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HomeMy WebLinkAboutPACKET DEC 5 2006 10%W� City of Beaumont REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS DECEMBER 5, 2006 1;30 P.M. CONSENT AGENDA * Approval of minutes * Confirmation of committee appointments Beverly Hatcher would be appointed to the Martin Luther King, Jr. Parkway Commission. The term would commence December 5, 2006 and expire December 4, 2008. (Councilmember Becky Ames) A) Approve compensation for the City Clerk B) Approve a contract for the purchase of lubricants C) Approve the purchase of desktop computers for the Beaumont Library System D) Approve a contract for repairs to the Main Terminal Building at the Beaumont Municipal Airport E) Authorize a License to Encroach for an aerial pedestrian overhead walkway across Hospital Drive A City of Beaumont Council Agenda Item � c TO: City Council FROM: Kyle Hayes, City Manager MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Approve compensation for the City Clerk. BACKGROUND Rose Ann Jones, City Clerk, would receive a 3% wage increase effective December 5, 2006. The City Council met in an Executive Session on November 14, 2006 to conduct an annual performance review of the City Clerk. RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Council hereby approves a 3% wage increase effective December 5, 2006 for the City Clerk, Rose Ann Jones. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - B City of Beaumont cl Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 27, 2006 REQUESTED ACTION: Council approval of a contract for the purchase of lubricants. RECOMMENDATION Administration recommends award of a six(6)month contract to Tri-Con Inc.,of Beaumont for the purchase of lubricants at the unit costs reflected in the attached bid tabulation,with an estimated total expenditure for the contract period of$71,213. BACKGROUND The contract specifies that the awarded bidder shall provide approximately 12,100 gallons of various lubricants at fixed unit costs for use by various City departments in maintaining vehicles and equipment. Seven (7) vendors were notified with two (2) submitting bids. The products bid by Tri-Con have been reviewed by Fleet personnel and meet the specifications set forth in the bid. Specifications allow for a six (6)month contract extension upon the expiration of the initial six (6)month term at the same pricing as that awarded herein. BUDGETARY IMPACT Funds are available for this expenditure in user Departments' operating budgets. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, Public Works Director, and Chief Financial Officer. BID TABULATION: SIX MONTH CONTRACT FOR LUBRICANTS BID OPENING DATE: THURSDAY, NOVEMBER 16, 2006 @ 2:00 PM BID NUMBER: RF1007-05 VENDORINC.TRI-CON, =- — -:: PUMPELLY OIL CO. BEAUMONT,TX_ _- I - SULPHUR, LA 5,000 - 15W-40, engine oil(bulk)n 1 Urnt$6.481 $32,400.00 j Unit $6 711^ $33,550 00�II _ _ 15W-40 engine oil drums $7.17 $7,170.00 $7 49 $7,490 00 500 SAE 40 engine oil(55 gal drums) f - _$5.54 - -$2,770.001 $7.59 $3,795.00 _1 000 -- -- _- (q) --- -- - --- i __ _$---� —-- $2,366.00t -$2_35 $3,055.00 16 00 Dexron III bulk). -- -- -- --- - i $5.32 $3,192_00 $6.81 $4,086.0011 100 97 Dexron III (55 gal drums) i $6.13 $613.00 j $7 $797.00 — -- - - — 100 Mercon 5(qt) $4.32 $432.00 $3.41 $341.00 2,500 Multi purpose trans.1hydraulic oil(bulk) $6.31 $15,775.00 $7.04 $17,600.00 500 !Multi purpose trans/hydraulic oil(drum) $7.98 _$3,990.00 $8.21 , $4,105.00 ' osit charge _— $30.00 — _i $25 00 500 'Caterpillar TO-4 com hydraulic oil $2,505.00, $11.87 $5,935.00 Drum De TOTAL BID J _ _ $71,213.00 $80,754 00'i' l Delivery time - i One t1)day OneA1)day ___ RESOLUTION NO. WHEREAS, bids were received for a six (6) month contract to purchase lubricants for use by various City departments in maintaining vehicles and equipment ; and, WHEREAS, Tri-Con, Inc., Beaumont, Texas, submitted a bid in the unit costs shown below for an estimated total of $71,213: Est. Qty. Description Unit Total 5,000 15W-40, engine oil bulk $6.48 $32,400.00 1,000 15W-40, engine oil 55 gal drums $7.17 $7,170.00 500 SAE 40 engine oil 55 gal drums $5.54 $2,770.00 1,300 Dexron III t $1.82 $2,366.00 600 Dexron III bulk $5.32 $3,192.00 100 Dexron III 55 gal drums $6.13 $613.00 100 Mercon 5 t $4.32 $432.00 2,500 Multi-purpose trans./hydraulic oil bulk $6.31 $15,775.00 500 Multi-purpose trans/hydraulic oil drum $7.98 $3,990.00 500 Caterpillar TO-4 comp. hydraulic oil $5.01 $2,505.00 Drum Deposit charge $30.00 TOTAL BID $71,213.00 Manufacturer Fina 'Delivery time One 1 day and, WHEREAS, City Council is of the opinion that the bid submitted by Tri-Con, Inc., Beaumont, Texas, should be accepted; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the bid submitted by Tri-Con, Inc., Beaumont, Texas, for a six (6) month contract to purchase lubricants for use by various City departments in maintaining vehicles and equipment at the unit costs shown above for an estimated total of $71,213 be accepted by the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - c PA. City of Beaumont Council Agenda Item � � g TO: Ci ty Council FROM: Kyle Hayes, City Manager PREPARED BY: Max Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 27, 2006 REQUESTED ACTION: Council consider the purchase of desktop computers for the Libraries. RECOMMENDATION Administration recommends the purchase of thirty-eight(3 8)desktop computers from Gateway,Inc. of Kansas City, Missouri through the State of Texas Department of Information Resources (DIR) contract for$1,234 each. BACKGROUND The Bill and Melinda Gates Foundation is providing grant funds to eligible libraries in Texas. These funds have been made available under the Public Access Computer Hardware Upgrade Grant(PAC HUG)program,which is being administered by the Texas State Library and Archives Commission. The purpose of the PAC HUG program is to provide grant funds to libraries that were granted NT- based public access computers by the Foundation between 1997 and 2000. PAC HUG is to help these libraries upgrade or replace existing systems so that the systems will be easier to support and upgrade in the future. The Department of Information Resources(DIR)is the State's information technology agency and they assist other state and local government agencies with the acquisition and management of information technology. The DIR offers negotiated contracts that take advantage of the state's aggregate buying power.Local governments may contact DIR contracted vendors directly to obtain contracted pricing. Purchases from these contracts meet all statutory bidding requirements. The thirty-eight(38)computers to be purchased are Gateway E-2600D desktop computers with 3.0 gigahertz (GHz) processors, 40 gigabyte (GB) hard drives, and 17" flat panel monitors. These computers are offered by Gateway for$1,234 each on their State DIR contract.The new computers will replace public access computers in the following facilities: RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Council hereby approves the purchase of thirty-eight (38) desktop computers for the libraries at $1,234 each for a total cost of $46,892 from Gateway, Inc. of Kansas City, Missouri through the State of Texas Department of Information Resources (DIR) contract. The funding for this expenditure is provided by the Bill and Melinda Gates Foundation under the Public Access Computer Hardware Upgrade Grant program. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - D City of Beaumont 11791-1 Council Agenda Item � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Director of Public Works MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 30, 2006 REQUESTED ACTION: Council approval to award a contract for repairs to the Main Terminal Building at the Beaumont Municipal Airport. RECOMMENDATION Administration recommends award of a J'ob order contract to Jamail Construction for repairs to the Main Terminal Building at the Beaumont Municipal Airport in the amount of$31,526.63. BACKGROUND Council authorized the award of a contract for job order contracting to Jamail Construction(Jamail) on July 11, 2006 through the Texas Association of School Boards (TASB) Buyboard cooperative purchasing program. Job order contracting is a fixed-unit-price contract that provides contract management services for the repair, renovation, and alteration of facilities. The Main Terminal Building at the Municipal Airport was damaged by Hurricane Rita. The scope of work includes exterior and interior painting, suspended ceiling tile repairs, flooring repairs and electrical repairs. Jamail provided a quotation based on the Buyboard contracted rates in the amount of$31,526.63. This price includes the insurance adjusters' agreed upon scope of work. Work will commence within two weeks and will be completed within thirty (30) days. Jamail will provide performance and payment bonds for this project as required by State statute for projects exceeding $25,000. Main Terminal Building November 30, 2006 Page 2 BUDGETARY IMPACT The cost of this project will be reimbursed by the City's insurance carrier. PREVIOUS ACTION Resolution No. 06-198 passed by Council on July 11, 2006. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, Director of Public Works and Capital Projects Manager. RESOLUTION NO. WHEREAS, on July 11, 2006, the City Council of the City of Beaumont, Texas, passed Resolution No. 06-198 awarding a contract to Jamail Construction of Houston, Texas through the Texas Association of School Boards (TASB) Buyboard cooperative purchasing program for repairs, renovations or alterations of various City facilities damaged by Hurricane Rita; and, WHEREAS, Jamail Construction (Jamail) has submitted a quote in the amount of $31,526.63 for exterior and interior painting, suspended ceiling the repairs, flooring repairs and electrical repairs to the Main Terminal Building at the Beaumont Municipal Airport: NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the quote in the amount of$31,526.63 for exterior and interior painting, suspended ceiling tile repairs, flooring repairs and electrical repairs to the Main Terminal Building at the Beaumont Municipal Airport be accepted by the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - E Cit of Beaumont y Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Public Works Director MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider a resolution authorizing the granting of a License to Encroach to BHST-POB 1 LTD for an aerial pedestrian overhead walkway across Hospital Drive. RECOMMENDATION BHST-POB 1 LTD. has submitted an application for a License to Encroach across the City's Hospital Drive sixty (60) foot right-of-way. The encroachment is an aerial pedestrian overhead walkway with a skyway column,comprising an area of 0.0201 acre of land and ranging from 14.50 to 33.50 feet above the pavement. The walkway extends from the Beaumont Physicians Plaza Building (being out of Lots 2 and 3, Block 2 of the Beaumont Medical Plaza Addition)across the City's Hospital Drive sixty (60) foot right-of-way and connects with Memorial Hermann Baptist Hospital (out of the David Brown Survey, Abstract No. 5). Administration recommends authorization to execute the License to Encroach. BACKGROUND The License to Encroach protects the City from liability and provides a thirty(30)day cancellation clause. BUDGETARY IMPACT There is a one time fee of$500 for the License to Encroach. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY: City Manager and Public Works Director engaerial-ib.wpd 29 November 2006 RESOLUTION NO. WHEREAS, BHST-POB 1 LTD has requested that the City of Beaumont grant it a License to Encroach across the City's Hospital Drive sixty foot (60') right-of-way for an aerial pedestrian overhead walkway, as described in Exhibit"A"attached hereto and made a part hereof for all purposes; and, WHEREAS, City staff has expended considerable time and effort in investigating the effect of such encroachment upon the City and utilities serving the same; and, WHEREAS, it appears that it would be equitable to allow such encroachment at this time; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Manager be and he is hereby authorized to execute a License to Encroach i with BHST-POB 1 LTD for an aerial pedestrian overhead walkway across the City's Hospital Drive sixty foot (60') right-of-way as described in Exhibit "A" attached hereto and made a part hereof for all purposes for a one-time fee of Five Hundred Dollars ($500.00) for each License to Encroach. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. i - Mayor Guy N. Goodson - Fitz & Shipman INC Consulting Engineers and Land Surveyors FIELD NOTE DESCRIPTION FOR A 0.0201 ACRE TRACT BEING A SKYWAY AERIAL ENCROACHMENT OUT OF THE DAVID BROWN SURVEY, ABSTRACT 5 JEFFERSON COUNTY, TEXAS AUGUST 18, 2006 That certain 0.0201 acre tract, being a Skyway Aerial Encroachment from 14.50 feet above the ground to 33.50 feet above the ground out of the David Brown Survey, Abstract 5, Jefferson County, Texas, said 0.0201 acres being more particularly described by metes & bounds as follows: Note: The Basis of Bearings is along the south line of a 2.421 acre tract conveyed to BHST - POB I LTD as recorded in Clerks File.No. 2003041121 of the Official Public Records of Real Property of Jefferson County, Texas -and the north right-of-way line of Medical Center Drive having been called South 89°58'51"West 250.00 feet. COMMENCING at a 5/8" iron rod found at the intersection of the north right-of-way line of Medical Center Drive with the west right-of-way line of Hospital Drive being the southeast corner of the said 2.421 acre tract from which a found Y2" iron rod bears South 89 058'51" West 249.77 feet (called South 89 058'51" 250.00 feet); THENCE North 00°08'22". East along the said west right-of-way line of Hospital Drive and the east line of the said 2.421 acre tract a distance of 123.85 feet (called North 00 004'45" East) to a point for the southwest corner of the said 0.0201 acre tract and the POINT OF BEGINNING: THENCE North 00°08'22" East continuing along the said west right-of-way line of Hospital Drive and the said east line of the 2.421 acre tract a distance of 14.45 feet (called North 00°04'45" East) to a point for the northwest corner of the said 0.0201 acre tract from which a found 5/8" iron rod bears North 00°08'22" East 11.39 feet (called North 00 004'45" East); THENCE South 89°36'40" East a distance of 14.36 feet to an angle point of the said 0.0201 acre tract; THENCE North 65°32'00" East a distance of 50.19 feet to a point in the east right-of-way line of Hospital Drive for the northeast corner of the said 0.0201 acre tract; THENCE South 00 004'35" West along the said east right-of-way line of Hospital Drive a distance of 9.41 feet to an angle point of the said 0.0201 acre tract; THENCE South 00 008'22" West continuing along the said east right-of-way line of Hospital Drive a distance of 5.36 feet to a point for the southeast corner of the said 0.0201 acre tract, THENCE South 65 051'18" West a distance of 50.03 feet to an angle point of the said 0.0201 acre tract; Fittz&Shipman,Inc. Page 1 of 2 Project No. 03379.T5aerial Plat and Description 1405 Cornerstone Court,*.Beaumont,Texas 77706 • (409) 832-7238 •fax(409) 832-7303 EXHIBIT "A" 1 pF 1 i THENCE North 89 036'40" West a distance of 14.40 feet to the POINT OF BEGINNING and containing 0.0201 acres of land, more or less. This Field Note Description is being submitted along with a plat of even date based on a survey performed by Fittz & Shipman, Inc. on August 15, 2006. o F r Walter J. Ksiazek *c,'�P�GISTERZ.'P Registered Professional Land Surveyor o. 5321 * >� WALTER J. KS AZT 5321 �,• • •'9oFESS��:,�Q. SURV� Fittz&Shipman,Inc. Page 2 of 2 Project No. 03379.T5aerial Plat and Description EXHIBIT "A" 2 p T i NUMBER iDIRECTION IDISTANCE / Zd L1 N 00'08'22" E 14.45 wc� L2 IS 89'36'40" E 14.36 W° L3 I N 65'32'00" E 150.19 1-4 S 00'04'35" W 9.41 EL L5 S 00'08'22" W 5.36 L6 S 65'51'18" W 50.03 o L7 N 89'36'40" W 114.40 z V) o> NOTE: BOTTOM OF SKYWAY 14.50' ABOVE GROUND. TOP OF SKYWAY 33.50' ABOVE'GROUND. = \ FOUND 5d8",,, � �D IRON RO J O O \ � C r 0� G / L2 ❑ 002 POINT OF BEGINNING - H w I � o q � 0. .�15— 30 I LU in a S s C A L I C)M NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o W THE BENEFIT OF A TITLE COMMITMENT. UO a0 ° NOT ALL EASEMENTS, WHETHER OF CIR 0 Z RECORD OR NOT, WERE RESEARCHED AT N O 0 THE TIME OF THIS SURVEY.uj I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND / I UNDER MY SUPERVISION DURING AUGUST 2006. I FOUND 1/2" I Q OF TFT Y IRON ROD I WALTER J. KSIAZEK *aje�G1STE2F�•cn* 5' STREET LIGHT EASEMENT I REGISTERED PROFESSIONAL L SURVEYOR O 5321 * • �' • WALTER J. KSIAZEK S 89'58'51" W 249.77' a,0 5321 r s (CALLED S 89'58'51" W 250.DO') COMMENCING .eq0 �P• (BASIS OF BEARINGS) POINT ` ••a•e e Dee Q` MEDICAL CENTER DRIVE IRON FOUND ROD 8" qM0 SIIA�11 � Fittz&ShIpI'Y an SKYWAY AERIAL ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST ConsultinsE4meers and Land SunNyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06 03379 T5 EXHIBIT "A" 's CS S Fittz & Shipman lug Consulting Engineers and Land Surveyors FIELD NOTE DESCRIPTION FOR A 65.01 SQUARE FOOT TRACT BEING A SKYWAY COLUMN ENCROACHMENT OUT OF THE DAVID BROWN SURVEY, ABSTRACT 5 JEFFERSON COUNTY, TEXAS AUGUST 18, 2006 That certain 65.01 square foot tract, being a Skyway Column Encroachment out of the David Brown Survey, Abstract 5, Jefferson County, Texas, said 65.01 square foot tract being more particularly described by metes & bounds as follows: Note: The Basis of Bearings is along the south line of a 2.421 acre tract conveyed to BHST - POB I LTD as recorded in Clerks File No. 2003041121 of the Official Public Records of Real Property of.Jefferson County, Texas-and the north right-of-way line of Medical Center Drive having been called South 89 058'51"West 250.00 feet,.- COMMENCING at a 5/8" iron rod found at the intersection of the north right-of-way line of Medical Center Drive with the west right-of-way line of Hospital Drive being the southeast corner of the said 2.421 acre tract from which a found %2" iron rod bears South 89°58'51" West 249.77 feet (called South 89 058'51" 250.00 feet); THENCE North 00°08'22" East along the said west right-of-way line of Hospital Drive and the east line of the said 2.421 acre tract a distance of 123.85 feet (called North 00 004'45" East) to a point from which a found 5/8" iron rod bears North 00 008'22" East 25.84 feet (called North 00°04'45" East); THENCE South 89 036'40" East a distance of 9.90 feet to the southwest corner of the said 65.01 square foot and the POINT OF BEGINNING; THENCE North 00°00'43" West along the west line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the northwest comer of the said 65.01 square foot tract; THENCE South 89 036'40" East along the north line of the said 65.01 square foot tract a distance of 4.50 feet to a point for the northeast corner of the said 65.01 square foot tract; THENCE South 00 000'43" East along the east line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the southeast corner of the said 65.01 square foot tract; THENCE North 89 036'40" West along the south line of the said 65.01 square foot tract a distance of 4.50 feet to the POINT OF BEGINNING and containing 65.01 square feet of land, more or less. This Field Note Description is being submitted along with a plat of even date based on a survey performed by Fittz & Shipman, In on August 15, 2006. C..••, alter k �,o.�GISTE2 If Registered Profess' al Land Su eyor No. 5321 �•».»•«.. WALTER J, KSIAZEK Fittz&Shipman,Inc. ,,0 5321 „a Page 1 of 1 •'9�FES '� Plat Project and DesOcription5colurnn a ,goo SURV�ypQ • • 1405 Cornerstone Court, ,Beaumont,Texas 77706 (409) 832-7238 fax(409) 832-7303 EXHIBIT "A" 4 a-$ 5 i i i NUMBER IDIRECTION IDISTANCE zi L1 IS 89'36'40" E 19.90 / Lim 11-2 N 00'00'43" W 114.45 / a° L3 S 89'36'40" E 4.50 / L4 S 00'00'43" E 14.45 V) L5 N 89'36'40" W 4.50 I ~N Z aJ 0 O 0> e FOUND RON ROD 8"-,, 6 p 65.01.. S.F. ,t L3 � o / 1 M L5 POINT OF ( 1 BEGINNING � W wv i -�—�s 30 I ``'a U1 S C A L E NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o THE BENEFIT OF A TITLE COMMITMENT. U) 00 Z NOT ALL EASEMENTS, WHETHER OF RECORD OR NOT, WERE RESEARCHED AT M O ° THE TIME OF THIS SURVEY. N O J I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND UNDER MY SUPERVISION DURING AUGUST 2006. I 2 T . FOUND 1/ ' OF �' Q.` e e e e �•�' WALTER J. KSIAZEK �j�•°GISTE/�°.'9S IRON R00 I REGISTERED PROFESSIONAL LAND VEYOR N0. 5 * • �G Fir * • • 5' STREET LIGHT EASEMENT I WALTER J. KSIAZEK S $9'58'51" W 249.77' 0.0 5321 (CALLED S 89'58'51" W 250,00') COMMENCING 00'90 :• (BASIS OF BEARINGS) POINT •rFESS�00•Q MEDICAL CENTER DRIVE IRON ROD 8„ �NOSUME�� Fittz&3hip an SKYWAY COLUMN ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST 1 ConsultintEngmeers and Land Surveyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06, 03379 T5 EXHIBIT "A" 5 a 5 �r ML Cttq of Beaumont REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS DECEMBER 5,2006 1:30 P.M. AGENDA CALL TO ORDER * Invocation Pledge Roll Call * Presentations and Recognition * Public Comment: Persons may speak on scheduled agenda items 1-8/Consent Agenda * Consent Agenda GENERAL BUSINESS 1. Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto 2. Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto 3. Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department 4. Consider approving a contract for the Main Street(Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project 5. Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation 6. Consider authorizing the City Manager to increase the Wiess Bluff Pump Station Neches River Bank Stabilization Project to increase the scope of work 7. Consider granting the City Manager authority to implement the contribution rate changes for retirees in the medical plans 8. Consider authorizing the reprogramming of Community Development Block Grant (CDBG) funds from FY2000-FY2005 into the FY2006 Clearance/Demolition line item for the demolition of dangerous structures 9. PUBLIC HEARING: Dangerous Structures Consider approval of an ordinance declaring certain structures to be dangerous structures and ordering their removal within 10 days or authorizing the property owner to enroll the dangerous structure in a work program COMMENTS * Councilmembers/City Manager comment on various matters * Public Comment (Persons are limited to 3 minutes) EXECUTIVE SESSION * Consider matters related to contemplated or pending litigation in accordance with Section 551.071 of the Government Code: Roy Cooper v. City of Beaumont, et al;No. 105324 Southwestern Bell Telephone v. City of Beaumont; Cause No. A-176610 Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact Lenny Caballero at 880-3716 three days prior to the meeting. 1 December 5, 2006 Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto City of Beaumont W Council Agenda Item ,jfj � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of $30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara ofRBC Dain Rauscher. A recommendation will be made to award the certificates to the underwriter offering the lowest overall interest cost to the City. The certificates will mature March 1,2008 through March 1,2025 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for various street, drainage and general improvements. BUDGETARY IMPACT All debt shall be incurred in the Debt Service Fund which is supported by property taxes. The current debt service property tax rate of $.0264447 is expected to be sufficient to meet debt service requirements on the certificates. PREVIOUS ACTION Council authorized publication of notice of intention to issue Certificates of Obligation on October 31, 2006. SUBSEQUENT ACTION None, RECOMMENDED BY City Manager and Chief Financial Officer. PRI:LI NI[NARY OFFICIAL STATEMENT DATED NOVEMBER 13, 2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase the Certificates. Upon the sale of the Certificates,the Official Statement will be completed and delivered to the Purchaser. IN THE OPINION OF BOND COUNSEL, INTEREST ON THE CERTIFICATES IS EVCLUDABLE FROM GROSS INCO.AfE FOR FEDERAL I,NCOME TAX PURPOSES UNDER EXISTING LAW, SUBJECT TO THE MATTERS DESCRIBED UNDER "LEGAL MATTERS -TAX EXE.VPTION"HEREIN, INCLUDING THE ALTERNATII E AILNIMUlf TAX ON CORPOR=1 TIONS. NEW ISSUE-BOOK-ENTRY-ONLY _ - $30,000,000 _ - THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) CERTIFICATES OF OBLIGATION, SERIES 2006 Dated: December 1,2006 Principal Due: March 1 Principal of and interest on The City of Beaumont,Texas$30,000,000 Certificates of Obligation,Series 2006(the"Certificates")are payable at the principal corporate trust office of The Bank of New York Trust Company, N.A., Dallas, Texas, the paying agent/registrar (the "Registrar'). The Certificates are initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneficial owners L thereof. Interest accrues from December 1, 2006, and is payable each March 1 and September 1 of each year, commencing September 1, 2007,until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1,2016 or any date thereafter, at the option of the City. Upon redemption the Certificates will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates are issued in fully registered form in integral multiples of$5,000. Principal of and interest on the Certificates will be payable by the Registrar to Cede& Co.,which will make distribution of the amounts so - - paid to the beneficial owners of the Certificates. See"THE CERTIFICATES-Book-Entry-Only System"herein. Interest on the Certificates will be payable by check, dated as of the interest payment date, and mailed by the Registrar to registered owners (initially Cede & Co.) shown on the records of the Registrar on the fifteenth calendar day of the month next preceding each interest payment date (the "Record Date"). See"THE CERTIFICATES-Description of the Certificates." '- MATURITY SCHEDULE _ - (Due March 1) Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. Maturity Amount Rate Yield(a) 074561 (c) Maturity Amount Rate Yield(a) 074561(c) - - 2008 $2,775,000 % % 2017(b) $1,180,000 % % 2009 2,065,000 2018(b) 1,240,000 2010 1,570,000 2019(b) 1,435,000 2011 1,515,000 2020(b) 1,550,000 2012 1,610,000 2021(b) 1,665,000 2013 1,690,000 2022(b) 1,780,000 2014 1,745,000 2023(b) 1,890,000 2015 1,070,000 2024(b) 2,000,000 2016 1,125,000 2025(b) 2,095,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Certificates maturing on or after March 1, 2017 are subject to redemption, at the option of the City, at the par value thereof plus accrued interest,in whole or in part,on March 1,2016,or any date thereafter. (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the registered owners of the Bonds. Neither the City, the Financial r � , Advisor,nor the Purchasers are responsible for the selection or correctness of the CUSIP numbers set forth herein. = - The above certificates (the"Certificates") are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an - ordinance(the"Ordinance')adopted by the City Council (the"City Council")of the City on December 5,2006. Proceeds from the sale of _ the Certificates will be used to provide funds for street, drainage, building and park improvements. The proceeds will also be used to pay certain costs in connection with the issuance of the Certificates. (See`'THE CERTIFICATES-Use of Proceeds.") The Certificates, when issued,will constitute valid and binding obligations of The City of Beaumont,Texas(the"City")and will be payable from the proceeds of an = annual ad valorem tax,levied within the limits prescribed by law,against taxable property within the City and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks system but only to the extent of and not in an amount in excess of _ $10,000. = The Certificates are offered when, as and if issued subject to the approving opinion of the Attorney General of the State of Texas and the _ opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel to the City as to the validity of the issuance of the Certificates under the Constitution and the laws of the State of Texas. The Certificates are expected to be available for delivery on or about December 28, = 2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF $30,000,000 THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2006; LEVYING TAXES TO PROVIDE FOR PAYMENT THEREOF; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, the City Council of The City of Beaumont,Texas (the "City"), has heretofore authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on December 5, 2006, the date tentatively set for passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of certain revenues of the City's waterworks and sewer system, or as soon thereafter as may be practicable, for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations, repairs and construction of new restrooms, field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and the laws of the State of Texas and the United States of America, respectively, particularly Chapter 271, Texas Local Government Code, as amended; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; and WHEREAS, the City Council of the City has determined to authorize such certificates of obligation for the purposes set out in this Ordinance; and WHEREAS, the City is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to pledge not more than $10,000 of the net revenues of the City's waterworks and sewer system as security for the certificates of obligation authorized herein; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Preamble. The matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term 'Business Day" shall mean any day which is not a Saturday, Sunday, a legal holiday, or a day on which the Registrar is authorized by law or executive order to close. The term "Certificates" or "Series 2006 Certificates" shall mean the Certificates of Obligation, Series 2006, authorized in this Ordinance, unless the context clearly indicates otherwise. The term "Certificates Insurance Policy" shall mean the municipal bond guaranty insurance policy issued by the Insurer insuring the payment when due of the principal of and interest on the Certificates as provided therein. The term "City" shall mean The City of Beaumont, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. -2- The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Construction Fund" shall mean the construction fund established by the City pursuant to Section 20 of this Ordinance. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean 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 the DTC Participants. The term "Insurer" shall mean the issuer of the Certificates Insurance Policy. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 20 of this Ordinance. The term "Interest Payment Date", when used in connection with any Certificate, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption. The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term "Ordinance" as used herein and in the Certificates shall mean this Ordinance authorizing the Certificates. The term "Owner" or "Registered Owner", when used with respect to any Certificate, shall mean the person or entity in whose name such Certificate is registered in the Register. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th day of the month next preceding such Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term 'Registrar" shall mean THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas, and its successors in that capacity. -3- I The term "SEC" shall mean the United States Securities and Exchange Commission and its successors. The term "System" shall mean the City's waterworks and sewer system. The term "Underwriter" shall mean 3. Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Thirty Million Dollars ($30,000,000), for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations repairs and construction of new restrooms field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith. 4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES -4- 2006", and shall be December 1, 2006. The Certificates shall bear interest from the later of December 1, 2006, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30-day months, which interest shall be payable on September 1, 2007, and semiannually thereafter on March 1 and September 1 of each year until maturity or earlier redemption. 5. Certificates, Numbers and Denominations. The Certificates shall be 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 Certificates shall mature, subject to prior redemption in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered upon transfer of or in exchange an e f o r other ertifc tes shall be numbered in order of their authentication by the Registrar, , shall be in the denomination of$5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Year Principal Interest Number of Maturity Amount Rate CR-1 2008 $3,415,000 % CR-2 2009 $2,065,000 % CR-3 2010 $1,570,000 % CR-4 2011 $1,515,000 % CR-5 2012 $1,610,000 % CR-6 2013 $1,690,000 % CR-7 2014 $1,745,000 % CR-8 2015 $1,070,000 % CR-9 2016 $1,125,000 % CR-10 2017 $1,180,000 % CR-11 2018 $1,240,000 % CR-12 2019 $1,350,000 % CR-13 2020 $1,470,000 % CR-14 2021 $1,580,000 % CR-15 2022 $1,690,000 % CR-16 2023 $1,795,000 % CR-17 2024 $1,900,000 % CR-18 2025 $1,990,000 % 6. Execution of Certificates; Seal. The Certificates shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the -5- Certificates shall have the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, 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 Certificates to be initially issued shall be delivered to the Attorney General of the State 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 17 of this Ordinance shall be attached or affixed to the initial Certificates. 8. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 17 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 Certificates 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 Certificates. The principal of the Certificates 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 become due and payable, at the designated corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Certificate 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 payment was due. 10. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the Registrar on not less than sixty (60) days' written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding principal or interest payment date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the 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 -6- deemed to have agreed to the provisions of this Section. 11. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) business 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 Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate 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 Certificate in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three (3) years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the provisions of Texas law, including to the extent applicable,Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer, and Exchange; Special Election for Uncertificated Certificates. So long as any Certificates remain outstanding,the Registrar shall keep the 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 Certificates in accordance with the terms of this Ordinance. Each Certificate 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 Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Certificate or Certificates, 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 Certificate or Certificates so presented. All Certificates shall be exchangeable upon presentation and surrender thereof at the -7- principal corporate trust office of the Registrar for a Certificate or Certificates of the same maturity and interest rate in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13. Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate 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 Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Neither the City nor the Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. Notwithstanding any other provision hereof, but at the sole election of the Underwriter, the ownership of the Certificates shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Certificates. With respect to Certificates 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 Certificates. 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 Certificates, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Certificate, as shown on the Register, of any notice with respect to the Certificates, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner of a Certificate, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on the Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute Owner of such Certificate for the purpose of payment of principal of, premium, if any, and interest on the Certificates, for the purpose of all matters with respect to such Certificates, for the purpose of registering transfers with respect to such Certificates, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Certificates only to or upon the order of the respective Owners, as shown in the Register as -8- provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Certificates to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a certificate for a Certificate evidencing the obligation of the City 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 Ordinance shall refer to such new nominee of DTC. In the event that the City or the Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the Letter of Representation and that it is in the best interest of the beneficial Owners of the Certificates that they be able to obtain certificated Certificates, or if DTC Participants owning at least 50% of the Certificates outstanding based on current records of the DTC determine that continuation of the system of book-entry transfers through the DTC (or a successor securities depository) is not in the best interest of such beneficial Owners of the Certificates, or in the event DTC discontinues the services described herein, the City or the Registrar 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 of the appointment of such successor securities depository and transfer one or more separate Certificates to such successor securities depository or (ii) notify DTC of the availability through DTC of Certificates and transfer one or more separate Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event, the Certificates 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 Certificates shall designate, in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Certificates 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 the Certificates, and all notices with respect thereto, shall be made and given in the manner provided in the Letter of Representation. 14. Mutilated, Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate 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 Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection -9- therewith and any other associated expenses, 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 Certificate, before any replacement Certificate 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 Certificate; (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. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Registrar shall be entitled to recover such replacement Certificate 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 Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate, authorize the Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15. Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates 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 Certificates. 16. Optional Redemption. The City reserves the right, at its option, to redeem Certificates having stated maturities on and after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates, or -10- portions thereof,to be redeemed. Certificates may be redeemed only in integral multiples of$5,000. If a Certificate subject to redemption is in a denomination larger that $5,000, a portion of such Certificate may be redeemed, but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered. Not less than thirty (30) days prior to a redemption date for the Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each Owner of each Certificate to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Certificates are to be surrendered for payment and, if less than all the Certificates are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice of redemption so mailed 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 Certificates or portions thereof to be redeemed. When Certificates have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid 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 Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 17. Forms. , The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Certificates 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: -11- UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION CR- $ REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS CERTIFICATE OF OBLIGATION SERIES 2006 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THE CITY OF BEAUMONT, TEXAS (the "City"), promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this certificate at the designated corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas (the 'Registrar"), or at its principal payment office in Dallas, Texas, 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 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 Dated Date specified above, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on September 1, 2007, and semiannually thereafter on each March I and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $30,000,000 (the "Certificates"), issued in accordance with the Constitution and the laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended, for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, the purchase of equipment and the cost of issuance of the Certificates, pursuant to an ordinance duly adopted by the City Council of the City -12- (the "Ordinance"),which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT, at its option,to redeem the Certificates having stated maturities on or after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Certificates. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each Certificate to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Certificates 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 CERTIFICATE 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 CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of this Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, 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 Certificates 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 Certificate has been duly and -13- 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 Certificate have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied, within the limits prescribed by law, against all taxable property in the City, and have been pledged irrevocably for such payment. IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues") to be derived from the operation of the City's waterworks and sewer system (the "System"), but only to the extent of and in an amount not to exceed Ten Thousand Dollars ($10,000.00) in the aggregate, are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose, all as set forth in the Ordinance to which reference is made for all particulars; provided, how-ever, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certificate and that series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Clerk of the City and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. THE CITY OF BEAUMONT, TEXAS Mayor (SEAL) City Clerk Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. -14- I hereby certify that this certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this day of , 2006. xxxxxxxxx Comptroller of Public Accounts (Seal) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. The Bank of New York Trust Company,N.A. Dallas, Texas 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 certificate and all rights thereunder, and hereby irrevocably constitutes and appoints -15- attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: The signature above must correspond to the name of the registered NOTICE: Signature must be owner as shown on the face guaranteed by a member firm of this Certificate in of the New York Stock Exchange every particular, without or a commercial bank or trust any alteration, enlargement company. or change whatsoever. 18. Form of Statement of Insurance. The following statement of insurance shall be printed on the back of or attached to each of the Certificates: STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning -16- of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $30,000,000 THE CITY OF BEAUMONT, TEXAS CERTIFICATES OF OBLIGATION, SERIES 2006 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. -17- 19. Legal Opinion; Cusip Numbers. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 20. Interest and Sinking Fund; Tax Lew; Pledge of Revenues; Construction Fund. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance are hereby irrevocably pledged and shall be deposited, as collected, in a special fund to be designated "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in the City sufficient to pay the current interest on the Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures but in each year never less than 2% of the original principal amount of the Certificates, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of the Certificates and to no other purpose. To pay the interest coming due on the Certificates on September 1, 2007,there is hereby appropriated from current funds on hand, which are certified to be on hand and available for such purpose, an amount sufficient to pay such interest, and such amount shall be used for no other purpose. The Net Revenues of the System, but only to the extent of and in an amount not to exceed $10,000 in the aggregate, are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes described in this Section of the Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of the Certificates; and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Construction Fund". Immediately after the sale and delivery of the Certificates, that portion of the proceeds of the Certificates to be used for the cost of construction of authorized street -18- improvements and the cost of issuance of the Certificates shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of such projects, interest earned on such proceeds may be used, at the City's discretion, for such projects and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1201.043, Texas Government Code Annotated, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of such street improvements, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. 21. Further Proceedings. After the Certificates shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates 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 Certificates to be initially issued shall have been approved by the Attorney General of the State of Texas, the Certificates shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Certificates to be initially issued,the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of the Comptroller shall be impressed, or placed in facsimile, thereon. In addition, the Mayor, the City Clerk and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the purposes of this Ordinance. 