3) above.
(5) Fifth, for any lawful purpose, including transfers to the
General Fund as permitted by law.
Whenever the total amounts on deposit to the credit of the Interest and Sinking
Fund and the Reserve Fund shall be equivalent to the sum of the aggregate
principal amount of all outstanding Parity Bonds plus the aggregate amount of all
interest accrued and to accrue thereon, no further payments need be made into
the Interest and Sinking Fund or the Reserve Fund.
(e) Interest and Sinking Fund. On or before the last Business
Day of each month so long as any Parity Bonds remain outstanding, after
making all required payments and provision for payment of Maintenance and
Operation Expenses, there shall be transferred into the Interest and Sinking
Fund from the Revenue Fund the following amounts:
(1) Such amounts, in approximately equal monthly installments,
as will be sufficient to pay the interest scheduled to become due on the
Parity Bonds on the next interest payment date; and
(2) Such amounts, in approximately equal monthly installments,
as will be sufficient to pay the next maturing principal of the Parity Bonds,
including the principal amounts of, and any redemption premiums on, any
Parity Bonds payable as a result of the exercise or operation of any
redemption provision contained in this Ordinance or in any ordinance
authorizing the issuance of Parity Bonds.
Moneys deposited to the credit of the Interest and Sinking Fund (except for
interest income, which shall be transferred to the Revenue Fund) shall be used
solely for the purpose of paying principal (either at maturity or prior redemption or
to purchase Parity Bonds in the open market to be credited against mandatory
redemption requirements), interest and redemption premiums on the Parity
Bonds, plus all bank charges and other costs and expenses relating to such
payment, on a pro rata basis among all series of Parity Bonds. On or before
each principal and/or interest payment date for the Parity Bonds, the City shall
transfer from the Interest and Sinking Fund to the paying agents for the Parity
Bonds an amount equal to the principal, interest and redemption premiums
payable on the Parity Bonds on such date, together with an amount equal to all
bank charges and other costs and expenses relating to such payment. The
paying agents for the Parity Bonds shall totally destroy all paid Parity Bonds and
coupons (if any) and shall provide the City with an appropriate certificate of
destruction.
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(f) Reserve Fund. Unless the Reserve Fund is fully funded, on
or before the last Business Day of each month so long as any Parity Bonds
remain outstanding, after making all required payments and provision for
payment of Maintenance and Operation Expenses, and after making the
transfers into the Interest and Sinking Fund required in the preceding Section,
there shall be transferred into the Reserve Fund from the Revenue Fund an
amount at least equal to one-sixtieth (1/60th) of the average annual principal and
interest requirements on the Parity Bonds, so that the Reserve Fund shall
contain, in no more than 60 months after the issuance of each such issue of
Parity Bonds, money and investments in an aggregate amount at least equal to
the average annual principal and interest requirements on all Parity Bonds then
outstanding. After such amount has accumulated in the Reserve Fund and so
long thereafter as such Fund contains such amount, no further deposits shall be
required to be made into the Reserve Fund, and any excess amounts may be
transferred to the Revenue Fund. But if and whenever the balance in the
Reserve Fund is reduced below such amount, monthly deposits into such Fund
shall be resumed and continued in amounts at least equal to one-sixtieth (1/60th)
of the average annual principal and interest requirements on the Parity Bonds
until the Reserve Fund has been restored to such amount. The Reserve Fund
shall be used to pay the principal of and interest on the Parity Bonds at any time
when there is not sufficient money available in the Interest and Sinking Fund for
such purpose and it may be used finally to pay and retire the last Parity Bonds to
mature or be redeemed.
To the extent permitted by law, the City expressly reserves the right at any
time to satisfy all or any part of the amounts required to be on deposit in the
Reserve Fund (the "Reserve Fund Requirement") by obtaining for the benefit of
the Reserve Fund one or more Reserve Fund Surety Policies (a "Reserve Fund
Surety Policy"). In the event the city elects to substitute at any time a Reserve
Fund Surety Policy for any funded amounts in the Reserve Fund, it may apply
any bond proceeds thereby released, to the greatest extent permitted by law, to
any purposes for which the bonds were issued, and if all such purposes have
been satisfied, to the payment of debt service on such bones, and it may apply
any other funds thereby released to any of the purposes for which such funds
may lawfully be applied including the payment of debt service on the Parity
Bonds. A Reserve Fund Surety Policy shall be an insurance policy or other
similar guarantee in a principal amount equal to the portion of the Reserve Fund
Requirement to be satisfied which is issued by a financial institution or insurance
company with a rating for its long term unsecured debt or claims paying ability in
the highest letter category by two major municipal securities evaluation sources.
The premium for any such policy shall be paid from bond proceeds or other
funds of the City lawfully available for such purpose. The City reserves the right
to fund any increase in the Reserve Fund Requirement caused by the issuance
of Additional Parity Bonds by the purchase of a Reserve Fund Surety Policy in
the amount of such increase or by making transfers from the Revenue Fund to
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the Reserve Fund, in approximately equal monthly installments, in amounts
sufficient to accumulate the increase in the Reserve Fund Requirement within
sixty (60) months of the issuance of such Additional Parity Bonds; If the Reserve
Fund contains only cash and the balance in the Reserve Fund is reduced below
the Reserve Fund Requirement at any time, the City shall make monthly
transfers from the Revenue Fund to the Reserve Fund, in approximately equal
monthly installments, in amounts sufficient to restore the balance in the Reserve
Fund to the Reserve Fund Requirement within twelve (12) months of the date on
which the balance in the Reserve Fund was so reduced. If the Reserve Fund
contains a Reserve Fund Surety Policy (an no cash) and a draw is made against
such policy, the City shall make monthly transfers from the Revenue Fund, in
approximately equal monthly installments, in amounts sufficient to reimburse the
amount drawn under such policy within twelve (12) months. If the Reserve Fund
contains a combination of cash and a Reserve Fund Surety Policy, and the
balance in the Reserve Fund is reduced below the Reserve Fund Requirement
by a combination of cash withdrawals and draws against the Reserve Fund
Surety Policy, the City shall make monthly transfers from the Revenue Fund, in
approximately equal monthly installments, in amounts sufficient to restore the
cash balance in the Reserve Fund and reimburse the amount drawn under such
policy within twelve (12) months, with reimbursement to be made for all amounts
drawn under such policy before any cash deposits are made into the Reserve
Fund. Any reimbursement of amounts drawn against a Reserve Fund Surety
Policy shall be limited to the amounts actually paid under such policy, and the
City shall have no obligation to make any reimbursement payment with respect
to any such policy except as provided herein.
(g) Deficiencies in Funds. If in any month there shall not be
deposited into any Fund maintained pursuant to this Section 21 the full amounts
required herein, amounts equivalent to such deficiency shall be set apart and
paid into such Fund or Funds from the first available and unallocated money in
the Revenue Fund, and such payment shall be in addition to the amounts
otherwise required to be paid into such Funds during the succeeding month or
months. To the extent necessary, the rates and charges for the System shall be
increased to make up for any such deficiencies.
(h) Investment of Funds: Transfer of Investment Income.
Money in each Fund maintained pursuant to this Section of this Ordinance may,
at the option of the City, be invested as permitted by law, provided that all such
deposits and investments shall be made in such manner that the money required
to be expended from any Fund will be available at the proper time or times, and
provided further that in no event shall deposits or investment of money in the
Reserve Fund mature later than the final maturity date of the Parity Bonds. Any
obligation in which money is so invested shall be kept and held in the Fund from
which the investment was made. All such investments shall be promptly sold
when necessary to prevent any default in connection with the Parity Bonds. All
interest and income derived from such deposits and investments shall be
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transferred or credited as received to the Revenue Fund, and shall constitute
Gross Revenues of the System.
(i) Additional Bonds.
(1) Additional Parity Bonds. The City reserves the right
to issue, for any lawful purpose, including the refunding of any previously
issued Parity Bonds or any other bonds or obligations of the City issued in
connection with the System, one or more series of Additional Parity Bonds
payable from, and secured by a first lien on and pledge of, the Net
Revenues of the System, on a parity with the Bonds, the Series 1989
Prior Lien Bonds, and any other Additional Parity Bonds then outstanding;
provided, however, that no Additional Parity Bonds may be issued unless:
(i) The Additional Parity Bonds mature on September 1,
and interest is payable on March 1 and September 1;
(ii) The Interest and Sinking Fund and the Reserve Fund
each contain the amount of money then required to be on deposit
therein;
(iii) For either the preceding Fiscal Year or any
consecutive 12-month calendar period ending no more than 90
days prior to adoption of the ordinance authorizing such Additional
Parity Bonds, Net Revenues were equal to at least 125% of the
average annual principal and interest requirements on all Parity
Bonds that will be outstanding after the issuance of the series of
Additional Parity Bonds then proposed to be issued, as certified by
the City's Finance Officer or by an independent certified public
accountant or firm of independent certified public accountants; or
(iv) If the City cannot meet the test described in (iii) above,
but a change in the rates and charges applicable to the System
becomes effective at least sixty (60) days prior to the adoption of
the ordinance authorizing Additional Parity Bonds and the City's
Finance Officer certifies that, had such change in rates and
charges been effective for the preceding fiscal year or 12
consecutive calendar month period ending no more than 90 days
prior to adoption of said ordinance, the Net Revenues for such
period would have met the test described in (iii) above.
(2) Subordinate Lien Obligations. The City reserves the
right to issue, for any lawful purpose, bonds, notes or other obligations
secured in whole or in part by liens on and pledges of the Net Revenues
that are junior and subordinate to the lien on and pledge of Net Revenues
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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.
(3) Special Project Bonds. The City reserves the right to
issue revenue bonds secured by liens on and pledges of revenues and
proceeds derived from Special Projects.
(j) Covenants and Provisions Relating to all Parity Bonds.
(1) Punctual Payment of Parity Bonds. The City will
punctually pay or cause to be paid the interest on and principal of all
Parity Bonds according to the terms thereof and will faithfully do and
perform, and at all times fully observe, any and all covenants,
undertakings, stipulations and provisions contained in this Ordinance and
in any ordinance authorizing the issuance of Additional Parity Bonds.
(2) Maintenance of System. So long as any Parity Bonds
remain outstanding, the City covenants that it will at all times maintain the
System, or within the limits of its authority cause the same to be
maintained, in good condition and working order and will operate the
same, or cause the same to be operated, in an efficient and economical
manner at a reasonable cost and in accordance with sound business
principles. In operating and maintaining the System, the City will comply
with all contractual provisions and agreements entered into by it and with
all valid rules, regulations, directions or order of any governmental,
administrative or judicial body promulgating same, noncompliance with
which would materially an adversely affect the operation of the System.
(3) Sale or Encumbrance of System. So long as any
Parity Bond remain outstanding, the City will not sell, dispose of or, except
as permitted in this Ordinance, further encumber the System; provided,
however, that this provision shall not prevent the City from disposing of
any portion of the System which is being replaced or is deemed by the
City to be obsolete, worn out, surplus or no longer needed for the proper
operation of the System. Any agreement pursuant to which the City
contracts with a person, corporation, municipal corporation or political
subdivision to operate the System or to lease and/or operate all or part of
the System shall not be considered as an encumbrance of the System.
(4) Insurance. The City further covenants and agrees
that it will keep the System insured with insurers of good standing against
risks, accidents or casualties against which and to the extent insurance is
customarily carried by political subdivisions of the State of Texas
operating similar properties, to the extent that such insurance is available.
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The cost of all such insurance, together with any additional insurance,
shall be a part of the Maintenance and Operation Expenses. All net
proceeds of such insurance shall be applied to repair or replace the
insured property that is damaged or destroyed, or to make other capital
improvements to the System, or to redeem Parity Bonds.