22. Sale of Certificates. The Certificates are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of Certificates, plus a premium of$ The purchase price of the Certificates will also include accrued interest to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Certificates and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Certificates. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Certificate Insurance Policy, and the printing on the Certificates covered by the Certificate Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 23. Tax Exemption. (a) The City intends that the interest on the Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and applicable 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 Certificates 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 23; -19- provided, however, that the City shall not be required to comply with any particular requirement of this Section 23 if the City has received an opinion of nationally recognized bond counsel (a "Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 23 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 23. (b) The City covenants and agrees that its use of Net Proceeds of the Certificates will at all times satisfy the following requirements: (i) The City will use all of the Net Proceeds of the Certificates for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, equipment purchases and the cost of issuance of the Certificates. The City has limited and will limit with respect to the Certificates the amount of original or investment proceeds thereof to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10% of the Net Proceeds of the Certificates ("private-use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Certificates in any manner contrary to the guidelines set forth in Revenue Procedure 93-19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City has not permitted and will not permit more than 5% of the Net Proceeds of the Certificates to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates in excess of 5% of the Net Proceeds thereof("excess private-use proceeds") did not and will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (iii) Principal of and interest on the Certificates shall be paid solely from ad valorem tax receipts collected by the City and from the Net Revenues of the System to the extent pledged hereunder. Further, no person using more than 10% of the Net Proceeds of the Certificates in a trade or business, other than a governmental unit, has made or shall make payments (other than as a member of the general public), directly or indirectly, accounting for more than 10%of such receipts; -20- (iv) The City has not permitted and will not permit with respect to the Certificates an amount of proceeds thereof exceeding the lesser of(a) $5,000,000 or(b) 5% of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than a governmental unit; and (v) The City will use $100,000 of the Net Proceeds of the Certificates to pay the costs of issuance of the Certificates. When used in this Section 23, the term "Net Proceeds" of the Certificates shall mean the proceeds from the sale thereof to the Underwriter, including investment earnings on such proceeds, less accrued interest with respect to such issue. (c) 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 Certificates 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) 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 Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates 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 Certificates, including interest or other investment income derived from the proceeds of the Certificates, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (e) 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 Certificates (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 Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates 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 Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every 5th anniversary date of the delivery of the Certificates, and within sixty (60) days after retirement of the Certificates, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with -21- respect to the gross proceeds of the Certificates that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (f) 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 Certificates are issued, an information statement concerning the Certificates, all under and in accordance with Section 149(e)of the Code and applicable regulations thereunder. Section 24. Application of Proceeds. Proceeds from the sale of the Certificates shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest shall be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund; and (b) The remaining proceeds from the sale of the Certificates, together with investment earnings thereof, shall be deposited into the Series 2006 Certificates of Obligation Construction Fund and shall be used for the purposes set out in Section 3 of this Ordinance, with any remainder constituting a reserve to be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund. 25. Open Meeting. 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 Chapter 551 of the Texas Government Code Annotated, Vernon's 1994, as amended, and such notice as given is hereby authorized, approved, adopted and ratified. 26. Re isg tray. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Certificates have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Certificates by the Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this -22- Ordinance. 29. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, the City Clerk, the City Treasurer, 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 issuance of the Certificates, 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 this Ordinance and to direct the application of funds of the City consistent with the provisions hereof. 30. No Personal Liability. No recourse shall be had for payment of the principal of or premium, if any, or interest on Certificate, or for any claim based thereon, or under this Ordinance, against any official or employee of the City or any person executing any Certificate. 31. Additional Obligations. The City undertakes and agrees for the benefit of the holders of the Certificates to provide directly, on or before six months after the end of the City's fiscal year,which fiscal year presently ends on September 30, a. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, annual financial information(which may be unaudited) and operating data regarding the City for fiscal years ending on or after January 1, 2006 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: SELECTED FINANCIAL INFORMATION DEBT STATEMENT TAX DATA SELECTED FINANCIAL DATA ADMINISTRATION OF THE CITY Appendix `B" b. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, audited financial statements for the City for fiscal years ending on or after January 1, 2006, when available, if the City commissions an audit and it is completed by the required time; provided that if audited statements are not commissioned or are not available by the required time, the City will provide unaudited statements when and if they become available. -23- C. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of any of the following events with respect to the Certificates, if material within the meaning of the federal security laws to a decision to purchase or sell Certificates: 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 Certificates; vii. Modifications to rights of Certificate holders; viii. Calls; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the Certificates; and xi. Rating changes. d. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of a failure of the City to provide required annual financial information and operating data, on or before six months after the end of the City's fiscal year. These undertakings and agreements are subject to appropriation of necessary funds and to applicable legal restrictions, if any. The accounting principles pursuant to which the City's financial statements are currently prepared are generally accepted accounting principles set out by the Government Accounting Standards Board, and, subject to changes in applicable law or regulations, such principles will be applied in the future. If the City changes its fiscal year, it will notify each nationally recognized municipal securities information repository and the appropriate state information depository of the change (and of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide annual financial information. -24- The City's obligation to update information and to provide notices of material events shall be limited to the agreements herein. The City shall not be obligated to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects and shall not be obligated to update any information that is provided, except as described herein. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Certificates at any future date. THE CITY DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL OWNERS OF CERTIFICATES MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS 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 paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The City may amend its continuing disclosure obligations and agreement in this Section 32 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 the agreement, as amended, would have permitted the Underwriter to purchase or sell the Certificates in compliance with SEC Rule 15c2-12, taking into account any amendments or interpretations of such Rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Certificates consent or 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 Certificates. The City may also amend or repeal the obligations and agreement in this Section 35 if the SEC amends or repeals the applicable provisions of Rule 15c2-12 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 the Underwriter from lawfully purchasing or reselling the Certificates in the primary offering of the Certificates in compliance with Rule 15c2-12. 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. The City's continuing obligation to provide annual financial information and operating data and notices of events will terminate if and when the City no longer remains an "obligated person" (as such term is defined in SEC Rule 15C2-12)with respect to the Certificates. 32. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. -25- 33. Effective Date. This Ordinance shall be in force and effect from and after its final passage, and it is so ordered. 34. 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. In the event that,on the second Business Day, and again on the Business Day,prior to the payment date on the Obligations, the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent/Trustee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agenarustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such -26- principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agenarustee and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received), (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee, and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agenarustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments,directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, principal and interest shall be deemed past due and not to have been paid),Y p p p p ) interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document,if any,circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order which does not require the consent of the bondholders, and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. -27- J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations, and (ii) any consent, amendment, waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved,together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3%or the maximum interest rate permitted by law, whichever is less. In addition, the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37,Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment; and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. M. The Issuer/Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if. (1) the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii)the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days, and (iii) the Issuer declares bankruptcy. In the event of default under this Bond Order,the Bond Insurer shall have the right to direct all remedies and the Insuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures, the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing -28- w ` document executed in connection herewith. Other than the usual redemption provisions,any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the following types of investments that are approved by the Bond Insurer. [The remainder of this page has intentionally been left blank]. -29- •f PASSED AND APPROVED this 5th day of December, 2006. Mayor, The City of Beaumont, Texas ATTEST: City Clerk, The City of Beaumont, Texas (SEAL) -30- 2 December 5, 2006 Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto t17EjJ-! City of Beaumont Council Agenda Item � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara of RBC Dain Rauscher. A recommendation will be made to award the bonds to the underwriter offering the lowest overall interest cost to the City. The revenue bonds will mature September 1, 2008 through September 1, 2030 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A.. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for the expansion, repair, renovation and related improvements to the waterworks and sewer system. BUDGETARY IMPACT All debt shall be incurred in the Water Fund which is supported by revenues of the waterworks and sewer system. I PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Chief Financial Officer. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 13,2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase = the Bonds. Upon the sale of the Bonds,the Official Statement will be completed and delivered to the Purchaser. f 2 IT IS ANTICIPATED THAT ON THE DELIVERY DATE FOR THE BONDS,BOND COUNSEL WILL RENDER AN OPINION THAT INTEREST ON THE BONDS IS EXCL UDABLE FRO:W GROSS LVCOa1E FOR FEDERAL LVCOME TAX PURPOSES UNDER EVISTING LAW AND THE BONDS ARE NOT PRIVATE ACTIVITY BONDS. SEE "LEGAL MATTERS- TAX EXEMPTION"HEREIN FOR A DISCUSSION OF BOND COUNSEL'S OPLVION,/:VCLU'DI,VG A DESCRIPTION OFALTERVATIYE M/,VZlfU.11 T.AJf CONSEQUENCES FOR CORPORATIONS. The City will not designate the Bonds as qualified tax-exempt obligations for financial institutions. NEW ISSUE-BOOK-ENTRY-ONLY $2090009000 THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) a WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A L Dated: December 1,2006 Principal Due: September 1 Principal of and interest on The City of Beaumont, Texas $20,000,000 Waterworks and Sewer System Revenue Bonds, Series 2006A (the ' "Bonds")are payable by The Bank of New York Trust Company,N.A., Dallas,Texas,the paying agentiregistrar(the"Registrar"). The Bonds ' are initially registered and delivered only to Cede&Co.,the nominee of The Depository Trust Company("DTC")pursuant to the Book-Entry- Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of$5,000 or integral multiples thereof. No -' physical delivery of the Bonds will be made to the beneficial owners thereof. Interest on the Bonds will accrue from December 1,2006 and is payable on March 1 and September 1 of each year,commencing September 1,2007,to the registered owners(initially Cede&Co.)appearing on the registration books of the Registrar on the 15th day of the month preceding each interest payment date(the "Record Date"). See THE y BONDS-Description." The Bonds are subject to redemption prior to their scheduled maturities on September 1,2016 or any date thereafter,at a price equal to the principal amount thereof plus accrued interest to the date of redemption. G The Bonds are special obligations of The City of Beaumont,Texas(the"City")and are payable solely from a first lien on and pledge of the Net - - Revenues (hereinafter defined) of the City's waterworks and sanitary sewer system. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR GENERAL OBLIGATION OF THE CITY AND ARE NOT PAYABLE FROM FUNDS RAISED OR TO BE RAISED s BY TAXATION. The lien on Net Revenues securing the Bonds are on a parity with the liens securing the City's outstanding Prior Lien Bonds r (as defined in the Ordinance). See"THE BONDS-Source of Payment." The proceeds of the Bonds will be used to provide funds for water and sewer system improvements and to pay certain costs incurred in connection with the issuance of the Bonds. (See "THE BONDS - Use of Proceeds"and"THE BONDS-Sources and Uses of Funds.") PRINCIPAL AMOUNTS,MATURITIES,INTEREST RATES AND PRICES v (Due September 1) 5 - - Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. s Maturity Amount Rate Yield(a) 074561(c) Maturity Amount Rate Yield(a) 074561(c) 2008 $ 100,000 % % 2020(b) $ 225,000 % % = 2009 100,000 2021(6) 225,000 Lr 2010 200,000 2022(b) 225,000 2011 200,000 2023(b) 225,000 2012 200,000 2024(b) 2,075,000 - 2013 200,000 2025(b) 2,180,000 2014 200,000 2026(b) 2,290,000 2015 200,000 2027(b) 2,400,000 2016 200,000 2028(b) 2,525,000 2017(b) 200,000 2029(6) 2.650,000 - -_ 2018(b) 200,000 2030(b) 2,780,000 2019(b) 200,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Bonds maturing on or after September 1,2017 are subject to redemption,at the option of the City,at the par value thereof plus accrued = interest,in whole or in part,on September 1,2016,or any date thereafter. J L (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies,Inc.,and are included solely for the convenience of the registered owners of the Bonds. Neither the City,the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbers set forth herein. The Bonds are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an ordinance(the"Ordinance")adopted by the City Council (the "City Council") of the City on December 5, 2006. The Bonds are offered when, as and if issued, subject to the approving opinion of the Attorney General of the State of Texas and the opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel for the City, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of Texas. See "LEGAL MATTERS." The Bonds are expected to be available for delivery on or about December 28.2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME } No. 3 ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE OF $20,000,000 THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (herein referred to as the "City" or the "Issuer") is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue bonds payable from the net revenues of its waterworks and sewer system to provide money for acquisitions, extensions, construction, improvement or repair of such system; and WHEREAS, the City now desires to issue bonds in order to provide funds to finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system; Now, Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Findings and Determinations. It is hereby found and determined that the matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 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 Chapter 1502, Texas Government Code, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance. The term "Blanket Issuer Letter of Representations" means the Blanket Issuer I V Letter of Representations between the City, the Registrar and DTC. The term "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment of principal and interest on the Bonds. The term "Bond Insurer" shall mean 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 $20,000,000 The City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A 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 "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 2 (but excluding any utility deposits) and the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, and the Reserve Fund. The term "Interest Payment Date", when used in connection with any Bond, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption of such Bond. 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 City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2006, 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. 3 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 "Registrar" shall mean The Bank of New York Trust Company, N.A., Dallas, Texas, 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 time. The term "SEC" shall mean the United States Securities and Exchange Commission. 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 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 "Underwriter" shall mean 3. Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of TWENTY MILLION DOLLARS ($20,000,000) for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds (the "Project"). 4 4. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A" and shall be dated December 1, 2006. The Bonds shall bear interest at the rates set forth in Section 5 below from the later of December 1, 2006, 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, 2007, and semiannually thereafter on March 1 and September 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 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. Bond Principal Interest Number Year Amount Rate R-1 2008 $ 100,000 % R-2 2009 $ 100,000 % R-3 2010 $ 200,000 % R-4 2011 $ 200,000 % R-5 2012 $ 200,000 % R-6 2013 $ 200,000 % R-7 2014 $ 200,000 % R-8 2015 $ 200,000 % R-9 2016 $ 200,000 % R-10 2017 $ 200,000 % R-11 2018 $ 200,000 % R-12 2019 $ 200,000 % R-13 2020 $ 225,000 % R-14 2021 $ 225,000 % R-15 2022 $ 225,000 % R-16 2023 $ 225,000 % R-17 2024 $2,075,000 % R-18 2025 $2,180,000 % R-19 2026 $2,290,000 % 5 I a R-20 2027 $2,400,000 % R-21 2028 $2,525,000 % R-22 2029 $2,650,000 % R-23 2030 $2,780,000 % 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. 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 6 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 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 7 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. 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, 8 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. 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. 9 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-EntySystem. (a) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriter,the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Bonds. (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 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. 10 (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. (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 and Mandatory Redemption. The City reserves the right, at its option, to redeem Bonds having stated maturities on and after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed,the City shall determine the Bonds, or portions thereof,to be redeemed. The Bonds maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms set out in the form of Bonds in this Order, at a price of par plus accrued interest to the date fixed for redemption. Bonds may be redeemed only in integral multiples of$5,000. If a Bond subject to redemption is in a denomination larger that $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. 11 Not less than thirty(30)days prior to a redemption date for the Bonds, the City shall cause a notice of redemption to be sent by United States mail, first class,postage prepaid, to each Owner of each Bond to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed 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. When Bonds have been called for redemption in whole or in part and due provision 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 being paid 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. 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 BONDS, SERIES 2006A 12 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 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 The Bank of New York Trust Company, N.A., Dallas, Texas (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 December 1, 2006, 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, 2007, mailed to the registered owner of record as shown on the books of registration kept by the Registrar as of the fifteenth day of the month next preceding each interest payment date. 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 $20,000,000 (the "Bonds"), issued for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds, pursuant to an ordinance adopted by the City Council on December 5, 2006 (the "Ordinance"), and in accordance with the authority of Chapter 1502, Texas Government Code, 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 Refunding Bonds, Series 1998, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding 13 Waterworks and Sewer System Revenue Bonds, Series 2005, 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 Interest and Sinking 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 HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY REVENUE BONDS, 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 the Bonds having stated maturities on or after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, in integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. THE BONDS maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the principal amount to be redeemed plus accrued interest to the redemption date: TERM BONDS DUE SEPTEMBER 1, Date ` Amount 9/1/2028 $2,525,000 9/1/2029 $2,650,000 9/1/2030 (Maturity) $2,780,000 14 I I The Paying Agent shall select for redemption by lot, or by any other customary method that results in random selection, a principal amount of Term Bonds equal to the aggregate principal 'amount of such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled mandatory redemption date, and shall give notice of such redemption in accordance with the Bond Order. The principal amount of Term Bonds required to be mandatorily redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall have been optionally redeemed and not previously credited against a mandatory redemption requirement. 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 owner 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 15 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. 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. (AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT, TEXAS (SEAL) Mayor City Clerk 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 16 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. The Bank of New York Trust Company,N.A. 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 to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED Signature Guaranteed: Registered Owner 17 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. STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $20,000,000 THE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A 18 1 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. 19 18. Legal Opinion; Cusip. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond 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. 19. (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, and (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) Construction Fund. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006, Construction Fund". Immediately after the sale and delivery of the Bonds, that portion of the proceeds of the Bonds to be used for the cost of the Project and the cost of issuance of the Bonds shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of the Project, interest earned on such proceeds may be used, at the City's discretion, for the Project and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1202.043 of the Texas Government Code, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of the Project, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. (c) 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: (i) to pay all Maintenance and Operation Expenses; and 20 (ii) 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. 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. (d) 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: (i) Waterworks and Sewer System Revenue Fund (the "Revenue Fund"); (ii) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund (the "Interest and Sinking Fund"); and (iii) 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. (e) 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: (i) First, to pay Maintenance and Operation Expenses and to provide 21 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. (ii) 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. (iii) 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 Additional Parity Bonds. (iv) Fourth, to pay any amounts due to any bond insurer of Parity Bonds not paid pursuant to subsections (ii) or(iii) above. (v) 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. (f) 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: (i) 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 (ii) 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. 22 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. (g) 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 (1/60 1h) 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 (1/601h) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount; provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below, then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. 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 23 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 bonds, 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 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 (and 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. (h) Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Section 19 the full amounts required herein, 24 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. (i) 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 transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 20. Additional Bonds. (a) Additional Parily 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 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 25 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. (b) 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. (c) 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. 21. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parily 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. (b) 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 26 operation of the System. (c) 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. (d) 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. 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. (e) 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. (f) 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. (g) 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 27 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. (h) 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 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. (i) 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. 28 (j) 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. (k) 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. (1) Obligations 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 of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of the Bonds, plus a premium of $ . In addition thereto, at the time of delivery the Underwriter shall pay to the City the accrued interest on the Bonds to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Bonds 29 and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Bonds. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Bond Insurance Policy, and the printing on the Bonds covered by the Bond Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 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 30 use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal 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 31 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 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: (i) Accrued interest, if any, shall be deposited into the Interest and Sinking Fund; (ii) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds, with any remaining portion thereof to be deposited into the Construction Fund and used to pay the costs of the Project; and (iii) The sum of $ from the sale of the Bonds shall be deposited into the Construction Fund and used to pay the costs of the Project; and (iv) Any proceeds from the Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 26. Re istrar. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Underwriter is hereby approved, authorized and ratified. The proper officials 32 of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. 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. 29. 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 "SELECTED FINANCIAL INFORMATION", "CITY REVENUE DEBT", "ADMINISTRATION OF THE CITY", "THE SYSTEM-Water and Sewer Rates" 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. (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; 33 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. Modifications to 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, 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. 34 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 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 underwriter 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. 30. 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 Chapter 551 of the Texas Government Code. 31. 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. 35 32. 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. In the event that on the second Business Day,and again on the Business Day,prior to the payment date on the Obligations,the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following,as the case may be,Business Day,the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws,then the Paying Agent/Tnistee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice,confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agent/Trustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders;and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating 36 to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent/Trustee and available for such payment(but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received),(b)receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee,and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations,and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent/Trustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid),with interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders,and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations,the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order 37 which does not require the consent of the bondholders,and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and,on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with(i)the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations,and(ii)any consent,amendment,waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved, together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law, whichever is less. In addition,the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37, Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment;and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. 38 M. The Issuer /Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if:(1)the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii) the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days,and(iii)the Issuer declares bankruptcy. In the event of default under this Bond Order, the Bond Insurer shall have the right to direct all remedies and the Issuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures,the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing document executed in connection herewith. Other than the usual redemption provisions, any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the types of investments that are approved by the Bond Insurer be used for such purpose. 33. Special Provisions Relating to Reserve Policy. The purchase of and payment of the premium for a Surety Policy to be issued by the Insurer to fund the Reserve Fund requirement under Section 19(f) of this Ordinance in accordance with the terms of a commitment for such policy presented to and hereby approved by the City Council is hereby authorized. Hereinafter such Surety Policy shall be referred to as the "Reserve Policy". So long as the Reserve Policy is in effect, the following provisions shall apply and be applicable: A. In setting the rates and charges for use and services of the System pursuant to Section 19(b) above, the City agrees to establish sufficient rates so as to generate sufficient revenues to pay all amounts owed to the Bond Insurer. B. The Paying Agent/Registrar shall deliver a demand for payment to the Bond Insurer in the form required by the Bond Insurer at least three days prior to the date on which funds are required. C. The Bond Insurer must be paid all amounts owed to it under the terms of the Financial Guaranty Agreement or any other documents before this Bond Order and any financing documents executed in connection herewith may be terminated. D. It shall be the responsibility of the Paying Agent/Registrar to maintain 39 adequate records, verified with the Bond Insurer,as to the amount available to be drawn at an given time udner the Reserve Policy and as to amounts paid and owing to the Bond Insurer under the terms of the Financial Guaranty Agreement. E. There may be no optional redemption of the Bonds or distribution of any funds to the Issuer unless all amounts owed to the Bond Insurer under the terms of the Financial Guaranty Agreement or any other documents have been paid. [The remainder of this page has intentionally been left blank.] 40 PASSED AND APPROVED this 5th day of December, 2006. Mayor The City of Beaumont ATTEST: City Clerk The City of Beaumont (SEAL) 41 3 December 5,2006 Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department �4~- " City of Beaumont •� Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tyrone E. Cooper, City Attorney MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider Amendments to Section 21-75, of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department. RECOMMENDATION Council consider amendments to Section 21-75, of the Code of Ordinances, increasing Grade III positions from 12 to 16 and reducing the number of Grade II positions from 44 to 40. BACKGROUND In an effort to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al, involving the promotion of several Grade II Sergeants to the position of Lieutenant, it is recommended that four (4)Lieutenant positions be added to the Police Department. However, the intent of the settlement is not increase the total number of positions in the Department. To achieve the intended purpose, it is necessary to reduce the total number of Grade II positions by four (4). By doing so, the total number of positions in the Department will remain unchanged. These positions are not needed for the orderly and efficient operation of the department. It is also intended and agreed that the four(4) new Lieutenant positions will be reduced by attrition as the positions become vacant in the future. BUDGETARY IMPACT The above changes will cost an estimated $22,000 if spread over a twelve(12) month period. PREVIOUS ACTION None. TO: Kyle Hayes DATE: November 29, 2006 FROM: Tyrone E. Cooper MEETING DATE: December 5, 2006 SUBJECT: Amend Ord. No. 06-055 Page 2/2 SUBSEQUENT ACTION None RECOMMENDED BY City Manager, Chief of Police and City Attorney ORDINANCE NO. ENTITLED AN ORDINANCE AMENDING SECTION 21-75,OF THE CODE OF ORDINANCES, CHANGING THE TOTAL NUMBER OF GRADE II AND GRADE III POSITIONS IN THE BEAUMONT POLICE DEPARTMENT; PROVIDING FOR SEVERABILITY AND PROVIDING FOR REPEAL. WHEREAS, the City Council of the City of Beaumont has agreed to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al; and, WHEREAS, settlement will require the addition of four(4) new Lieutenant positions in the Police Department and the abolishing of four(4) Sergeant positions in order that the total number of positions in the Department remain unchanged. The four (4) Sergeant positions are not needed for the orderly and efficient operation of the Department. BE IT ORDAINED BY THE CITY OF BEAUMONT: Section 1. THAT Chapter 21, Section 21-75 of the Code of Ordinances of the City of Beaumont be and the same is hereby amended to read as follows: Section 21-75. Grades and Classifications - Police Department The following grades and classifications are hereby established within the Police Department. Grade Classification Positions I Officers 199 II Sergeants 40 III Lieutenants 16 IV Captains 3 Assistant Chief 1 Total 259 Section 2. That if any section, subsection, sentence, clause or phrase of this ordinance, or the application of same to a particular set of persons or circumstances, should for any reason be held to be invalid, such invalidity shall not affect the remaining portions of this ordinance, and to such end the various portions and provisions of this ordinance are declared to be severable. Section 3. All ordinances or parts of ordinances in conflict herewith, including conflicting portions of the City Budget, are repealed to the extent of the conflict only. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - 4 December 5, 2006 Consider approving a contract for the Main Street (Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Public Works Director MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 22, 2006 REQUESTED ACTION: Council consider a resolution authorizing the award of a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project in the amount of$6,377,885.59. RECOMMENDATION Administration recommends awarding the contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project to Brystar Contracting, Inc. in the amount of $6,377,885.59. BACKGROUND On November 16, 2006, the City of Beaumont received three (3) bids for the Main Street (Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project. The lowest bid was submitted by Brystar Contracting, Inc. in the amount of$6,377,885.59. A copy of the Bid Tabulation sheets is attached. The MBE participation will be met through subcontracts with Crabtree Barricade System, Inc., Highway Pavement Specialities,Inc., O.A. Moreno andAssociates,Texas Mechanical,and Wholesale Electric for a total of$1,251,000 which represents 19.61 percent of the contract amount. A copy of the Schedule of MBE Participation sheet is attached. BUDGETARY IMPACT Funds are available for this project in the Capital Improvement Program Fund. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, Public Works Director and City Engineer. EngMainStreetContract.wpd November 28,2006 CITY OF BEAUMONT / SCHEDULE OF MBE PARTICIPATION NAME CERTIFIED MBE CONTRACTOR ADDRESS TYPE OF WORK AGREED PRICE f rsb�rge �arri t 'p.0, J3o1� Did 3 �arr�c.�ts , 5;1"s, -t 8 rj 1 600 . d 6 y s-1en,s 734pay.0n+ 77( 7'7'��o and -rraT_ d4.d le Se- 4) , 000 oa �.A. iV10R�nb �.'45SoG . j31 50) .�45],-�vr� po;nr Q^_ �r�clL Pars -i- ZG�I (3Oc=) Cxc� eKa s f V�l ,.:cam, l J,0` 3 x 7523 ee -� `3 00, 4"2910 iN_ La44" fir_ cGf.c�c! /��:e. 560 t 000 , 00 TX The undersigned will enter into a formal agreement with MBE Contractors for work listed in this schedule conditioned upon execution of a contract with the City of Beaumont. NOTE: 1. This schedule should be submitted with your bid. SIG ATURE 13 r y�i n 1 �+e fps TITLE CITY OF FONT MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 1 OF 4 APAC-TEXAS Item Item BRYSTAR CONTRACTING ALLCO,LTD INC. No. Code Alt Description Unit Estimated Unit Total Unit Total Unit Total Measure Quantity Price PUBLIC WORKS Price Price 104 001 REMOVING CONCRETE CURB&GUTTER COMBINED) LF 9,625.00 104 002 REMOVING CONCRETE DRIVEWAYS)(6") $7.50 $72,187.50 $9.00 $86,625.00 $6.00 $57,750.00 104 003 REMOVING CONCRETE SIDEWALK&W.C.RAMPS 4" SY 1,693.75 $7.00 $11,856.25 $13.00 $22,018.75 $12.40 $21,002.50 104 004 SAW CUT AT BUILDING FULL DEPTH ( ) SY 6,826.11 $8.00 $54,608.88 $13.00 $68,739.43 $21.00 $143,348.31 104 005 REMOVE CONCRETE ROADWAY 6"-10" LF 10,774.00 $1.25 $13,467.50 $3.50 $37,709.00 $8.00 $86,192.00 110 001 EXCAVATION CURB AND&GUTTER COMBINED(12") CY 28'21522 $7.00 $200,970.00 $9.00 $258,390.00 $15.80 $453,618.00 110 002 EXCAVATION DRIVEWAYS 10") $15.00 $3,228.30 $40.00 $8,608.80 $8.00 $1,721.76 110 003 EXCAVATION SIDEWALK&WHEEL CHAIR RAMPS 8" CY 470.49 $15.00 $7,057.35 $36.00 $16,937.64 $28.00 $13,173.72 110 004 EXCAVATION ROADWAYS ( ) CY 1,516.14 $15.00 $22,742.10 $33.00 $50,032.62 $58.00 $87,936.12 CY 3,500.00 $12.00 $42,000.00 $20.00 $70,000.00 $44.00 $154,000.00 247 001 FLEX BASE(TY A)GR.1)(8"(CL5 DC)(DEL SIDEWALK&W.C.RAMPS SY 6,826.11 247 002 FLEX BASE A GR.1)(1 2")(CL5)(DC)(DEL CURB&GUTTER COMB. SY 645.67 $20.00 $136,522.20 $21.50 $146,761.37 $21.00 $143,348.31 260 001 LIME TREATED SUBGRADE 5"DS 7% - $30.00 $19,370.10 $35.00 $22,598.45 $36.00 $23,244.12 264 001 LIME 7Y.C SLURRY SY 28,526.67 $3.95 $112,680.35 $2.75 $78,448.34 $3.50 $99,843.35 276 001 CEM TRT BASE(STG.L(TYA)(CL 5)(GR.3)(10" DRIVEWAYS TON 524.86 $130.00 $68,231.80 $128.00 $67,182.08 $120.00 $62,983.20 276 002 CEM TRT BASE(STG.L(TYAxCL 5(GR:3 6" ROADWAY SY 1,693.75 $30.00 $50,812.50 $33.00 $55,893.75 $45.00 $76,218.75 300 001 ASPHALTIC MATERIAL(CRS2 SY 27,429.67 $14.00 $384,015.38 $14.00 $384,015.38 $18.00 $493,734.06 340 001 HOT MIX AS PHALT CONCRETE TYPED 1-1/2") TON -1,2-9 .00 .00 $3.00 $3,669.00 $3.70 $4,525.10 $5.00 $6,115.00 345 001 ASB GR.1 6" $125.00 $36,500.00 $115.00 $33,580.00 $161.00 $47,012.00 345 002 ASB GR.1 PIPE 6" TON 166.00 $140.00 $23,240.00 $86.00 $14,276.00 $105.00 $17,430.00 354 001 PLANING PAVEMENT 1-1/2") TON 442.00 $140.00 $61,880.00 $120.00 $53,040.00 $150.00 $66,300.00 356 001 FABRIC UNDERSEAL SY 3,494.00 $1.00 $3,494.00 $4.80 $16,771.20 $1.00 $3,494.00 360 001 CONCRETE PAVEMENT(10" CL P SY 5,425.67 $2.00 $10,851.34 $1.60 $8,681.07 $1.50 $8,138.51 400 001 STRUCTURAL EXCAVATION PROP.PIPES(STORM SEW. SY 26,899.67 $47.00 $1,264,284.49 $50.00 $1,344,983.50 $63.00 $1,694,679.21 400 002 STRUCTURAL EXCAVATION PROP.INLETS&MH STM SEW. CY 3,610.00 $9.00 $32,490.00 $0.10 $361.00 $9.00 $32,490.00 003 CEM STAB SAND BKFL(2 SA 400 CK PROP.PIPES STM SWR) CY 500.00 $10.00 $5,000.00 $0:10 $50.00 $9.00 $4,500.00 CY 2,936.00 $42.00 $123,312.00 $46.00 $135,056.00 $65.00 $190,840.00 400 004 CEM STAB SAND BKFL 2 SACK PROP.INLETS&MH STM SWR) CY 256.00 464 001 RCP 12" STORM SEW. $42.00 $10,752.00 $46.00 $11,776.00 $65.00 $16,640.00 464 002 RCP 18" STORM SEW. LF 78.00 $0.00 $0.00 $0.00 $0.00 $130.00 $10,140.00 464 003 RCP 24" STORM SEW.) LF 1,900.00 $0.00 $0.00 $0.00 $0.00 $140.00 $266,000.00 4fi4A 001 1 12"HDPE STM SWR TY S LF 126.00 $0.00 $0.00 $0.00 $0.00 $150.00 $18,900.00 464A 002 1 18"HDPE STM SWR TY S LF 78.00 $35.00 $2,730.00 $83.50 $6,513.00 $0.00 $0.00 464A 003 1 24"HDPE STM SWR TY S LF 1,900.00 $47.00 $89,300.00 $88.00 $167,200.00 $0.00 $0.00 465 001 CURB INLETS TYPE C LF 126.00 $58.00 $7,308.00 $94.00 $11 844.00 $0.00 $O.DO 465 002 CURB INLETS TYPE C WITH EXTENSION EA 22.00 $3,050.00 $67,100.00 $2,850.00 $62,700.00 $5,500.00 $121,000.00 465 003 MANHOLE TYPE M(STORM SEW EA 10.00 $3,500.00 $35,000.00 $3,275.00 $32,750.00 $7,300.00 $73,000.00 465 004 MANHOLE TYPE M WITH PIPE SADDLE(STORM SEW) -EA 7.00 $5,000.00 $35,000.00 $4,600.00 $32,200.00 $7,300.00 $51,100.00 465 005 GRATE INLET YH) 2.00 $8,500.00 $17,000.00 $9,830.00 $19,660.00 $4,400.00 $8,800.00 479 001 ADJUST MANHOLE EA 1.00 $8,000.00 $8,000.00 $2,130.00 $2,130.00 $4,500.00 $4,500.00 479 002 ADJUST STEEL PLATE COVER EA 20.00 $500.00 $10,000.00 $520.00 $10,400.00 $650.00 $13,000.00 479 003 ADJUST METAL GRATE COVER EA 7.00 $500.00 $3,500.00 $820.00 $5,740.00 $900.00 $6,300.00 479 004 ADJUST CONCRETE PANEL BOX EA 2.00 $1,250.00 $2,500.00 $820.00 $1,640.00 $900.00 $1,800.00 EA 3.00 $550.00 $1,650.00 $850.001 $2,550.00 $650.00 $1;950.00 CITY OF B IPONT BID MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 2 OF 4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. Item Item Unit Estimated Unit Total Unit Total Unit Total No.79 Code Alt Descri tion Measure Quantity Price Price Price 479 005 ADJUST MANHOLE STORM SEW.) EA 3.00 $500.00 $1,500.00 $770.00 $2,310.00 $3,200.00 $9,600.00 496 004 REMOVE WATER VALVE EA 51.00 $100.00 $5,100.00 $385.00 $19,635.00 $140.00 $7,140.00 496 005 REMOVETELEPHONEBOOTH EA 1.00 $100.00 $100.00 $93.50 $93.50 $500.00 $500.00 496 006 REMOVE PARKING METER EA 6.00 $90.00 $540.00 $100.00 $600.00 $450.00 $2,700.00 496 007 REMOVE FIRE HYDRANT EA 10.00 $250.00 $2,500.00 $500.00 $5,000.00 $300.00 $3,000.00 496 008 REMOVE OLD STRUCTURES(MH(SAN.SEW. EA 21.00 $700.00 $14,700.00 $550.00 $11,550.00 $300.00 $6,300.00 496 009 REMOVE OLD PIPES STORM SEW. LF 1,618.00 $8.00 $12,944.00 $32.00 $51,776.00 $14.00 $22,652.00 496 010 REMOVE OLD STRUCTURES(INLETS) EA 30.00 $700.00 $21,000.00 $980.00 $29,400.00 $430.00 $12,900.00 496 011 REMOVE OLD STRUCTURES(MH)(STORM SEW.) EA 9.00 $700.00 $6,300.00 $2,375.00 $21,375.00 $430.00 $3,870.00 496 012 REMOVE PED.SIG.FOUNDATION EA 5.00 $500.00 $2,500.00 $82.00 $410.00 $84.00 $420.00 496 013 REMOVE TRAF.SIG FOUNDATION EA 22.00 $850.00 $18,700.00 $220.00 $4,840.00 $220.00 $4,840.00 496 014 REMOVE JUNCTION BOX 500 001 MOBILIZAT EA 16.00 $650.00 $10,400.00 $55.00 $880.00 $56.00 $896.00 50 ION - 2 001 BARR.,SIGNS AND TRAFFIC HANDLING LS 1.00 $350,000.00 $350,000.00 $402,174.04 $402,174.04 $444,000.00 $444,000.00 529 001 CONCRETE CURB&GUTTER COMBINED CL A MO 15.00 $2,200.00 $33,000.00 $3,640.00 $54,600.00 $2,O00.DO $30,000.00 ( LF 1,025.00 $24.00 $24,600.00 $20.00 $20,500.00 $19.00 $19,475.00 529 002 REINF.CONC.RESTRAINING BLOCK 6"x9")(CL A)(SIDEWALK) LF 9,348.00_ $10.00 $93,480.00 $13.50 $126,198.00 $15.50 $144,894.00 529 003 REINF.CONC.RESTRAINING BLOCK 6"x12")(CL A)(DRIVEWAYS) LF 1,457.40 $14.00 $20,403.60 $15.00 $21,86-1.00 $20.00 $29,148.00 529 004 CONCRETE CURB(I Y II)MONO LF 10,091.00 $3.50 $35,318.50 $4.30 $43,391.30 $3.30 $33,300.30 530 001 DRIVEWAYS 10" CL A) SY 208.00 001 $65.00 $13,520.00 $67.00 $13,936.00 $68.00 $14,144.00 531 SIDEWALK 4") SF 1,350.00 $4.00 $5,400.00 $7.65 $10,327.50 $6.50 $8,775.00 540 001 METAL BEAM GUARD FENCE LF 120.00 $42.00 $5,040.00 $33.00 $3,960.00 $45.00 $5,400.00 2010 001 TRENCH SAFETY SYSTEMS LF 4,760.00 $1.00 $4,760.00 $1.00 $4,760.00 $1.00 $4,760.00 5009 001 TEMP SEDIMENT CONTROL FENCE INSTALL LF 1,520.00 $2.25 $3,420.00 $3.30 $5,016.00 $1.60 $2,432.00 5009 002 TEMP SEDIMENT CONTROL FENCE REMOVE&REPLACE) LF 1,520.00 $2.75 $4,180.00 X$2 $3,952.00 $2.55 $3,876.00 5009 003 TEMP SEDIMENT CONTROL FENCE REMOVE LF 1,520.00 $0.50 $760.00 $2,584.00 $1.10 $1,672.00 9000 001 BRICK CL SAND FILLERS&BEDDING)(SIDEWALK) SF 61,437.00 $3.00 $184,311.00 230,388.75 $3.25 $199,670.25 9000 002 BRICK PAVERS(INCL SAND FILLERS&BEDDING)(W.C.RAMPS SF 2,34980 $700 $16,448.60 $8,811.75 $7.50 $17,623.50 9000 003 BRICK PAVERS INCL SAND FILLERS&BEDDING DRIVEWAYS) SF 15,243.75 $4.00 $60,975.00 $57,164.06 $4.20 $64,023.75 9000 004 BRICK PAVERS INCL SAND FILLERS&BEDDING MEDIANS) SF -7,040.00 $4.50 $31,680.00 $26,400.00 $5.00 $35,200.00 9000 005 ALT BRICK PAVERS INCL SAND FILLERS&BEDDING)CROSSWALKS SF 8,235.00 $D.DO $0.00 $30,881.25 $4.60 $37,881.00 9005 001 BUILDING WATER PROOFING LF 1,562.00 $1.00 $1,562.00 $28,116.00 $1.60 $2,499.20 9010 001 BOX DRAINS EA 25.00 $1,250.00 $31,250.00 $900.00 $22,500.00 $2,600.00 $65,000.00 9030 001 RAILROAD FLAGGING DAY 10.00 $5 0.001 $5,000.00 $1,150.001 $11,500.00 $1,340.00 $13,400.00 PUBLIC WORKS TOTAL $4,075,703.74 $4,649,278.63' $5,834,234.9 i TRANSPORTATION 12'FIBERGLASS LAMP POLE COMPLETE 610 001 INCLUDING ELEC.WIRINGS)(SINGLE FIXTURES) EA 92.00 $3,500.00 $322,000.00 $3,320.00 $305,440.00 $3,200.00 $294,400.00 611 001 REMOVE RDWY ILLUMINATION ASSEMBLIES EA 17.00 $625.00 $10,625.00 $310.00 $5,270.00 $290.00 $4,930.00 618 001 2"PVC SCHED 40 CONDUIT INCL.GEM.STAB SAND BKFL) LF 7,365.00 $7.50 $55,237.50 $10.00 $73,650.00 $10.00 $73,650.00 624 001 JUNCTION BOXES EA 47.00 $750.00 $35,250.00 $500.00 $23,500.00 $500.00 $23,500.00 629 001 REMOVE SERVICE POLE EA 2.00 $250.00 $500.00 $275.00 $550.00 $280.00 $560.00 644 001 SMALL ROADWAY SIGN ASSEMBLIES EA 31.00 $600.00 $18,600.00 $550.00 $17,050.00 $500.00 $15,500.00 CITY OF ONT BID MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 3OF4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. r6556Item Unit Estimated Unit Total Unit Total Unit Total Code Alt Descri lion Measure Quantity Price Price Price 001 REMOVE ROADSIDE SIGN ASSEMBLIES EA 37.00 $50.00 $1,850.00 $98.00 $3,626.00 $60.00 $2,220.00 001 12'FIB SIGNAL FOUNDATION EA 19.00 $750.00 $14,250.00 $2,480.00 $47,120.00 $2,540.00 $48,260.00 002 12'FIBERGLASS LAMP POLE FOUNDATION(COMPLETE) EA 92.00 $300.00 $27,600.00 $330.00 $30,360.00 $336.00 $30,912.00 003 PEDESTRIAN SIGNAL FOUNDATION EA 7.00 $360.00 $2,520.00 $425.00 $2,975.00 $436.00 $3,052.00 004 TRAFFIC SIGNAL CONTROLLER FOUNDATION EA 5.00 $1,300.00 $6,500.00 $1,375.00 $6,875.00 $1,410.00 $7,050.00 001 REFL PAV MRKG TY II Y)(4")(SLD)REMOVABLE LF 5,862.00 $1.50 $8,793.00 $1.65 $9,672.30 $1.60 $9,379.20 002 REFL PAV MRKG TY II Y)(4")(SLD) NONREMOVABLE LF 5,910.00 $0.95 $5,614.50 $1.00 $5,910.00 $1.00 $5,910.00 001 REFL PAV MRKG TY-II Y)(4")(SLD) LF 5,350.00 $0.95 $5,082.50 $1.00 $5,350.00 $1.001 $5,350.00 666 002 REFL PAV MRKG TY-II(Y(4")(BRK LF 308.00 $1.00 $308.00 $1.10 $338.80 $1.05 $323.40 666 003 REFL PAV MRKG TY-II )4")SLD LF 295.00 $1.00 $295.00 $1.10 $324.50 $1.05 $309.75 666 004 REFL PAV MRKGTY-II )(4" BRK LF 1,493.00 $1.00 $1,493.00 $1.10 $1,642.30 $1.05 $1,567.65 666 005 REFL PAV MRKG TY-II(W)8")(SLD) LF 591.00 $1.25 $738.75 $1.35 $797.85 $1.30 $768.3C 666 006 REFL PAV MRKG TY-II W)(12")(SLD) LF 2,704.00 $1.95 $5,272.80 $2.00 $5,408.00 $2.00 $5,408.00 666 007 REFL PAV MRKG TY-II Y(12")(SLD) LF 20.00 $1.95 $39.00 $2.00 $40.00 $2.00 $40.00 666 008 REFL PAV MRKGTY-II W(24")(SLD) LF 567.00 $3.00 $1,701.00 $3:30 $1,871.10 $3.05 $1,729.35 666 009 REFL PAV MRKGTY-II(W)(WORD) EA 8.00 $150.00 $1,200.00 $163.00 $1,304.00 $160.00 $1,280.00 666 010 REFL PAV MRKG TY-II(W)(ARROW) EA 8.00 $75.00 $600.00 $82.00 $656:00 $82.00 $656.00 666 011 REFL PAV MRKG TY-II(R)(SLD CURB) LF 576.00 $0.95 $547.20 $1.00 $576.00 $1.00 $576.00 666 012 REFL PAV MRKG Y)SLD CURB) LF 1,584.00 $0.90 $1,425.60 $1.00 $1,584.00 $1.00 $1,584.00 666 013 RAILROAD CROSSING EA 4.00 $200.00 $800.00 $220.00 $880.00 $210.00 $840.00 672 001 RATS PV MRKR CL B(REFL TY I-C EA 144.00 $5.00 $720.00 $5.50 $792.00 $5.25 $756.00 672 002 RATS PV MRKR CL B REFL)TY II-A-A EA 161.00 $5.00 $805.00 $5.50 $885.50 $5.25 $845.25 677 001 REMOVE PAVEMENT MARKINGS(STRIPING LF 94.00 $3.00 $282.00 $3.25 $305.50 $3.10 $291.40 680 001 TRFFIC SIGNAL CONTROLLER EA 5.00 $43,000.00 $215,000.00 $6,100.00 $30,500.00 $5,040.00 $25,200.00 682 001 TRAFFIC SIGNAL HEADS EA 44.00 $1,200.00 $52,800.00 $800.00 $35,200.00 $830.00 $36,520.00 682 002 PEDESTRIAN SIGNAL HEADS EA 44.00 $900.00 $39,600.00 $590.00 $25,960.00 $600.00 $26,400.00 686 001 TRAFFIC SIGNAL POLE ASSEMBLY 686 002 PEDE EA 20.00 $15,000.00 $300,000.00 $10,300.00 $206,000.00 $9,800.00 $196,000.00 STAL POLE ASSEMBLY EA 9.00 $4,200.00 $37,800.00 $3,400.00 $30,600.00 $3,300.00 $29,700.00 9020 001 REMOVE PEDESTRIAN SIGNAL ASSEMBLIES EA 7.00 $400.00 $2,800.00 $200.00 $1,400.00 $200.00 $1,400.00 9020 002 REMOVE IKAFFIC SIGNAL ASSEMBLIES EA 23.00 $950.00 $21,850.00 $710.00 $16,330.00 $720.00 $16,560.00 9035 001 LED STREET LIGHTS EA 19.00 $4,200.00 $79,800.00 $3,150.00 $59,850.00 $3,000.00 $57,000.00 9045 001 VIDEO DETECTORS EA 12.00 $6,975.00 $83,700.00 $5,400.00 $64,800.00 $5,400.00 $64,800.00 TRANSPORTATION TOTAL $1,363,999.85 $1,025,393.85 WATER UTILITIES $995,228.30 702 001 6"PVC OPEN TRENCH SAN SEW) LF 100 $45.00 $4,500.00 $86.00 $8,600.00 $49.00 $4,900.00 708 001 MANHOLE(FIBERGLASS EA 3 $3,100.00 $9,300.00 $2,700.00 $8,100.00 $3,400.00 $10,200.00 807 003 16"XS"MJTEE EA 2 $1,550.00 $3,100.00 $975.00 $1,950.00 $1,700.00 $3,400.00 8)7 004 16"X 6"MJ TEE EA 3 $1,500.00 $4,500.00 $900.00 $2,700.00 $1,600.00 $4,800.00 807 005 16"X4"MJTEE EA 1 $1,450.00 $1,450.00 $950.00 $950.00 $1,550.00 $1,550.00 807 006 12"X12"MJTEE EA 2 $1,000.00 $2,000.00 $575.00 _ $1,150.00 $1,000.00 $2,000.00 807 007 12"X 8"MJ TEE EA 6 $900.00 $5,400.00 $500.00 $3,000.00 $95000 $5,700.00 807 008 12"X 6"MJTEE EA 9--1 850.001 $7,650.001 500.00 $4,500.00 900.00 $8,100.00 CITY BI*ONT BI MAIN STREET(CALDER TO BLANCHETTE) BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 4 OF 4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. Item Item - Unit Estimated Unit Total Unit Total Unit Total No. Code Alt Description Measure Quantitv Price 807 009 12"X 4"MJ TEE Price Price EA 2 $800.00 $1,600.00 $450.00 $900.00 $850.00 $1,700.00 807 010 8"X8"MJTEE EA 3 $500.00 $1,500.00 $335.00 $1,005.00 $510.00 $1,530.00 807 011 6"X 6"45 TEE EA 1 $350.00 $350.00 $285.00 $285.00 $360.00 $360.00 807 012 16"MJ 45 BEND 807 013 6"MJ 45 BEND EA 1 $1,200.00 $1,200.00 $800.00 $800.00. $1,300.00 $1,300.00 12"MJ D EA 2 $700000 $1,400.00 $400.00 $800.00 $750.00 $1,500,00 807 015 6" BEN 807 014 MJ 90 0 BEN D BEN EA 2 $600.00 $1,200.00 $285.00 $570.00 $630.00 $1,260.00 EA 1 $400.00 $400.00 $200.00 $200.00 $420.00 $420,00 807 016 8"MJ 22-1l2 BEND EA 4 $600.00 $2,400.00 $260.00 $1,040.00 $610.00 $2,440.00 807 017 16"X 8"MJ WYE EA 1 $2,000.00 $2,000.00 $1,425.00 $1,425.00 $2,100.00 $2,100.00 807 018 16"X6"MJWYE EA 1 $2,000.00 $2,000.00 $1,375.00 $1,375.00 $2,100.00 $2,100.00 807 019 16"X4"MJ WYE EA 1 $2,000.00 $2,000.00 $1,375.00 $1,375.00 $2,100.00 $2,100.00 807 021 16"X12"MJREDUCER EA 1 $1,000.00 $1,000.00 $550,00 $550.00 $1,050.00 $1,050.00 807 022 8"X E V REDUCER $400.00 $400.00 $200.00 $200.00 $420.00 807 023 12"SERVICE SADDLE EA 1 $420.00 $600.00 $6,600.00 $800.00 $8,800,00 $620.00 808 001 FIRE HYDRANT 19 $6,820.00 810 001 6"PVC OPEN TRENCH(WATER) $2,400.00 $21,600.00 $2,330.00 $20,970.00 $2,500.00 $22,500.00 810 002 8"PVC OPEN TRENCH(WATER) LF 331 $72.00 $23,832.00 $90.00 $29,790.00 $75.00 $24,825.00 810 003 12"PVC OPEN TRENCH WATER LF 1166 $75.00 $87,450.00 $92.00 $107,272.00 $80.00 $93,280,00 810 004 16"PVC OPEN TRENCH(WATER) LF 142 $85.00 $12,070.00 $105.00 $14,910.00 $90.00 $12,780.00 810 006 4"PVC SHORT SIDE SERVICE CONNECTION LF 1216 $80.00 $97,280.00 $115.00 $139,840.00 $87.00 $105,792.00 810 007 4"PVC LONG SIDE SERVICE CONNECTION LF 70 $50.00 $3,500.00 $21.66 $1,516.20 $52.00 $3,640.00 810 008 2"HDPE SHORT SIDE SERVICE CONNECTION LF 52 $85.00 $4,420.00--$27.66 $1,438.32--$90.00 $4,680.00 810 009 2"HDPE LONG SIDE SERVICE CONNECTION LF 195 $40.00 $7,800.00 $8.34 $1,626.30 $43.00 $8,385.00 810 010 1"HDPE LONG SIDE SERVICE CONNECTION LF 105 $70.00 $7,350.00 $17.34 $1,820.70 $75.00 $7,875.00 811 001 4"WATER VALVE LF 65 $60.00 $3,900.00 $16.74 $1,088.10 $65.00 $4,225.00 811 002 6"WATER VALVE 4 $500.00 $2,000.00 $725.00 $2,900.00 $540.00 $2,160.00 811 003 8"WATER VALVE EA 17 $650.00 $11,050.00 $800.00 $13,600.00 $700.00 $11,900.00 811 004 12"WATER VALVE EA 15 $1,000.00 $15,000.00 $1,350.00 $20,250.00 $1,050.00 $15,750.00 811 005 16"WATER VALVE EA 17 $1,800.00 $30,600.00 $1,785.00 $30,345.00 $1,900.00 $32,300.00 813 001 12"PVC WATER BORE) EA 11 $5,500.00 $60,500.00 $4,825.00 $53,075.00 $6,000.00 $66,000.00 LF 2774 $100.00 $277,400.00 $140.00 $388,360.00 $105.00 $291,270.00 2534 001 SAN SEW SERVICE STUB OR RECONNECT EA 1 $2,400,00 $2,400,00 $3,800.00 $3,800.00 $2,600.00 $2,600.00 3301 001 MANHOLE PRECAST EA 12 $3,100.00 $37,200.00 $5,300.00 $63,600.00 $3,200.00 $38,400.00 4020 001 6"HDPE PIPE BURST SAN SEW LF 608 $45.00 $27,360.00 $50.00 $30,400.00 $49.00 $29,792.00 4020 002 8"HDPE PIPE BURST SAN SEW LF 451 $70.00 $31,570.00 $99.00 $44,649.0D $75.00 $"x3,825.00 4020 003 12"HDPE PIPE BURST SAN SEW LF 860 $115.00 $98,900.00 $140.00 $120,400.00 $126.00 $108,360.00 4020 004 16"HDPE PIPE BURST SAN SEW LF 58 $225.00 $13,050.00 $218.00 $12,644.00 $240.00 $13,920.00 WATER UTILITIES TOTAL $938A82.001 $1,154.569.62 $1.00( 009.00 TOTAL CONTRACT AMOUNT $6,377,885.59 $6,829,242.10 $7,829,472:21 RESOLUTION NO. WHEREAS, bids were received for a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project; and, WHEREAS, Brystar Contracting, Inc. submitted a bid in the amount of $6,377,885.59; and, WHEREAS, City Council is of the opinion that the bid submitted by Brystar Contracting, Inc. should be accepted; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the bid submitted by Brystar Contracting, Inc. for a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project in the amount of $6,377,885.59 be accepted by the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - 5 December 5, 2006 Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation City of Beaumont Council Agenda Item K g TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Director of Public Works MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council approve Change Order No. 2 for the Julie Rogers Theatre renovation. RECOMMENDATION Administration recommends authorizing the City Manager to execute Change Order No. 2 for the renovation of the Julie Rogers Theatre in the amount of$65,380.01. BACKGROUND Council awarded a contract to Bruce's General Construction for the interior renovations to the Julie Rogers Theatre on August 15, 2006 in the amount of$1,845,000. The project began in September and the renovations are proceeding as scheduled. Change Order No. 1 in the amount of$5,331.75 was executed on November 2, 2006. Change Order No. 2 consist of several projects stated below that are necessary because of either unforseen damage or modifications to enhance the building. 1. Addition of rubber flooring in the elevator, stage door foyer, kitchen in Green Room, and both concession areas on the I' and 2'' floors and deletion of basic carpet in the meeting room and 2'floor women's lounge. Also deleted was a ceramic wainscot in all restrooms that was not available for shipment until February possibly delaying the building's completion. 2. Remove and replace glazing compound on all exterior windows. During the renovation, it was discovered that the exterior window glazing had failed. During heavy wind driven rains, water enters and damages interior work. Broken panes will also be replaced. i NUMBER iDIRECTION IDISTANCE / Zd L1 N 00'08'22" E 14.45 wc� L2 IS 89'36'40" E 14.36 W° L3 I N 65'32'00" E 150.19 1-4 S 00'04'35" W 9.41 EL L5 S 00'08'22" W 5.36 L6 S 65'51'18" W 50.03 o L7 N 89'36'40" W 114.40 z V) o> NOTE: BOTTOM OF SKYWAY 14.50' ABOVE GROUND. TOP OF SKYWAY 33.50' ABOVE'GROUND. = \ FOUND 5d8",,, � �D IRON RO J O O \ � C r 0� G / L2 ❑ 002 POINT OF BEGINNING - H w I � o q � 0. .�15— 30 I LU in a S s C A L I C)M NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o W THE BENEFIT OF A TITLE COMMITMENT. UO a0 ° NOT ALL EASEMENTS, WHETHER OF CIR 0 Z RECORD OR NOT, WERE RESEARCHED AT N O 0 THE TIME OF THIS SURVEY.uj I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND / I UNDER MY SUPERVISION DURING AUGUST 2006. I FOUND 1/2" I Q OF TFT Y IRON ROD I WALTER J. KSIAZEK *aje�G1STE2F�•cn* 5' STREET LIGHT EASEMENT I REGISTERED PROFESSIONAL L SURVEYOR O 5321 * • �' • WALTER J. KSIAZEK S 89'58'51" W 249.77' a,0 5321 r s (CALLED S 89'58'51" W 250.DO') COMMENCING .eq0 �P• (BASIS OF BEARINGS) POINT ` ••a•e e Dee Q` MEDICAL CENTER DRIVE IRON FOUND ROD 8" qM0 SIIA�11 � Fittz&ShIpI'Y an SKYWAY AERIAL ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST ConsultinsE4meers and Land SunNyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06 03379 T5 EXHIBIT "A" 's CS S Fittz & Shipman lug Consulting Engineers and Land Surveyors FIELD NOTE DESCRIPTION FOR A 65.01 SQUARE FOOT TRACT BEING A SKYWAY COLUMN ENCROACHMENT OUT OF THE DAVID BROWN SURVEY, ABSTRACT 5 JEFFERSON COUNTY, TEXAS AUGUST 18, 2006 That certain 65.01 square foot tract, being a Skyway Column Encroachment out of the David Brown Survey, Abstract 5, Jefferson County, Texas, said 65.01 square foot tract being more particularly described by metes & bounds as follows: Note: The Basis of Bearings is along the south line of a 2.421 acre tract conveyed to BHST - POB I LTD as recorded in Clerks File No. 2003041121 of the Official Public Records of Real Property of.Jefferson County, Texas-and the north right-of-way line of Medical Center Drive having been called South 89 058'51"West 250.00 feet,.- COMMENCING at a 5/8" iron rod found at the intersection of the north right-of-way line of Medical Center Drive with the west right-of-way line of Hospital Drive being the southeast corner of the said 2.421 acre tract from which a found %2" iron rod bears South 89°58'51" West 249.77 feet (called South 89 058'51" 250.00 feet); THENCE North 00°08'22" East along the said west right-of-way line of Hospital Drive and the east line of the said 2.421 acre tract a distance of 123.85 feet (called North 00 004'45" East) to a point from which a found 5/8" iron rod bears North 00 008'22" East 25.84 feet (called North 00°04'45" East); THENCE South 89 036'40" East a distance of 9.90 feet to the southwest corner of the said 65.01 square foot and the POINT OF BEGINNING; THENCE North 00°00'43" West along the west line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the northwest comer of the said 65.01 square foot tract; THENCE South 89 036'40" East along the north line of the said 65.01 square foot tract a distance of 4.50 feet to a point for the northeast corner of the said 65.01 square foot tract; THENCE South 00 000'43" East along the east line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the southeast corner of the said 65.01 square foot tract; THENCE North 89 036'40" West along the south line of the said 65.01 square foot tract a distance of 4.50 feet to the POINT OF BEGINNING and containing 65.01 square feet of land, more or less. This Field Note Description is being submitted along with a plat of even date based on a survey performed by Fittz & Shipman, In on August 15, 2006. C..••, alter k �,o.�GISTE2 If Registered Profess' al Land Su eyor No. 5321 �•».»•«.. WALTER J, KSIAZEK Fittz&Shipman,Inc. ,,0 5321 „a Page 1 of 1 •'9�FES '� Plat Project and DesOcription5colurnn a ,goo SURV�ypQ • • 1405 Cornerstone Court, ,Beaumont,Texas 77706 (409) 832-7238 fax(409) 832-7303 EXHIBIT "A" 4 a-$ 5 i i i NUMBER IDIRECTION IDISTANCE zi L1 IS 89'36'40" E 19.90 / Lim 11-2 N 00'00'43" W 114.45 / a° L3 S 89'36'40" E 4.50 / L4 S 00'00'43" E 14.45 V) L5 N 89'36'40" W 4.50 I ~N Z aJ 0 O 0> e FOUND RON ROD 8"-,, 6 p 65.01.. S.F. ,t L3 � o / 1 M L5 POINT OF ( 1 BEGINNING � W wv i -�—�s 30 I ``'a U1 S C A L E NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o THE BENEFIT OF A TITLE COMMITMENT. U) 00 Z NOT ALL EASEMENTS, WHETHER OF RECORD OR NOT, WERE RESEARCHED AT M O ° THE TIME OF THIS SURVEY. N O J I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND UNDER MY SUPERVISION DURING AUGUST 2006. I 2 T . FOUND 1/ ' OF �' Q.` e e e e �•�' WALTER J. KSIAZEK �j�•°GISTE/�°.'9S IRON R00 I REGISTERED PROFESSIONAL LAND VEYOR N0. 5 * • �G Fir * • • 5' STREET LIGHT EASEMENT I WALTER J. KSIAZEK S $9'58'51" W 249.77' 0.0 5321 (CALLED S 89'58'51" W 250,00') COMMENCING 00'90 :• (BASIS OF BEARINGS) POINT •rFESS�00•Q MEDICAL CENTER DRIVE IRON ROD 8„ �NOSUME�� Fittz&3hip an SKYWAY COLUMN ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST 1 ConsultintEngmeers and Land Surveyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06, 03379 T5 EXHIBIT "A" 5 a 5 �r ML Cttq of Beaumont REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS DECEMBER 5,2006 1:30 P.M. AGENDA CALL TO ORDER * Invocation Pledge Roll Call * Presentations and Recognition * Public Comment: Persons may speak on scheduled agenda items 1-8/Consent Agenda * Consent Agenda GENERAL BUSINESS 1. Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto 2. Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto 3. Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department 4. Consider approving a contract for the Main Street(Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project 5. Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation 6. Consider authorizing the City Manager to increase the Wiess Bluff Pump Station Neches River Bank Stabilization Project to increase the scope of work 7. Consider granting the City Manager authority to implement the contribution rate changes for retirees in the medical plans 8. Consider authorizing the reprogramming of Community Development Block Grant (CDBG) funds from FY2000-FY2005 into the FY2006 Clearance/Demolition line item for the demolition of dangerous structures 9. PUBLIC HEARING: Dangerous Structures Consider approval of an ordinance declaring certain structures to be dangerous structures and ordering their removal within 10 days or authorizing the property owner to enroll the dangerous structure in a work program COMMENTS * Councilmembers/City Manager comment on various matters * Public Comment (Persons are limited to 3 minutes) EXECUTIVE SESSION * Consider matters related to contemplated or pending litigation in accordance with Section 551.071 of the Government Code: Roy Cooper v. City of Beaumont, et al;No. 105324 Southwestern Bell Telephone v. City of Beaumont; Cause No. A-176610 Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact Lenny Caballero at 880-3716 three days prior to the meeting. 1 December 5, 2006 Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto City of Beaumont W Council Agenda Item ,jfj � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of $30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara ofRBC Dain Rauscher. A recommendation will be made to award the certificates to the underwriter offering the lowest overall interest cost to the City. The certificates will mature March 1,2008 through March 1,2025 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for various street, drainage and general improvements. BUDGETARY IMPACT All debt shall be incurred in the Debt Service Fund which is supported by property taxes. The current debt service property tax rate of $.0264447 is expected to be sufficient to meet debt service requirements on the certificates. PREVIOUS ACTION Council authorized publication of notice of intention to issue Certificates of Obligation on October 31, 2006. SUBSEQUENT ACTION None, RECOMMENDED BY City Manager and Chief Financial Officer. PRI:LI NI[NARY OFFICIAL STATEMENT DATED NOVEMBER 13, 2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase the Certificates. Upon the sale of the Certificates,the Official Statement will be completed and delivered to the Purchaser. IN THE OPINION OF BOND COUNSEL, INTEREST ON THE CERTIFICATES IS EVCLUDABLE FROM GROSS INCO.AfE FOR FEDERAL I,NCOME TAX PURPOSES UNDER EXISTING LAW, SUBJECT TO THE MATTERS DESCRIBED UNDER "LEGAL MATTERS -TAX EXE.VPTION"HEREIN, INCLUDING THE ALTERNATII E AILNIMUlf TAX ON CORPOR=1 TIONS. NEW ISSUE-BOOK-ENTRY-ONLY _ - $30,000,000 _ - THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) CERTIFICATES OF OBLIGATION, SERIES 2006 Dated: December 1,2006 Principal Due: March 1 Principal of and interest on The City of Beaumont,Texas$30,000,000 Certificates of Obligation,Series 2006(the"Certificates")are payable at the principal corporate trust office of The Bank of New York Trust Company, N.A., Dallas, Texas, the paying agent/registrar (the "Registrar'). The Certificates are initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneficial owners L thereof. Interest accrues from December 1, 2006, and is payable each March 1 and September 1 of each year, commencing September 1, 2007,until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1,2016 or any date thereafter, at the option of the City. Upon redemption the Certificates will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates are issued in fully registered form in integral multiples of$5,000. Principal of and interest on the Certificates will be payable by the Registrar to Cede& Co.,which will make distribution of the amounts so - - paid to the beneficial owners of the Certificates. See"THE CERTIFICATES-Book-Entry-Only System"herein. Interest on the Certificates will be payable by check, dated as of the interest payment date, and mailed by the Registrar to registered owners (initially Cede & Co.) shown on the records of the Registrar on the fifteenth calendar day of the month next preceding each interest payment date (the "Record Date"). See"THE CERTIFICATES-Description of the Certificates." '- MATURITY SCHEDULE _ - (Due March 1) Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. Maturity Amount Rate Yield(a) 074561 (c) Maturity Amount Rate Yield(a) 074561(c) - - 2008 $2,775,000 % % 2017(b) $1,180,000 % % 2009 2,065,000 2018(b) 1,240,000 2010 1,570,000 2019(b) 1,435,000 2011 1,515,000 2020(b) 1,550,000 2012 1,610,000 2021(b) 1,665,000 2013 1,690,000 2022(b) 1,780,000 2014 1,745,000 2023(b) 1,890,000 2015 1,070,000 2024(b) 2,000,000 2016 1,125,000 2025(b) 2,095,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Certificates maturing on or after March 1, 2017 are subject to redemption, at the option of the City, at the par value thereof plus accrued interest,in whole or in part,on March 1,2016,or any date thereafter. (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the registered owners of the Bonds. Neither the City, the Financial r � , Advisor,nor the Purchasers are responsible for the selection or correctness of the CUSIP numbers set forth herein. = - The above certificates (the"Certificates") are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an - ordinance(the"Ordinance')adopted by the City Council (the"City Council")of the City on December 5,2006. Proceeds from the sale of _ the Certificates will be used to provide funds for street, drainage, building and park improvements. The proceeds will also be used to pay certain costs in connection with the issuance of the Certificates. (See`'THE CERTIFICATES-Use of Proceeds.") The Certificates, when issued,will constitute valid and binding obligations of The City of Beaumont,Texas(the"City")and will be payable from the proceeds of an = annual ad valorem tax,levied within the limits prescribed by law,against taxable property within the City and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks system but only to the extent of and not in an amount in excess of _ $10,000. = The Certificates are offered when, as and if issued subject to the approving opinion of the Attorney General of the State of Texas and the _ opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel to the City as to the validity of the issuance of the Certificates under the Constitution and the laws of the State of Texas. The Certificates are expected to be available for delivery on or about December 28, = 2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF $30,000,000 THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2006; LEVYING TAXES TO PROVIDE FOR PAYMENT THEREOF; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, the City Council of The City of Beaumont,Texas (the "City"), has heretofore authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on December 5, 2006, the date tentatively set for passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of certain revenues of the City's waterworks and sewer system, or as soon thereafter as may be practicable, for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations, repairs and construction of new restrooms, field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and the laws of the State of Texas and the United States of America, respectively, particularly Chapter 271, Texas Local Government Code, as amended; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; and WHEREAS, the City Council of the City has determined to authorize such certificates of obligation for the purposes set out in this Ordinance; and WHEREAS, the City is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to pledge not more than $10,000 of the net revenues of the City's waterworks and sewer system as security for the certificates of obligation authorized herein; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Preamble. The matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term 'Business Day" shall mean any day which is not a Saturday, Sunday, a legal holiday, or a day on which the Registrar is authorized by law or executive order to close. The term "Certificates" or "Series 2006 Certificates" shall mean the Certificates of Obligation, Series 2006, authorized in this Ordinance, unless the context clearly indicates otherwise. The term "Certificates Insurance Policy" shall mean the municipal bond guaranty insurance policy issued by the Insurer insuring the payment when due of the principal of and interest on the Certificates as provided therein. The term "City" shall mean The City of Beaumont, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. -2- The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Construction Fund" shall mean the construction fund established by the City pursuant to Section 20 of this Ordinance. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean 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 the DTC Participants. The term "Insurer" shall mean the issuer of the Certificates Insurance Policy. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 20 of this Ordinance. The term "Interest Payment Date", when used in connection with any Certificate, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption. The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term "Ordinance" as used herein and in the Certificates shall mean this Ordinance authorizing the Certificates. The term "Owner" or "Registered Owner", when used with respect to any Certificate, shall mean the person or entity in whose name such Certificate is registered in the Register. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th day of the month next preceding such Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term 'Registrar" shall mean THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas, and its successors in that capacity. -3- I The term "SEC" shall mean the United States Securities and Exchange Commission and its successors. The term "System" shall mean the City's waterworks and sewer system. The term "Underwriter" shall mean 3. Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Thirty Million Dollars ($30,000,000), for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations repairs and construction of new restrooms field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith. 4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES -4- 2006", and shall be December 1, 2006. The Certificates shall bear interest from the later of December 1, 2006, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30-day months, which interest shall be payable on September 1, 2007, and semiannually thereafter on March 1 and September 1 of each year until maturity or earlier redemption. 5. Certificates, Numbers and Denominations. The Certificates shall be 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 Certificates shall mature, subject to prior redemption in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered upon transfer of or in exchange an e f o r other ertifc tes shall be numbered in order of their authentication by the Registrar, , shall be in the denomination of$5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Year Principal Interest Number of Maturity Amount Rate CR-1 2008 $3,415,000 % CR-2 2009 $2,065,000 % CR-3 2010 $1,570,000 % CR-4 2011 $1,515,000 % CR-5 2012 $1,610,000 % CR-6 2013 $1,690,000 % CR-7 2014 $1,745,000 % CR-8 2015 $1,070,000 % CR-9 2016 $1,125,000 % CR-10 2017 $1,180,000 % CR-11 2018 $1,240,000 % CR-12 2019 $1,350,000 % CR-13 2020 $1,470,000 % CR-14 2021 $1,580,000 % CR-15 2022 $1,690,000 % CR-16 2023 $1,795,000 % CR-17 2024 $1,900,000 % CR-18 2025 $1,990,000 % 6. Execution of Certificates; Seal. The Certificates shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the -5- Certificates shall have the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, 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 Certificates to be initially issued shall be delivered to the Attorney General of the State 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 17 of this Ordinance shall be attached or affixed to the initial Certificates. 8. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 17 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 Certificates 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 Certificates. The principal of the Certificates 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 become due and payable, at the designated corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Certificate 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 payment was due. 10. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the Registrar on not less than sixty (60) days' written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding principal or interest payment date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the 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 -6- deemed to have agreed to the provisions of this Section. 11. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) business 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 Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate 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 Certificate in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three (3) years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the provisions of Texas law, including to the extent applicable,Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer, and Exchange; Special Election for Uncertificated Certificates. So long as any Certificates remain outstanding,the Registrar shall keep the 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 Certificates in accordance with the terms of this Ordinance. Each Certificate 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 Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Certificate or Certificates, 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 Certificate or Certificates so presented. All Certificates shall be exchangeable upon presentation and surrender thereof at the -7- principal corporate trust office of the Registrar for a Certificate or Certificates of the same maturity and interest rate in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13. Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate 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 Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Neither the City nor the Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. Notwithstanding any other provision hereof, but at the sole election of the Underwriter, the ownership of the Certificates shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Certificates. With respect to Certificates 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 Certificates. 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 Certificates, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Certificate, as shown on the Register, of any notice with respect to the Certificates, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner of a Certificate, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on the Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute Owner of such Certificate for the purpose of payment of principal of, premium, if any, and interest on the Certificates, for the purpose of all matters with respect to such Certificates, for the purpose of registering transfers with respect to such Certificates, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Certificates only to or upon the order of the respective Owners, as shown in the Register as -8- provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Certificates to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a certificate for a Certificate evidencing the obligation of the City 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 Ordinance shall refer to such new nominee of DTC. In the event that the City or the Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the Letter of Representation and that it is in the best interest of the beneficial Owners of the Certificates that they be able to obtain certificated Certificates, or if DTC Participants owning at least 50% of the Certificates outstanding based on current records of the DTC determine that continuation of the system of book-entry transfers through the DTC (or a successor securities depository) is not in the best interest of such beneficial Owners of the Certificates, or in the event DTC discontinues the services described herein, the City or the Registrar 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 of the appointment of such successor securities depository and transfer one or more separate Certificates to such successor securities depository or (ii) notify DTC of the availability through DTC of Certificates and transfer one or more separate Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event, the Certificates 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 Certificates shall designate, in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Certificates 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 the Certificates, and all notices with respect thereto, shall be made and given in the manner provided in the Letter of Representation. 14. Mutilated, Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate 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 Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection -9- therewith and any other associated expenses, 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 Certificate, before any replacement Certificate 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 Certificate; (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. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Registrar shall be entitled to recover such replacement Certificate 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 Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate, authorize the Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15. Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates 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 Certificates. 16. Optional Redemption. The City reserves the right, at its option, to redeem Certificates having stated maturities on and after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates, or -10- portions thereof,to be redeemed. Certificates may be redeemed only in integral multiples of$5,000. If a Certificate subject to redemption is in a denomination larger that $5,000, a portion of such Certificate may be redeemed, but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered. Not less than thirty (30) days prior to a redemption date for the Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each Owner of each Certificate to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Certificates are to be surrendered for payment and, if less than all the Certificates are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice of redemption so mailed 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 Certificates or portions thereof to be redeemed. When Certificates have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid 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 Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 17. Forms. , The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Certificates 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: -11- UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION CR- $ REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS CERTIFICATE OF OBLIGATION SERIES 2006 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THE CITY OF BEAUMONT, TEXAS (the "City"), promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this certificate at the designated corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas (the 'Registrar"), or at its principal payment office in Dallas, Texas, 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 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 Dated Date specified above, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on September 1, 2007, and semiannually thereafter on each March I and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $30,000,000 (the "Certificates"), issued in accordance with the Constitution and the laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended, for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, the purchase of equipment and the cost of issuance of the Certificates, pursuant to an ordinance duly adopted by the City Council of the City -12- (the "Ordinance"),which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT, at its option,to redeem the Certificates having stated maturities on or after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Certificates. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each Certificate to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Certificates 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 CERTIFICATE 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 CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of this Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, 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 Certificates 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 Certificate has been duly and -13- 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 Certificate have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied, within the limits prescribed by law, against all taxable property in the City, and have been pledged irrevocably for such payment. IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues") to be derived from the operation of the City's waterworks and sewer system (the "System"), but only to the extent of and in an amount not to exceed Ten Thousand Dollars ($10,000.00) in the aggregate, are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose, all as set forth in the Ordinance to which reference is made for all particulars; provided, how-ever, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certificate and that series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Clerk of the City and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. THE CITY OF BEAUMONT, TEXAS Mayor (SEAL) City Clerk Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. -14- I hereby certify that this certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this day of , 2006. xxxxxxxxx Comptroller of Public Accounts (Seal) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. The Bank of New York Trust Company,N.A. Dallas, Texas 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 certificate and all rights thereunder, and hereby irrevocably constitutes and appoints -15- attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: The signature above must correspond to the name of the registered NOTICE: Signature must be owner as shown on the face guaranteed by a member firm of this Certificate in of the New York Stock Exchange every particular, without or a commercial bank or trust any alteration, enlargement company. or change whatsoever. 18. Form of Statement of Insurance. The following statement of insurance shall be printed on the back of or attached to each of the Certificates: STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning -16- of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $30,000,000 THE CITY OF BEAUMONT, TEXAS CERTIFICATES OF OBLIGATION, SERIES 2006 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. -17- 19. Legal Opinion; Cusip Numbers. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 20. Interest and Sinking Fund; Tax Lew; Pledge of Revenues; Construction Fund. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance are hereby irrevocably pledged and shall be deposited, as collected, in a special fund to be designated "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in the City sufficient to pay the current interest on the Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures but in each year never less than 2% of the original principal amount of the Certificates, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of the Certificates and to no other purpose. To pay the interest coming due on the Certificates on September 1, 2007,there is hereby appropriated from current funds on hand, which are certified to be on hand and available for such purpose, an amount sufficient to pay such interest, and such amount shall be used for no other purpose. The Net Revenues of the System, but only to the extent of and in an amount not to exceed $10,000 in the aggregate, are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes described in this Section of the Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of the Certificates; and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Construction Fund". Immediately after the sale and delivery of the Certificates, that portion of the proceeds of the Certificates to be used for the cost of construction of authorized street -18- improvements and the cost of issuance of the Certificates shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of such projects, interest earned on such proceeds may be used, at the City's discretion, for such projects and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1201.043, Texas Government Code Annotated, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of such street improvements, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. 21. Further Proceedings. After the Certificates shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates 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 Certificates to be initially issued shall have been approved by the Attorney General of the State of Texas, the Certificates shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Certificates to be initially issued,the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of the Comptroller shall be impressed, or placed in facsimile, thereon. In addition, the Mayor, the City Clerk and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the purposes of this Ordinance. 22. Sale of Certificates. The Certificates are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of Certificates, plus a premium of$ The purchase price of the Certificates will also include accrued interest to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Certificates and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Certificates. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Certificate Insurance Policy, and the printing on the Certificates covered by the Certificate Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 23. Tax Exemption. (a) The City intends that the interest on the Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and applicable 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 Certificates 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 23; -19- provided, however, that the City shall not be required to comply with any particular requirement of this Section 23 if the City has received an opinion of nationally recognized bond counsel (a "Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 23 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 23. (b) The City covenants and agrees that its use of Net Proceeds of the Certificates will at all times satisfy the following requirements: (i) The City will use all of the Net Proceeds of the Certificates for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, equipment purchases and the cost of issuance of the Certificates. The City has limited and will limit with respect to the Certificates the amount of original or investment proceeds thereof to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10% of the Net Proceeds of the Certificates ("private-use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Certificates in any manner contrary to the guidelines set forth in Revenue Procedure 93-19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City has not permitted and will not permit more than 5% of the Net Proceeds of the Certificates to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates in excess of 5% of the Net Proceeds thereof("excess private-use proceeds") did not and will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (iii) Principal of and interest on the Certificates shall be paid solely from ad valorem tax receipts collected by the City and from the Net Revenues of the System to the extent pledged hereunder. Further, no person using more than 10% of the Net Proceeds of the Certificates in a trade or business, other than a governmental unit, has made or shall make payments (other than as a member of the general public), directly or indirectly, accounting for more than 10%of such receipts; -20- (iv) The City has not permitted and will not permit with respect to the Certificates an amount of proceeds thereof exceeding the lesser of(a) $5,000,000 or(b) 5% of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than a governmental unit; and (v) The City will use $100,000 of the Net Proceeds of the Certificates to pay the costs of issuance of the Certificates. When used in this Section 23, the term "Net Proceeds" of the Certificates shall mean the proceeds from the sale thereof to the Underwriter, including investment earnings on such proceeds, less accrued interest with respect to such issue. (c) 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 Certificates 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) 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 Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates 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 Certificates, including interest or other investment income derived from the proceeds of the Certificates, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (e) 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 Certificates (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 Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates 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 Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every 5th anniversary date of the delivery of the Certificates, and within sixty (60) days after retirement of the Certificates, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with -21- respect to the gross proceeds of the Certificates that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (f) 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 Certificates are issued, an information statement concerning the Certificates, all under and in accordance with Section 149(e)of the Code and applicable regulations thereunder. Section 24. Application of Proceeds. Proceeds from the sale of the Certificates shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest shall be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund; and (b) The remaining proceeds from the sale of the Certificates, together with investment earnings thereof, shall be deposited into the Series 2006 Certificates of Obligation Construction Fund and shall be used for the purposes set out in Section 3 of this Ordinance, with any remainder constituting a reserve to be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund. 25. Open Meeting. 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 Chapter 551 of the Texas Government Code Annotated, Vernon's 1994, as amended, and such notice as given is hereby authorized, approved, adopted and ratified. 26. Re isg tray. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Certificates have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Certificates by the Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this -22- Ordinance. 29. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, the City Clerk, the City Treasurer, 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 issuance of the Certificates, 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 this Ordinance and to direct the application of funds of the City consistent with the provisions hereof. 30. No Personal Liability. No recourse shall be had for payment of the principal of or premium, if any, or interest on Certificate, or for any claim based thereon, or under this Ordinance, against any official or employee of the City or any person executing any Certificate. 31. Additional Obligations. The City undertakes and agrees for the benefit of the holders of the Certificates to provide directly, on or before six months after the end of the City's fiscal year,which fiscal year presently ends on September 30, a. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, annual financial information(which may be unaudited) and operating data regarding the City for fiscal years ending on or after January 1, 2006 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: SELECTED FINANCIAL INFORMATION DEBT STATEMENT TAX DATA SELECTED FINANCIAL DATA ADMINISTRATION OF THE CITY Appendix `B" b. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, audited financial statements for the City for fiscal years ending on or after January 1, 2006, when available, if the City commissions an audit and it is completed by the required time; provided that if audited statements are not commissioned or are not available by the required time, the City will provide unaudited statements when and if they become available. -23- C. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of any of the following events with respect to the Certificates, if material within the meaning of the federal security laws to a decision to purchase or sell Certificates: 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 Certificates; vii. Modifications to rights of Certificate holders; viii. Calls; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the Certificates; and xi. Rating changes. d. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of a failure of the City to provide required annual financial information and operating data, on or before six months after the end of the City's fiscal year. These undertakings and agreements are subject to appropriation of necessary funds and to applicable legal restrictions, if any. The accounting principles pursuant to which the City's financial statements are currently prepared are generally accepted accounting principles set out by the Government Accounting Standards Board, and, subject to changes in applicable law or regulations, such principles will be applied in the future. If the City changes its fiscal year, it will notify each nationally recognized municipal securities information repository and the appropriate state information depository of the change (and of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide annual financial information. -24- The City's obligation to update information and to provide notices of material events shall be limited to the agreements herein. The City shall not be obligated to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects and shall not be obligated to update any information that is provided, except as described herein. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Certificates at any future date. THE CITY DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL OWNERS OF CERTIFICATES MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS 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 paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The City may amend its continuing disclosure obligations and agreement in this Section 32 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 the agreement, as amended, would have permitted the Underwriter to purchase or sell the Certificates in compliance with SEC Rule 15c2-12, taking into account any amendments or interpretations of such Rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Certificates consent or 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 Certificates. The City may also amend or repeal the obligations and agreement in this Section 35 if the SEC amends or repeals the applicable provisions of Rule 15c2-12 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 the Underwriter from lawfully purchasing or reselling the Certificates in the primary offering of the Certificates in compliance with Rule 15c2-12. 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. The City's continuing obligation to provide annual financial information and operating data and notices of events will terminate if and when the City no longer remains an "obligated person" (as such term is defined in SEC Rule 15C2-12)with respect to the Certificates. 32. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. -25- 33. Effective Date. This Ordinance shall be in force and effect from and after its final passage, and it is so ordered. 34. 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. In the event that,on the second Business Day, and again on the Business Day,prior to the payment date on the Obligations, the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent/Trustee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agenarustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such -26- principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agenarustee and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received), (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee, and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agenarustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments,directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, principal and interest shall be deemed past due and not to have been paid),Y p p p p ) interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document,if any,circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order which does not require the consent of the bondholders, and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. -27- J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations, and (ii) any consent, amendment, waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved,together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3%or the maximum interest rate permitted by law, whichever is less. In addition, the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37,Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment; and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. M. The Issuer/Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if. (1) the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii)the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days, and (iii) the Issuer declares bankruptcy. In the event of default under this Bond Order,the Bond Insurer shall have the right to direct all remedies and the Insuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures, the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing -28- w ` document executed in connection herewith. Other than the usual redemption provisions,any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the following types of investments that are approved by the Bond Insurer. [The remainder of this page has intentionally been left blank]. -29- •f PASSED AND APPROVED this 5th day of December, 2006. Mayor, The City of Beaumont, Texas ATTEST: City Clerk, The City of Beaumont, Texas (SEAL) -30- 2 December 5, 2006 Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto t17EjJ-! City of Beaumont Council Agenda Item � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara of RBC Dain Rauscher. A recommendation will be made to award the bonds to the underwriter offering the lowest overall interest cost to the City. The revenue bonds will mature September 1, 2008 through September 1, 2030 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A.. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for the expansion, repair, renovation and related improvements to the waterworks and sewer system. BUDGETARY IMPACT All debt shall be incurred in the Water Fund which is supported by revenues of the waterworks and sewer system. I PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Chief Financial Officer. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 13,2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase = the Bonds. Upon the sale of the Bonds,the Official Statement will be completed and delivered to the Purchaser. f 2 IT IS ANTICIPATED THAT ON THE DELIVERY DATE FOR THE BONDS,BOND COUNSEL WILL RENDER AN OPINION THAT INTEREST ON THE BONDS IS EXCL UDABLE FRO:W GROSS LVCOa1E FOR FEDERAL LVCOME TAX PURPOSES UNDER EVISTING LAW AND THE BONDS ARE NOT PRIVATE ACTIVITY BONDS. SEE "LEGAL MATTERS- TAX EXEMPTION"HEREIN FOR A DISCUSSION OF BOND COUNSEL'S OPLVION,/:VCLU'DI,VG A DESCRIPTION OFALTERVATIYE M/,VZlfU.11 T.AJf CONSEQUENCES FOR CORPORATIONS. The City will not designate the Bonds as qualified tax-exempt obligations for financial institutions. NEW ISSUE-BOOK-ENTRY-ONLY $2090009000 THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) a WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A L Dated: December 1,2006 Principal Due: September 1 Principal of and interest on The City of Beaumont, Texas $20,000,000 Waterworks and Sewer System Revenue Bonds, Series 2006A (the ' "Bonds")are payable by The Bank of New York Trust Company,N.A., Dallas,Texas,the paying agentiregistrar(the"Registrar"). The Bonds ' are initially registered and delivered only to Cede&Co.,the nominee of The Depository Trust Company("DTC")pursuant to the Book-Entry- Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of$5,000 or integral multiples thereof. No -' physical delivery of the Bonds will be made to the beneficial owners thereof. Interest on the Bonds will accrue from December 1,2006 and is payable on March 1 and September 1 of each year,commencing September 1,2007,to the registered owners(initially Cede&Co.)appearing on the registration books of the Registrar on the 15th day of the month preceding each interest payment date(the "Record Date"). See THE y BONDS-Description." The Bonds are subject to redemption prior to their scheduled maturities on September 1,2016 or any date thereafter,at a price equal to the principal amount thereof plus accrued interest to the date of redemption. G The Bonds are special obligations of The City of Beaumont,Texas(the"City")and are payable solely from a first lien on and pledge of the Net - - Revenues (hereinafter defined) of the City's waterworks and sanitary sewer system. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR GENERAL OBLIGATION OF THE CITY AND ARE NOT PAYABLE FROM FUNDS RAISED OR TO BE RAISED s BY TAXATION. The lien on Net Revenues securing the Bonds are on a parity with the liens securing the City's outstanding Prior Lien Bonds r (as defined in the Ordinance). See"THE BONDS-Source of Payment." The proceeds of the Bonds will be used to provide funds for water and sewer system improvements and to pay certain costs incurred in connection with the issuance of the Bonds. (See "THE BONDS - Use of Proceeds"and"THE BONDS-Sources and Uses of Funds.") PRINCIPAL AMOUNTS,MATURITIES,INTEREST RATES AND PRICES v (Due September 1) 5 - - Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. s Maturity Amount Rate Yield(a) 074561(c) Maturity Amount Rate Yield(a) 074561(c) 2008 $ 100,000 % % 2020(b) $ 225,000 % % = 2009 100,000 2021(6) 225,000 Lr 2010 200,000 2022(b) 225,000 2011 200,000 2023(b) 225,000 2012 200,000 2024(b) 2,075,000 - 2013 200,000 2025(b) 2,180,000 2014 200,000 2026(b) 2,290,000 2015 200,000 2027(b) 2,400,000 2016 200,000 2028(b) 2,525,000 2017(b) 200,000 2029(6) 2.650,000 - -_ 2018(b) 200,000 2030(b) 2,780,000 2019(b) 200,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Bonds maturing on or after September 1,2017 are subject to redemption,at the option of the City,at the par value thereof plus accrued = interest,in whole or in part,on September 1,2016,or any date thereafter. J L (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies,Inc.,and are included solely for the convenience of the registered owners of the Bonds. Neither the City,the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbers set forth herein. The Bonds are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an ordinance(the"Ordinance")adopted by the City Council (the "City Council") of the City on December 5, 2006. The Bonds are offered when, as and if issued, subject to the approving opinion of the Attorney General of the State of Texas and the opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel for the City, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of Texas. See "LEGAL MATTERS." The Bonds are expected to be available for delivery on or about December 28.2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME } No. 3 ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE OF $20,000,000 THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (herein referred to as the "City" or the "Issuer") is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue bonds payable from the net revenues of its waterworks and sewer system to provide money for acquisitions, extensions, construction, improvement or repair of such system; and WHEREAS, the City now desires to issue bonds in order to provide funds to finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system; Now, Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Findings and Determinations. It is hereby found and determined that the matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 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 Chapter 1502, Texas Government Code, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance. The term "Blanket Issuer Letter of Representations" means the Blanket Issuer I V Letter of Representations between the City, the Registrar and DTC. The term "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment of principal and interest on the Bonds. The term "Bond Insurer" shall mean 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 $20,000,000 The City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A 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 "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 2 (but excluding any utility deposits) and the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, and the Reserve Fund. The term "Interest Payment Date", when used in connection with any Bond, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption of such Bond. 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 City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2006, 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. 3 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 "Registrar" shall mean The Bank of New York Trust Company, N.A., Dallas, Texas, 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 time. The term "SEC" shall mean the United States Securities and Exchange Commission. 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 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 "Underwriter" shall mean 3. Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of TWENTY MILLION DOLLARS ($20,000,000) for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds (the "Project"). 4 4. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A" and shall be dated December 1, 2006. The Bonds shall bear interest at the rates set forth in Section 5 below from the later of December 1, 2006, 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, 2007, and semiannually thereafter on March 1 and September 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 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. Bond Principal Interest Number Year Amount Rate R-1 2008 $ 100,000 % R-2 2009 $ 100,000 % R-3 2010 $ 200,000 % R-4 2011 $ 200,000 % R-5 2012 $ 200,000 % R-6 2013 $ 200,000 % R-7 2014 $ 200,000 % R-8 2015 $ 200,000 % R-9 2016 $ 200,000 % R-10 2017 $ 200,000 % R-11 2018 $ 200,000 % R-12 2019 $ 200,000 % R-13 2020 $ 225,000 % R-14 2021 $ 225,000 % R-15 2022 $ 225,000 % R-16 2023 $ 225,000 % R-17 2024 $2,075,000 % R-18 2025 $2,180,000 % R-19 2026 $2,290,000 % 5 I a R-20 2027 $2,400,000 % R-21 2028 $2,525,000 % R-22 2029 $2,650,000 % R-23 2030 $2,780,000 % 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. 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 6 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 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 7 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. 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, 8 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. 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. 9 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-EntySystem. (a) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriter,the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Bonds. (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 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. 10 (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. (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 and Mandatory Redemption. The City reserves the right, at its option, to redeem Bonds having stated maturities on and after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed,the City shall determine the Bonds, or portions thereof,to be redeemed. The Bonds maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms set out in the form of Bonds in this Order, at a price of par plus accrued interest to the date fixed for redemption. Bonds may be redeemed only in integral multiples of$5,000. If a Bond subject to redemption is in a denomination larger that $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. 11 Not less than thirty(30)days prior to a redemption date for the Bonds, the City shall cause a notice of redemption to be sent by United States mail, first class,postage prepaid, to each Owner of each Bond to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed 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. When Bonds have been called for redemption in whole or in part and due provision 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 being paid 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. 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 BONDS, SERIES 2006A 12 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 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 The Bank of New York Trust Company, N.A., Dallas, Texas (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 December 1, 2006, 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, 2007, mailed to the registered owner of record as shown on the books of registration kept by the Registrar as of the fifteenth day of the month next preceding each interest payment date. 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 $20,000,000 (the "Bonds"), issued for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds, pursuant to an ordinance adopted by the City Council on December 5, 2006 (the "Ordinance"), and in accordance with the authority of Chapter 1502, Texas Government Code, 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 Refunding Bonds, Series 1998, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding 13 Waterworks and Sewer System Revenue Bonds, Series 2005, 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 Interest and Sinking 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 HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY REVENUE BONDS, 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 the Bonds having stated maturities on or after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, in integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. THE BONDS maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the principal amount to be redeemed plus accrued interest to the redemption date: TERM BONDS DUE SEPTEMBER 1, Date ` Amount 9/1/2028 $2,525,000 9/1/2029 $2,650,000 9/1/2030 (Maturity) $2,780,000 14 I I The Paying Agent shall select for redemption by lot, or by any other customary method that results in random selection, a principal amount of Term Bonds equal to the aggregate principal 'amount of such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled mandatory redemption date, and shall give notice of such redemption in accordance with the Bond Order. The principal amount of Term Bonds required to be mandatorily redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall have been optionally redeemed and not previously credited against a mandatory redemption requirement. 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 owner 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 15 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. 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. (AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT, TEXAS (SEAL) Mayor City Clerk 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 16 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. The Bank of New York Trust Company,N.A. 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 to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED Signature Guaranteed: Registered Owner 17 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. STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $20,000,000 THE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A 18 1 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. 19 18. Legal Opinion; Cusip. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond 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. 19. (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, and (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) Construction Fund. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006, Construction Fund". Immediately after the sale and delivery of the Bonds, that portion of the proceeds of the Bonds to be used for the cost of the Project and the cost of issuance of the Bonds shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of the Project, interest earned on such proceeds may be used, at the City's discretion, for the Project and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1202.043 of the Texas Government Code, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of the Project, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. (c) 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: (i) to pay all Maintenance and Operation Expenses; and 20 (ii) 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. 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. (d) 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: (i) Waterworks and Sewer System Revenue Fund (the "Revenue Fund"); (ii) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund (the "Interest and Sinking Fund"); and (iii) 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. (e) 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: (i) First, to pay Maintenance and Operation Expenses and to provide 21 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. (ii) 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. (iii) 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 Additional Parity Bonds. (iv) Fourth, to pay any amounts due to any bond insurer of Parity Bonds not paid pursuant to subsections (ii) or(iii) above. (v) 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. (f) 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: (i) 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 (ii) 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. 22 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. (g) 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 (1/60 1h) 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 (1/601h) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount; provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below, then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. 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 23 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 bonds, 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 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 (and 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. (h) Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Section 19 the full amounts required herein, 24 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. (i) 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 transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 20. Additional Bonds. (a) Additional Parily 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 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 25 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. (b) 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. (c) 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. 21. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parily 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. (b) 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 26 operation of the System. (c) 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. (d) 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. 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. (e) 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. (f) 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. (g) 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 27 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. (h) 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 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. (i) 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. 28 (j) 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. (k) 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. (1) Obligations 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 of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of the Bonds, plus a premium of $ . In addition thereto, at the time of delivery the Underwriter shall pay to the City the accrued interest on the Bonds to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Bonds 29 and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Bonds. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Bond Insurance Policy, and the printing on the Bonds covered by the Bond Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 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 30 use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal 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 31 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 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: (i) Accrued interest, if any, shall be deposited into the Interest and Sinking Fund; (ii) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds, with any remaining portion thereof to be deposited into the Construction Fund and used to pay the costs of the Project; and (iii) The sum of $ from the sale of the Bonds shall be deposited into the Construction Fund and used to pay the costs of the Project; and (iv) Any proceeds from the Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 26. Re istrar. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Underwriter is hereby approved, authorized and ratified. The proper officials 32 of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. 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. 29. 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 "SELECTED FINANCIAL INFORMATION", "CITY REVENUE DEBT", "ADMINISTRATION OF THE CITY", "THE SYSTEM-Water and Sewer Rates" 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. (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; 33 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. Modifications to 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, 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. 34 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 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 underwriter 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. 30. 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 Chapter 551 of the Texas Government Code. 31. 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. 35 32. 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. In the event that on the second Business Day,and again on the Business Day,prior to the payment date on the Obligations,the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following,as the case may be,Business Day,the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws,then the Paying Agent/Tnistee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice,confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agent/Trustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders;and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating 36 to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent/Trustee and available for such payment(but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received),(b)receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee,and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations,and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent/Trustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid),with interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders,and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations,the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order 37 which does not require the consent of the bondholders,and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and,on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with(i)the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations,and(ii)any consent,amendment,waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved, together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law, whichever is less. In addition,the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37, Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment;and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. 38 M. The Issuer /Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if:(1)the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii) the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days,and(iii)the Issuer declares bankruptcy. In the event of default under this Bond Order, the Bond Insurer shall have the right to direct all remedies and the Issuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures,the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing document executed in connection herewith. Other than the usual redemption provisions, any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the types of investments that are approved by the Bond Insurer be used for such purpose. 33. Special Provisions Relating to Reserve Policy. The purchase of and payment of the premium for a Surety Policy to be issued by the Insurer to fund the Reserve Fund requirement under Section 19(f) of this Ordinance in accordance with the terms of a commitment for such policy presented to and hereby approved by the City Council is hereby authorized. Hereinafter such Surety Policy shall be referred to as the "Reserve Policy". So long as the Reserve Policy is in effect, the following provisions shall apply and be applicable: A. In setting the rates and charges for use and services of the System pursuant to Section 19(b) above, the City agrees to establish sufficient rates so as to generate sufficient revenues to pay all amounts owed to the Bond Insurer. B. The Paying Agent/Registrar shall deliver a demand for payment to the Bond Insurer in the form required by the Bond Insurer at least three days prior to the date on which funds are required. C. The Bond Insurer must be paid all amounts owed to it under the terms of the Financial Guaranty Agreement or any other documents before this Bond Order and any financing documents executed in connection herewith may be terminated. D. It shall be the responsibility of the Paying Agent/Registrar to maintain 39 adequate records, verified with the Bond Insurer,as to the amount available to be drawn at an given time udner the Reserve Policy and as to amounts paid and owing to the Bond Insurer under the terms of the Financial Guaranty Agreement. E. There may be no optional redemption of the Bonds or distribution of any funds to the Issuer unless all amounts owed to the Bond Insurer under the terms of the Financial Guaranty Agreement or any other documents have been paid. [The remainder of this page has intentionally been left blank.] 40 PASSED AND APPROVED this 5th day of December, 2006. Mayor The City of Beaumont ATTEST: City Clerk The City of Beaumont (SEAL) 41 3 December 5,2006 Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department �4~- " City of Beaumont •� Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tyrone E. Cooper, City Attorney MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider Amendments to Section 21-75, of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department. RECOMMENDATION Council consider amendments to Section 21-75, of the Code of Ordinances, increasing Grade III positions from 12 to 16 and reducing the number of Grade II positions from 44 to 40. BACKGROUND In an effort to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al, involving the promotion of several Grade II Sergeants to the position of Lieutenant, it is recommended that four (4)Lieutenant positions be added to the Police Department. However, the intent of the settlement is not increase the total number of positions in the Department. To achieve the intended purpose, it is necessary to reduce the total number of Grade II positions by four (4). By doing so, the total number of positions in the Department will remain unchanged. These positions are not needed for the orderly and efficient operation of the department. It is also intended and agreed that the four(4) new Lieutenant positions will be reduced by attrition as the positions become vacant in the future. BUDGETARY IMPACT The above changes will cost an estimated $22,000 if spread over a twelve(12) month period. PREVIOUS ACTION None. TO: Kyle Hayes DATE: November 29, 2006 FROM: Tyrone E. Cooper MEETING DATE: December 5, 2006 SUBJECT: Amend Ord. No. 06-055 Page 2/2 SUBSEQUENT ACTION None RECOMMENDED BY City Manager, Chief of Police and City Attorney ORDINANCE NO. ENTITLED AN ORDINANCE AMENDING SECTION 21-75,OF THE CODE OF ORDINANCES, CHANGING THE TOTAL NUMBER OF GRADE II AND GRADE III POSITIONS IN THE BEAUMONT POLICE DEPARTMENT; PROVIDING FOR SEVERABILITY AND PROVIDING FOR REPEAL. WHEREAS, the City Council of the City of Beaumont has agreed to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al; and, WHEREAS, settlement will require the addition of four(4) new Lieutenant positions in the Police Department and the abolishing of four(4) Sergeant positions in order that the total number of positions in the Department remain unchanged. The four (4) Sergeant positions are not needed for the orderly and efficient operation of the Department. BE IT ORDAINED BY THE CITY OF BEAUMONT: Section 1. THAT Chapter 21, Section 21-75 of the Code of Ordinances of the City of Beaumont be and the same is hereby amended to read as follows: Section 21-75. Grades and Classifications - Police Department The following grades and classifications are hereby established within the Police Department. Grade Classification Positions I Officers 199 II Sergeants 40 III Lieutenants 16 IV Captains 3 Assistant Chief 1 Total 259 Section 2. That if any section, subsection, sentence, clause or phrase of this ordinance, or the application of same to a particular set of persons or circumstances, should for any reason be held to be invalid, such invalidity shall not affect the remaining portions of this ordinance, and to such end the various portions and provisions of this ordinance are declared to be severable. Section 3. All ordinances or parts of ordinances in conflict herewith, including conflicting portions of the City Budget, are repealed to the extent of the conflict only. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - 4 December 5, 2006 Consider approving a contract for the Main Street (Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Public Works Director MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 22, 2006 REQUESTED ACTION: Council consider a resolution authorizing the award of a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project in the amount of$6,377,885.59. RECOMMENDATION Administration recommends awarding the contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project to Brystar Contracting, Inc. in the amount of $6,377,885.59. BACKGROUND On November 16, 2006, the City of Beaumont received three (3) bids for the Main Street (Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project. The lowest bid was submitted by Brystar Contracting, Inc. in the amount of$6,377,885.59. A copy of the Bid Tabulation sheets is attached. The MBE participation will be met through subcontracts with Crabtree Barricade System, Inc., Highway Pavement Specialities,Inc., O.A. Moreno andAssociates,Texas Mechanical,and Wholesale Electric for a total of$1,251,000 which represents 19.61 percent of the contract amount. A copy of the Schedule of MBE Participation sheet is attached. BUDGETARY IMPACT Funds are available for this project in the Capital Improvement Program Fund. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, Public Works Director and City Engineer. EngMainStreetContract.wpd November 28,2006 CITY OF BEAUMONT / SCHEDULE OF MBE PARTICIPATION NAME CERTIFIED MBE CONTRACTOR ADDRESS TYPE OF WORK AGREED PRICE f rsb�rge �arri t 'p.0, J3o1� Did 3 �arr�c.�ts , 5;1"s, -t 8 rj 1 600 . d 6 y s-1en,s 734pay.0n+ 77( 7'7'��o and -rraT_ d4.d le Se- 4) , 000 oa �.A. iV10R�nb �.'45SoG . j31 50) .