(5) Accounts. Records and Audits. So long as any Parity
Bonds remain outstanding, the City covenants and agrees that it will
maintain a proper and complete system of records and accounts
pertaining to the operation of the System in which full, true and proper
entries will be made of all dealings, transactions, business and affairs
which in any way affect or pertain to the System or the Gross Revenues
or the Net Revenues thereof. The City shall after the close of each of its
Fiscal Years cause an audit report of such records and accounts to be
prepared by an independent certified public accountant or independent
firm of certified public accountants. Each year promptly after such audit
report is prepared, the City shall furnish a copy thereof without cost to the
Municipal Advisory Council of Texas and any holders of Parity Bonds who
shall request same. All expenses incurred in preparing such audits shall
be Maintenance and Operation Expenses.
(6) Competition. To the extent it legally may, the City will
not grant any franchise or allow for the acquisition, construction or
operation of any competing facilities which might be used as a substitute
for the System and will prohibit the operation of any such competing
facilities.
(7) Pledge and Encumbrance of Net Revenues. The City
covenants and represents that it has the lawful power to pledge the Net
Revenues to the payment of the Parity Bonds and has lawfully exercised
such power under the Constitution and laws of the State of Texas. The
City further covenants and represents that, other than to the payment of
the Parity Bonds, the Net Revenues are not and will not be pledged to the
payment of any debt or obligation of the City, or in any other manner
encumbered unless such pledge or encumbrance is junior and
subordinate to the lien and pledge securing payment of the Parity Bonds.
(8) Remedies. This Ordinance shall constitute a contract
between the City and the holders of the Parity Bonds from time to time
outstanding, and the Bond Insurers, and shall remain in effect until the
Parity Bonds and the interest thereon and all amounts owing to the Bond
Insurers under any Bond Insurance Policy 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 this Ordinance or a default in respect of any Bond
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Insurance Policy, the holder or holders of any of the Parity Bonds or any
Bond Insurer, as appropriate, may pursue all legal remedies afforded by
the Constitution and laws of the State of Texas to compel the City to
remedy such default and to prevent further default or defaults. Without in
any way limiting the generality of the foregoing, it is expressly provided
that any holder of any of the Parity Bonds or any Bond Insurer may at law
or in equity, by suit, action, mandamus, or other proceedings, enforce and
compel performance of all duties required to be performed by the City
under this Ordinance, including the making and collection of reasonable
and sufficient rates and charges for the use and services of the System,
the deposit of the Gross Revenues thereof into the special funds as
herein provided, and the application of such Gross Revenues and Net
Revenues in the manner required in this Ordinance.
(9) Defeasance. The City may defease the provisions of
this Ordinance and discharge its obligation to the holders of any or all of
the Parity Bonds to pay principal, interest and redemption premium (if
any) thereon in any manner permitted by law, including, without limitation,
by depositing with any paying agent for such Parity Bonds or with the
State Treasurer of the State of Texas either: (i) cash in an amount equal
to the principal amount and redemption premium, if any, of such Parity
Bonds plus interest thereon to the date of maturity or redemption, or
(ii) pursuant to an escrow or trust agreement, direct obligations of, or
obligations the principal and interest of which are guaranteed by, the
United States of America, in principal amounts and maturities and bearing
interest at rates sufficient to provide for the timely payment of the principal
amount 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 ordinance authorizing such Parity
Bonds. Upon such deposit, such Parity Bonds and coupons appertaining
thereto shall no longer be regarded to be outstanding or unpaid, and the
lien on and pledge of Net Revenues securing such Parity Bonds shall
thereupon cease and terminate.
(10) Legal Holidays. In any case where the date fixed for
payment of interest on or principal of the Parity Bonds or the date fixed for
redemption of any Parity Bonds shall be a legal holiday or a day on which
a paying agent for the Parity Bonds is authorized by law to close, then
payment of interest or principal by such paying agent need not be made
on such date but may be made on the next succeeding business day with
the same force and effect as if made on the date fixed for such payment
and no interest shall accrue for the period from such date to the date of
actual payment.
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(11) Unavailability of Authorized Publication. If, because
of the temporary or permanent suspension of any newspaper, journal or
other publication, or, for any reason, publication of notice cannot be made
meeting any requirements herein established, any notice required to be
published by the provisions of this Ordinance shall be given in such other
manner and at such time or times as in the judgment of the City shall most
effectively approximate such required publication and the giving of such
notice in such manner shall for all purposes of this Ordinance be deemed
to be in compliance with the requirements for publication thereof.
(12) Obli-gations Owing to Insurers. The City stipulates
and agrees that it shall make full and timely payment of all amounts owing
to any Insurer under any Financial Guaranty Agreements and there shall
be no termination of this Ordinance or redemption, refunding or
defeasance of the Parity Bonds unless and until all of such amounts
owing under the Financial Guaranty Agreement in respect of those Bonds
shall have been paid in full.
22. Further Proceedings. After the Bonds to be initially issued shall
have been executed, it shall be the duty of the Mayor and other appropriate
officials and agents of the City to deliver the Bonds to be initially issued and all
pertinent records and proceedings to the Attorney General of the State of Texas,
for examination and approval. After the Bonds to be initially issued shall have
been approved by the Attorney General, they shall be delivered to the
Comptroller of Public Accounts of the State of Texas for registration. Upon
registration of the Bonds to be initially issued, the Comptroller of Public Accounts
(or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in
writing to act for the Comptroller) shall manually sign the Comptroller's
Registration Certificate prescribed herein and the seal of said Comptroller shall
be impressed or placed in facsimile, thereon.
23. Sale Bond Purchase Agreement, Bond Insurance. The Bonds
are hereby sold and shall be delivered to the Underwriters at a price of
$ which represents the par amount of the Bonds, less an
original issue discount of $ and less an underwriting discount of
$ all in accordance with the terms of a bond purchase
agreement of even date herewith, presented to and hereby approved by the City
Council, which price and terms are hereby found and determined to be the most
advantageous reasonably obtainable by the City. The Mayor and other
appropriate officials of the City are hereby authorized and directed to execute
such bond purchase agreement on behalf of the City, and the Mayor and all
other officers, agents and representatives of the City are hereby authorized to do
any and all things necessary or desirable to satisfy the conditions set out therein
and to provide for the issuance and delivery of the Bonds.