�45],-�vr� po;nr Q^_ �r�clL Pars -i- ZG�I (3Oc=) Cxc� eKa s f V�l ,.:cam, l J,0` 3 x 7523 ee -� `3 00, 4"2910 iN_ La44" fir_ cGf.c�c! /��:e. 560 t 000 , 00 TX The undersigned will enter into a formal agreement with MBE Contractors for work listed in this schedule conditioned upon execution of a contract with the City of Beaumont. NOTE: 1. This schedule should be submitted with your bid. SIG ATURE 13 r y�i n 1 �+e fps TITLE CITY OF FONT MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 1 OF 4 APAC-TEXAS Item Item BRYSTAR CONTRACTING ALLCO,LTD INC. No. Code Alt Description Unit Estimated Unit Total Unit Total Unit Total Measure Quantity Price PUBLIC WORKS Price Price 104 001 REMOVING CONCRETE CURB&GUTTER COMBINED) LF 9,625.00 104 002 REMOVING CONCRETE DRIVEWAYS)(6") $7.50 $72,187.50 $9.00 $86,625.00 $6.00 $57,750.00 104 003 REMOVING CONCRETE SIDEWALK&W.C.RAMPS 4" SY 1,693.75 $7.00 $11,856.25 $13.00 $22,018.75 $12.40 $21,002.50 104 004 SAW CUT AT BUILDING FULL DEPTH ( ) SY 6,826.11 $8.00 $54,608.88 $13.00 $68,739.43 $21.00 $143,348.31 104 005 REMOVE CONCRETE ROADWAY 6"-10" LF 10,774.00 $1.25 $13,467.50 $3.50 $37,709.00 $8.00 $86,192.00 110 001 EXCAVATION CURB AND&GUTTER COMBINED(12") CY 28'21522 $7.00 $200,970.00 $9.00 $258,390.00 $15.80 $453,618.00 110 002 EXCAVATION DRIVEWAYS 10") $15.00 $3,228.30 $40.00 $8,608.80 $8.00 $1,721.76 110 003 EXCAVATION SIDEWALK&WHEEL CHAIR RAMPS 8" CY 470.49 $15.00 $7,057.35 $36.00 $16,937.64 $28.00 $13,173.72 110 004 EXCAVATION ROADWAYS ( ) CY 1,516.14 $15.00 $22,742.10 $33.00 $50,032.62 $58.00 $87,936.12 CY 3,500.00 $12.00 $42,000.00 $20.00 $70,000.00 $44.00 $154,000.00 247 001 FLEX BASE(TY A)GR.1)(8"(CL5 DC)(DEL SIDEWALK&W.C.RAMPS SY 6,826.11 247 002 FLEX BASE A GR.1)(1 2")(CL5)(DC)(DEL CURB&GUTTER COMB. SY 645.67 $20.00 $136,522.20 $21.50 $146,761.37 $21.00 $143,348.31 260 001 LIME TREATED SUBGRADE 5"DS 7% - $30.00 $19,370.10 $35.00 $22,598.45 $36.00 $23,244.12 264 001 LIME 7Y.C SLURRY SY 28,526.67 $3.95 $112,680.35 $2.75 $78,448.34 $3.50 $99,843.35 276 001 CEM TRT BASE(STG.L(TYA)(CL 5)(GR.3)(10" DRIVEWAYS TON 524.86 $130.00 $68,231.80 $128.00 $67,182.08 $120.00 $62,983.20 276 002 CEM TRT BASE(STG.L(TYAxCL 5(GR:3 6" ROADWAY SY 1,693.75 $30.00 $50,812.50 $33.00 $55,893.75 $45.00 $76,218.75 300 001 ASPHALTIC MATERIAL(CRS2 SY 27,429.67 $14.00 $384,015.38 $14.00 $384,015.38 $18.00 $493,734.06 340 001 HOT MIX AS PHALT CONCRETE TYPED 1-1/2") TON -1,2-9 .00 .00 $3.00 $3,669.00 $3.70 $4,525.10 $5.00 $6,115.00 345 001 ASB GR.1 6" $125.00 $36,500.00 $115.00 $33,580.00 $161.00 $47,012.00 345 002 ASB GR.1 PIPE 6" TON 166.00 $140.00 $23,240.00 $86.00 $14,276.00 $105.00 $17,430.00 354 001 PLANING PAVEMENT 1-1/2") TON 442.00 $140.00 $61,880.00 $120.00 $53,040.00 $150.00 $66,300.00 356 001 FABRIC UNDERSEAL SY 3,494.00 $1.00 $3,494.00 $4.80 $16,771.20 $1.00 $3,494.00 360 001 CONCRETE PAVEMENT(10" CL P SY 5,425.67 $2.00 $10,851.34 $1.60 $8,681.07 $1.50 $8,138.51 400 001 STRUCTURAL EXCAVATION PROP.PIPES(STORM SEW. SY 26,899.67 $47.00 $1,264,284.49 $50.00 $1,344,983.50 $63.00 $1,694,679.21 400 002 STRUCTURAL EXCAVATION PROP.INLETS&MH STM SEW. CY 3,610.00 $9.00 $32,490.00 $0.10 $361.00 $9.00 $32,490.00 003 CEM STAB SAND BKFL(2 SA 400 CK PROP.PIPES STM SWR) CY 500.00 $10.00 $5,000.00 $0:10 $50.00 $9.00 $4,500.00 CY 2,936.00 $42.00 $123,312.00 $46.00 $135,056.00 $65.00 $190,840.00 400 004 CEM STAB SAND BKFL 2 SACK PROP.INLETS&MH STM SWR) CY 256.00 464 001 RCP 12" STORM SEW. $42.00 $10,752.00 $46.00 $11,776.00 $65.00 $16,640.00 464 002 RCP 18" STORM SEW. LF 78.00 $0.00 $0.00 $0.00 $0.00 $130.00 $10,140.00 464 003 RCP 24" STORM SEW.) LF 1,900.00 $0.00 $0.00 $0.00 $0.00 $140.00 $266,000.00 4fi4A 001 1 12"HDPE STM SWR TY S LF 126.00 $0.00 $0.00 $0.00 $0.00 $150.00 $18,900.00 464A 002 1 18"HDPE STM SWR TY S LF 78.00 $35.00 $2,730.00 $83.50 $6,513.00 $0.00 $0.00 464A 003 1 24"HDPE STM SWR TY S LF 1,900.00 $47.00 $89,300.00 $88.00 $167,200.00 $0.00 $0.00 465 001 CURB INLETS TYPE C LF 126.00 $58.00 $7,308.00 $94.00 $11 844.00 $0.00 $O.DO 465 002 CURB INLETS TYPE C WITH EXTENSION EA 22.00 $3,050.00 $67,100.00 $2,850.00 $62,700.00 $5,500.00 $121,000.00 465 003 MANHOLE TYPE M(STORM SEW EA 10.00 $3,500.00 $35,000.00 $3,275.00 $32,750.00 $7,300.00 $73,000.00 465 004 MANHOLE TYPE M WITH PIPE SADDLE(STORM SEW) -EA 7.00 $5,000.00 $35,000.00 $4,600.00 $32,200.00 $7,300.00 $51,100.00 465 005 GRATE INLET YH) 2.00 $8,500.00 $17,000.00 $9,830.00 $19,660.00 $4,400.00 $8,800.00 479 001 ADJUST MANHOLE EA 1.00 $8,000.00 $8,000.00 $2,130.00 $2,130.00 $4,500.00 $4,500.00 479 002 ADJUST STEEL PLATE COVER EA 20.00 $500.00 $10,000.00 $520.00 $10,400.00 $650.00 $13,000.00 479 003 ADJUST METAL GRATE COVER EA 7.00 $500.00 $3,500.00 $820.00 $5,740.00 $900.00 $6,300.00 479 004 ADJUST CONCRETE PANEL BOX EA 2.00 $1,250.00 $2,500.00 $820.00 $1,640.00 $900.00 $1,800.00 EA 3.00 $550.00 $1,650.00 $850.001 $2,550.00 $650.00 $1;950.00 CITY OF B IPONT BID MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 2 OF 4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. Item Item Unit Estimated Unit Total Unit Total Unit Total No.79 Code Alt Descri tion Measure Quantity Price Price Price 479 005 ADJUST MANHOLE STORM SEW.) EA 3.00 $500.00 $1,500.00 $770.00 $2,310.00 $3,200.00 $9,600.00 496 004 REMOVE WATER VALVE EA 51.00 $100.00 $5,100.00 $385.00 $19,635.00 $140.00 $7,140.00 496 005 REMOVETELEPHONEBOOTH EA 1.00 $100.00 $100.00 $93.50 $93.50 $500.00 $500.00 496 006 REMOVE PARKING METER EA 6.00 $90.00 $540.00 $100.00 $600.00 $450.00 $2,700.00 496 007 REMOVE FIRE HYDRANT EA 10.00 $250.00 $2,500.00 $500.00 $5,000.00 $300.00 $3,000.00 496 008 REMOVE OLD STRUCTURES(MH(SAN.SEW. EA 21.00 $700.00 $14,700.00 $550.00 $11,550.00 $300.00 $6,300.00 496 009 REMOVE OLD PIPES STORM SEW. LF 1,618.00 $8.00 $12,944.00 $32.00 $51,776.00 $14.00 $22,652.00 496 010 REMOVE OLD STRUCTURES(INLETS) EA 30.00 $700.00 $21,000.00 $980.00 $29,400.00 $430.00 $12,900.00 496 011 REMOVE OLD STRUCTURES(MH)(STORM SEW.) EA 9.00 $700.00 $6,300.00 $2,375.00 $21,375.00 $430.00 $3,870.00 496 012 REMOVE PED.SIG.FOUNDATION EA 5.00 $500.00 $2,500.00 $82.00 $410.00 $84.00 $420.00 496 013 REMOVE TRAF.SIG FOUNDATION EA 22.00 $850.00 $18,700.00 $220.00 $4,840.00 $220.00 $4,840.00 496 014 REMOVE JUNCTION BOX 500 001 MOBILIZAT EA 16.00 $650.00 $10,400.00 $55.00 $880.00 $56.00 $896.00 50 ION - 2 001 BARR.,SIGNS AND TRAFFIC HANDLING LS 1.00 $350,000.00 $350,000.00 $402,174.04 $402,174.04 $444,000.00 $444,000.00 529 001 CONCRETE CURB&GUTTER COMBINED CL A MO 15.00 $2,200.00 $33,000.00 $3,640.00 $54,600.00 $2,O00.DO $30,000.00 ( LF 1,025.00 $24.00 $24,600.00 $20.00 $20,500.00 $19.00 $19,475.00 529 002 REINF.CONC.RESTRAINING BLOCK 6"x9")(CL A)(SIDEWALK) LF 9,348.00_ $10.00 $93,480.00 $13.50 $126,198.00 $15.50 $144,894.00 529 003 REINF.CONC.RESTRAINING BLOCK 6"x12")(CL A)(DRIVEWAYS) LF 1,457.40 $14.00 $20,403.60 $15.00 $21,86-1.00 $20.00 $29,148.00 529 004 CONCRETE CURB(I Y II)MONO LF 10,091.00 $3.50 $35,318.50 $4.30 $43,391.30 $3.30 $33,300.30 530 001 DRIVEWAYS 10" CL A) SY 208.00 001 $65.00 $13,520.00 $67.00 $13,936.00 $68.00 $14,144.00 531 SIDEWALK 4") SF 1,350.00 $4.00 $5,400.00 $7.65 $10,327.50 $6.50 $8,775.00 540 001 METAL BEAM GUARD FENCE LF 120.00 $42.00 $5,040.00 $33.00 $3,960.00 $45.00 $5,400.00 2010 001 TRENCH SAFETY SYSTEMS LF 4,760.00 $1.00 $4,760.00 $1.00 $4,760.00 $1.00 $4,760.00 5009 001 TEMP SEDIMENT CONTROL FENCE INSTALL LF 1,520.00 $2.25 $3,420.00 $3.30 $5,016.00 $1.60 $2,432.00 5009 002 TEMP SEDIMENT CONTROL FENCE REMOVE&REPLACE) LF 1,520.00 $2.75 $4,180.00 X$2 $3,952.00 $2.55 $3,876.00 5009 003 TEMP SEDIMENT CONTROL FENCE REMOVE LF 1,520.00 $0.50 $760.00 $2,584.00 $1.10 $1,672.00 9000 001 BRICK CL SAND FILLERS&BEDDING)(SIDEWALK) SF 61,437.00 $3.00 $184,311.00 230,388.75 $3.25 $199,670.25 9000 002 BRICK PAVERS(INCL SAND FILLERS&BEDDING)(W.C.RAMPS SF 2,34980 $700 $16,448.60 $8,811.75 $7.50 $17,623.50 9000 003 BRICK PAVERS INCL SAND FILLERS&BEDDING DRIVEWAYS) SF 15,243.75 $4.00 $60,975.00 $57,164.06 $4.20 $64,023.75 9000 004 BRICK PAVERS INCL SAND FILLERS&BEDDING MEDIANS) SF -7,040.00 $4.50 $31,680.00 $26,400.00 $5.00 $35,200.00 9000 005 ALT BRICK PAVERS INCL SAND FILLERS&BEDDING)CROSSWALKS SF 8,235.00 $D.DO $0.00 $30,881.25 $4.60 $37,881.00 9005 001 BUILDING WATER PROOFING LF 1,562.00 $1.00 $1,562.00 $28,116.00 $1.60 $2,499.20 9010 001 BOX DRAINS EA 25.00 $1,250.00 $31,250.00 $900.00 $22,500.00 $2,600.00 $65,000.00 9030 001 RAILROAD FLAGGING DAY 10.00 $5 0.001 $5,000.00 $1,150.001 $11,500.00 $1,340.00 $13,400.00 PUBLIC WORKS TOTAL $4,075,703.74 $4,649,278.63' $5,834,234.9 i TRANSPORTATION 12'FIBERGLASS LAMP POLE COMPLETE 610 001 INCLUDING ELEC.WIRINGS)(SINGLE FIXTURES) EA 92.00 $3,500.00 $322,000.00 $3,320.00 $305,440.00 $3,200.00 $294,400.00 611 001 REMOVE RDWY ILLUMINATION ASSEMBLIES EA 17.00 $625.00 $10,625.00 $310.00 $5,270.00 $290.00 $4,930.00 618 001 2"PVC SCHED 40 CONDUIT INCL.GEM.STAB SAND BKFL) LF 7,365.00 $7.50 $55,237.50 $10.00 $73,650.00 $10.00 $73,650.00 624 001 JUNCTION BOXES EA 47.00 $750.00 $35,250.00 $500.00 $23,500.00 $500.00 $23,500.00 629 001 REMOVE SERVICE POLE EA 2.00 $250.00 $500.00 $275.00 $550.00 $280.00 $560.00 644 001 SMALL ROADWAY SIGN ASSEMBLIES EA 31.00 $600.00 $18,600.00 $550.00 $17,050.00 $500.00 $15,500.00 CITY OF ONT BID MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 3OF4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. r6556Item Unit Estimated Unit Total Unit Total Unit Total Code Alt Descri lion Measure Quantity Price Price Price 001 REMOVE ROADSIDE SIGN ASSEMBLIES EA 37.00 $50.00 $1,850.00 $98.00 $3,626.00 $60.00 $2,220.00 001 12'FIB SIGNAL FOUNDATION EA 19.00 $750.00 $14,250.00 $2,480.00 $47,120.00 $2,540.00 $48,260.00 002 12'FIBERGLASS LAMP POLE FOUNDATION(COMPLETE) EA 92.00 $300.00 $27,600.00 $330.00 $30,360.00 $336.00 $30,912.00 003 PEDESTRIAN SIGNAL FOUNDATION EA 7.00 $360.00 $2,520.00 $425.00 $2,975.00 $436.00 $3,052.00 004 TRAFFIC SIGNAL CONTROLLER FOUNDATION EA 5.00 $1,300.00 $6,500.00 $1,375.00 $6,875.00 $1,410.00 $7,050.00 001 REFL PAV MRKG TY II Y)(4")(SLD)REMOVABLE LF 5,862.00 $1.50 $8,793.00 $1.65 $9,672.30 $1.60 $9,379.20 002 REFL PAV MRKG TY II Y)(4")(SLD) NONREMOVABLE LF 5,910.00 $0.95 $5,614.50 $1.00 $5,910.00 $1.00 $5,910.00 001 REFL PAV MRKG TY-II Y)(4")(SLD) LF 5,350.00 $0.95 $5,082.50 $1.00 $5,350.00 $1.001 $5,350.00 666 002 REFL PAV MRKG TY-II(Y(4")(BRK LF 308.00 $1.00 $308.00 $1.10 $338.80 $1.05 $323.40 666 003 REFL PAV MRKG TY-II )4")SLD LF 295.00 $1.00 $295.00 $1.10 $324.50 $1.05 $309.75 666 004 REFL PAV MRKGTY-II )(4" BRK LF 1,493.00 $1.00 $1,493.00 $1.10 $1,642.30 $1.05 $1,567.65 666 005 REFL PAV MRKG TY-II(W)8")(SLD) LF 591.00 $1.25 $738.75 $1.35 $797.85 $1.30 $768.3C 666 006 REFL PAV MRKG TY-II W)(12")(SLD) LF 2,704.00 $1.95 $5,272.80 $2.00 $5,408.00 $2.00 $5,408.00 666 007 REFL PAV MRKG TY-II Y(12")(SLD) LF 20.00 $1.95 $39.00 $2.00 $40.00 $2.00 $40.00 666 008 REFL PAV MRKGTY-II W(24")(SLD) LF 567.00 $3.00 $1,701.00 $3:30 $1,871.10 $3.05 $1,729.35 666 009 REFL PAV MRKGTY-II(W)(WORD) EA 8.00 $150.00 $1,200.00 $163.00 $1,304.00 $160.00 $1,280.00 666 010 REFL PAV MRKG TY-II(W)(ARROW) EA 8.00 $75.00 $600.00 $82.00 $656:00 $82.00 $656.00 666 011 REFL PAV MRKG TY-II(R)(SLD CURB) LF 576.00 $0.95 $547.20 $1.00 $576.00 $1.00 $576.00 666 012 REFL PAV MRKG Y)SLD CURB) LF 1,584.00 $0.90 $1,425.60 $1.00 $1,584.00 $1.00 $1,584.00 666 013 RAILROAD CROSSING EA 4.00 $200.00 $800.00 $220.00 $880.00 $210.00 $840.00 672 001 RATS PV MRKR CL B(REFL TY I-C EA 144.00 $5.00 $720.00 $5.50 $792.00 $5.25 $756.00 672 002 RATS PV MRKR CL B REFL)TY II-A-A EA 161.00 $5.00 $805.00 $5.50 $885.50 $5.25 $845.25 677 001 REMOVE PAVEMENT MARKINGS(STRIPING LF 94.00 $3.00 $282.00 $3.25 $305.50 $3.10 $291.40 680 001 TRFFIC SIGNAL CONTROLLER EA 5.00 $43,000.00 $215,000.00 $6,100.00 $30,500.00 $5,040.00 $25,200.00 682 001 TRAFFIC SIGNAL HEADS EA 44.00 $1,200.00 $52,800.00 $800.00 $35,200.00 $830.00 $36,520.00 682 002 PEDESTRIAN SIGNAL HEADS EA 44.00 $900.00 $39,600.00 $590.00 $25,960.00 $600.00 $26,400.00 686 001 TRAFFIC SIGNAL POLE ASSEMBLY 686 002 PEDE EA 20.00 $15,000.00 $300,000.00 $10,300.00 $206,000.00 $9,800.00 $196,000.00 STAL POLE ASSEMBLY EA 9.00 $4,200.00 $37,800.00 $3,400.00 $30,600.00 $3,300.00 $29,700.00 9020 001 REMOVE PEDESTRIAN SIGNAL ASSEMBLIES EA 7.00 $400.00 $2,800.00 $200.00 $1,400.00 $200.00 $1,400.00 9020 002 REMOVE IKAFFIC SIGNAL ASSEMBLIES EA 23.00 $950.00 $21,850.00 $710.00 $16,330.00 $720.00 $16,560.00 9035 001 LED STREET LIGHTS EA 19.00 $4,200.00 $79,800.00 $3,150.00 $59,850.00 $3,000.00 $57,000.00 9045 001 VIDEO DETECTORS EA 12.00 $6,975.00 $83,700.00 $5,400.00 $64,800.00 $5,400.00 $64,800.00 TRANSPORTATION TOTAL $1,363,999.85 $1,025,393.85 WATER UTILITIES $995,228.30 702 001 6"PVC OPEN TRENCH SAN SEW) LF 100 $45.00 $4,500.00 $86.00 $8,600.00 $49.00 $4,900.00 708 001 MANHOLE(FIBERGLASS EA 3 $3,100.00 $9,300.00 $2,700.00 $8,100.00 $3,400.00 $10,200.00 807 003 16"XS"MJTEE EA 2 $1,550.00 $3,100.00 $975.00 $1,950.00 $1,700.00 $3,400.00 8)7 004 16"X 6"MJ TEE EA 3 $1,500.00 $4,500.00 $900.00 $2,700.00 $1,600.00 $4,800.00 807 005 16"X4"MJTEE EA 1 $1,450.00 $1,450.00 $950.00 $950.00 $1,550.00 $1,550.00 807 006 12"X12"MJTEE EA 2 $1,000.00 $2,000.00 $575.00 _ $1,150.00 $1,000.00 $2,000.00 807 007 12"X 8"MJ TEE EA 6 $900.00 $5,400.00 $500.00 $3,000.00 $95000 $5,700.00 807 008 12"X 6"MJTEE EA 9--1 850.001 $7,650.001 500.00 $4,500.00 900.00 $8,100.00 CITY BI*ONT BI MAIN STREET(CALDER TO BLANCHETTE) BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 4 OF 4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. Item Item - Unit Estimated Unit Total Unit Total Unit Total No. Code Alt Description Measure Quantitv Price 807 009 12"X 4"MJ TEE Price Price EA 2 $800.00 $1,600.00 $450.00 $900.00 $850.00 $1,700.00 807 010 8"X8"MJTEE EA 3 $500.00 $1,500.00 $335.00 $1,005.00 $510.00 $1,530.00 807 011 6"X 6"45 TEE EA 1 $350.00 $350.00 $285.00 $285.00 $360.00 $360.00 807 012 16"MJ 45 BEND 807 013 6"MJ 45 BEND EA 1 $1,200.00 $1,200.00 $800.00 $800.00. $1,300.00 $1,300.00 12"MJ D EA 2 $700000 $1,400.00 $400.00 $800.00 $750.00 $1,500,00 807 015 6" BEN 807 014 MJ 90 0 BEN D BEN EA 2 $600.00 $1,200.00 $285.00 $570.00 $630.00 $1,260.00 EA 1 $400.00 $400.00 $200.00 $200.00 $420.00 $420,00 807 016 8"MJ 22-1l2 BEND EA 4 $600.00 $2,400.00 $260.00 $1,040.00 $610.00 $2,440.00 807 017 16"X 8"MJ WYE EA 1 $2,000.00 $2,000.00 $1,425.00 $1,425.00 $2,100.00 $2,100.00 807 018 16"X6"MJWYE EA 1 $2,000.00 $2,000.00 $1,375.00 $1,375.00 $2,100.00 $2,100.00 807 019 16"X4"MJ WYE EA 1 $2,000.00 $2,000.00 $1,375.00 $1,375.00 $2,100.00 $2,100.00 807 021 16"X12"MJREDUCER EA 1 $1,000.00 $1,000.00 $550,00 $550.00 $1,050.00 $1,050.00 807 022 8"X E V REDUCER $400.00 $400.00 $200.00 $200.00 $420.00 807 023 12"SERVICE SADDLE EA 1 $420.00 $600.00 $6,600.00 $800.00 $8,800,00 $620.00 808 001 FIRE HYDRANT 19 $6,820.00 810 001 6"PVC OPEN TRENCH(WATER) $2,400.00 $21,600.00 $2,330.00 $20,970.00 $2,500.00 $22,500.00 810 002 8"PVC OPEN TRENCH(WATER) LF 331 $72.00 $23,832.00 $90.00 $29,790.00 $75.00 $24,825.00 810 003 12"PVC OPEN TRENCH WATER LF 1166 $75.00 $87,450.00 $92.00 $107,272.00 $80.00 $93,280,00 810 004 16"PVC OPEN TRENCH(WATER) LF 142 $85.00 $12,070.00 $105.00 $14,910.00 $90.00 $12,780.00 810 006 4"PVC SHORT SIDE SERVICE CONNECTION LF 1216 $80.00 $97,280.00 $115.00 $139,840.00 $87.00 $105,792.00 810 007 4"PVC LONG SIDE SERVICE CONNECTION LF 70 $50.00 $3,500.00 $21.66 $1,516.20 $52.00 $3,640.00 810 008 2"HDPE SHORT SIDE SERVICE CONNECTION LF 52 $85.00 $4,420.00--$27.66 $1,438.32--$90.00 $4,680.00 810 009 2"HDPE LONG SIDE SERVICE CONNECTION LF 195 $40.00 $7,800.00 $8.34 $1,626.30 $43.00 $8,385.00 810 010 1"HDPE LONG SIDE SERVICE CONNECTION LF 105 $70.00 $7,350.00 $17.34 $1,820.70 $75.00 $7,875.00 811 001 4"WATER VALVE LF 65 $60.00 $3,900.00 $16.74 $1,088.10 $65.00 $4,225.00 811 002 6"WATER VALVE 4 $500.00 $2,000.00 $725.00 $2,900.00 $540.00 $2,160.00 811 003 8"WATER VALVE EA 17 $650.00 $11,050.00 $800.00 $13,600.00 $700.00 $11,900.00 811 004 12"WATER VALVE EA 15 $1,000.00 $15,000.00 $1,350.00 $20,250.00 $1,050.00 $15,750.00 811 005 16"WATER VALVE EA 17 $1,800.00 $30,600.00 $1,785.00 $30,345.00 $1,900.00 $32,300.00 813 001 12"PVC WATER BORE) EA 11 $5,500.00 $60,500.00 $4,825.00 $53,075.00 $6,000.00 $66,000.00 LF 2774 $100.00 $277,400.00 $140.00 $388,360.00 $105.00 $291,270.00 2534 001 SAN SEW SERVICE STUB OR RECONNECT EA 1 $2,400,00 $2,400,00 $3,800.00 $3,800.00 $2,600.00 $2,600.00 3301 001 MANHOLE PRECAST EA 12 $3,100.00 $37,200.00 $5,300.00 $63,600.00 $3,200.00 $38,400.00 4020 001 6"HDPE PIPE BURST SAN SEW LF 608 $45.00 $27,360.00 $50.00 $30,400.00 $49.00 $29,792.00 4020 002 8"HDPE PIPE BURST SAN SEW LF 451 $70.00 $31,570.00 $99.00 $44,649.0D $75.00 $"x3,825.00 4020 003 12"HDPE PIPE BURST SAN SEW LF 860 $115.00 $98,900.00 $140.00 $120,400.00 $126.00 $108,360.00 4020 004 16"HDPE PIPE BURST SAN SEW LF 58 $225.00 $13,050.00 $218.00 $12,644.00 $240.00 $13,920.00 WATER UTILITIES TOTAL $938A82.001 $1,154.569.62 $1.00( 009.00 TOTAL CONTRACT AMOUNT $6,377,885.59 $6,829,242.10 $7,829,472:21 RESOLUTION NO. WHEREAS, bids were received for a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project; and, WHEREAS, Brystar Contracting, Inc. submitted a bid in the amount of $6,377,885.59; and, WHEREAS, City Council is of the opinion that the bid submitted by Brystar Contracting, Inc. should be accepted; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the bid submitted by Brystar Contracting, Inc. for a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project in the amount of $6,377,885.59 be accepted by the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - 5 December 5, 2006 Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation City of Beaumont Council Agenda Item K g TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Director of Public Works MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council approve Change Order No. 2 for the Julie Rogers Theatre renovation. RECOMMENDATION Administration recommends authorizing the City Manager to execute Change Order No. 2 for the renovation of the Julie Rogers Theatre in the amount of$65,380.01. BACKGROUND Council awarded a contract to Bruce's General Construction for the interior renovations to the Julie Rogers Theatre on August 15, 2006 in the amount of$1,845,000. The project began in September and the renovations are proceeding as scheduled. Change Order No. 1 in the amount of$5,331.75 was executed on November 2, 2006. Change Order No. 2 consist of several projects stated below that are necessary because of either unforseen damage or modifications to enhance the building. 1. Addition of rubber flooring in the elevator, stage door foyer, kitchen in Green Room, and both concession areas on the I' and 2'' floors and deletion of basic carpet in the meeting room and 2'floor women's lounge. Also deleted was a ceramic wainscot in all restrooms that was not available for shipment until February possibly delaying the building's completion. 2. Remove and replace glazing compound on all exterior windows. During the renovation, it was discovered that the exterior window glazing had failed. During heavy wind driven rains, water enters and damages interior work. Broken panes will also be replaced. i NUMBER iDIRECTION IDISTANCE / Zd L1 N 00'08'22" E 14.45 wc� L2 IS 89'36'40" E 14.36 W° L3 I N 65'32'00" E 150.19 1-4 S 00'04'35" W 9.41 EL L5 S 00'08'22" W 5.36 L6 S 65'51'18" W 50.03 o L7 N 89'36'40" W 114.40 z V) o> NOTE: BOTTOM OF SKYWAY 14.50' ABOVE GROUND. TOP OF SKYWAY 33.50' ABOVE'GROUND. = \ FOUND 5d8",,, � �D IRON RO J O O \ � C r 0� G / L2 ❑ 002 POINT OF BEGINNING - H w I � o q � 0. .�15— 30 I LU in a S s C A L I C)M NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o W THE BENEFIT OF A TITLE COMMITMENT. UO a0 ° NOT ALL EASEMENTS, WHETHER OF CIR 0 Z RECORD OR NOT, WERE RESEARCHED AT N O 0 THE TIME OF THIS SURVEY.uj I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND / I UNDER MY SUPERVISION DURING AUGUST 2006. I FOUND 1/2" I Q OF TFT Y IRON ROD I WALTER J. KSIAZEK *aje�G1STE2F�•cn* 5' STREET LIGHT EASEMENT I REGISTERED PROFESSIONAL L SURVEYOR O 5321 * • �' • WALTER J. KSIAZEK S 89'58'51" W 249.77' a,0 5321 r s (CALLED S 89'58'51" W 250.DO') COMMENCING .eq0 �P• (BASIS OF BEARINGS) POINT ` ••a•e e Dee Q` MEDICAL CENTER DRIVE IRON FOUND ROD 8" qM0 SIIA�11 � Fittz&ShIpI'Y an SKYWAY AERIAL ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST ConsultinsE4meers and Land SunNyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06 03379 T5 EXHIBIT "A" 's CS S Fittz & Shipman lug Consulting Engineers and Land Surveyors FIELD NOTE DESCRIPTION FOR A 65.01 SQUARE FOOT TRACT BEING A SKYWAY COLUMN ENCROACHMENT OUT OF THE DAVID BROWN SURVEY, ABSTRACT 5 JEFFERSON COUNTY, TEXAS AUGUST 18, 2006 That certain 65.01 square foot tract, being a Skyway Column Encroachment out of the David Brown Survey, Abstract 5, Jefferson County, Texas, said 65.01 square foot tract being more particularly described by metes & bounds as follows: Note: The Basis of Bearings is along the south line of a 2.421 acre tract conveyed to BHST - POB I LTD as recorded in Clerks File No. 2003041121 of the Official Public Records of Real Property of.Jefferson County, Texas-and the north right-of-way line of Medical Center Drive having been called South 89 058'51"West 250.00 feet,.- COMMENCING at a 5/8" iron rod found at the intersection of the north right-of-way line of Medical Center Drive with the west right-of-way line of Hospital Drive being the southeast corner of the said 2.421 acre tract from which a found %2" iron rod bears South 89°58'51" West 249.77 feet (called South 89 058'51" 250.00 feet); THENCE North 00°08'22" East along the said west right-of-way line of Hospital Drive and the east line of the said 2.421 acre tract a distance of 123.85 feet (called North 00 004'45" East) to a point from which a found 5/8" iron rod bears North 00 008'22" East 25.84 feet (called North 00°04'45" East); THENCE South 89 036'40" East a distance of 9.90 feet to the southwest corner of the said 65.01 square foot and the POINT OF BEGINNING; THENCE North 00°00'43" West along the west line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the northwest comer of the said 65.01 square foot tract; THENCE South 89 036'40" East along the north line of the said 65.01 square foot tract a distance of 4.50 feet to a point for the northeast corner of the said 65.01 square foot tract; THENCE South 00 000'43" East along the east line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the southeast corner of the said 65.01 square foot tract; THENCE North 89 036'40" West along the south line of the said 65.01 square foot tract a distance of 4.50 feet to the POINT OF BEGINNING and containing 65.01 square feet of land, more or less. This Field Note Description is being submitted along with a plat of even date based on a survey performed by Fittz & Shipman, In on August 15, 2006. C..••, alter k �,o.�GISTE2 If Registered Profess' al Land Su eyor No. 5321 �•».»•«.. WALTER J, KSIAZEK Fittz&Shipman,Inc. ,,0 5321 „a Page 1 of 1 •'9�FES '� Plat Project and DesOcription5colurnn a ,goo SURV�ypQ • • 1405 Cornerstone Court, ,Beaumont,Texas 77706 (409) 832-7238 fax(409) 832-7303 EXHIBIT "A" 4 a-$ 5 i i i NUMBER IDIRECTION IDISTANCE zi L1 IS 89'36'40" E 19.90 / Lim 11-2 N 00'00'43" W 114.45 / a° L3 S 89'36'40" E 4.50 / L4 S 00'00'43" E 14.45 V) L5 N 89'36'40" W 4.50 I ~N Z aJ 0 O 0> e FOUND RON ROD 8"-,, 6 p 65.01.. S.F. ,t L3 � o / 1 M L5 POINT OF ( 1 BEGINNING � W wv i -�—�s 30 I ``'a U1 S C A L E NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o THE BENEFIT OF A TITLE COMMITMENT. U) 00 Z NOT ALL EASEMENTS, WHETHER OF RECORD OR NOT, WERE RESEARCHED AT M O ° THE TIME OF THIS SURVEY. N O J I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND UNDER MY SUPERVISION DURING AUGUST 2006. I 2 T . FOUND 1/ ' OF �' Q.` e e e e �•�' WALTER J. KSIAZEK �j�•°GISTE/�°.'9S IRON R00 I REGISTERED PROFESSIONAL LAND VEYOR N0. 5 * • �G Fir * • • 5' STREET LIGHT EASEMENT I WALTER J. KSIAZEK S $9'58'51" W 249.77' 0.0 5321 (CALLED S 89'58'51" W 250,00') COMMENCING 00'90 :• (BASIS OF BEARINGS) POINT •rFESS�00•Q MEDICAL CENTER DRIVE IRON ROD 8„ �NOSUME�� Fittz&3hip an SKYWAY COLUMN ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST 1 ConsultintEngmeers and Land Surveyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06, 03379 T5 EXHIBIT "A" 5 a 5 �r ML Cttq of Beaumont REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS DECEMBER 5,2006 1:30 P.M. AGENDA CALL TO ORDER * Invocation Pledge Roll Call * Presentations and Recognition * Public Comment: Persons may speak on scheduled agenda items 1-8/Consent Agenda * Consent Agenda GENERAL BUSINESS 1. Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto 2. Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto 3. Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department 4. Consider approving a contract for the Main Street(Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project 5. Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation 6. Consider authorizing the City Manager to increase the Wiess Bluff Pump Station Neches River Bank Stabilization Project to increase the scope of work 7. Consider granting the City Manager authority to implement the contribution rate changes for retirees in the medical plans 8. Consider authorizing the reprogramming of Community Development Block Grant (CDBG) funds from FY2000-FY2005 into the FY2006 Clearance/Demolition line item for the demolition of dangerous structures 9. PUBLIC HEARING: Dangerous Structures Consider approval of an ordinance declaring certain structures to be dangerous structures and ordering their removal within 10 days or authorizing the property owner to enroll the dangerous structure in a work program COMMENTS * Councilmembers/City Manager comment on various matters * Public Comment (Persons are limited to 3 minutes) EXECUTIVE SESSION * Consider matters related to contemplated or pending litigation in accordance with Section 551.071 of the Government Code: Roy Cooper v. City of Beaumont, et al;No. 105324 Southwestern Bell Telephone v. City of Beaumont; Cause No. A-176610 Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact Lenny Caballero at 880-3716 three days prior to the meeting. 1 December 5, 2006 Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto City of Beaumont W Council Agenda Item ,jfj � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of $30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara ofRBC Dain Rauscher. A recommendation will be made to award the certificates to the underwriter offering the lowest overall interest cost to the City. The certificates will mature March 1,2008 through March 1,2025 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for various street, drainage and general improvements. BUDGETARY IMPACT All debt shall be incurred in the Debt Service Fund which is supported by property taxes. The current debt service property tax rate of $.0264447 is expected to be sufficient to meet debt service requirements on the certificates. PREVIOUS ACTION Council authorized publication of notice of intention to issue Certificates of Obligation on October 31, 2006. SUBSEQUENT ACTION None, RECOMMENDED BY City Manager and Chief Financial Officer. PRI:LI NI[NARY OFFICIAL STATEMENT DATED NOVEMBER 13, 2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase the Certificates. Upon the sale of the Certificates,the Official Statement will be completed and delivered to the Purchaser. IN THE OPINION OF BOND COUNSEL, INTEREST ON THE CERTIFICATES IS EVCLUDABLE FROM GROSS INCO.AfE FOR FEDERAL I,NCOME TAX PURPOSES UNDER EXISTING LAW, SUBJECT TO THE MATTERS DESCRIBED UNDER "LEGAL MATTERS -TAX EXE.VPTION"HEREIN, INCLUDING THE ALTERNATII E AILNIMUlf TAX ON CORPOR=1 TIONS. NEW ISSUE-BOOK-ENTRY-ONLY _ - $30,000,000 _ - THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) CERTIFICATES OF OBLIGATION, SERIES 2006 Dated: December 1,2006 Principal Due: March 1 Principal of and interest on The City of Beaumont,Texas$30,000,000 Certificates of Obligation,Series 2006(the"Certificates")are payable at the principal corporate trust office of The Bank of New York Trust Company, N.A., Dallas, Texas, the paying agent/registrar (the "Registrar'). The Certificates are initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneficial owners L thereof. Interest accrues from December 1, 2006, and is payable each March 1 and September 1 of each year, commencing September 1, 2007,until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1,2016 or any date thereafter, at the option of the City. Upon redemption the Certificates will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates are issued in fully registered form in integral multiples of$5,000. Principal of and interest on the Certificates will be payable by the Registrar to Cede& Co.,which will make distribution of the amounts so - - paid to the beneficial owners of the Certificates. See"THE CERTIFICATES-Book-Entry-Only System"herein. Interest on the Certificates will be payable by check, dated as of the interest payment date, and mailed by the Registrar to registered owners (initially Cede & Co.) shown on the records of the Registrar on the fifteenth calendar day of the month next preceding each interest payment date (the "Record Date"). See"THE CERTIFICATES-Description of the Certificates." '- MATURITY SCHEDULE _ - (Due March 1) Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. Maturity Amount Rate Yield(a) 074561 (c) Maturity Amount Rate Yield(a) 074561(c) - - 2008 $2,775,000 % % 2017(b) $1,180,000 % % 2009 2,065,000 2018(b) 1,240,000 2010 1,570,000 2019(b) 1,435,000 2011 1,515,000 2020(b) 1,550,000 2012 1,610,000 2021(b) 1,665,000 2013 1,690,000 2022(b) 1,780,000 2014 1,745,000 2023(b) 1,890,000 2015 1,070,000 2024(b) 2,000,000 2016 1,125,000 2025(b) 2,095,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Certificates maturing on or after March 1, 2017 are subject to redemption, at the option of the City, at the par value thereof plus accrued interest,in whole or in part,on March 1,2016,or any date thereafter. (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the registered owners of the Bonds. Neither the City, the Financial r � , Advisor,nor the Purchasers are responsible for the selection or correctness of the CUSIP numbers set forth herein. = - The above certificates (the"Certificates") are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an - ordinance(the"Ordinance')adopted by the City Council (the"City Council")of the City on December 5,2006. Proceeds from the sale of _ the Certificates will be used to provide funds for street, drainage, building and park improvements. The proceeds will also be used to pay certain costs in connection with the issuance of the Certificates. (See`'THE CERTIFICATES-Use of Proceeds.") The Certificates, when issued,will constitute valid and binding obligations of The City of Beaumont,Texas(the"City")and will be payable from the proceeds of an = annual ad valorem tax,levied within the limits prescribed by law,against taxable property within the City and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks system but only to the extent of and not in an amount in excess of _ $10,000. = The Certificates are offered when, as and if issued subject to the approving opinion of the Attorney General of the State of Texas and the _ opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel to the City as to the validity of the issuance of the Certificates under the Constitution and the laws of the State of Texas. The Certificates are expected to be available for delivery on or about December 28, = 2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF $30,000,000 THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2006; LEVYING TAXES TO PROVIDE FOR PAYMENT THEREOF; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, the City Council of The City of Beaumont,Texas (the "City"), has heretofore authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on December 5, 2006, the date tentatively set for passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of certain revenues of the City's waterworks and sewer system, or as soon thereafter as may be practicable, for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations, repairs and construction of new restrooms, field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and the laws of the State of Texas and the United States of America, respectively, particularly Chapter 271, Texas Local Government Code, as amended; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; and WHEREAS, the City Council of the City has determined to authorize such certificates of obligation for the purposes set out in this Ordinance; and WHEREAS, the City is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to pledge not more than $10,000 of the net revenues of the City's waterworks and sewer system as security for the certificates of obligation authorized herein; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Preamble. The matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term 'Business Day" shall mean any day which is not a Saturday, Sunday, a legal holiday, or a day on which the Registrar is authorized by law or executive order to close. The term "Certificates" or "Series 2006 Certificates" shall mean the Certificates of Obligation, Series 2006, authorized in this Ordinance, unless the context clearly indicates otherwise. The term "Certificates Insurance Policy" shall mean the municipal bond guaranty insurance policy issued by the Insurer insuring the payment when due of the principal of and interest on the Certificates as provided therein. The term "City" shall mean The City of Beaumont, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. -2- The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Construction Fund" shall mean the construction fund established by the City pursuant to Section 20 of this Ordinance. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean 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 the DTC Participants. The term "Insurer" shall mean the issuer of the Certificates Insurance Policy. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 20 of this Ordinance. The term "Interest Payment Date", when used in connection with any Certificate, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption. The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term "Ordinance" as used herein and in the Certificates shall mean this Ordinance authorizing the Certificates. The term "Owner" or "Registered Owner", when used with respect to any Certificate, shall mean the person or entity in whose name such Certificate is registered in the Register. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th day of the month next preceding such Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term 'Registrar" shall mean THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas, and its successors in that capacity. -3- I The term "SEC" shall mean the United States Securities and Exchange Commission and its successors. The term "System" shall mean the City's waterworks and sewer system. The term "Underwriter" shall mean 3. Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Thirty Million Dollars ($30,000,000), for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations repairs and construction of new restrooms field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith. 4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES -4- 2006", and shall be December 1, 2006. The Certificates shall bear interest from the later of December 1, 2006, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30-day months, which interest shall be payable on September 1, 2007, and semiannually thereafter on March 1 and September 1 of each year until maturity or earlier redemption. 5. Certificates, Numbers and Denominations. The Certificates shall be 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 Certificates shall mature, subject to prior redemption in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered upon transfer of or in exchange an e f o r other ertifc tes shall be numbered in order of their authentication by the Registrar, , shall be in the denomination of$5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Year Principal Interest Number of Maturity Amount Rate CR-1 2008 $3,415,000 % CR-2 2009 $2,065,000 % CR-3 2010 $1,570,000 % CR-4 2011 $1,515,000 % CR-5 2012 $1,610,000 % CR-6 2013 $1,690,000 % CR-7 2014 $1,745,000 % CR-8 2015 $1,070,000 % CR-9 2016 $1,125,000 % CR-10 2017 $1,180,000 % CR-11 2018 $1,240,000 % CR-12 2019 $1,350,000 % CR-13 2020 $1,470,000 % CR-14 2021 $1,580,000 % CR-15 2022 $1,690,000 % CR-16 2023 $1,795,000 % CR-17 2024 $1,900,000 % CR-18 2025 $1,990,000 % 6. Execution of Certificates; Seal. The Certificates shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the -5- Certificates shall have the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, 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 Certificates to be initially issued shall be delivered to the Attorney General of the State 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 17 of this Ordinance shall be attached or affixed to the initial Certificates. 8. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 17 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 Certificates 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 Certificates. The principal of the Certificates 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 become due and payable, at the designated corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Certificate 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 payment was due. 10. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the Registrar on not less than sixty (60) days' written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding principal or interest payment date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the 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 -6- deemed to have agreed to the provisions of this Section. 11. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) business 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 Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate 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 Certificate in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three (3) years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the provisions of Texas law, including to the extent applicable,Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer, and Exchange; Special Election for Uncertificated Certificates. So long as any Certificates remain outstanding,the Registrar shall keep the 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 Certificates in accordance with the terms of this Ordinance. Each Certificate 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 Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Certificate or Certificates, 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 Certificate or Certificates so presented. All Certificates shall be exchangeable upon presentation and surrender thereof at the -7- principal corporate trust office of the Registrar for a Certificate or Certificates of the same maturity and interest rate in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13. Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate 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 Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Neither the City nor the Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. Notwithstanding any other provision hereof, but at the sole election of the Underwriter, the ownership of the Certificates shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Certificates. With respect to Certificates 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 Certificates. 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 Certificates, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Certificate, as shown on the Register, of any notice with respect to the Certificates, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner of a Certificate, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on the Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute Owner of such Certificate for the purpose of payment of principal of, premium, if any, and interest on the Certificates, for the purpose of all matters with respect to such Certificates, for the purpose of registering transfers with respect to such Certificates, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Certificates only to or upon the order of the respective Owners, as shown in the Register as -8- provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Certificates to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a certificate for a Certificate evidencing the obligation of the City 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 Ordinance shall refer to such new nominee of DTC. In the event that the City or the Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the Letter of Representation and that it is in the best interest of the beneficial Owners of the Certificates that they be able to obtain certificated Certificates, or if DTC Participants owning at least 50% of the Certificates outstanding based on current records of the DTC determine that continuation of the system of book-entry transfers through the DTC (or a successor securities depository) is not in the best interest of such beneficial Owners of the Certificates, or in the event DTC discontinues the services described herein, the City or the Registrar 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 of the appointment of such successor securities depository and transfer one or more separate Certificates to such successor securities depository or (ii) notify DTC of the availability through DTC of Certificates and transfer one or more separate Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event, the Certificates 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 Certificates shall designate, in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Certificates 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 the Certificates, and all notices with respect thereto, shall be made and given in the manner provided in the Letter of Representation. 14. Mutilated, Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate 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 Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection -9- therewith and any other associated expenses, 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 Certificate, before any replacement Certificate 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 Certificate; (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. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Registrar shall be entitled to recover such replacement Certificate 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 Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate, authorize the Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15. Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates 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 Certificates. 16. Optional Redemption. The City reserves the right, at its option, to redeem Certificates having stated maturities on and after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates, or -10- portions thereof,to be redeemed. Certificates may be redeemed only in integral multiples of$5,000. If a Certificate subject to redemption is in a denomination larger that $5,000, a portion of such Certificate may be redeemed, but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered. Not less than thirty (30) days prior to a redemption date for the Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each Owner of each Certificate to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Certificates are to be surrendered for payment and, if less than all the Certificates are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice of redemption so mailed 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 Certificates or portions thereof to be redeemed. When Certificates have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid 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 Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 17. Forms. , The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Certificates 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: -11- UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION CR- $ REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS CERTIFICATE OF OBLIGATION SERIES 2006 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THE CITY OF BEAUMONT, TEXAS (the "City"), promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this certificate at the designated corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas (the 'Registrar"), or at its principal payment office in Dallas, Texas, 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 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 Dated Date specified above, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on September 1, 2007, and semiannually thereafter on each March I and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $30,000,000 (the "Certificates"), issued in accordance with the Constitution and the laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended, for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, the purchase of equipment and the cost of issuance of the Certificates, pursuant to an ordinance duly adopted by the City Council of the City -12- (the "Ordinance"),which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT, at its option,to redeem the Certificates having stated maturities on or after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Certificates. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each Certificate to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Certificates 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 CERTIFICATE 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 CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of this Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, 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 Certificates 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 Certificate has been duly and -13- 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 Certificate have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied, within the limits prescribed by law, against all taxable property in the City, and have been pledged irrevocably for such payment. IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues") to be derived from the operation of the City's waterworks and sewer system (the "System"), but only to the extent of and in an amount not to exceed Ten Thousand Dollars ($10,000.00) in the aggregate, are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose, all as set forth in the Ordinance to which reference is made for all particulars; provided, how-ever, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certificate and that series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Clerk of the City and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. THE CITY OF BEAUMONT, TEXAS Mayor (SEAL) City Clerk Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. -14- I hereby certify that this certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this day of , 2006. xxxxxxxxx Comptroller of Public Accounts (Seal) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. The Bank of New York Trust Company,N.A. Dallas, Texas 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 certificate and all rights thereunder, and hereby irrevocably constitutes and appoints -15- attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: The signature above must correspond to the name of the registered NOTICE: Signature must be owner as shown on the face guaranteed by a member firm of this Certificate in of the New York Stock Exchange every particular, without or a commercial bank or trust any alteration, enlargement company. or change whatsoever. 18. Form of Statement of Insurance. The following statement of insurance shall be printed on the back of or attached to each of the Certificates: STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning -16- of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $30,000,000 THE CITY OF BEAUMONT, TEXAS CERTIFICATES OF OBLIGATION, SERIES 2006 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. -17- 19. Legal Opinion; Cusip Numbers. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 20. Interest and Sinking Fund; Tax Lew; Pledge of Revenues; Construction Fund. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance are hereby irrevocably pledged and shall be deposited, as collected, in a special fund to be designated "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in the City sufficient to pay the current interest on the Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures but in each year never less than 2% of the original principal amount of the Certificates, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of the Certificates and to no other purpose. To pay the interest coming due on the Certificates on September 1, 2007,there is hereby appropriated from current funds on hand, which are certified to be on hand and available for such purpose, an amount sufficient to pay such interest, and such amount shall be used for no other purpose. The Net Revenues of the System, but only to the extent of and in an amount not to exceed $10,000 in the aggregate, are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes described in this Section of the Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of the Certificates; and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Construction Fund". Immediately after the sale and delivery of the Certificates, that portion of the proceeds of the Certificates to be used for the cost of construction of authorized street -18- improvements and the cost of issuance of the Certificates shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of such projects, interest earned on such proceeds may be used, at the City's discretion, for such projects and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1201.043, Texas Government Code Annotated, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of such street improvements, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. 21. Further Proceedings. After the Certificates shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates 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 Certificates to be initially issued shall have been approved by the Attorney General of the State of Texas, the Certificates shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Certificates to be initially issued,the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of the Comptroller shall be impressed, or placed in facsimile, thereon. In addition, the Mayor, the City Clerk and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the purposes of this Ordinance. 22. Sale of Certificates. The Certificates are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of Certificates, plus a premium of$ The purchase price of the Certificates will also include accrued interest to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Certificates and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Certificates. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Certificate Insurance Policy, and the printing on the Certificates covered by the Certificate Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 23. Tax Exemption. (a) The City intends that the interest on the Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and applicable 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 Certificates 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 23; -19- provided, however, that the City shall not be required to comply with any particular requirement of this Section 23 if the City has received an opinion of nationally recognized bond counsel (a "Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 23 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 23. (b) The City covenants and agrees that its use of Net Proceeds of the Certificates will at all times satisfy the following requirements: (i) The City will use all of the Net Proceeds of the Certificates for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, equipment purchases and the cost of issuance of the Certificates. The City has limited and will limit with respect to the Certificates the amount of original or investment proceeds thereof to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10% of the Net Proceeds of the Certificates ("private-use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Certificates in any manner contrary to the guidelines set forth in Revenue Procedure 93-19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City has not permitted and will not permit more than 5% of the Net Proceeds of the Certificates to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates in excess of 5% of the Net Proceeds thereof("excess private-use proceeds") did not and will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (iii) Principal of and interest on the Certificates shall be paid solely from ad valorem tax receipts collected by the City and from the Net Revenues of the System to the extent pledged hereunder. Further, no person using more than 10% of the Net Proceeds of the Certificates in a trade or business, other than a governmental unit, has made or shall make payments (other than as a member of the general public), directly or indirectly, accounting for more than 10%of such receipts; -20- (iv) The City has not permitted and will not permit with respect to the Certificates an amount of proceeds thereof exceeding the lesser of(a) $5,000,000 or(b) 5% of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than a governmental unit; and (v) The City will use $100,000 of the Net Proceeds of the Certificates to pay the costs of issuance of the Certificates. When used in this Section 23, the term "Net Proceeds" of the Certificates shall mean the proceeds from the sale thereof to the Underwriter, including investment earnings on such proceeds, less accrued interest with respect to such issue. (c) 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 Certificates 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) 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 Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates 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 Certificates, including interest or other investment income derived from the proceeds of the Certificates, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (e) 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 Certificates (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 Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates 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 Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every 5th anniversary date of the delivery of the Certificates, and within sixty (60) days after retirement of the Certificates, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with -21- respect to the gross proceeds of the Certificates that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (f) 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 Certificates are issued, an information statement concerning the Certificates, all under and in accordance with Section 149(e)of the Code and applicable regulations thereunder. Section 24. Application of Proceeds. Proceeds from the sale of the Certificates shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest shall be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund; and (b) The remaining proceeds from the sale of the Certificates, together with investment earnings thereof, shall be deposited into the Series 2006 Certificates of Obligation Construction Fund and shall be used for the purposes set out in Section 3 of this Ordinance, with any remainder constituting a reserve to be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund. 25. Open Meeting. 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 Chapter 551 of the Texas Government Code Annotated, Vernon's 1994, as amended, and such notice as given is hereby authorized, approved, adopted and ratified. 26. Re isg tray. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Certificates have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Certificates by the Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this -22- Ordinance. 29. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, the City Clerk, the City Treasurer, 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 issuance of the Certificates, 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 this Ordinance and to direct the application of funds of the City consistent with the provisions hereof. 30. No Personal Liability. No recourse shall be had for payment of the principal of or premium, if any, or interest on Certificate, or for any claim based thereon, or under this Ordinance, against any official or employee of the City or any person executing any Certificate. 31. Additional Obligations. The City undertakes and agrees for the benefit of the holders of the Certificates to provide directly, on or before six months after the end of the City's fiscal year,which fiscal year presently ends on September 30, a. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, annual financial information(which may be unaudited) and operating data regarding the City for fiscal years ending on or after January 1, 2006 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: SELECTED FINANCIAL INFORMATION DEBT STATEMENT TAX DATA SELECTED FINANCIAL DATA ADMINISTRATION OF THE CITY Appendix `B" b. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, audited financial statements for the City for fiscal years ending on or after January 1, 2006, when available, if the City commissions an audit and it is completed by the required time; provided that if audited statements are not commissioned or are not available by the required time, the City will provide unaudited statements when and if they become available. -23- C. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of any of the following events with respect to the Certificates, if material within the meaning of the federal security laws to a decision to purchase or sell Certificates: 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 Certificates; vii. Modifications to rights of Certificate holders; viii. Calls; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the Certificates; and xi. Rating changes. d. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of a failure of the City to provide required annual financial information and operating data, on or before six months after the end of the City's fiscal year. These undertakings and agreements are subject to appropriation of necessary funds and to applicable legal restrictions, if any. The accounting principles pursuant to which the City's financial statements are currently prepared are generally accepted accounting principles set out by the Government Accounting Standards Board, and, subject to changes in applicable law or regulations, such principles will be applied in the future. If the City changes its fiscal year, it will notify each nationally recognized municipal securities information repository and the appropriate state information depository of the change (and of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide annual financial information. -24- The City's obligation to update information and to provide notices of material events shall be limited to the agreements herein. The City shall not be obligated to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects and shall not be obligated to update any information that is provided, except as described herein. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Certificates at any future date. THE CITY DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL OWNERS OF CERTIFICATES MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS 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 paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The City may amend its continuing disclosure obligations and agreement in this Section 32 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 the agreement, as amended, would have permitted the Underwriter to purchase or sell the Certificates in compliance with SEC Rule 15c2-12, taking into account any amendments or interpretations of such Rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Certificates consent or 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 Certificates. The City may also amend or repeal the obligations and agreement in this Section 35 if the SEC amends or repeals the applicable provisions of Rule 15c2-12 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 the Underwriter from lawfully purchasing or reselling the Certificates in the primary offering of the Certificates in compliance with Rule 15c2-12. 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. The City's continuing obligation to provide annual financial information and operating data and notices of events will terminate if and when the City no longer remains an "obligated person" (as such term is defined in SEC Rule 15C2-12)with respect to the Certificates. 32. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. -25- 33. Effective Date. This Ordinance shall be in force and effect from and after its final passage, and it is so ordered. 34. 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. In the event that,on the second Business Day, and again on the Business Day,prior to the payment date on the Obligations, the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent/Trustee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agenarustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such -26- principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agenarustee and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received), (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee, and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agenarustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments,directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, principal and interest shall be deemed past due and not to have been paid),Y p p p p ) interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document,if any,circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order which does not require the consent of the bondholders, and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. -27- J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations, and (ii) any consent, amendment, waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved,together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3%or the maximum interest rate permitted by law, whichever is less. In addition, the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37,Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment; and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. M. The Issuer/Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if. (1) the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii)the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days, and (iii) the Issuer declares bankruptcy. In the event of default under this Bond Order,the Bond Insurer shall have the right to direct all remedies and the Insuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures, the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing -28- w ` document executed in connection herewith. Other than the usual redemption provisions,any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the following types of investments that are approved by the Bond Insurer. [The remainder of this page has intentionally been left blank]. -29- •f PASSED AND APPROVED this 5th day of December, 2006. Mayor, The City of Beaumont, Texas ATTEST: City Clerk, The City of Beaumont, Texas (SEAL) -30- 2 December 5, 2006 Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto t17EjJ-! City of Beaumont Council Agenda Item � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara of RBC Dain Rauscher. A recommendation will be made to award the bonds to the underwriter offering the lowest overall interest cost to the City. The revenue bonds will mature September 1, 2008 through September 1, 2030 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A.. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for the expansion, repair, renovation and related improvements to the waterworks and sewer system. BUDGETARY IMPACT All debt shall be incurred in the Water Fund which is supported by revenues of the waterworks and sewer system. I PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Chief Financial Officer. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 13,2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase = the Bonds. Upon the sale of the Bonds,the Official Statement will be completed and delivered to the Purchaser. f 2 IT IS ANTICIPATED THAT ON THE DELIVERY DATE FOR THE BONDS,BOND COUNSEL WILL RENDER AN OPINION THAT INTEREST ON THE BONDS IS EXCL UDABLE FRO:W GROSS LVCOa1E FOR FEDERAL LVCOME TAX PURPOSES UNDER EVISTING LAW AND THE BONDS ARE NOT PRIVATE ACTIVITY BONDS. SEE "LEGAL MATTERS- TAX EXEMPTION"HEREIN FOR A DISCUSSION OF BOND COUNSEL'S OPLVION,/:VCLU'DI,VG A DESCRIPTION OFALTERVATIYE M/,VZlfU.11 T.AJf CONSEQUENCES FOR CORPORATIONS. The City will not designate the Bonds as qualified tax-exempt obligations for financial institutions. NEW ISSUE-BOOK-ENTRY-ONLY $2090009000 THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) a WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A L Dated: December 1,2006 Principal Due: September 1 Principal of and interest on The City of Beaumont, Texas $20,000,000 Waterworks and Sewer System Revenue Bonds, Series 2006A (the ' "Bonds")are payable by The Bank of New York Trust Company,N.A., Dallas,Texas,the paying agentiregistrar(the"Registrar"). The Bonds ' are initially registered and delivered only to Cede&Co.,the nominee of The Depository Trust Company("DTC")pursuant to the Book-Entry- Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of$5,000 or integral multiples thereof. No -' physical delivery of the Bonds will be made to the beneficial owners thereof. Interest on the Bonds will accrue from December 1,2006 and is payable on March 1 and September 1 of each year,commencing September 1,2007,to the registered owners(initially Cede&Co.)appearing on the registration books of the Registrar on the 15th day of the month preceding each interest payment date(the "Record Date"). See THE y BONDS-Description." The Bonds are subject to redemption prior to their scheduled maturities on September 1,2016 or any date thereafter,at a price equal to the principal amount thereof plus accrued interest to the date of redemption. G The Bonds are special obligations of The City of Beaumont,Texas(the"City")and are payable solely from a first lien on and pledge of the Net - - Revenues (hereinafter defined) of the City's waterworks and sanitary sewer system. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR GENERAL OBLIGATION OF THE CITY AND ARE NOT PAYABLE FROM FUNDS RAISED OR TO BE RAISED s BY TAXATION. The lien on Net Revenues securing the Bonds are on a parity with the liens securing the City's outstanding Prior Lien Bonds r (as defined in the Ordinance). See"THE BONDS-Source of Payment." The proceeds of the Bonds will be used to provide funds for water and sewer system improvements and to pay certain costs incurred in connection with the issuance of the Bonds. (See "THE BONDS - Use of Proceeds"and"THE BONDS-Sources and Uses of Funds.") PRINCIPAL AMOUNTS,MATURITIES,INTEREST RATES AND PRICES v (Due September 1) 5 - - Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. s Maturity Amount Rate Yield(a) 074561(c) Maturity Amount Rate Yield(a) 074561(c) 2008 $ 100,000 % % 2020(b) $ 225,000 % % = 2009 100,000 2021(6) 225,000 Lr 2010 200,000 2022(b) 225,000 2011 200,000 2023(b) 225,000 2012 200,000 2024(b) 2,075,000 - 2013 200,000 2025(b) 2,180,000 2014 200,000 2026(b) 2,290,000 2015 200,000 2027(b) 2,400,000 2016 200,000 2028(b) 2,525,000 2017(b) 200,000 2029(6) 2.650,000 - -_ 2018(b) 200,000 2030(b) 2,780,000 2019(b) 200,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Bonds maturing on or after September 1,2017 are subject to redemption,at the option of the City,at the par value thereof plus accrued = interest,in whole or in part,on September 1,2016,or any date thereafter. J L (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies,Inc.,and are included solely for the convenience of the registered owners of the Bonds. Neither the City,the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbers set forth herein. The Bonds are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an ordinance(the"Ordinance")adopted by the City Council (the "City Council") of the City on December 5, 2006. The Bonds are offered when, as and if issued, subject to the approving opinion of the Attorney General of the State of Texas and the opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel for the City, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of Texas. See "LEGAL MATTERS." The Bonds are expected to be available for delivery on or about December 28.2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME } No. 3 ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE OF $20,000,000 THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (herein referred to as the "City" or the "Issuer") is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue bonds payable from the net revenues of its waterworks and sewer system to provide money for acquisitions, extensions, construction, improvement or repair of such system; and WHEREAS, the City now desires to issue bonds in order to provide funds to finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system; Now, Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Findings and Determinations. It is hereby found and determined that the matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 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 Chapter 1502, Texas Government Code, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance. The term "Blanket Issuer Letter of Representations" means the Blanket Issuer I V Letter of Representations between the City, the Registrar and DTC. The term "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment of principal and interest on the Bonds. The term "Bond Insurer" shall mean 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 $20,000,000 The City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A 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 "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 2 (but excluding any utility deposits) and the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, and the Reserve Fund. The term "Interest Payment Date", when used in connection with any Bond, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption of such Bond. 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 City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2006, 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. 3 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 "Registrar" shall mean The Bank of New York Trust Company, N.A., Dallas, Texas, 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 time. The term "SEC" shall mean the United States Securities and Exchange Commission. 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 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 "Underwriter" shall mean 3. Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of TWENTY MILLION DOLLARS ($20,000,000) for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds (the "Project"). 4 4. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A" and shall be dated December 1, 2006. The Bonds shall bear interest at the rates set forth in Section 5 below from the later of December 1, 2006, 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, 2007, and semiannually thereafter on March 1 and September 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 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. Bond Principal Interest Number Year Amount Rate R-1 2008 $ 100,000 % R-2 2009 $ 100,000 % R-3 2010 $ 200,000 % R-4 2011 $ 200,000 % R-5 2012 $ 200,000 % R-6 2013 $ 200,000 % R-7 2014 $ 200,000 % R-8 2015 $ 200,000 % R-9 2016 $ 200,000 % R-10 2017 $ 200,000 % R-11 2018 $ 200,000 % R-12 2019 $ 200,000 % R-13 2020 $ 225,000 % R-14 2021 $ 225,000 % R-15 2022 $ 225,000 % R-16 2023 $ 225,000 % R-17 2024 $2,075,000 % R-18 2025 $2,180,000 % R-19 2026 $2,290,000 % 5 I a R-20 2027 $2,400,000 % R-21 2028 $2,525,000 % R-22 2029 $2,650,000 % R-23 2030 $2,780,000 % 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. 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 6 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 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 7 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. 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, 8 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. 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. 9 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-EntySystem. (a) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriter,the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Bonds. (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 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. 10 (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. (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 and Mandatory Redemption. The City reserves the right, at its option, to redeem Bonds having stated maturities on and after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed,the City shall determine the Bonds, or portions thereof,to be redeemed. The Bonds maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms set out in the form of Bonds in this Order, at a price of par plus accrued interest to the date fixed for redemption. Bonds may be redeemed only in integral multiples of$5,000. If a Bond subject to redemption is in a denomination larger that $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. 11 Not less than thirty(30)days prior to a redemption date for the Bonds, the City shall cause a notice of redemption to be sent by United States mail, first class,postage prepaid, to each Owner of each Bond to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed 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. When Bonds have been called for redemption in whole or in part and due provision 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 being paid 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. 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 BONDS, SERIES 2006A 12 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 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 The Bank of New York Trust Company, N.A., Dallas, Texas (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 December 1, 2006, 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, 2007, mailed to the registered owner of record as shown on the books of registration kept by the Registrar as of the fifteenth day of the month next preceding each interest payment date. 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 $20,000,000 (the "Bonds"), issued for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds, pursuant to an ordinance adopted by the City Council on December 5, 2006 (the "Ordinance"), and in accordance with the authority of Chapter 1502, Texas Government Code, 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 Refunding Bonds, Series 1998, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding 13 Waterworks and Sewer System Revenue Bonds, Series 2005, 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 Interest and Sinking 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 HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY REVENUE BONDS, 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 the Bonds having stated maturities on or after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, in integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. THE BONDS maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the principal amount to be redeemed plus accrued interest to the redemption date: TERM BONDS DUE SEPTEMBER 1, Date ` Amount 9/1/2028 $2,525,000 9/1/2029 $2,650,000 9/1/2030 (Maturity) $2,780,000 14 I I The Paying Agent shall select for redemption by lot, or by any other customary method that results in random selection, a principal amount of Term Bonds equal to the aggregate principal 'amount of such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled mandatory redemption date, and shall give notice of such redemption in accordance with the Bond Order. The principal amount of Term Bonds required to be mandatorily redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall have been optionally redeemed and not previously credited against a mandatory redemption requirement. 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 owner 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 15 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. 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. (AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT, TEXAS (SEAL) Mayor City Clerk 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 16 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. The Bank of New York Trust Company,N.A. 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 to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED Signature Guaranteed: Registered Owner 17 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. STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $20,000,000 THE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A 18 1 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. 19 18. Legal Opinion; Cusip. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond 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. 19. (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, and (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) Construction Fund. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006, Construction Fund". Immediately after the sale and delivery of the Bonds, that portion of the proceeds of the Bonds to be used for the cost of the Project and the cost of issuance of the Bonds shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of the Project, interest earned on such proceeds may be used, at the City's discretion, for the Project and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1202.043 of the Texas Government Code, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of the Project, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. (c) 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: (i) to pay all Maintenance and Operation Expenses; and 20 (ii) 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. 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. (d) 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: (i) Waterworks and Sewer System Revenue Fund (the "Revenue Fund"); (ii) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund (the "Interest and Sinking Fund"); and (iii) 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. (e) 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: (i) First, to pay Maintenance and Operation Expenses and to provide 21 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. (ii) 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. (iii) 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 Additional Parity Bonds. (iv) Fourth, to pay any amounts due to any bond insurer of Parity Bonds not paid pursuant to subsections (ii) or(iii) above. (v) 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. (f) 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: (i) 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 (ii) 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. 22 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. (g) 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 (1/60 1h) 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 (1/601h) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount; provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below, then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. 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 23 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 bonds, 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 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 (and 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. (h) Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Section 19 the full amounts required herein, 24 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. (i) 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 transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 20. Additional Bonds. (a) Additional Parily 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 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 25 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. (b) 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. (c) 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. 21. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parily 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. (b) 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 26 operation of the System. (c) 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. (d) 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. 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. (e) 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. (f) 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. (g) 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 27 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. (h) 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 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. (i) 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. 28 (j) 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. (k) 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. (1) Obligations 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 of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of the Bonds, plus a premium of $ . In addition thereto, at the time of delivery the Underwriter shall pay to the City the accrued interest on the Bonds to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Bonds 29 and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Bonds. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Bond Insurance Policy, and the printing on the Bonds covered by the Bond Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 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 30 use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal 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 31 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 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: (i) Accrued interest, if any, shall be deposited into the Interest and Sinking Fund; (ii) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds, with any remaining portion thereof to be deposited into the Construction Fund and used to pay the costs of the Project; and (iii) The sum of $ from the sale of the Bonds shall be deposited into the Construction Fund and used to pay the costs of the Project; and (iv) Any proceeds from the Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 26. Re istrar. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Underwriter is hereby approved, authorized and ratified. The proper officials 32 of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. 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. 29. 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 "SELECTED FINANCIAL INFORMATION", "CITY REVENUE DEBT", "ADMINISTRATION OF THE CITY", "THE SYSTEM-Water and Sewer Rates" 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. (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; 33 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. Modifications to 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, 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. 34 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 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 underwriter 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. 30. 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 Chapter 551 of the Texas Government Code. 31. 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. 35 32. 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. In the event that on the second Business Day,and again on the Business Day,prior to the payment date on the Obligations,the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following,as the case may be,Business Day,the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws,then the Paying Agent/Tnistee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice,confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agent/Trustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders;and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating 36 to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent/Trustee and available for such payment(but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received),(b)receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee,and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations,and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent/Trustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid),with interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders,and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations,the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order 37 which does not require the consent of the bondholders,and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and,on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with(i)the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations,and(ii)any consent,amendment,waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved, together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law, whichever is less. In addition,the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37, Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment;and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. 38 M. The Issuer /Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if:(1)the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii) the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days,and(iii)the Issuer declares bankruptcy. In the event of default under this Bond Order, the Bond Insurer shall have the right to direct all remedies and the Issuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures,the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing document executed in connection herewith. Other than the usual redemption provisions, any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the types of investments that are approved by the Bond Insurer be used for such purpose. 33. Special Provisions Relating to Reserve Policy. The purchase of and payment of the premium for a Surety Policy to be issued by the Insurer to fund the Reserve Fund requirement under Section 19(f) of this Ordinance in accordance with the terms of a commitment for such policy presented to and hereby approved by the City Council is hereby authorized. Hereinafter such Surety Policy shall be referred to as the "Reserve Policy". So long as the Reserve Policy is in effect, the following provisions shall apply and be applicable: A. In setting the rates and charges for use and services of the System pursuant to Section 19(b) above, the City agrees to establish sufficient rates so as to generate sufficient revenues to pay all amounts owed to the Bond Insurer. B. The Paying Agent/Registrar shall deliver a demand for payment to the Bond Insurer in the form required by the Bond Insurer at least three days prior to the date on which funds are required. C. The Bond Insurer must be paid all amounts owed to it under the terms of the Financial Guaranty Agreement or any other documents before this Bond Order and any financing documents executed in connection herewith may be terminated. D. It shall be the responsibility of the Paying Agent/Registrar to maintain 39 adequate records, verified with the Bond Insurer,as to the amount available to be drawn at an given time udner the Reserve Policy and as to amounts paid and owing to the Bond Insurer under the terms of the Financial Guaranty Agreement. E. There may be no optional redemption of the Bonds or distribution of any funds to the Issuer unless all amounts owed to the Bond Insurer under the terms of the Financial Guaranty Agreement or any other documents have been paid. [The remainder of this page has intentionally been left blank.] 40 PASSED AND APPROVED this 5th day of December, 2006. Mayor The City of Beaumont ATTEST: City Clerk The City of Beaumont (SEAL) 41 3 December 5,2006 Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department �4~- " City of Beaumont •� Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tyrone E. Cooper, City Attorney MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider Amendments to Section 21-75, of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department. RECOMMENDATION Council consider amendments to Section 21-75, of the Code of Ordinances, increasing Grade III positions from 12 to 16 and reducing the number of Grade II positions from 44 to 40. BACKGROUND In an effort to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al, involving the promotion of several Grade II Sergeants to the position of Lieutenant, it is recommended that four (4)Lieutenant positions be added to the Police Department. However, the intent of the settlement is not increase the total number of positions in the Department. To achieve the intended purpose, it is necessary to reduce the total number of Grade II positions by four (4). By doing so, the total number of positions in the Department will remain unchanged. These positions are not needed for the orderly and efficient operation of the department. It is also intended and agreed that the four(4) new Lieutenant positions will be reduced by attrition as the positions become vacant in the future. BUDGETARY IMPACT The above changes will cost an estimated $22,000 if spread over a twelve(12) month period. PREVIOUS ACTION None. TO: Kyle Hayes DATE: November 29, 2006 FROM: Tyrone E. Cooper MEETING DATE: December 5, 2006 SUBJECT: Amend Ord. No. 06-055 Page 2/2 SUBSEQUENT ACTION None RECOMMENDED BY City Manager, Chief of Police and City Attorney ORDINANCE NO. ENTITLED AN ORDINANCE AMENDING SECTION 21-75,OF THE CODE OF ORDINANCES, CHANGING THE TOTAL NUMBER OF GRADE II AND GRADE III POSITIONS IN THE BEAUMONT POLICE DEPARTMENT; PROVIDING FOR SEVERABILITY AND PROVIDING FOR REPEAL. WHEREAS, the City Council of the City of Beaumont has agreed to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al; and, WHEREAS, settlement will require the addition of four(4) new Lieutenant positions in the Police Department and the abolishing of four(4) Sergeant positions in order that the total number of positions in the Department remain unchanged. The four (4) Sergeant positions are not needed for the orderly and efficient operation of the Department. BE IT ORDAINED BY THE CITY OF BEAUMONT: Section 1. THAT Chapter 21, Section 21-75 of the Code of Ordinances of the City of Beaumont be and the same is hereby amended to read as follows: Section 21-75. Grades and Classifications - Police Department The following grades and classifications are hereby established within the Police Department. Grade Classification Positions I Officers 199 II Sergeants 40 III Lieutenants 16 IV Captains 3 Assistant Chief 1 Total 259 Section 2. That if any section, subsection, sentence, clause or phrase of this ordinance, or the application of same to a particular set of persons or circumstances, should for any reason be held to be invalid, such invalidity shall not affect the remaining portions of this ordinance, and to such end the various portions and provisions of this ordinance are declared to be severable. Section 3. All ordinances or parts of ordinances in conflict herewith, including conflicting portions of the City Budget, are repealed to the extent of the conflict only. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - 4 December 5, 2006 Consider approving a contract for the Main Street (Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Public Works Director MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 22, 2006 REQUESTED ACTION: Council consider a resolution authorizing the award of a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project in the amount of$6,377,885.59. RECOMMENDATION Administration recommends awarding the contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project to Brystar Contracting, Inc. in the amount of $6,377,885.59. BACKGROUND On November 16, 2006, the City of Beaumont received three (3) bids for the Main Street (Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project. The lowest bid was submitted by Brystar Contracting, Inc. in the amount of$6,377,885.59. A copy of the Bid Tabulation sheets is attached. The MBE participation will be met through subcontracts with Crabtree Barricade System, Inc., Highway Pavement Specialities,Inc., O.A. Moreno andAssociates,Texas Mechanical,and Wholesale Electric for a total of$1,251,000 which represents 19.61 percent of the contract amount. A copy of the Schedule of MBE Participation sheet is attached. BUDGETARY IMPACT Funds are available for this project in the Capital Improvement Program Fund. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, Public Works Director and City Engineer. EngMainStreetContract.wpd November 28,2006 CITY OF BEAUMONT / SCHEDULE OF MBE PARTICIPATION NAME CERTIFIED MBE CONTRACTOR ADDRESS TYPE OF WORK AGREED PRICE f rsb�rge �arri t 'p.0, J3o1� Did 3 �arr�c.�ts , 5;1"s, -t 8 rj 1 600 . d 6 y s-1en,s 734pay.0n+ 77( 7'7'��o and -rraT_ d4.d le Se- 4) , 000 oa �.A. iV10R�nb �.'45SoG . j31 50) .