The purchase of and payment of the premium for the Bond Insurnace
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Policy by the City, in accordance with the terms of a commitment for such
insurance presented to and hereby approved by the City Council is hereby
authorized. All officials and representatives of the City are authorized and
directed to execute such documents and to do any and all things necessary or
desirable to obtain such insurance, and the printing on the Bonds of an
appropriate legend regarding such insurance is hereby approved.
24. Tax Exemption.
(a) General Tax Covenant. The City intends that the interest on
the Bonds shall be excludable from gross income for purposes of federal income
taxation pursuant to Sections 103 and 141 through 150 of the Code, and the
applicable Income Tax Regulations (the "Regulations"). The City covenants and
agrees not to take any action, or knowingly omit to take any action within its
control, that if taken or omitted, respectively, would cause the interest on the
Bonds to be includable in gross income, as defined in Section 61 of the Code, of
the holders thereof for purposes of federal income taxation. In particular, the
City covenants and agrees to comply with each requirement of this Section;
provided, however, that the City shall not be required to comply with any
particular requirement of this Section if the City has received an opinion of
nationally recognized bond counsel ("Counsel's Opinion") that such
noncompliance will not adversely affect the exclusion from gross income for
federal income tax purposes of interest on the Bonds or if the City has received
Counsel's Opinion to the effect that compliance with some other requirement set
forth in this Section will satisfy the applicable requirements of the Code, in which
case compliance with such other requirement specified in such Counsel's
Opinion shall constitute compliance with the corresponding requirement specified
in this Section. The City represents and warrants that the City shall realize
present value debt service savings (determined without regard to administrative
expenses) in connection with issuance of the Bonds to the extent that the
proceeds thereof are used to refund the Refunded Bonds.
(b) No Private Use or Payment and No Private Loan Financing.
The City shall certify, through an authorized officer, employee or agent that
based upon all facts and circumstances known or reasonably expected to be in
existence on the date the Bonds are delivered, that the proceeds of the
Refunded Bonds have not been used, and that proceeds of the Refunded Bonds
and the Bonds will not be used in a manner that would cause the Bonds to be
"private activity bonds" within the meaning of Section 141 of the Code and the
Regulations promulgated thereunder. Moreover, the City covenants and agrees
that it will make such use of the proceeds of the Refunded Bonds and the Bonds
including interest or other investment income derived from Bond proceeds,
regulate the use of property financed, directly or indirectly, with such proceeds,
and take such other and further action as may be required so that the Bonds will
not be "private activity bonds" within the meaning of Section 141 of the Code and
the Regulations promulgated thereunder.
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(c) No Federal Guaranty. The City covenants and agrees not to
take any action, or knowingly omit to take any action within its control, that, if
taken or omitted, respectively, would cause the Bonds to be "federally
guaranteed" within the meaning of Section 149(b) of the Code and applicable
regulations thereunder, except as permitted by Section 149(b)(3) of the Code
and such Regulations.
(d) No-Arbitrage Covenant. The City shall certify, through an
authorized officer, employee or agent, that based upon all facts and estimates
known or reasonably expected to be in existence on the date the Bonds are
delivered, the City will reasonably expect that the proceeds of the Bonds and the
amounts transferred from the Reserve Fund for the Refunded Bonds pursuant to
Section 26 of this Ordinance will not be used in a manner that would cause the
Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code
and applicable Regulations thereunder. Moreover, the City covenants and
agrees that it will make such use of the proceeds of the Bonds and the amounts
so transferred from said Reserve Fund (including interest or other investment
income derived therefrom), regulate investments of such proceeds and amounts,
and take such other and further action as may be required so that the Bonds will
not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and
applicable Regulations thereunder.
(e) Arbitrage Rebate. If the City does not qualify for an
exception to the requirements of Section 148(f) of the Code relating to rebate to
the United States, the City will take all necessary steps to comply with the
requirement that certain amounts earned by the City on the investment of the
"gross proceeds" of the Bonds (within the meaning of Section 148(f)(6)(B) of the
Code), be rebated to the federal government. Specifically, the City will
(i) maintain records regarding the investment of the gross proceeds of the Bonds
as may be required to calculate the amount earned on the investment of the
gross proceeds of the Bonds separately from records of amounts on deposit in
the funds and accounts of the City allocable to other bond issues of the City or
moneys which do not represent gross proceeds of any bonds of the City,
(ii) calculate at such times as are required by applicable regulations, the amount
earned from the investment of the gross proceeds of the Bonds which is required
to be rebated to the federal government, and (iii) pay, not less often than every
fifth anniversary date of the delivery of the Bonds, and within sixty days after the
retirement of the Bonds, or on such other date as may be permitted under
applicable regulations with respect to "gross proceeds" in the Escrow Fund, all
amounts required to be rebated to the federal government. Further, the City will
not indirectly pay any amount otherwise payable to the federal government
pursuant to the foregoing requirements to any person other than the federal
government by entering into an investment arrangement with respect to the
gross proceeds of the Bonds that might result in a reduction in the amount
required to be paid to the federal government because such arrangement results
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in a smaller profit or a larger loss than would have resulted if the arrangment had
been at arm's length and had the yield on the issue not been relevant to either
party.
(f) Information Reporting. The City covenants and agrees to
file or cause to be filed with the Secretary of the Treasury, not later than the 15th
day of the second calendar month after the close of the calendar quarter in
which the Bonds are issued, an information statement concerning the Bonds, all
under and in accordance with Section 149(e) of the Code and applicable
regulations thereunder.
(g) Continuing Obligation. Notwithstanding any other provision of
this Ordinance, the City's obligations under the covenants and provisions of this
Section shall survive the defeasance and discharge of the Bonds.
25. Application of Proceeds. Proceeds from the sale of the Bonds
shall, promptly upon receipt by the City, be applied as follows:
(a) Accrued interest shall be deposited into the Interest and
Sinking Fund;
(b) $ from the sale of the Bonds shall be applied to
establish an escrow fund to refund the Refunded Bonds, as more fully
provided below, and, to the extent not otherwise provided for, to pay all
expenses arising in connection with the establishment of such escrow
fund and the refunding of the Refunded Bonds;
(c) $ from the sale of the Bonds shall be used to
pay the costs of issuing the Bonds not otherwise paid pursuant to clause
(b) above; and
(d) The sum of $ from the sale of the Bonds
shall be used as a rounding amount and shall be deposited in the Interest
and Sinking Fund for the Bonds; and
(e) Any proceeds from the Bonds remaining after making all such
deposits and payments shall be deposited into the Interest and Sinking
Fund.
26. Transfer of Monte in Reserve Fund and Interest and Sinking Fund
Maintained for Refunded Bonds. On the date of issuance and delivery of the
Bonds, amounts contained in the Reserve Fund for the Refunded Bonds shall be
transferred to the Reserve Fund for the Bonds and amounts contained in the
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Interest and Sinking Fund for the Refunded Bonds shall be transferred to the
Interest and Sinking Fund for the Bonds and shall be applied as herein provided.
27. Redemption of Refunded Bonds. The City hereby irrevocably calls
the following bonds of the City for redemption prior to maturity on the date set
forth below, and authorizes and directs notice of such redemption to be given as
provided in substantially the form attached hereto as Exhibit "A" (with such
changes to this form as any official of the City may approve):
Bonds To Be Redeemed Redemption Date
The City of Beaumont, Texas,
Waterworks and Sewer System
Junior Lien Revenue Bonds,
Series 1992, Maturities
1999 through 2002 Escrowed to maturity
The City of Beaumont, Texas,
Waterworks and Sewer System
Junior Lien Revenue Bonds,
Series 1992, Maturities
2003 through 2012 September 1, 2002
The City of Beaumont, Texas
Waterworks and Sewer System
Revenue and Refunding Bonds,
Series 1989, in the following
maturities and amounts:
9/01/2001 $360,000 September 1, 1999
9/01/2001 $385,000 September 1, 1999
9/01/2002 $405,000 September 1, 1999
9/01/2003 $440,000 September 1, 1999
9/01/2004 $470,000 September 1, 1999
28. Escrow Agreement. The discharge and defeasance of the
Refunded Bonds shall be effectuated pursuant to the terms and provisions of an
Escrow Agreement to be entered into by and between the City and Chase Bank
of Texas, National Association, as Escrow Agent, which shall be substantially
in the form attached hereto as Exhibit "B", the terms and provisions of which are
hereby approved, subject to such insertions, additions and modifications as shall
be necessary (a) to carry out the program designed for the City by Dain
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Rauscher Incorporated., and which shall be certified as to mathematical
accuracy by , Certified Public Accountants, whose report
(the "Report") shall be attached to the Escrow Agreement, (b) to maximize the
City's present value savings and/or to minimize the City's costs of refunding,
(c) to comply with all applicable laws and regulations relating to the refunding of
the Refunded Bonds and (d) to carry out the other intents and purposes of this
Ordinance, and the Mayor or Mayor Pro Tem is hereby authorized to execute
and deliver such Escrow Agreement on behalf of the City in multiple counterparts
and the City Clerk or any Deputy City Clerk is hereby authorized to attest thereto
and affix the City's seal.
29. Source of City Funds Used in Refunding. No money of the City
other than proceeds of the Bonds shall be used to refund the Refunded Bonds.
30. Purchase of United States Treasury Obligations. To assure the
purchase of the Escrowed Securities referred to in the Escrow Agreement, the
Mayor or Mayor Pro Tem, the City's Chief Financial Officer, and the Escrow
Agent are hereby authorized to subscribe for, agree to purchase, and purchase
non-callable obligations of the United States of America, in such amounts and
maturities and bearing interest at such rates as may be provided for in the
Report, and to execute any and all subscriptions, purchase agreements,
commitments, letters of authorization and other documents necessary to
effectuate the foregoing, and any actions heretofore taken for such purpose are
hereby ratified and approved.
31. Related Matters. To satisfy in a timely manner all of the City's
obligations under this Ordinance and the Escrow Agreement, the Mayor or
Mayor Pro Tem, the City Clerk or any Deputy City Clerk, and all other
appropriate officers and agents of the City are hereby authorized and directed to
take all other actions that are reasonably necessary to provide for the refunding
of the Refunded Bonds, including without limitation, executing and delivering on
behalf of the City all certificates, consents, receipts, requests, and other
documents as may be reasonably necessary to satisfy the City's obligations
under the Escrow Agreement and this Ordinance and to direct the application of
funds of the City consistent with the provisions of such Escrow Agreement and
this Ordinance.
32. Registrar. The form of agreement setting forth the duties of the
Registrar is hereby approved, and the appropriate officials of the City are hereby
authorized to execute such agreement for and on behalf of the City.
33. Official Statement. The City Council of the City hereby ratifies,
authorizes and approves, in connection with the sale of the Bonds, the
preparation and distribution of the Preliminary Official Statement dated October
28, 1998, and an Official Statement dated November 10, 1998, containing such
information as may be necessary to conform to the terms of the Bonds, this
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Ordinance, and the purchase contract for the Bonds. The appropriate officials of
the City are hereby authorized to sign such Official Statement and/or to deliver a
certificate pertaining to such Official Statement as prescribed therein, dated as of
the date of payment for and delivery of the Bonds.
34. No Personal Liability. No recourse shall be had for payment of the
principal of or interest on any Bonds or for any claim based thereon, or on this
Ordinance, against any official or employee of the City or any person executing
any Bonds.
35. Continuing Disclosure Undertaking. (a) Annual Reports. The City
shall provide annually to each NRMSIR and the SID, within six months after the
end of each fiscal year, financial information and operating data with respect to the
City of the general type included in the final Official Statement authorized in this
Ordinance (i) under the headings "OFFICIAL STATEMENT SUMMARY', "CITY
REVENUE DEBT", "TAX DATA", "SELECTED FINANCIAL DATA",
"ADMINISTRATION OF THE CITY", and in APPENDIX B. The information to be
provided shall include the financial statements of the City prepared in accordance
with the accounting principles the City may be required to employ from time to time
pursuant to State law or regulation and audited, if the audit is completed within the
period during which they must be provided. If the audit of such financial
statements is not completed within such period, then the City shall provide
unaudited financial statements for the applicable fiscal year to each NRMSI and
the SID within such six month period, and audited financial statements when the
audit report on such statement becomes available.
If the City changes its fiscal year, it will notify each NMSIR and the SID of
the change (and of the date of the new fiscal year end) prior to the next date by
which the City otherwise would be required to provide financial information and
operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this
Section may be set forth in full in one or more documents or may be included by
specific reference to any document(including an official statement or other offering
document, if it is available from the MSRB) that theretofore has been provided to
each NRMSIR and the SID or filed with the SEC.
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(b) Material Event Notices. The City shall notify the SID and either each
NRMSIR or the MSRB, in a timely manner, of any of the following events with
respect to the Bonds, if such event is material within the meaning of the federal
securities laws:
i. Principal and interest payment delinquencies;
ii. Non-payment related defaults;
iii. Unscheduled draws on debt service reserves
reflecting financial difficulties;
iv. Unscheduled draws on credit enhancements
reflecting financial difficulties;
V. Substitution of credit or liquidity providers,
or their failure to perform;
vi. Adverse tax opinions or events affecting the
tax-exempt status of the Bonds;
vii. Modificationsto rights of Bondholders;
viii. Bond calls;
ix. Defeasances;
X. Release, substitution or sale of property
securing repayment of the securities;and
xi. Rating changes.
The City shall notify the SID and either each NRMSIR or the MSRB, in a
timely manner, of any failure by the City to provide financial information or
operating data in accordance with section (a) above..
(c) Limitations Disclaimers and Amendments. The City shall be obligated
to observe and perform the covenants specified in this Section for so long as, but
only for so long as, the City remains an "obligated person" with respect to the
Bonds within the meaning of the Rule, except that the City in any event will give
notice of any deposit made in accordance with Texas law that causes Bonds no
longer to be outstanding.
The provisions of this Section are for the sole benefit of the holders and
beneficial owners of the Bonds, and nothing in this Section, express or implied,
shall give any benefit or any legal or equitable right, remedy, or claim hereunder to
any other person. The City undertakes to provide only the financial information,
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operating data, financial statements, and notices which it has expressly agreed to
provide pursuant to this Section and does not hereby undertake to provide any
other information that may be relevant or material to a complete presentation of the
City's financial results, condition, or prospects or hereby undertake to update any
information provided in accordance with this Section or otherwise, except as
expressly provided herein. The City does not make any representation or warranty
concerning such information or its usefulness to a decision to invest in or sell
Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE
HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON,
IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN
PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON
ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION. HOLDERS OR
BENEFICIAL OWNERS OF BONDS MAY SEEK AS THEIR SOLE REMEDY A
WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH ITS
AGREEMENT.
No default by the City with respect to its continuing disclosure agreement
shall constitute a breach of or default under this Ordinance for purposes of any
other provision of this Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or
otherwise limit the duties of the City under federal and state securities laws.
The provisions of this Section may be amended by the City from time to
time to adapt to changed circumstances that arise from a change in legal
requirements,a change in law, or a change in the identity, nature, status or type of
operations of the City, if (i) the agreement, as amended, would have permitted the
Underwriter to purchase or sell the Bonds in the initial primary offering in
compliance with the Rule, taking into account any amendments or interpretations
of such rule to the date of such amendment, as well as such changed
circumstances, and (ii) either (a) the holders of a majority in aggregate principal
amount of the outstanding Bonds consent to such amendment, or (b) any person
unaffiliated with the City (such as nationally recognized bond counsel) determines
the amendment will not materially impair the interests of the holders and beneficial
owners of the Bonds. The City may also amend or repeal the obligations and
agreement in this Section if the SEC amends or repeals the applicable provisions
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of the Rule or a court of final jurisdiction determines that such provisions are
invalid, and the City may amend the agreement in its discretion in any other
circumstance or manner, but in either case only to the extent that its right to do so
would not prevent an underwriters from lawfully purchasing or reselling the Bonds
in the primary offering of the Bonds in compliance with the Rule. If the City
amends its agreement, it must include with the next financial information and
operating data provided in accordance with its agreement an explanation, in
narrative form, of the reasons for the amendment and of the impact of any change
in the type of information and operating data so provided.
36. Open Meeting. It is hereby officially found and determined that the
meeting at which this Ordinance was adopted was open to the public, and public
notice of the time, place and purpose of said meeting was given, all as required
by Article 6252-17, Vernon's Texas Civil Statutes.
37. Interpretations. All terms defined herein and all pronouns used in this
Ordinance shall be deemed to apply equally to singular and plural and to all
genders. The titles and headings of the sections of this Ordinance have been
inserted for convenience of reference only and are not to be considered a part
hereof and shall not in any way modify or restrict any of the terms or provisions
hereof. This Ordinance and all of the terms and provisions hereof shall be
liberally construed to effectuate the purposes set forth herein and to sustain the
validity of the Parity Bonds and the validity of the lien on and pledge of the Net
Revenues to secure the payment of the Parity Bonds.
38. Provisions Relating to Bond Insurance. Notwithstanding any
provision in this Ordinance to the contrary, as long as the Bond Insurance Policy
shall be in full force and effect, the City and the Registrar agree to comply with
the following provisions:
(a) The Bond Insurer shall be deemed to be the sole holder of the Bonds
insured by it for the purpose of exercising any voting right or privilege or giving
any consent or direction or taking any other action that holders of the Bonds
insured by the Bond Insurer are entitled to take pursuant to this Ordinance.
(b) In the event the maturity of the Bonds is accelerated, the Bond Insurer
may elect, in its sole discretion, to pay accelerated principal and interest on such
principal to the date of acceleration (to the extent unpaid by the City) and the
Paying Agent shall be required to accept such amounts. Upon payment of such
accelerated principal and interest accrued to the acceleration date as provided
above, the Bond Insurer's obligations under the Bond Insurance Policy with
respect to such Bonds shall be fully discharged.
(c) No grace period provided under this Ordinance for a bond covenant
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default by the City shall exceed 30 days, nor shall same be extended for more
than 60 days, without the prior written consent of the Bond Insurer.
(d) The Bond Insurer is a third party beneficiary of this Ordinance and of
the covenants made by the City herein.
(e) No modification, amendment or supplement to this Ordinance or any
other transaction document (each a "Related Document") may become effective
except upon obtaining the prior written consent of the Bond Insurer.
(f) Copies of any modification or amendment to this Ordinance or any
other Related Document shall be sent to Standard & Poor's Rating Services and
Moody's Investors Service, Inc. at least 10 days prior to the effective date
thereof.
(g) Rights of the Bond Insurer to direct or consent to City or Bondholder
actions under this Ordinance shall be suspended during any period in which the
Insurer is in default in its payment obligations under the Bond Insurance Policy
(except to the extent of amounts previously paid by the Bond Insurer and due
and owing to the Bond Insurer) and shall be of no force or effect in the event the
Bond Insurance Policy is no longer in effect or the Bond Insurer asserts that the
Bond Insurance Policy is not in effect or the Bond Insurer shall have provided
written notice that it waives such rights.
(h) The rights granted to the Bond Insurer under this Ordinance or any
other Related Documents to request, consent to or direct any action are rights
granted to the Insurer in consideration of its issuance of the Bond Insurance
Policy. Any exercise by the Bond Insurer of such rights is merely an exercise of
the Bond Insurer's contractual rights and shall not be construed or deemed to be
taken for the benefit or on behalf of the Bondholders nor does such action
evidence any position of the Bond Insurer, positive or negative, as to whether
Bondholder consent is required in addition to consent of the Bond Insurer.
(i) Only (1) cash, (2) non-callable direct obligations of the United States of
America ("Treasuries"), (3) evidences of ownership of proportionate interests in
future interest and principal payments on Treasuries held by a bank or trust
company as custodian, under which the owner of the investment is the real party
in interest and has the right to proceed directly and individually against the
obligor and the underlying Treasuries are not available to any person claiming
through the custodian or to whom the custodian may be obligated or (4) pre-
refunded municipal obligations rated "AAA" and "Aaa" by Standard and Poor's
and Moody's, respectively, or any combination thereof, shall be authorized to be
used to effect defeasance of the Bonds unless the Bond Insurer otherwise
approves.
To accomplish a defeasance of the bonds, the City shall cause to be
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delivered (i) a report of an independent firm of nationally recognized certified
public accountants or such other accountant as shall be acceptable to the Bond
Insurer ("Accountant") verifying the sufficiency of the escrow established to pay
the Bonds in full on the maturity or redemption date ("Verification"), (ii) an Escrow
Deposit Agreement (which shall be acceptable in form and substance to the
Bond Insurer), and (iii) an opinion of nationally recognized bond counsel to the
effect that the Bonds are no longer "Outstanding" under this Ordinance; each
Verification and defeasance opinion shall be acceptable in form and substance,
and addressed, to the City, the Paying Agent and the Bond Insurer. In the event
a forward purchase agreement will be employed in the refunding, such
agreement shall be subject to the approval of the Bond Insurer and shall be
accompanied by such opinions of counsel as may be required by the Bond
Insurer. The Bond Insurer shall be provided with final drafts of the above-
referenced documentation not less than five business days prior to the funding of
the escrow.
Bonds shall be deemed "Outstanding" under this Ordinance unless and
until they are in fact paid and retired or the above criteria are met.
(j) Amounts paid by the Bond Insurer under the Bond Insurance Policy
shall not be deemed paid for purposes of this Ordinance and shall remain
Outstanding and continue to be due and owing until paid by the City in
accordance with this Ordinance.
(k) This Ordinance shall not be discharged unless all amounts due or to
become due to the Bond Insurer have been paid in full or duly provided for.
(1) Claims Upon the Bond Insurance Policy and Payments by and to the
Bond Insurer.
If, on the third business day prior to the related scheduled interest
payment date or principal payment date ("Payment Date") there is not on
deposit with the Paying Agent, after making all transfers and deposits
required under this Ordinance, moneys sufficient to pay the principal of
and interest on the Bonds due on such Payment Date, the Paying Agent
shall give notice to the Bond Insurer and to its designated agent (if any)
(the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of
such deficiency by 12:00 noon, New York City time, on such Business
Day. If, on the second Business Day prior to the related Payment Date,
there continues to be a deficiency in the amount available to pay the
principal of and interest on the Bonds due on such Payment Date, the
Paying Agent shall make a claim under the Bond Insurance Policy and
give notice to the Bond Insurer and the Insurer's Fiscal Agent (if any) by
telephone of the amount of such deficiency, and the allocation of such
deficiency between the amount required to pay interest on the Bonds and
the amount required to pay principal of the Bonds, confirmed in writing to
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the Bond Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York
City time, on such second Business Day by filling in the form of Notice of
Claim and Certificate delivered with the Bond Insurance Policy.
In the event the claim to be made is for a mandatory sinking fund
redemption installment, upon receipt of the moneys due, the Paying Agent
shall authenticate and deliver to affected Bondholders who surrender their
bonds a new Bond or Bonds in an aggregate principal amount equal to
the unredeemed portion of the Bond surrendered. The Paying Agent shall
designate any portion or payment of principal on Bonds paid by the Bond
Insurer, whether by virtue of mandatory sinking fund redemption, maturity
or other advancement of maturity, on its books as a reduction in the
principal amount of Bonds registered to the then current Bondholder,
whether DTC or its nominee or otherwise, and shall issue a replacement
Bond to the Bond Insurer, registered in the name of Financial Security
Assurance Inc., in a principal amount equal to the amount of principal so
paid (without regard to authorized denominations); provided that the
Paying Agent's failure to so designate any payment or issue any
replacement Bond shall have no effect on the amount of principal or
interest payable by the City on any Bond or the subrogation rights of the
Bond Insurer.
The Paying Agent shall keep a complete and accurate record of all
funds deposited by the Bond Insurer into the Policy Payments Account
and the allocation of such funds to payment of interest on and principal
paid in respect of any Bond. The Bond Insurer shall have the right to
inspect such records at reasonable times upon reasonable notice to the
Paying Agent.
Upon payment of a claim under the Bond Insurance Policy the
Paying Agent shall establish a separate special purpose trust account for
the benefit of Bondholders referred to herein as the "Policy Payments
Account" and over which the Paying Agent shall have exclusive control
and sole right of withdrawal. The Paying Agent shall receive any payment
under the Bond Insurance Policy in trust on behalf of Bondholders and
shall deposit any such amount in the Policy Payments Account and
distribute such amount only for purposes of making the payments for
which a claim was made. Such amounts shall be disbursed by the Paying
Agent to Bondholders in the same manner as principal and interest
payments are to be made with respect to the Bonds under the sections
hereof regarding payment of Bonds. It shall not be necessary for such
payments to be made by checks or wire transfers separate from the check
or wire transfer used to pay debt service with other funds available to
make such payments.
Funds held in the Policy Payments Account shall not be invested
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by the Paying Agent and may not be applied to satisfy any costs,
expenses or liabilities of the Paying Agent.
Any funds remaining in the Policy Payments Account following a
Bond payment date shall promptly be remitted to the Bond Insurer.
(m) The Bond Insurer shall, to the extent it makes any payment of
principal of or interest on the Bonds, become subrogated to the rights of the
recipients of such payments in accordance with the terms of the Bond Insurance
Policy.
(n) The City shall pay or reimburse the Bond Insurer any and all charges,
fees, costs and expenses which the Bond Insurer may reasonably pay or incur in
connection with (i) the administration, enforcement, defense or preservation of
any rights or security in any Related Document; (ii) the pursuit of any remedies
under this Ordinance or any other Related Documents or otherwise afforded by
law or equity; (iii) any amendment, waiver or other action with respect to, or
related to, this Ordinance or any other Related Document whether or not
executed or completed; (iv) the violation by the City of any law, rule or regulation,
or any judgment, order or decree applicable to it; or (v) any litigation or other
dispute in connection with this Ordinance or any other Related Document or the
transactions contemplated thereby, other than amounts resulting from the failure
of the Bond Insurer to honor its obligations under the Bond Insurance Policy.
The Bond Insurer reserves the right to charge a reasonable fee as a condition to
executing any amendment, waiver or consent proposed in respect of this
Ordinance or any other Related Document.
(o) The Bond Insurer shall be entitled to pay principal or interest on the
Bonds that shall become Due for Payment but shall be unpaid by reason of
Nonpayment by the City (as such terms are defined in the Bond Insurance
Policy) and any amounts due on the Bonds as a result of acceleration of the
maturity thereof in accordance with this Ordinance, whether or not the Bond
Insurer has received a Notice of Nonpayment (as such term is defined in the
Bond Insurance Policy) or a claim upon the Bond Insurance Policy.
(p) The notice address of the Bond Insurer is: Financial Security
Assurance Inc., 350 Park Avenue, New York, New York 10022-6022, Attention:
Managing Director — Durveillance; Re: Policy No. Telephone: (212) 826-
0100; Telecopier: (212) 339-3529. In each case in which notice or other
communication refers to an Event of Default, then a copy of such notice or other
communication shall also be sent to the attention of General Counsel and shall
be marked to indicated "URGENT MATERIAL ENCLOSED."
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(q) The Bond Insurer shall be provided with the following information:
(i) Annual audited financial statements within 120 days after the
end of the City's fiscal year and the City's annual budget within
30 days after the approval thereof;
(ii) Notice of any draw upon the Debt Service Reserve Fund within
two Business Days after knowledge thereof other than (1)
withdrawals of amounts in excess of the Debt Service Reserve
Requirement and (2) withdrawals in connection with a refunding
of Bonds;
(iii) Notice of any default known to the Paying Agent within five
Business Days after knowledge thereof;
(iv) Prior notice of the advance refunding or redemption of any of
the Bonds, including the principal amount, maturities and
CUSIP numbers thereof;
(v) Notice of the resignation or removal of the Paying Agent,
Paying Agent and Bond Registrar and the appointment of, and
acceptance of duties by, any successor thereto;
(vi) Notice of the commencement of any proceeding by or against
the City commenced under the United States Bankruptcy Code
or any other applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (an "Insolvency Proceeding");
(vii) Notice of the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential
transfer of any payment or principal of, or interest on, the
Bonds;
(viii) A full original transcript of all proceedings relating to the
execution of any amendment or supplement to the Related
Documents; and
(ix) All reports, notices and correspondence to be delivered under
the terms of the Related Documents.
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(r) The City shall not be permitted to issue any Additional Parity bond if
(1) should any Event of Default (or any event which, once all notice or grace
periods have passed, would constitute an Event of Default) have occurred and
be continuing unless such default shall be cured upon such issuance and (2)
unless the Debt Service Reserve Fund is fully funded at its requirement
(including the new issue) upon the issuance of such Additional Bonds, in either
case unless otherwise permitted by the Bond Insurer.
(s) Capitalized terms used in this Section 38 that are not defined
elsewhere in this Ordinance shall have the meaning ascribed to them in the
Bond Insurance Policy.
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PASSED AND APPROVED this 10th day of November, 1998.
, Z' /'Ial
Mayor Pro T
The City of Beaumont
ATTEST:
Deputy City Clerk
The City of Beaumont
X24
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EXHIBIT "A"
NOTICE OF PRIOR REDEMPTION
The City of Beaumont, Texas, Waterworks and Sewer System Junior Lien
Revenue Bonds, Series 1992, Maturities 2002 through 2012
The City of Beaumont, Texas, Waterworks and Sewer System Revenue
and Refunding Bonds, Series 1989, in the following amounts and maturities:
9/01/2001 $360,000
9/01/2001 $385,000
9/01/2002 $405,000
9/01/2003 $440,000
9/01/2004 $470,000
NOTICE IS HEREBY GIVEN that The City of Beaumont, Texas, has
called the above bonds for redemption on September 1, 1999. Such bonds will
be redeemed at Chase Bank of Texas, National Association, Houston, Texas,
where due provision shall be made to pay the redemption price of the principal
amount of such bonds plus accrued interest to the date fixed for redemption.
Such bonds shall not bear interest after September 1, 1999.
BY ORDINANCE of The City of Beaumont, Texas, adopted November 10,
1998.
David W. Moore, Mayor
City of Beaumont, Texas
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