�45],-�vr� po;nr Q^_ �r�clL Pars -i- ZG�I (3Oc=) Cxc� eKa s f V�l ,.:cam, l J,0` 3 x 7523 ee -� `3 00, 4"2910 iN_ La44" fir_ cGf.c�c! /��:e. 560 t 000 , 00 TX The undersigned will enter into a formal agreement with MBE Contractors for work listed in this schedule conditioned upon execution of a contract with the City of Beaumont. NOTE: 1. This schedule should be submitted with your bid. SIG ATURE 13 r y�i n 1 �+e fps TITLE CITY OF FONT MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 1 OF 4 APAC-TEXAS Item Item BRYSTAR CONTRACTING ALLCO,LTD INC. No. Code Alt Description Unit Estimated Unit Total Unit Total Unit Total Measure Quantity Price PUBLIC WORKS Price Price 104 001 REMOVING CONCRETE CURB&GUTTER COMBINED) LF 9,625.00 104 002 REMOVING CONCRETE DRIVEWAYS)(6") $7.50 $72,187.50 $9.00 $86,625.00 $6.00 $57,750.00 104 003 REMOVING CONCRETE SIDEWALK&W.C.RAMPS 4" SY 1,693.75 $7.00 $11,856.25 $13.00 $22,018.75 $12.40 $21,002.50 104 004 SAW CUT AT BUILDING FULL DEPTH ( ) SY 6,826.11 $8.00 $54,608.88 $13.00 $68,739.43 $21.00 $143,348.31 104 005 REMOVE CONCRETE ROADWAY 6"-10" LF 10,774.00 $1.25 $13,467.50 $3.50 $37,709.00 $8.00 $86,192.00 110 001 EXCAVATION CURB AND&GUTTER COMBINED(12") CY 28'21522 $7.00 $200,970.00 $9.00 $258,390.00 $15.80 $453,618.00 110 002 EXCAVATION DRIVEWAYS 10") $15.00 $3,228.30 $40.00 $8,608.80 $8.00 $1,721.76 110 003 EXCAVATION SIDEWALK&WHEEL CHAIR RAMPS 8" CY 470.49 $15.00 $7,057.35 $36.00 $16,937.64 $28.00 $13,173.72 110 004 EXCAVATION ROADWAYS ( ) CY 1,516.14 $15.00 $22,742.10 $33.00 $50,032.62 $58.00 $87,936.12 CY 3,500.00 $12.00 $42,000.00 $20.00 $70,000.00 $44.00 $154,000.00 247 001 FLEX BASE(TY A)GR.1)(8"(CL5 DC)(DEL SIDEWALK&W.C.RAMPS SY 6,826.11 247 002 FLEX BASE A GR.1)(1 2")(CL5)(DC)(DEL CURB&GUTTER COMB. SY 645.67 $20.00 $136,522.20 $21.50 $146,761.37 $21.00 $143,348.31 260 001 LIME TREATED SUBGRADE 5"DS 7% - $30.00 $19,370.10 $35.00 $22,598.45 $36.00 $23,244.12 264 001 LIME 7Y.C SLURRY SY 28,526.67 $3.95 $112,680.35 $2.75 $78,448.34 $3.50 $99,843.35 276 001 CEM TRT BASE(STG.L(TYA)(CL 5)(GR.3)(10" DRIVEWAYS TON 524.86 $130.00 $68,231.80 $128.00 $67,182.08 $120.00 $62,983.20 276 002 CEM TRT BASE(STG.L(TYAxCL 5(GR:3 6" ROADWAY SY 1,693.75 $30.00 $50,812.50 $33.00 $55,893.75 $45.00 $76,218.75 300 001 ASPHALTIC MATERIAL(CRS2 SY 27,429.67 $14.00 $384,015.38 $14.00 $384,015.38 $18.00 $493,734.06 340 001 HOT MIX AS PHALT CONCRETE TYPED 1-1/2") TON -1,2-9 .00 .00 $3.00 $3,669.00 $3.70 $4,525.10 $5.00 $6,115.00 345 001 ASB GR.1 6" $125.00 $36,500.00 $115.00 $33,580.00 $161.00 $47,012.00 345 002 ASB GR.1 PIPE 6" TON 166.00 $140.00 $23,240.00 $86.00 $14,276.00 $105.00 $17,430.00 354 001 PLANING PAVEMENT 1-1/2") TON 442.00 $140.00 $61,880.00 $120.00 $53,040.00 $150.00 $66,300.00 356 001 FABRIC UNDERSEAL SY 3,494.00 $1.00 $3,494.00 $4.80 $16,771.20 $1.00 $3,494.00 360 001 CONCRETE PAVEMENT(10" CL P SY 5,425.67 $2.00 $10,851.34 $1.60 $8,681.07 $1.50 $8,138.51 400 001 STRUCTURAL EXCAVATION PROP.PIPES(STORM SEW. SY 26,899.67 $47.00 $1,264,284.49 $50.00 $1,344,983.50 $63.00 $1,694,679.21 400 002 STRUCTURAL EXCAVATION PROP.INLETS&MH STM SEW. CY 3,610.00 $9.00 $32,490.00 $0.10 $361.00 $9.00 $32,490.00 003 CEM STAB SAND BKFL(2 SA 400 CK PROP.PIPES STM SWR) CY 500.00 $10.00 $5,000.00 $0:10 $50.00 $9.00 $4,500.00 CY 2,936.00 $42.00 $123,312.00 $46.00 $135,056.00 $65.00 $190,840.00 400 004 CEM STAB SAND BKFL 2 SACK PROP.INLETS&MH STM SWR) CY 256.00 464 001 RCP 12" STORM SEW. $42.00 $10,752.00 $46.00 $11,776.00 $65.00 $16,640.00 464 002 RCP 18" STORM SEW. LF 78.00 $0.00 $0.00 $0.00 $0.00 $130.00 $10,140.00 464 003 RCP 24" STORM SEW.) LF 1,900.00 $0.00 $0.00 $0.00 $0.00 $140.00 $266,000.00 4fi4A 001 1 12"HDPE STM SWR TY S LF 126.00 $0.00 $0.00 $0.00 $0.00 $150.00 $18,900.00 464A 002 1 18"HDPE STM SWR TY S LF 78.00 $35.00 $2,730.00 $83.50 $6,513.00 $0.00 $0.00 464A 003 1 24"HDPE STM SWR TY S LF 1,900.00 $47.00 $89,300.00 $88.00 $167,200.00 $0.00 $0.00 465 001 CURB INLETS TYPE C LF 126.00 $58.00 $7,308.00 $94.00 $11 844.00 $0.00 $O.DO 465 002 CURB INLETS TYPE C WITH EXTENSION EA 22.00 $3,050.00 $67,100.00 $2,850.00 $62,700.00 $5,500.00 $121,000.00 465 003 MANHOLE TYPE M(STORM SEW EA 10.00 $3,500.00 $35,000.00 $3,275.00 $32,750.00 $7,300.00 $73,000.00 465 004 MANHOLE TYPE M WITH PIPE SADDLE(STORM SEW) -EA 7.00 $5,000.00 $35,000.00 $4,600.00 $32,200.00 $7,300.00 $51,100.00 465 005 GRATE INLET YH) 2.00 $8,500.00 $17,000.00 $9,830.00 $19,660.00 $4,400.00 $8,800.00 479 001 ADJUST MANHOLE EA 1.00 $8,000.00 $8,000.00 $2,130.00 $2,130.00 $4,500.00 $4,500.00 479 002 ADJUST STEEL PLATE COVER EA 20.00 $500.00 $10,000.00 $520.00 $10,400.00 $650.00 $13,000.00 479 003 ADJUST METAL GRATE COVER EA 7.00 $500.00 $3,500.00 $820.00 $5,740.00 $900.00 $6,300.00 479 004 ADJUST CONCRETE PANEL BOX EA 2.00 $1,250.00 $2,500.00 $820.00 $1,640.00 $900.00 $1,800.00 EA 3.00 $550.00 $1,650.00 $850.001 $2,550.00 $650.00 $1;950.00 CITY OF B IPONT BID MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 2 OF 4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. Item Item Unit Estimated Unit Total Unit Total Unit Total No.79 Code Alt Descri tion Measure Quantity Price Price Price 479 005 ADJUST MANHOLE STORM SEW.) EA 3.00 $500.00 $1,500.00 $770.00 $2,310.00 $3,200.00 $9,600.00 496 004 REMOVE WATER VALVE EA 51.00 $100.00 $5,100.00 $385.00 $19,635.00 $140.00 $7,140.00 496 005 REMOVETELEPHONEBOOTH EA 1.00 $100.00 $100.00 $93.50 $93.50 $500.00 $500.00 496 006 REMOVE PARKING METER EA 6.00 $90.00 $540.00 $100.00 $600.00 $450.00 $2,700.00 496 007 REMOVE FIRE HYDRANT EA 10.00 $250.00 $2,500.00 $500.00 $5,000.00 $300.00 $3,000.00 496 008 REMOVE OLD STRUCTURES(MH(SAN.SEW. EA 21.00 $700.00 $14,700.00 $550.00 $11,550.00 $300.00 $6,300.00 496 009 REMOVE OLD PIPES STORM SEW. LF 1,618.00 $8.00 $12,944.00 $32.00 $51,776.00 $14.00 $22,652.00 496 010 REMOVE OLD STRUCTURES(INLETS) EA 30.00 $700.00 $21,000.00 $980.00 $29,400.00 $430.00 $12,900.00 496 011 REMOVE OLD STRUCTURES(MH)(STORM SEW.) EA 9.00 $700.00 $6,300.00 $2,375.00 $21,375.00 $430.00 $3,870.00 496 012 REMOVE PED.SIG.FOUNDATION EA 5.00 $500.00 $2,500.00 $82.00 $410.00 $84.00 $420.00 496 013 REMOVE TRAF.SIG FOUNDATION EA 22.00 $850.00 $18,700.00 $220.00 $4,840.00 $220.00 $4,840.00 496 014 REMOVE JUNCTION BOX 500 001 MOBILIZAT EA 16.00 $650.00 $10,400.00 $55.00 $880.00 $56.00 $896.00 50 ION - 2 001 BARR.,SIGNS AND TRAFFIC HANDLING LS 1.00 $350,000.00 $350,000.00 $402,174.04 $402,174.04 $444,000.00 $444,000.00 529 001 CONCRETE CURB&GUTTER COMBINED CL A MO 15.00 $2,200.00 $33,000.00 $3,640.00 $54,600.00 $2,O00.DO $30,000.00 ( LF 1,025.00 $24.00 $24,600.00 $20.00 $20,500.00 $19.00 $19,475.00 529 002 REINF.CONC.RESTRAINING BLOCK 6"x9")(CL A)(SIDEWALK) LF 9,348.00_ $10.00 $93,480.00 $13.50 $126,198.00 $15.50 $144,894.00 529 003 REINF.CONC.RESTRAINING BLOCK 6"x12")(CL A)(DRIVEWAYS) LF 1,457.40 $14.00 $20,403.60 $15.00 $21,86-1.00 $20.00 $29,148.00 529 004 CONCRETE CURB(I Y II)MONO LF 10,091.00 $3.50 $35,318.50 $4.30 $43,391.30 $3.30 $33,300.30 530 001 DRIVEWAYS 10" CL A) SY 208.00 001 $65.00 $13,520.00 $67.00 $13,936.00 $68.00 $14,144.00 531 SIDEWALK 4") SF 1,350.00 $4.00 $5,400.00 $7.65 $10,327.50 $6.50 $8,775.00 540 001 METAL BEAM GUARD FENCE LF 120.00 $42.00 $5,040.00 $33.00 $3,960.00 $45.00 $5,400.00 2010 001 TRENCH SAFETY SYSTEMS LF 4,760.00 $1.00 $4,760.00 $1.00 $4,760.00 $1.00 $4,760.00 5009 001 TEMP SEDIMENT CONTROL FENCE INSTALL LF 1,520.00 $2.25 $3,420.00 $3.30 $5,016.00 $1.60 $2,432.00 5009 002 TEMP SEDIMENT CONTROL FENCE REMOVE&REPLACE) LF 1,520.00 $2.75 $4,180.00 X$2 $3,952.00 $2.55 $3,876.00 5009 003 TEMP SEDIMENT CONTROL FENCE REMOVE LF 1,520.00 $0.50 $760.00 $2,584.00 $1.10 $1,672.00 9000 001 BRICK CL SAND FILLERS&BEDDING)(SIDEWALK) SF 61,437.00 $3.00 $184,311.00 230,388.75 $3.25 $199,670.25 9000 002 BRICK PAVERS(INCL SAND FILLERS&BEDDING)(W.C.RAMPS SF 2,34980 $700 $16,448.60 $8,811.75 $7.50 $17,623.50 9000 003 BRICK PAVERS INCL SAND FILLERS&BEDDING DRIVEWAYS) SF 15,243.75 $4.00 $60,975.00 $57,164.06 $4.20 $64,023.75 9000 004 BRICK PAVERS INCL SAND FILLERS&BEDDING MEDIANS) SF -7,040.00 $4.50 $31,680.00 $26,400.00 $5.00 $35,200.00 9000 005 ALT BRICK PAVERS INCL SAND FILLERS&BEDDING)CROSSWALKS SF 8,235.00 $D.DO $0.00 $30,881.25 $4.60 $37,881.00 9005 001 BUILDING WATER PROOFING LF 1,562.00 $1.00 $1,562.00 $28,116.00 $1.60 $2,499.20 9010 001 BOX DRAINS EA 25.00 $1,250.00 $31,250.00 $900.00 $22,500.00 $2,600.00 $65,000.00 9030 001 RAILROAD FLAGGING DAY 10.00 $5 0.001 $5,000.00 $1,150.001 $11,500.00 $1,340.00 $13,400.00 PUBLIC WORKS TOTAL $4,075,703.74 $4,649,278.63' $5,834,234.9 i TRANSPORTATION 12'FIBERGLASS LAMP POLE COMPLETE 610 001 INCLUDING ELEC.WIRINGS)(SINGLE FIXTURES) EA 92.00 $3,500.00 $322,000.00 $3,320.00 $305,440.00 $3,200.00 $294,400.00 611 001 REMOVE RDWY ILLUMINATION ASSEMBLIES EA 17.00 $625.00 $10,625.00 $310.00 $5,270.00 $290.00 $4,930.00 618 001 2"PVC SCHED 40 CONDUIT INCL.GEM.STAB SAND BKFL) LF 7,365.00 $7.50 $55,237.50 $10.00 $73,650.00 $10.00 $73,650.00 624 001 JUNCTION BOXES EA 47.00 $750.00 $35,250.00 $500.00 $23,500.00 $500.00 $23,500.00 629 001 REMOVE SERVICE POLE EA 2.00 $250.00 $500.00 $275.00 $550.00 $280.00 $560.00 644 001 SMALL ROADWAY SIGN ASSEMBLIES EA 31.00 $600.00 $18,600.00 $550.00 $17,050.00 $500.00 $15,500.00 CITY OF ONT BID MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 3OF4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. r6556Item Unit Estimated Unit Total Unit Total Unit Total Code Alt Descri lion Measure Quantity Price Price Price 001 REMOVE ROADSIDE SIGN ASSEMBLIES EA 37.00 $50.00 $1,850.00 $98.00 $3,626.00 $60.00 $2,220.00 001 12'FIB SIGNAL FOUNDATION EA 19.00 $750.00 $14,250.00 $2,480.00 $47,120.00 $2,540.00 $48,260.00 002 12'FIBERGLASS LAMP POLE FOUNDATION(COMPLETE) EA 92.00 $300.00 $27,600.00 $330.00 $30,360.00 $336.00 $30,912.00 003 PEDESTRIAN SIGNAL FOUNDATION EA 7.00 $360.00 $2,520.00 $425.00 $2,975.00 $436.00 $3,052.00 004 TRAFFIC SIGNAL CONTROLLER FOUNDATION EA 5.00 $1,300.00 $6,500.00 $1,375.00 $6,875.00 $1,410.00 $7,050.00 001 REFL PAV MRKG TY II Y)(4")(SLD)REMOVABLE LF 5,862.00 $1.50 $8,793.00 $1.65 $9,672.30 $1.60 $9,379.20 002 REFL PAV MRKG TY II Y)(4")(SLD) NONREMOVABLE LF 5,910.00 $0.95 $5,614.50 $1.00 $5,910.00 $1.00 $5,910.00 001 REFL PAV MRKG TY-II Y)(4")(SLD) LF 5,350.00 $0.95 $5,082.50 $1.00 $5,350.00 $1.001 $5,350.00 666 002 REFL PAV MRKG TY-II(Y(4")(BRK LF 308.00 $1.00 $308.00 $1.10 $338.80 $1.05 $323.40 666 003 REFL PAV MRKG TY-II )4")SLD LF 295.00 $1.00 $295.00 $1.10 $324.50 $1.05 $309.75 666 004 REFL PAV MRKGTY-II )(4" BRK LF 1,493.00 $1.00 $1,493.00 $1.10 $1,642.30 $1.05 $1,567.65 666 005 REFL PAV MRKG TY-II(W)8")(SLD) LF 591.00 $1.25 $738.75 $1.35 $797.85 $1.30 $768.3C 666 006 REFL PAV MRKG TY-II W)(12")(SLD) LF 2,704.00 $1.95 $5,272.80 $2.00 $5,408.00 $2.00 $5,408.00 666 007 REFL PAV MRKG TY-II Y(12")(SLD) LF 20.00 $1.95 $39.00 $2.00 $40.00 $2.00 $40.00 666 008 REFL PAV MRKGTY-II W(24")(SLD) LF 567.00 $3.00 $1,701.00 $3:30 $1,871.10 $3.05 $1,729.35 666 009 REFL PAV MRKGTY-II(W)(WORD) EA 8.00 $150.00 $1,200.00 $163.00 $1,304.00 $160.00 $1,280.00 666 010 REFL PAV MRKG TY-II(W)(ARROW) EA 8.00 $75.00 $600.00 $82.00 $656:00 $82.00 $656.00 666 011 REFL PAV MRKG TY-II(R)(SLD CURB) LF 576.00 $0.95 $547.20 $1.00 $576.00 $1.00 $576.00 666 012 REFL PAV MRKG Y)SLD CURB) LF 1,584.00 $0.90 $1,425.60 $1.00 $1,584.00 $1.00 $1,584.00 666 013 RAILROAD CROSSING EA 4.00 $200.00 $800.00 $220.00 $880.00 $210.00 $840.00 672 001 RATS PV MRKR CL B(REFL TY I-C EA 144.00 $5.00 $720.00 $5.50 $792.00 $5.25 $756.00 672 002 RATS PV MRKR CL B REFL)TY II-A-A EA 161.00 $5.00 $805.00 $5.50 $885.50 $5.25 $845.25 677 001 REMOVE PAVEMENT MARKINGS(STRIPING LF 94.00 $3.00 $282.00 $3.25 $305.50 $3.10 $291.40 680 001 TRFFIC SIGNAL CONTROLLER EA 5.00 $43,000.00 $215,000.00 $6,100.00 $30,500.00 $5,040.00 $25,200.00 682 001 TRAFFIC SIGNAL HEADS EA 44.00 $1,200.00 $52,800.00 $800.00 $35,200.00 $830.00 $36,520.00 682 002 PEDESTRIAN SIGNAL HEADS EA 44.00 $900.00 $39,600.00 $590.00 $25,960.00 $600.00 $26,400.00 686 001 TRAFFIC SIGNAL POLE ASSEMBLY 686 002 PEDE EA 20.00 $15,000.00 $300,000.00 $10,300.00 $206,000.00 $9,800.00 $196,000.00 STAL POLE ASSEMBLY EA 9.00 $4,200.00 $37,800.00 $3,400.00 $30,600.00 $3,300.00 $29,700.00 9020 001 REMOVE PEDESTRIAN SIGNAL ASSEMBLIES EA 7.00 $400.00 $2,800.00 $200.00 $1,400.00 $200.00 $1,400.00 9020 002 REMOVE IKAFFIC SIGNAL ASSEMBLIES EA 23.00 $950.00 $21,850.00 $710.00 $16,330.00 $720.00 $16,560.00 9035 001 LED STREET LIGHTS EA 19.00 $4,200.00 $79,800.00 $3,150.00 $59,850.00 $3,000.00 $57,000.00 9045 001 VIDEO DETECTORS EA 12.00 $6,975.00 $83,700.00 $5,400.00 $64,800.00 $5,400.00 $64,800.00 TRANSPORTATION TOTAL $1,363,999.85 $1,025,393.85 WATER UTILITIES $995,228.30 702 001 6"PVC OPEN TRENCH SAN SEW) LF 100 $45.00 $4,500.00 $86.00 $8,600.00 $49.00 $4,900.00 708 001 MANHOLE(FIBERGLASS EA 3 $3,100.00 $9,300.00 $2,700.00 $8,100.00 $3,400.00 $10,200.00 807 003 16"XS"MJTEE EA 2 $1,550.00 $3,100.00 $975.00 $1,950.00 $1,700.00 $3,400.00 8)7 004 16"X 6"MJ TEE EA 3 $1,500.00 $4,500.00 $900.00 $2,700.00 $1,600.00 $4,800.00 807 005 16"X4"MJTEE EA 1 $1,450.00 $1,450.00 $950.00 $950.00 $1,550.00 $1,550.00 807 006 12"X12"MJTEE EA 2 $1,000.00 $2,000.00 $575.00 _ $1,150.00 $1,000.00 $2,000.00 807 007 12"X 8"MJ TEE EA 6 $900.00 $5,400.00 $500.00 $3,000.00 $95000 $5,700.00 807 008 12"X 6"MJTEE EA 9--1 850.001 $7,650.001 500.00 $4,500.00 900.00 $8,100.00 CITY BI*ONT BI MAIN STREET(CALDER TO BLANCHETTE) BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 4 OF 4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. Item Item - Unit Estimated Unit Total Unit Total Unit Total No. Code Alt Description Measure Quantitv Price 807 009 12"X 4"MJ TEE Price Price EA 2 $800.00 $1,600.00 $450.00 $900.00 $850.00 $1,700.00 807 010 8"X8"MJTEE EA 3 $500.00 $1,500.00 $335.00 $1,005.00 $510.00 $1,530.00 807 011 6"X 6"45 TEE EA 1 $350.00 $350.00 $285.00 $285.00 $360.00 $360.00 807 012 16"MJ 45 BEND 807 013 6"MJ 45 BEND EA 1 $1,200.00 $1,200.00 $800.00 $800.00. $1,300.00 $1,300.00 12"MJ D EA 2 $700000 $1,400.00 $400.00 $800.00 $750.00 $1,500,00 807 015 6" BEN 807 014 MJ 90 0 BEN D BEN EA 2 $600.00 $1,200.00 $285.00 $570.00 $630.00 $1,260.00 EA 1 $400.00 $400.00 $200.00 $200.00 $420.00 $420,00 807 016 8"MJ 22-1l2 BEND EA 4 $600.00 $2,400.00 $260.00 $1,040.00 $610.00 $2,440.00 807 017 16"X 8"MJ WYE EA 1 $2,000.00 $2,000.00 $1,425.00 $1,425.00 $2,100.00 $2,100.00 807 018 16"X6"MJWYE EA 1 $2,000.00 $2,000.00 $1,375.00 $1,375.00 $2,100.00 $2,100.00 807 019 16"X4"MJ WYE EA 1 $2,000.00 $2,000.00 $1,375.00 $1,375.00 $2,100.00 $2,100.00 807 021 16"X12"MJREDUCER EA 1 $1,000.00 $1,000.00 $550,00 $550.00 $1,050.00 $1,050.00 807 022 8"X E V REDUCER $400.00 $400.00 $200.00 $200.00 $420.00 807 023 12"SERVICE SADDLE EA 1 $420.00 $600.00 $6,600.00 $800.00 $8,800,00 $620.00 808 001 FIRE HYDRANT 19 $6,820.00 810 001 6"PVC OPEN TRENCH(WATER) $2,400.00 $21,600.00 $2,330.00 $20,970.00 $2,500.00 $22,500.00 810 002 8"PVC OPEN TRENCH(WATER) LF 331 $72.00 $23,832.00 $90.00 $29,790.00 $75.00 $24,825.00 810 003 12"PVC OPEN TRENCH WATER LF 1166 $75.00 $87,450.00 $92.00 $107,272.00 $80.00 $93,280,00 810 004 16"PVC OPEN TRENCH(WATER) LF 142 $85.00 $12,070.00 $105.00 $14,910.00 $90.00 $12,780.00 810 006 4"PVC SHORT SIDE SERVICE CONNECTION LF 1216 $80.00 $97,280.00 $115.00 $139,840.00 $87.00 $105,792.00 810 007 4"PVC LONG SIDE SERVICE CONNECTION LF 70 $50.00 $3,500.00 $21.66 $1,516.20 $52.00 $3,640.00 810 008 2"HDPE SHORT SIDE SERVICE CONNECTION LF 52 $85.00 $4,420.00--$27.66 $1,438.32--$90.00 $4,680.00 810 009 2"HDPE LONG SIDE SERVICE CONNECTION LF 195 $40.00 $7,800.00 $8.34 $1,626.30 $43.00 $8,385.00 810 010 1"HDPE LONG SIDE SERVICE CONNECTION LF 105 $70.00 $7,350.00 $17.34 $1,820.70 $75.00 $7,875.00 811 001 4"WATER VALVE LF 65 $60.00 $3,900.00 $16.74 $1,088.10 $65.00 $4,225.00 811 002 6"WATER VALVE 4 $500.00 $2,000.00 $725.00 $2,900.00 $540.00 $2,160.00 811 003 8"WATER VALVE EA 17 $650.00 $11,050.00 $800.00 $13,600.00 $700.00 $11,900.00 811 004 12"WATER VALVE EA 15 $1,000.00 $15,000.00 $1,350.00 $20,250.00 $1,050.00 $15,750.00 811 005 16"WATER VALVE EA 17 $1,800.00 $30,600.00 $1,785.00 $30,345.00 $1,900.00 $32,300.00 813 001 12"PVC WATER BORE) EA 11 $5,500.00 $60,500.00 $4,825.00 $53,075.00 $6,000.00 $66,000.00 LF 2774 $100.00 $277,400.00 $140.00 $388,360.00 $105.00 $291,270.00 2534 001 SAN SEW SERVICE STUB OR RECONNECT EA 1 $2,400,00 $2,400,00 $3,800.00 $3,800.00 $2,600.00 $2,600.00 3301 001 MANHOLE PRECAST EA 12 $3,100.00 $37,200.00 $5,300.00 $63,600.00 $3,200.00 $38,400.00 4020 001 6"HDPE PIPE BURST SAN SEW LF 608 $45.00 $27,360.00 $50.00 $30,400.00 $49.00 $29,792.00 4020 002 8"HDPE PIPE BURST SAN SEW LF 451 $70.00 $31,570.00 $99.00 $44,649.0D $75.00 $"x3,825.00 4020 003 12"HDPE PIPE BURST SAN SEW LF 860 $115.00 $98,900.00 $140.00 $120,400.00 $126.00 $108,360.00 4020 004 16"HDPE PIPE BURST SAN SEW LF 58 $225.00 $13,050.00 $218.00 $12,644.00 $240.00 $13,920.00 WATER UTILITIES TOTAL $938A82.001 $1,154.569.62 $1.00( 009.00 TOTAL CONTRACT AMOUNT $6,377,885.59 $6,829,242.10 $7,829,472:21 RESOLUTION NO. WHEREAS, bids were received for a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project; and, WHEREAS, Brystar Contracting, Inc. submitted a bid in the amount of $6,377,885.59; and, WHEREAS, City Council is of the opinion that the bid submitted by Brystar Contracting, Inc. should be accepted; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the bid submitted by Brystar Contracting, Inc. for a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project in the amount of $6,377,885.59 be accepted by the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - 5 December 5, 2006 Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation City of Beaumont Council Agenda Item K g TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Director of Public Works MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council approve Change Order No. 2 for the Julie Rogers Theatre renovation. RECOMMENDATION Administration recommends authorizing the City Manager to execute Change Order No. 2 for the renovation of the Julie Rogers Theatre in the amount of$65,380.01. BACKGROUND Council awarded a contract to Bruce's General Construction for the interior renovations to the Julie Rogers Theatre on August 15, 2006 in the amount of$1,845,000. The project began in September and the renovations are proceeding as scheduled. Change Order No. 1 in the amount of$5,331.75 was executed on November 2, 2006. Change Order No. 2 consist of several projects stated below that are necessary because of either unforseen damage or modifications to enhance the building. 1. Addition of rubber flooring in the elevator, stage door foyer, kitchen in Green Room, and both concession areas on the I' and 2'' floors and deletion of basic carpet in the meeting room and 2'floor women's lounge. Also deleted was a ceramic wainscot in all restrooms that was not available for shipment until February possibly delaying the building's completion. 2. Remove and replace glazing compound on all exterior windows. During the renovation, it was discovered that the exterior window glazing had failed. During heavy wind driven rains, water enters and damages interior work. Broken panes will also be replaced. i NUMBER iDIRECTION IDISTANCE / Zd L1 N 00'08'22" E 14.45 wc� L2 IS 89'36'40" E 14.36 W° L3 I N 65'32'00" E 150.19 1-4 S 00'04'35" W 9.41 EL L5 S 00'08'22" W 5.36 L6 S 65'51'18" W 50.03 o L7 N 89'36'40" W 114.40 z V) o> NOTE: BOTTOM OF SKYWAY 14.50' ABOVE GROUND. TOP OF SKYWAY 33.50' ABOVE'GROUND. = \ FOUND 5d8",,, � �D IRON RO J O O \ � C r 0� G / L2 ❑ 002 POINT OF BEGINNING - H w I � o q � 0. .�15— 30 I LU in a S s C A L I C)M NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o W THE BENEFIT OF A TITLE COMMITMENT. UO a0 ° NOT ALL EASEMENTS, WHETHER OF CIR 0 Z RECORD OR NOT, WERE RESEARCHED AT N O 0 THE TIME OF THIS SURVEY.uj I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND / I UNDER MY SUPERVISION DURING AUGUST 2006. I FOUND 1/2" I Q OF TFT Y IRON ROD I WALTER J. KSIAZEK *aje�G1STE2F�•cn* 5' STREET LIGHT EASEMENT I REGISTERED PROFESSIONAL L SURVEYOR O 5321 * • �' • WALTER J. KSIAZEK S 89'58'51" W 249.77' a,0 5321 r s (CALLED S 89'58'51" W 250.DO') COMMENCING .eq0 �P• (BASIS OF BEARINGS) POINT ` ••a•e e Dee Q` MEDICAL CENTER DRIVE IRON FOUND ROD 8" qM0 SIIA�11 � Fittz&ShIpI'Y an SKYWAY AERIAL ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST ConsultinsE4meers and Land SunNyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06 03379 T5 EXHIBIT "A" 's CS S Fittz & Shipman lug Consulting Engineers and Land Surveyors FIELD NOTE DESCRIPTION FOR A 65.01 SQUARE FOOT TRACT BEING A SKYWAY COLUMN ENCROACHMENT OUT OF THE DAVID BROWN SURVEY, ABSTRACT 5 JEFFERSON COUNTY, TEXAS AUGUST 18, 2006 That certain 65.01 square foot tract, being a Skyway Column Encroachment out of the David Brown Survey, Abstract 5, Jefferson County, Texas, said 65.01 square foot tract being more particularly described by metes & bounds as follows: Note: The Basis of Bearings is along the south line of a 2.421 acre tract conveyed to BHST - POB I LTD as recorded in Clerks File No. 2003041121 of the Official Public Records of Real Property of.Jefferson County, Texas-and the north right-of-way line of Medical Center Drive having been called South 89 058'51"West 250.00 feet,.- COMMENCING at a 5/8" iron rod found at the intersection of the north right-of-way line of Medical Center Drive with the west right-of-way line of Hospital Drive being the southeast corner of the said 2.421 acre tract from which a found %2" iron rod bears South 89°58'51" West 249.77 feet (called South 89 058'51" 250.00 feet); THENCE North 00°08'22" East along the said west right-of-way line of Hospital Drive and the east line of the said 2.421 acre tract a distance of 123.85 feet (called North 00 004'45" East) to a point from which a found 5/8" iron rod bears North 00 008'22" East 25.84 feet (called North 00°04'45" East); THENCE South 89 036'40" East a distance of 9.90 feet to the southwest corner of the said 65.01 square foot and the POINT OF BEGINNING; THENCE North 00°00'43" West along the west line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the northwest comer of the said 65.01 square foot tract; THENCE South 89 036'40" East along the north line of the said 65.01 square foot tract a distance of 4.50 feet to a point for the northeast corner of the said 65.01 square foot tract; THENCE South 00 000'43" East along the east line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the southeast corner of the said 65.01 square foot tract; THENCE North 89 036'40" West along the south line of the said 65.01 square foot tract a distance of 4.50 feet to the POINT OF BEGINNING and containing 65.01 square feet of land, more or less. This Field Note Description is being submitted along with a plat of even date based on a survey performed by Fittz & Shipman, In on August 15, 2006. C..••, alter k �,o.�GISTE2 If Registered Profess' al Land Su eyor No. 5321 �•».»•«.. WALTER J, KSIAZEK Fittz&Shipman,Inc. ,,0 5321 „a Page 1 of 1 •'9�FES '� Plat Project and DesOcription5colurnn a ,goo SURV�ypQ • • 1405 Cornerstone Court, ,Beaumont,Texas 77706 (409) 832-7238 fax(409) 832-7303 EXHIBIT "A" 4 a-$ 5 i i i NUMBER IDIRECTION IDISTANCE zi L1 IS 89'36'40" E 19.90 / Lim 11-2 N 00'00'43" W 114.45 / a° L3 S 89'36'40" E 4.50 / L4 S 00'00'43" E 14.45 V) L5 N 89'36'40" W 4.50 I ~N Z aJ 0 O 0> e FOUND RON ROD 8"-,, 6 p 65.01.. S.F. ,t L3 � o / 1 M L5 POINT OF ( 1 BEGINNING � W wv i -�—�s 30 I ``'a U1 S C A L E NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o THE BENEFIT OF A TITLE COMMITMENT. U) 00 Z NOT ALL EASEMENTS, WHETHER OF RECORD OR NOT, WERE RESEARCHED AT M O ° THE TIME OF THIS SURVEY. N O J I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND UNDER MY SUPERVISION DURING AUGUST 2006. I 2 T . FOUND 1/ ' OF �' Q.` e e e e �•�' WALTER J. KSIAZEK �j�•°GISTE/�°.'9S IRON R00 I REGISTERED PROFESSIONAL LAND VEYOR N0. 5 * • �G Fir * • • 5' STREET LIGHT EASEMENT I WALTER J. KSIAZEK S $9'58'51" W 249.77' 0.0 5321 (CALLED S 89'58'51" W 250,00') COMMENCING 00'90 :• (BASIS OF BEARINGS) POINT •rFESS�00•Q MEDICAL CENTER DRIVE IRON ROD 8„ �NOSUME�� Fittz&3hip an SKYWAY COLUMN ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST 1 ConsultintEngmeers and Land Surveyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06, 03379 T5 EXHIBIT "A" 5 a 5 �r ML Cttq of Beaumont REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS DECEMBER 5,2006 1:30 P.M. AGENDA CALL TO ORDER * Invocation Pledge Roll Call * Presentations and Recognition * Public Comment: Persons may speak on scheduled agenda items 1-8/Consent Agenda * Consent Agenda GENERAL BUSINESS 1. Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto 2. Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto 3. Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department 4. Consider approving a contract for the Main Street(Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project 5. Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation 6. Consider authorizing the City Manager to increase the Wiess Bluff Pump Station Neches River Bank Stabilization Project to increase the scope of work 7. Consider granting the City Manager authority to implement the contribution rate changes for retirees in the medical plans 8. Consider authorizing the reprogramming of Community Development Block Grant (CDBG) funds from FY2000-FY2005 into the FY2006 Clearance/Demolition line item for the demolition of dangerous structures 9. PUBLIC HEARING: Dangerous Structures Consider approval of an ordinance declaring certain structures to be dangerous structures and ordering their removal within 10 days or authorizing the property owner to enroll the dangerous structure in a work program COMMENTS * Councilmembers/City Manager comment on various matters * Public Comment (Persons are limited to 3 minutes) EXECUTIVE SESSION * Consider matters related to contemplated or pending litigation in accordance with Section 551.071 of the Government Code: Roy Cooper v. City of Beaumont, et al;No. 105324 Southwestern Bell Telephone v. City of Beaumont; Cause No. A-176610 Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact Lenny Caballero at 880-3716 three days prior to the meeting. 1 December 5, 2006 Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto City of Beaumont W Council Agenda Item ,jfj � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of $30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara ofRBC Dain Rauscher. A recommendation will be made to award the certificates to the underwriter offering the lowest overall interest cost to the City. The certificates will mature March 1,2008 through March 1,2025 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for various street, drainage and general improvements. BUDGETARY IMPACT All debt shall be incurred in the Debt Service Fund which is supported by property taxes. The current debt service property tax rate of $.0264447 is expected to be sufficient to meet debt service requirements on the certificates. PREVIOUS ACTION Council authorized publication of notice of intention to issue Certificates of Obligation on October 31, 2006. SUBSEQUENT ACTION None, RECOMMENDED BY City Manager and Chief Financial Officer. PRI:LI NI[NARY OFFICIAL STATEMENT DATED NOVEMBER 13, 2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase the Certificates. Upon the sale of the Certificates,the Official Statement will be completed and delivered to the Purchaser. IN THE OPINION OF BOND COUNSEL, INTEREST ON THE CERTIFICATES IS EVCLUDABLE FROM GROSS INCO.AfE FOR FEDERAL I,NCOME TAX PURPOSES UNDER EXISTING LAW, SUBJECT TO THE MATTERS DESCRIBED UNDER "LEGAL MATTERS -TAX EXE.VPTION"HEREIN, INCLUDING THE ALTERNATII E AILNIMUlf TAX ON CORPOR=1 TIONS. NEW ISSUE-BOOK-ENTRY-ONLY _ - $30,000,000 _ - THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) CERTIFICATES OF OBLIGATION, SERIES 2006 Dated: December 1,2006 Principal Due: March 1 Principal of and interest on The City of Beaumont,Texas$30,000,000 Certificates of Obligation,Series 2006(the"Certificates")are payable at the principal corporate trust office of The Bank of New York Trust Company, N.A., Dallas, Texas, the paying agent/registrar (the "Registrar'). The Certificates are initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneficial owners L thereof. Interest accrues from December 1, 2006, and is payable each March 1 and September 1 of each year, commencing September 1, 2007,until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1,2016 or any date thereafter, at the option of the City. Upon redemption the Certificates will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates are issued in fully registered form in integral multiples of$5,000. Principal of and interest on the Certificates will be payable by the Registrar to Cede& Co.,which will make distribution of the amounts so - - paid to the beneficial owners of the Certificates. See"THE CERTIFICATES-Book-Entry-Only System"herein. Interest on the Certificates will be payable by check, dated as of the interest payment date, and mailed by the Registrar to registered owners (initially Cede & Co.) shown on the records of the Registrar on the fifteenth calendar day of the month next preceding each interest payment date (the "Record Date"). See"THE CERTIFICATES-Description of the Certificates." '- MATURITY SCHEDULE _ - (Due March 1) Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. Maturity Amount Rate Yield(a) 074561 (c) Maturity Amount Rate Yield(a) 074561(c) - - 2008 $2,775,000 % % 2017(b) $1,180,000 % % 2009 2,065,000 2018(b) 1,240,000 2010 1,570,000 2019(b) 1,435,000 2011 1,515,000 2020(b) 1,550,000 2012 1,610,000 2021(b) 1,665,000 2013 1,690,000 2022(b) 1,780,000 2014 1,745,000 2023(b) 1,890,000 2015 1,070,000 2024(b) 2,000,000 2016 1,125,000 2025(b) 2,095,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Certificates maturing on or after March 1, 2017 are subject to redemption, at the option of the City, at the par value thereof plus accrued interest,in whole or in part,on March 1,2016,or any date thereafter. (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the registered owners of the Bonds. Neither the City, the Financial r � , Advisor,nor the Purchasers are responsible for the selection or correctness of the CUSIP numbers set forth herein. = - The above certificates (the"Certificates") are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an - ordinance(the"Ordinance')adopted by the City Council (the"City Council")of the City on December 5,2006. Proceeds from the sale of _ the Certificates will be used to provide funds for street, drainage, building and park improvements. The proceeds will also be used to pay certain costs in connection with the issuance of the Certificates. (See`'THE CERTIFICATES-Use of Proceeds.") The Certificates, when issued,will constitute valid and binding obligations of The City of Beaumont,Texas(the"City")and will be payable from the proceeds of an = annual ad valorem tax,levied within the limits prescribed by law,against taxable property within the City and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks system but only to the extent of and not in an amount in excess of _ $10,000. = The Certificates are offered when, as and if issued subject to the approving opinion of the Attorney General of the State of Texas and the _ opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel to the City as to the validity of the issuance of the Certificates under the Constitution and the laws of the State of Texas. The Certificates are expected to be available for delivery on or about December 28, = 2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF $30,000,000 THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2006; LEVYING TAXES TO PROVIDE FOR PAYMENT THEREOF; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, the City Council of The City of Beaumont,Texas (the "City"), has heretofore authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on December 5, 2006, the date tentatively set for passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of certain revenues of the City's waterworks and sewer system, or as soon thereafter as may be practicable, for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations, repairs and construction of new restrooms, field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and the laws of the State of Texas and the United States of America, respectively, particularly Chapter 271, Texas Local Government Code, as amended; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; and WHEREAS, the City Council of the City has determined to authorize such certificates of obligation for the purposes set out in this Ordinance; and WHEREAS, the City is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to pledge not more than $10,000 of the net revenues of the City's waterworks and sewer system as security for the certificates of obligation authorized herein; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Preamble. The matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term 'Business Day" shall mean any day which is not a Saturday, Sunday, a legal holiday, or a day on which the Registrar is authorized by law or executive order to close. The term "Certificates" or "Series 2006 Certificates" shall mean the Certificates of Obligation, Series 2006, authorized in this Ordinance, unless the context clearly indicates otherwise. The term "Certificates Insurance Policy" shall mean the municipal bond guaranty insurance policy issued by the Insurer insuring the payment when due of the principal of and interest on the Certificates as provided therein. The term "City" shall mean The City of Beaumont, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. -2- The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Construction Fund" shall mean the construction fund established by the City pursuant to Section 20 of this Ordinance. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean 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 the DTC Participants. The term "Insurer" shall mean the issuer of the Certificates Insurance Policy. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 20 of this Ordinance. The term "Interest Payment Date", when used in connection with any Certificate, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption. The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term "Ordinance" as used herein and in the Certificates shall mean this Ordinance authorizing the Certificates. The term "Owner" or "Registered Owner", when used with respect to any Certificate, shall mean the person or entity in whose name such Certificate is registered in the Register. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th day of the month next preceding such Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term 'Registrar" shall mean THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas, and its successors in that capacity. -3- I The term "SEC" shall mean the United States Securities and Exchange Commission and its successors. The term "System" shall mean the City's waterworks and sewer system. The term "Underwriter" shall mean 3. Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Thirty Million Dollars ($30,000,000), for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations repairs and construction of new restrooms field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith. 4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES -4- 2006", and shall be December 1, 2006. The Certificates shall bear interest from the later of December 1, 2006, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30-day months, which interest shall be payable on September 1, 2007, and semiannually thereafter on March 1 and September 1 of each year until maturity or earlier redemption. 5. Certificates, Numbers and Denominations. The Certificates shall be 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 Certificates shall mature, subject to prior redemption in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered upon transfer of or in exchange an e f o r other ertifc tes shall be numbered in order of their authentication by the Registrar, , shall be in the denomination of$5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Year Principal Interest Number of Maturity Amount Rate CR-1 2008 $3,415,000 % CR-2 2009 $2,065,000 % CR-3 2010 $1,570,000 % CR-4 2011 $1,515,000 % CR-5 2012 $1,610,000 % CR-6 2013 $1,690,000 % CR-7 2014 $1,745,000 % CR-8 2015 $1,070,000 % CR-9 2016 $1,125,000 % CR-10 2017 $1,180,000 % CR-11 2018 $1,240,000 % CR-12 2019 $1,350,000 % CR-13 2020 $1,470,000 % CR-14 2021 $1,580,000 % CR-15 2022 $1,690,000 % CR-16 2023 $1,795,000 % CR-17 2024 $1,900,000 % CR-18 2025 $1,990,000 % 6. Execution of Certificates; Seal. The Certificates shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the -5- Certificates shall have the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, 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 Certificates to be initially issued shall be delivered to the Attorney General of the State 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 17 of this Ordinance shall be attached or affixed to the initial Certificates. 8. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 17 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 Certificates 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 Certificates. The principal of the Certificates 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 become due and payable, at the designated corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Certificate 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 payment was due. 10. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the Registrar on not less than sixty (60) days' written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding principal or interest payment date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the 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 -6- deemed to have agreed to the provisions of this Section. 11. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) business 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 Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate 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 Certificate in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three (3) years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the provisions of Texas law, including to the extent applicable,Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer, and Exchange; Special Election for Uncertificated Certificates. So long as any Certificates remain outstanding,the Registrar shall keep the 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 Certificates in accordance with the terms of this Ordinance. Each Certificate 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 Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Certificate or Certificates, 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 Certificate or Certificates so presented. All Certificates shall be exchangeable upon presentation and surrender thereof at the -7- principal corporate trust office of the Registrar for a Certificate or Certificates of the same maturity and interest rate in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13. Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate 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 Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Neither the City nor the Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. Notwithstanding any other provision hereof, but at the sole election of the Underwriter, the ownership of the Certificates shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Certificates. With respect to Certificates 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 Certificates. 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 Certificates, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Certificate, as shown on the Register, of any notice with respect to the Certificates, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner of a Certificate, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on the Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute Owner of such Certificate for the purpose of payment of principal of, premium, if any, and interest on the Certificates, for the purpose of all matters with respect to such Certificates, for the purpose of registering transfers with respect to such Certificates, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Certificates only to or upon the order of the respective Owners, as shown in the Register as -8- provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Certificates to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a certificate for a Certificate evidencing the obligation of the City 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 Ordinance shall refer to such new nominee of DTC. In the event that the City or the Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the Letter of Representation and that it is in the best interest of the beneficial Owners of the Certificates that they be able to obtain certificated Certificates, or if DTC Participants owning at least 50% of the Certificates outstanding based on current records of the DTC determine that continuation of the system of book-entry transfers through the DTC (or a successor securities depository) is not in the best interest of such beneficial Owners of the Certificates, or in the event DTC discontinues the services described herein, the City or the Registrar 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 of the appointment of such successor securities depository and transfer one or more separate Certificates to such successor securities depository or (ii) notify DTC of the availability through DTC of Certificates and transfer one or more separate Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event, the Certificates 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 Certificates shall designate, in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Certificates 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 the Certificates, and all notices with respect thereto, shall be made and given in the manner provided in the Letter of Representation. 14. Mutilated, Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate 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 Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection -9- therewith and any other associated expenses, 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 Certificate, before any replacement Certificate 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 Certificate; (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. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Registrar shall be entitled to recover such replacement Certificate 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 Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate, authorize the Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15. Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates 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 Certificates. 16. Optional Redemption. The City reserves the right, at its option, to redeem Certificates having stated maturities on and after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates, or -10- portions thereof,to be redeemed. Certificates may be redeemed only in integral multiples of$5,000. If a Certificate subject to redemption is in a denomination larger that $5,000, a portion of such Certificate may be redeemed, but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered. Not less than thirty (30) days prior to a redemption date for the Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each Owner of each Certificate to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Certificates are to be surrendered for payment and, if less than all the Certificates are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice of redemption so mailed 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 Certificates or portions thereof to be redeemed. When Certificates have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid 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 Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 17. Forms. , The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Certificates 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: -11- UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION CR- $ REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS CERTIFICATE OF OBLIGATION SERIES 2006 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THE CITY OF BEAUMONT, TEXAS (the "City"), promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this certificate at the designated corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas (the 'Registrar"), or at its principal payment office in Dallas, Texas, 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 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 Dated Date specified above, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on September 1, 2007, and semiannually thereafter on each March I and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $30,000,000 (the "Certificates"), issued in accordance with the Constitution and the laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended, for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, the purchase of equipment and the cost of issuance of the Certificates, pursuant to an ordinance duly adopted by the City Council of the City -12- (the "Ordinance"),which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT, at its option,to redeem the Certificates having stated maturities on or after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Certificates. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each Certificate to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Certificates 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 CERTIFICATE 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 CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of this Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, 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 Certificates 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 Certificate has been duly and -13- 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 Certificate have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied, within the limits prescribed by law, against all taxable property in the City, and have been pledged irrevocably for such payment. IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues") to be derived from the operation of the City's waterworks and sewer system (the "System"), but only to the extent of and in an amount not to exceed Ten Thousand Dollars ($10,000.00) in the aggregate, are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose, all as set forth in the Ordinance to which reference is made for all particulars; provided, how-ever, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certificate and that series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Clerk of the City and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. THE CITY OF BEAUMONT, TEXAS Mayor (SEAL) City Clerk Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. -14- I hereby certify that this certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this day of , 2006. xxxxxxxxx Comptroller of Public Accounts (Seal) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. The Bank of New York Trust Company,N.A. Dallas, Texas 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 certificate and all rights thereunder, and hereby irrevocably constitutes and appoints -15- attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: The signature above must correspond to the name of the registered NOTICE: Signature must be owner as shown on the face guaranteed by a member firm of this Certificate in of the New York Stock Exchange every particular, without or a commercial bank or trust any alteration, enlargement company. or change whatsoever. 18. Form of Statement of Insurance. The following statement of insurance shall be printed on the back of or attached to each of the Certificates: STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning -16- of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $30,000,000 THE CITY OF BEAUMONT, TEXAS CERTIFICATES OF OBLIGATION, SERIES 2006 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. -17- 19. Legal Opinion; Cusip Numbers. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 20. Interest and Sinking Fund; Tax Lew; Pledge of Revenues; Construction Fund. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance are hereby irrevocably pledged and shall be deposited, as collected, in a special fund to be designated "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in the City sufficient to pay the current interest on the Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures but in each year never less than 2% of the original principal amount of the Certificates, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of the Certificates and to no other purpose. To pay the interest coming due on the Certificates on September 1, 2007,there is hereby appropriated from current funds on hand, which are certified to be on hand and available for such purpose, an amount sufficient to pay such interest, and such amount shall be used for no other purpose. The Net Revenues of the System, but only to the extent of and in an amount not to exceed $10,000 in the aggregate, are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes described in this Section of the Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of the Certificates; and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Construction Fund". Immediately after the sale and delivery of the Certificates, that portion of the proceeds of the Certificates to be used for the cost of construction of authorized street -18- improvements and the cost of issuance of the Certificates shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of such projects, interest earned on such proceeds may be used, at the City's discretion, for such projects and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1201.043, Texas Government Code Annotated, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of such street improvements, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. 21. Further Proceedings. After the Certificates shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates 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 Certificates to be initially issued shall have been approved by the Attorney General of the State of Texas, the Certificates shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Certificates to be initially issued,the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of the Comptroller shall be impressed, or placed in facsimile, thereon. In addition, the Mayor, the City Clerk and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the purposes of this Ordinance. 22. Sale of Certificates. The Certificates are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of Certificates, plus a premium of$ The purchase price of the Certificates will also include accrued interest to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Certificates and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Certificates. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Certificate Insurance Policy, and the printing on the Certificates covered by the Certificate Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 23. Tax Exemption. (a) The City intends that the interest on the Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and applicable 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 Certificates 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 23; -19- provided, however, that the City shall not be required to comply with any particular requirement of this Section 23 if the City has received an opinion of nationally recognized bond counsel (a "Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 23 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 23. (b) The City covenants and agrees that its use of Net Proceeds of the Certificates will at all times satisfy the following requirements: (i) The City will use all of the Net Proceeds of the Certificates for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, equipment purchases and the cost of issuance of the Certificates. The City has limited and will limit with respect to the Certificates the amount of original or investment proceeds thereof to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10% of the Net Proceeds of the Certificates ("private-use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Certificates in any manner contrary to the guidelines set forth in Revenue Procedure 93-19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City has not permitted and will not permit more than 5% of the Net Proceeds of the Certificates to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates in excess of 5% of the Net Proceeds thereof("excess private-use proceeds") did not and will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (iii) Principal of and interest on the Certificates shall be paid solely from ad valorem tax receipts collected by the City and from the Net Revenues of the System to the extent pledged hereunder. Further, no person using more than 10% of the Net Proceeds of the Certificates in a trade or business, other than a governmental unit, has made or shall make payments (other than as a member of the general public), directly or indirectly, accounting for more than 10%of such receipts; -20- (iv) The City has not permitted and will not permit with respect to the Certificates an amount of proceeds thereof exceeding the lesser of(a) $5,000,000 or(b) 5% of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than a governmental unit; and (v) The City will use $100,000 of the Net Proceeds of the Certificates to pay the costs of issuance of the Certificates. When used in this Section 23, the term "Net Proceeds" of the Certificates shall mean the proceeds from the sale thereof to the Underwriter, including investment earnings on such proceeds, less accrued interest with respect to such issue. (c) 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 Certificates 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) 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 Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates 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 Certificates, including interest or other investment income derived from the proceeds of the Certificates, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (e) 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 Certificates (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 Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates 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 Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every 5th anniversary date of the delivery of the Certificates, and within sixty (60) days after retirement of the Certificates, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with -21- respect to the gross proceeds of the Certificates that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (f) 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 Certificates are issued, an information statement concerning the Certificates, all under and in accordance with Section 149(e)of the Code and applicable regulations thereunder. Section 24. Application of Proceeds. Proceeds from the sale of the Certificates shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest shall be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund; and (b) The remaining proceeds from the sale of the Certificates, together with investment earnings thereof, shall be deposited into the Series 2006 Certificates of Obligation Construction Fund and shall be used for the purposes set out in Section 3 of this Ordinance, with any remainder constituting a reserve to be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund. 25. Open Meeting. 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 Chapter 551 of the Texas Government Code Annotated, Vernon's 1994, as amended, and such notice as given is hereby authorized, approved, adopted and ratified. 26. Re isg tray. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Certificates have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Certificates by the Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this -22- Ordinance. 29. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, the City Clerk, the City Treasurer, 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 issuance of the Certificates, 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 this Ordinance and to direct the application of funds of the City consistent with the provisions hereof. 30. No Personal Liability. No recourse shall be had for payment of the principal of or premium, if any, or interest on Certificate, or for any claim based thereon, or under this Ordinance, against any official or employee of the City or any person executing any Certificate. 31. Additional Obligations. The City undertakes and agrees for the benefit of the holders of the Certificates to provide directly, on or before six months after the end of the City's fiscal year,which fiscal year presently ends on September 30, a. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, annual financial information(which may be unaudited) and operating data regarding the City for fiscal years ending on or after January 1, 2006 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: SELECTED FINANCIAL INFORMATION DEBT STATEMENT TAX DATA SELECTED FINANCIAL DATA ADMINISTRATION OF THE CITY Appendix `B" b. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, audited financial statements for the City for fiscal years ending on or after January 1, 2006, when available, if the City commissions an audit and it is completed by the required time; provided that if audited statements are not commissioned or are not available by the required time, the City will provide unaudited statements when and if they become available. -23- C. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of any of the following events with respect to the Certificates, if material within the meaning of the federal security laws to a decision to purchase or sell Certificates: 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 Certificates; vii. Modifications to rights of Certificate holders; viii. Calls; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the Certificates; and xi. Rating changes. d. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of a failure of the City to provide required annual financial information and operating data, on or before six months after the end of the City's fiscal year. These undertakings and agreements are subject to appropriation of necessary funds and to applicable legal restrictions, if any. The accounting principles pursuant to which the City's financial statements are currently prepared are generally accepted accounting principles set out by the Government Accounting Standards Board, and, subject to changes in applicable law or regulations, such principles will be applied in the future. If the City changes its fiscal year, it will notify each nationally recognized municipal securities information repository and the appropriate state information depository of the change (and of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide annual financial information. -24- The City's obligation to update information and to provide notices of material events shall be limited to the agreements herein. The City shall not be obligated to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects and shall not be obligated to update any information that is provided, except as described herein. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Certificates at any future date. THE CITY DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL OWNERS OF CERTIFICATES MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS 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 paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The City may amend its continuing disclosure obligations and agreement in this Section 32 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 the agreement, as amended, would have permitted the Underwriter to purchase or sell the Certificates in compliance with SEC Rule 15c2-12, taking into account any amendments or interpretations of such Rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Certificates consent or 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 Certificates. The City may also amend or repeal the obligations and agreement in this Section 35 if the SEC amends or repeals the applicable provisions of Rule 15c2-12 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 the Underwriter from lawfully purchasing or reselling the Certificates in the primary offering of the Certificates in compliance with Rule 15c2-12. 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. The City's continuing obligation to provide annual financial information and operating data and notices of events will terminate if and when the City no longer remains an "obligated person" (as such term is defined in SEC Rule 15C2-12)with respect to the Certificates. 32. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. -25- 33. Effective Date. This Ordinance shall be in force and effect from and after its final passage, and it is so ordered. 34. 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. In the event that,on the second Business Day, and again on the Business Day,prior to the payment date on the Obligations, the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent/Trustee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agenarustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such -26- principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agenarustee and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received), (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee, and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agenarustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments,directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, principal and interest shall be deemed past due and not to have been paid),Y p p p p ) interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document,if any,circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order which does not require the consent of the bondholders, and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. -27- J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations, and (ii) any consent, amendment, waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved,together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3%or the maximum interest rate permitted by law, whichever is less. In addition, the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37,Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment; and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. M. The Issuer/Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if. (1) the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii)the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days, and (iii) the Issuer declares bankruptcy. In the event of default under this Bond Order,the Bond Insurer shall have the right to direct all remedies and the Insuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures, the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing -28- w ` document executed in connection herewith. Other than the usual redemption provisions,any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the following types of investments that are approved by the Bond Insurer. [The remainder of this page has intentionally been left blank]. -29- •f PASSED AND APPROVED this 5th day of December, 2006. Mayor, The City of Beaumont, Texas ATTEST: City Clerk, The City of Beaumont, Texas (SEAL) -30- 2 December 5, 2006 Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto t17EjJ-! City of Beaumont Council Agenda Item � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara of RBC Dain Rauscher. A recommendation will be made to award the bonds to the underwriter offering the lowest overall interest cost to the City. The revenue bonds will mature September 1, 2008 through September 1, 2030 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A.. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for the expansion, repair, renovation and related improvements to the waterworks and sewer system. BUDGETARY IMPACT All debt shall be incurred in the Water Fund which is supported by revenues of the waterworks and sewer system. I PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Chief Financial Officer. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 13,2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase = the Bonds. Upon the sale of the Bonds,the Official Statement will be completed and delivered to the Purchaser. f 2 IT IS ANTICIPATED THAT ON THE DELIVERY DATE FOR THE BONDS,BOND COUNSEL WILL RENDER AN OPINION THAT INTEREST ON THE BONDS IS EXCL UDABLE FRO:W GROSS LVCOa1E FOR FEDERAL LVCOME TAX PURPOSES UNDER EVISTING LAW AND THE BONDS ARE NOT PRIVATE ACTIVITY BONDS. SEE "LEGAL MATTERS- TAX EXEMPTION"HEREIN FOR A DISCUSSION OF BOND COUNSEL'S OPLVION,/:VCLU'DI,VG A DESCRIPTION OFALTERVATIYE M/,VZlfU.11 T.AJf CONSEQUENCES FOR CORPORATIONS. The City will not designate the Bonds as qualified tax-exempt obligations for financial institutions. NEW ISSUE-BOOK-ENTRY-ONLY $2090009000 THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) a WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A L Dated: December 1,2006 Principal Due: September 1 Principal of and interest on The City of Beaumont, Texas $20,000,000 Waterworks and Sewer System Revenue Bonds, Series 2006A (the ' "Bonds")are payable by The Bank of New York Trust Company,N.A., Dallas,Texas,the paying agentiregistrar(the"Registrar"). The Bonds ' are initially registered and delivered only to Cede&Co.,the nominee of The Depository Trust Company("DTC")pursuant to the Book-Entry- Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of$5,000 or integral multiples thereof. No -' physical delivery of the Bonds will be made to the beneficial owners thereof. Interest on the Bonds will accrue from December 1,2006 and is payable on March 1 and September 1 of each year,commencing September 1,2007,to the registered owners(initially Cede&Co.)appearing on the registration books of the Registrar on the 15th day of the month preceding each interest payment date(the "Record Date"). See THE y BONDS-Description." The Bonds are subject to redemption prior to their scheduled maturities on September 1,2016 or any date thereafter,at a price equal to the principal amount thereof plus accrued interest to the date of redemption. G The Bonds are special obligations of The City of Beaumont,Texas(the"City")and are payable solely from a first lien on and pledge of the Net - - Revenues (hereinafter defined) of the City's waterworks and sanitary sewer system. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR GENERAL OBLIGATION OF THE CITY AND ARE NOT PAYABLE FROM FUNDS RAISED OR TO BE RAISED s BY TAXATION. The lien on Net Revenues securing the Bonds are on a parity with the liens securing the City's outstanding Prior Lien Bonds r (as defined in the Ordinance). See"THE BONDS-Source of Payment." The proceeds of the Bonds will be used to provide funds for water and sewer system improvements and to pay certain costs incurred in connection with the issuance of the Bonds. (See "THE BONDS - Use of Proceeds"and"THE BONDS-Sources and Uses of Funds.") PRINCIPAL AMOUNTS,MATURITIES,INTEREST RATES AND PRICES v (Due September 1) 5 - - Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. s Maturity Amount Rate Yield(a) 074561(c) Maturity Amount Rate Yield(a) 074561(c) 2008 $ 100,000 % % 2020(b) $ 225,000 % % = 2009 100,000 2021(6) 225,000 Lr 2010 200,000 2022(b) 225,000 2011 200,000 2023(b) 225,000 2012 200,000 2024(b) 2,075,000 - 2013 200,000 2025(b) 2,180,000 2014 200,000 2026(b) 2,290,000 2015 200,000 2027(b) 2,400,000 2016 200,000 2028(b) 2,525,000 2017(b) 200,000 2029(6) 2.650,000 - -_ 2018(b) 200,000 2030(b) 2,780,000 2019(b) 200,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Bonds maturing on or after September 1,2017 are subject to redemption,at the option of the City,at the par value thereof plus accrued = interest,in whole or in part,on September 1,2016,or any date thereafter. J L (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies,Inc.,and are included solely for the convenience of the registered owners of the Bonds. Neither the City,the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbers set forth herein. The Bonds are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an ordinance(the"Ordinance")adopted by the City Council (the "City Council") of the City on December 5, 2006. The Bonds are offered when, as and if issued, subject to the approving opinion of the Attorney General of the State of Texas and the opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel for the City, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of Texas. See "LEGAL MATTERS." The Bonds are expected to be available for delivery on or about December 28.2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME } No. 3 ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE OF $20,000,000 THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (herein referred to as the "City" or the "Issuer") is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue bonds payable from the net revenues of its waterworks and sewer system to provide money for acquisitions, extensions, construction, improvement or repair of such system; and WHEREAS, the City now desires to issue bonds in order to provide funds to finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system; Now, Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Findings and Determinations. It is hereby found and determined that the matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 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 Chapter 1502, Texas Government Code, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance. The term "Blanket Issuer Letter of Representations" means the Blanket Issuer I V Letter of Representations between the City, the Registrar and DTC. The term "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment of principal and interest on the Bonds. The term "Bond Insurer" shall mean 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 $20,000,000 The City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A 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 "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 2 (but excluding any utility deposits) and the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, and the Reserve Fund. The term "Interest Payment Date", when used in connection with any Bond, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption of such Bond. 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 City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2006, 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. 3 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 "Registrar" shall mean The Bank of New York Trust Company, N.A., Dallas, Texas, 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 time. The term "SEC" shall mean the United States Securities and Exchange Commission. 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 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 "Underwriter" shall mean 3. Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of TWENTY MILLION DOLLARS ($20,000,000) for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds (the "Project"). 4 4. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A" and shall be dated December 1, 2006. The Bonds shall bear interest at the rates set forth in Section 5 below from the later of December 1, 2006, 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, 2007, and semiannually thereafter on March 1 and September 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 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. Bond Principal Interest Number Year Amount Rate R-1 2008 $ 100,000 % R-2 2009 $ 100,000 % R-3 2010 $ 200,000 % R-4 2011 $ 200,000 % R-5 2012 $ 200,000 % R-6 2013 $ 200,000 % R-7 2014 $ 200,000 % R-8 2015 $ 200,000 % R-9 2016 $ 200,000 % R-10 2017 $ 200,000 % R-11 2018 $ 200,000 % R-12 2019 $ 200,000 % R-13 2020 $ 225,000 % R-14 2021 $ 225,000 % R-15 2022 $ 225,000 % R-16 2023 $ 225,000 % R-17 2024 $2,075,000 % R-18 2025 $2,180,000 % R-19 2026 $2,290,000 % 5 I a R-20 2027 $2,400,000 % R-21 2028 $2,525,000 % R-22 2029 $2,650,000 % R-23 2030 $2,780,000 % 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. 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 6 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 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 7 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. 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, 8 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. 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. 9 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-EntySystem. (a) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriter,the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Bonds. (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 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. 10 (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. (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 and Mandatory Redemption. The City reserves the right, at its option, to redeem Bonds having stated maturities on and after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed,the City shall determine the Bonds, or portions thereof,to be redeemed. The Bonds maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms set out in the form of Bonds in this Order, at a price of par plus accrued interest to the date fixed for redemption. Bonds may be redeemed only in integral multiples of$5,000. If a Bond subject to redemption is in a denomination larger that $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. 11 Not less than thirty(30)days prior to a redemption date for the Bonds, the City shall cause a notice of redemption to be sent by United States mail, first class,postage prepaid, to each Owner of each Bond to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed 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. When Bonds have been called for redemption in whole or in part and due provision 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 being paid 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. 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 BONDS, SERIES 2006A 12 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 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 The Bank of New York Trust Company, N.A., Dallas, Texas (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 December 1, 2006, 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, 2007, mailed to the registered owner of record as shown on the books of registration kept by the Registrar as of the fifteenth day of the month next preceding each interest payment date. 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 $20,000,000 (the "Bonds"), issued for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds, pursuant to an ordinance adopted by the City Council on December 5, 2006 (the "Ordinance"), and in accordance with the authority of Chapter 1502, Texas Government Code, 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 Refunding Bonds, Series 1998, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding 13 Waterworks and Sewer System Revenue Bonds, Series 2005, 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 Interest and Sinking 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 HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY REVENUE BONDS, 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 the Bonds having stated maturities on or after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, in integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. THE BONDS maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the principal amount to be redeemed plus accrued interest to the redemption date: TERM BONDS DUE SEPTEMBER 1, Date ` Amount 9/1/2028 $2,525,000 9/1/2029 $2,650,000 9/1/2030 (Maturity) $2,780,000 14 I I The Paying Agent shall select for redemption by lot, or by any other customary method that results in random selection, a principal amount of Term Bonds equal to the aggregate principal 'amount of such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled mandatory redemption date, and shall give notice of such redemption in accordance with the Bond Order. The principal amount of Term Bonds required to be mandatorily redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall have been optionally redeemed and not previously credited against a mandatory redemption requirement. 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 owner 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 15 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. 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. (AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT, TEXAS (SEAL) Mayor City Clerk 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 16 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. The Bank of New York Trust Company,N.A. 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 to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED Signature Guaranteed: Registered Owner 17 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. STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $20,000,000 THE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A 18 1 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. 19 18. Legal Opinion; Cusip. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond 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. 19. (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, and (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) Construction Fund. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006, Construction Fund". Immediately after the sale and delivery of the Bonds, that portion of the proceeds of the Bonds to be used for the cost of the Project and the cost of issuance of the Bonds shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of the Project, interest earned on such proceeds may be used, at the City's discretion, for the Project and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1202.043 of the Texas Government Code, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of the Project, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. (c) 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: (i) to pay all Maintenance and Operation Expenses; and 20 (ii) 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. 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. (d) 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: (i) Waterworks and Sewer System Revenue Fund (the "Revenue Fund"); (ii) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund (the "Interest and Sinking Fund"); and (iii) 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. (e) 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: (i) First, to pay Maintenance and Operation Expenses and to provide 21 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. (ii) 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. (iii) 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 Additional Parity Bonds. (iv) Fourth, to pay any amounts due to any bond insurer of Parity Bonds not paid pursuant to subsections (ii) or(iii) above. (v) 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. (f) 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: (i) 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 (ii) 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. 22 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. (g) 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 (1/60 1h) 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 (1/601h) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount; provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below, then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. 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 23 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 bonds, 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 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 (and 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. (h) Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Section 19 the full amounts required herein, 24 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. (i) 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 transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 20. Additional Bonds. (a) Additional Parily 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 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 25 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. (b) 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. (c) 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. 21. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parily 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. (b) 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 26 operation of the System. (c) 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. (d) 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. 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. (e) 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. (f) 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. (g) 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 27 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. (h) 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 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. (i) 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. 28 (j) 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. (k) 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. (1) Obligations 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 of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of the Bonds, plus a premium of $ . In addition thereto, at the time of delivery the Underwriter shall pay to the City the accrued interest on the Bonds to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Bonds 29 and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Bonds. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Bond Insurance Policy, and the printing on the Bonds covered by the Bond Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 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 30 use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal 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 31 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 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: (i) Accrued interest, if any, shall be deposited into the Interest and Sinking Fund; (ii) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds, with any remaining portion thereof to be deposited into the Construction Fund and used to pay the costs of the Project; and (iii) The sum of $ from the sale of the Bonds shall be deposited into the Construction Fund and used to pay the costs of the Project; and (iv) Any proceeds from the Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 26. Re istrar. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Underwriter is hereby approved, authorized and ratified. The proper officials 32 of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. 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. 29. 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 "SELECTED FINANCIAL INFORMATION", "CITY REVENUE DEBT", "ADMINISTRATION OF THE CITY", "THE SYSTEM-Water and Sewer Rates" 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. (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; 33 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. Modifications to 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, 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. 34 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 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 underwriter 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. 30. 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 Chapter 551 of the Texas Government Code. 31. 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. 35 32. 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. In the event that on the second Business Day,and again on the Business Day,prior to the payment date on the Obligations,the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following,as the case may be,Business Day,the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws,then the Paying Agent/Tnistee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice,confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agent/Trustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders;and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating 36 to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent/Trustee and available for such payment(but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received),(b)receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee,and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations,and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent/Trustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid),with interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders,and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations,the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order 37 which does not require the consent of the bondholders,and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and,on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with(i)the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations,and(ii)any consent,amendment,waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved, together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law, whichever is less. In addition,the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37, Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment;and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. 38 M. The Issuer /Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if:(1)the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii) the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days,and(iii)the Issuer declares bankruptcy. In the event of default under this Bond Order, the Bond Insurer shall have the right to direct all remedies and the Issuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures,the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing document executed in connection herewith. Other than the usual redemption provisions, any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the types of investments that are approved by the Bond Insurer be used for such purpose. 33. Special Provisions Relating to Reserve Policy. The purchase of and payment of the premium for a Surety Policy to be issued by the Insurer to fund the Reserve Fund requirement under Section 19(f) of this Ordinance in accordance with the terms of a commitment for such policy presented to and hereby approved by the City Council is hereby authorized. Hereinafter such Surety Policy shall be referred to as the "Reserve Policy". So long as the Reserve Policy is in effect, the following provisions shall apply and be applicable: A. In setting the rates and charges for use and services of the System pursuant to Section 19(b) above, the City agrees to establish sufficient rates so as to generate sufficient revenues to pay all amounts owed to the Bond Insurer. B. The Paying Agent/Registrar shall deliver a demand for payment to the Bond Insurer in the form required by the Bond Insurer at least three days prior to the date on which funds are required. C. The Bond Insurer must be paid all amounts owed to it under the terms of the Financial Guaranty Agreement or any other documents before this Bond Order and any financing documents executed in connection herewith may be terminated. D. It shall be the responsibility of the Paying Agent/Registrar to maintain 39 adequate records, verified with the Bond Insurer,as to the amount available to be drawn at an given time udner the Reserve Policy and as to amounts paid and owing to the Bond Insurer under the terms of the Financial Guaranty Agreement. E. There may be no optional redemption of the Bonds or distribution of any funds to the Issuer unless all amounts owed to the Bond Insurer under the terms of the Financial Guaranty Agreement or any other documents have been paid. [The remainder of this page has intentionally been left blank.] 40 PASSED AND APPROVED this 5th day of December, 2006. Mayor The City of Beaumont ATTEST: City Clerk The City of Beaumont (SEAL) 41 3 December 5,2006 Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department �4~- " City of Beaumont •� Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tyrone E. Cooper, City Attorney MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider Amendments to Section 21-75, of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department. RECOMMENDATION Council consider amendments to Section 21-75, of the Code of Ordinances, increasing Grade III positions from 12 to 16 and reducing the number of Grade II positions from 44 to 40. BACKGROUND In an effort to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al, involving the promotion of several Grade II Sergeants to the position of Lieutenant, it is recommended that four (4)Lieutenant positions be added to the Police Department. However, the intent of the settlement is not increase the total number of positions in the Department. To achieve the intended purpose, it is necessary to reduce the total number of Grade II positions by four (4). By doing so, the total number of positions in the Department will remain unchanged. These positions are not needed for the orderly and efficient operation of the department. It is also intended and agreed that the four(4) new Lieutenant positions will be reduced by attrition as the positions become vacant in the future. BUDGETARY IMPACT The above changes will cost an estimated $22,000 if spread over a twelve(12) month period. PREVIOUS ACTION None. TO: Kyle Hayes DATE: November 29, 2006 FROM: Tyrone E. Cooper MEETING DATE: December 5, 2006 SUBJECT: Amend Ord. No. 06-055 Page 2/2 SUBSEQUENT ACTION None RECOMMENDED BY City Manager, Chief of Police and City Attorney ORDINANCE NO. ENTITLED AN ORDINANCE AMENDING SECTION 21-75,OF THE CODE OF ORDINANCES, CHANGING THE TOTAL NUMBER OF GRADE II AND GRADE III POSITIONS IN THE BEAUMONT POLICE DEPARTMENT; PROVIDING FOR SEVERABILITY AND PROVIDING FOR REPEAL. WHEREAS, the City Council of the City of Beaumont has agreed to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al; and, WHEREAS, settlement will require the addition of four(4) new Lieutenant positions in the Police Department and the abolishing of four(4) Sergeant positions in order that the total number of positions in the Department remain unchanged. The four (4) Sergeant positions are not needed for the orderly and efficient operation of the Department. BE IT ORDAINED BY THE CITY OF BEAUMONT: Section 1. THAT Chapter 21, Section 21-75 of the Code of Ordinances of the City of Beaumont be and the same is hereby amended to read as follows: Section 21-75. Grades and Classifications - Police Department The following grades and classifications are hereby established within the Police Department. Grade Classification Positions I Officers 199 II Sergeants 40 III Lieutenants 16 IV Captains 3 Assistant Chief 1 Total 259 Section 2. That if any section, subsection, sentence, clause or phrase of this ordinance, or the application of same to a particular set of persons or circumstances, should for any reason be held to be invalid, such invalidity shall not affect the remaining portions of this ordinance, and to such end the various portions and provisions of this ordinance are declared to be severable. Section 3. All ordinances or parts of ordinances in conflict herewith, including conflicting portions of the City Budget, are repealed to the extent of the conflict only. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - 4 December 5, 2006 Consider approving a contract for the Main Street (Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Public Works Director MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 22, 2006 REQUESTED ACTION: Council consider a resolution authorizing the award of a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project in the amount of$6,377,885.59. RECOMMENDATION Administration recommends awarding the contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project to Brystar Contracting, Inc. in the amount of $6,377,885.59. BACKGROUND On November 16, 2006, the City of Beaumont received three (3) bids for the Main Street (Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project. The lowest bid was submitted by Brystar Contracting, Inc. in the amount of$6,377,885.59. A copy of the Bid Tabulation sheets is attached. The MBE participation will be met through subcontracts with Crabtree Barricade System, Inc., Highway Pavement Specialities,Inc., O.A. Moreno andAssociates,Texas Mechanical,and Wholesale Electric for a total of$1,251,000 which represents 19.61 percent of the contract amount. A copy of the Schedule of MBE Participation sheet is attached. BUDGETARY IMPACT Funds are available for this project in the Capital Improvement Program Fund. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, Public Works Director and City Engineer. EngMainStreetContract.wpd November 28,2006 CITY OF BEAUMONT / SCHEDULE OF MBE PARTICIPATION NAME CERTIFIED MBE CONTRACTOR ADDRESS TYPE OF WORK AGREED PRICE f rsb�rge �arri t 'p.0, J3o1� Did 3 �arr�c.�ts , 5;1"s, -t 8 rj 1 600 . d 6 y s-1en,s 734pay.0n+ 77( 7'7'��o and -rraT_ d4.d le Se- 4) , 000 oa �.A. iV10R�nb �.'45SoG . j31 50) .�45],-�vr� po;nr Q^_ �r�clL Pars -i- ZG�I (3Oc=) Cxc� eKa s f V�l ,.:cam, l J,0` 3 x 7523 ee -� `3 00, 4"2910 iN_ La44" fir_ cGf.c�c! /��:e. 560 t 000 , 00 TX The undersigned will enter into a formal agreement with MBE Contractors for work listed in this schedule conditioned upon execution of a contract with the City of Beaumont. NOTE: 1. This schedule should be submitted with your bid. SIG ATURE 13 r y�i n 1 �+e fps TITLE CITY OF FONT MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 1 OF 4 APAC-TEXAS Item Item BRYSTAR CONTRACTING ALLCO,LTD INC. No. Code Alt Description Unit Estimated Unit Total Unit Total Unit Total Measure Quantity Price PUBLIC WORKS Price Price 104 001 REMOVING CONCRETE CURB&GUTTER COMBINED) LF 9,625.00 104 002 REMOVING CONCRETE DRIVEWAYS)(6") $7.50 $72,187.50 $9.00 $86,625.00 $6.00 $57,750.00 104 003 REMOVING CONCRETE SIDEWALK&W.C.RAMPS 4" SY 1,693.75 $7.00 $11,856.25 $13.00 $22,018.75 $12.40 $21,002.50 104 004 SAW CUT AT BUILDING FULL DEPTH ( ) SY 6,826.11 $8.00 $54,608.88 $13.00 $68,739.43 $21.00 $143,348.31 104 005 REMOVE CONCRETE ROADWAY 6"-10" LF 10,774.00 $1.25 $13,467.50 $3.50 $37,709.00 $8.00 $86,192.00 110 001 EXCAVATION CURB AND&GUTTER COMBINED(12") CY 28'21522 $7.00 $200,970.00 $9.00 $258,390.00 $15.80 $453,618.00 110 002 EXCAVATION DRIVEWAYS 10") $15.00 $3,228.30 $40.00 $8,608.80 $8.00 $1,721.76 110 003 EXCAVATION SIDEWALK&WHEEL CHAIR RAMPS 8" CY 470.49 $15.00 $7,057.35 $36.00 $16,937.64 $28.00 $13,173.72 110 004 EXCAVATION ROADWAYS ( ) CY 1,516.14 $15.00 $22,742.10 $33.00 $50,032.62 $58.00 $87,936.12 CY 3,500.00 $12.00 $42,000.00 $20.00 $70,000.00 $44.00 $154,000.00 247 001 FLEX BASE(TY A)GR.1)(8"(CL5 DC)(DEL SIDEWALK&W.C.RAMPS SY 6,826.11 247 002 FLEX BASE A GR.1)(1 2")(CL5)(DC)(DEL CURB&GUTTER COMB. SY 645.67 $20.00 $136,522.20 $21.50 $146,761.37 $21.00 $143,348.31 260 001 LIME TREATED SUBGRADE 5"DS 7% - $30.00 $19,370.10 $35.00 $22,598.45 $36.00 $23,244.12 264 001 LIME 7Y.C SLURRY SY 28,526.67 $3.95 $112,680.35 $2.75 $78,448.34 $3.50 $99,843.35 276 001 CEM TRT BASE(STG.L(TYA)(CL 5)(GR.3)(10" DRIVEWAYS TON 524.86 $130.00 $68,231.80 $128.00 $67,182.08 $120.00 $62,983.20 276 002 CEM TRT BASE(STG.L(TYAxCL 5(GR:3 6" ROADWAY SY 1,693.75 $30.00 $50,812.50 $33.00 $55,893.75 $45.00 $76,218.75 300 001 ASPHALTIC MATERIAL(CRS2 SY 27,429.67 $14.00 $384,015.38 $14.00 $384,015.38 $18.00 $493,734.06 340 001 HOT MIX AS PHALT CONCRETE TYPED 1-1/2") TON -1,2-9 .00 .00 $3.00 $3,669.00 $3.70 $4,525.10 $5.00 $6,115.00 345 001 ASB GR.1 6" $125.00 $36,500.00 $115.00 $33,580.00 $161.00 $47,012.00 345 002 ASB GR.1 PIPE 6" TON 166.00 $140.00 $23,240.00 $86.00 $14,276.00 $105.00 $17,430.00 354 001 PLANING PAVEMENT 1-1/2") TON 442.00 $140.00 $61,880.00 $120.00 $53,040.00 $150.00 $66,300.00 356 001 FABRIC UNDERSEAL SY 3,494.00 $1.00 $3,494.00 $4.80 $16,771.20 $1.00 $3,494.00 360 001 CONCRETE PAVEMENT(10" CL P SY 5,425.67 $2.00 $10,851.34 $1.60 $8,681.07 $1.50 $8,138.51 400 001 STRUCTURAL EXCAVATION PROP.PIPES(STORM SEW. SY 26,899.67 $47.00 $1,264,284.49 $50.00 $1,344,983.50 $63.00 $1,694,679.21 400 002 STRUCTURAL EXCAVATION PROP.INLETS&MH STM SEW. CY 3,610.00 $9.00 $32,490.00 $0.10 $361.00 $9.00 $32,490.00 003 CEM STAB SAND BKFL(2 SA 400 CK PROP.PIPES STM SWR) CY 500.00 $10.00 $5,000.00 $0:10 $50.00 $9.00 $4,500.00 CY 2,936.00 $42.00 $123,312.00 $46.00 $135,056.00 $65.00 $190,840.00 400 004 CEM STAB SAND BKFL 2 SACK PROP.INLETS&MH STM SWR) CY 256.00 464 001 RCP 12" STORM SEW. $42.00 $10,752.00 $46.00 $11,776.00 $65.00 $16,640.00 464 002 RCP 18" STORM SEW. LF 78.00 $0.00 $0.00 $0.00 $0.00 $130.00 $10,140.00 464 003 RCP 24" STORM SEW.) LF 1,900.00 $0.00 $0.00 $0.00 $0.00 $140.00 $266,000.00 4fi4A 001 1 12"HDPE STM SWR TY S LF 126.00 $0.00 $0.00 $0.00 $0.00 $150.00 $18,900.00 464A 002 1 18"HDPE STM SWR TY S LF 78.00 $35.00 $2,730.00 $83.50 $6,513.00 $0.00 $0.00 464A 003 1 24"HDPE STM SWR TY S LF 1,900.00 $47.00 $89,300.00 $88.00 $167,200.00 $0.00 $0.00 465 001 CURB INLETS TYPE C LF 126.00 $58.00 $7,308.00 $94.00 $11 844.00 $0.00 $O.DO 465 002 CURB INLETS TYPE C WITH EXTENSION EA 22.00 $3,050.00 $67,100.00 $2,850.00 $62,700.00 $5,500.00 $121,000.00 465 003 MANHOLE TYPE M(STORM SEW EA 10.00 $3,500.00 $35,000.00 $3,275.00 $32,750.00 $7,300.00 $73,000.00 465 004 MANHOLE TYPE M WITH PIPE SADDLE(STORM SEW) -EA 7.00 $5,000.00 $35,000.00 $4,600.00 $32,200.00 $7,300.00 $51,100.00 465 005 GRATE INLET YH) 2.00 $8,500.00 $17,000.00 $9,830.00 $19,660.00 $4,400.00 $8,800.00 479 001 ADJUST MANHOLE EA 1.00 $8,000.00 $8,000.00 $2,130.00 $2,130.00 $4,500.00 $4,500.00 479 002 ADJUST STEEL PLATE COVER EA 20.00 $500.00 $10,000.00 $520.00 $10,400.00 $650.00 $13,000.00 479 003 ADJUST METAL GRATE COVER EA 7.00 $500.00 $3,500.00 $820.00 $5,740.00 $900.00 $6,300.00 479 004 ADJUST CONCRETE PANEL BOX EA 2.00 $1,250.00 $2,500.00 $820.00 $1,640.00 $900.00 $1,800.00 EA 3.00 $550.00 $1,650.00 $850.001 $2,550.00 $650.00 $1;950.00 CITY OF B IPONT BID MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 2 OF 4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. Item Item Unit Estimated Unit Total Unit Total Unit Total No.79 Code Alt Descri tion Measure Quantity Price Price Price 479 005 ADJUST MANHOLE STORM SEW.) EA 3.00 $500.00 $1,500.00 $770.00 $2,310.00 $3,200.00 $9,600.00 496 004 REMOVE WATER VALVE EA 51.00 $100.00 $5,100.00 $385.00 $19,635.00 $140.00 $7,140.00 496 005 REMOVETELEPHONEBOOTH EA 1.00 $100.00 $100.00 $93.50 $93.50 $500.00 $500.00 496 006 REMOVE PARKING METER EA 6.00 $90.00 $540.00 $100.00 $600.00 $450.00 $2,700.00 496 007 REMOVE FIRE HYDRANT EA 10.00 $250.00 $2,500.00 $500.00 $5,000.00 $300.00 $3,000.00 496 008 REMOVE OLD STRUCTURES(MH(SAN.SEW. EA 21.00 $700.00 $14,700.00 $550.00 $11,550.00 $300.00 $6,300.00 496 009 REMOVE OLD PIPES STORM SEW. LF 1,618.00 $8.00 $12,944.00 $32.00 $51,776.00 $14.00 $22,652.00 496 010 REMOVE OLD STRUCTURES(INLETS) EA 30.00 $700.00 $21,000.00 $980.00 $29,400.00 $430.00 $12,900.00 496 011 REMOVE OLD STRUCTURES(MH)(STORM SEW.) EA 9.00 $700.00 $6,300.00 $2,375.00 $21,375.00 $430.00 $3,870.00 496 012 REMOVE PED.SIG.FOUNDATION EA 5.00 $500.00 $2,500.00 $82.00 $410.00 $84.00 $420.00 496 013 REMOVE TRAF.SIG FOUNDATION EA 22.00 $850.00 $18,700.00 $220.00 $4,840.00 $220.00 $4,840.00 496 014 REMOVE JUNCTION BOX 500 001 MOBILIZAT EA 16.00 $650.00 $10,400.00 $55.00 $880.00 $56.00 $896.00 50 ION - 2 001 BARR.,SIGNS AND TRAFFIC HANDLING LS 1.00 $350,000.00 $350,000.00 $402,174.04 $402,174.04 $444,000.00 $444,000.00 529 001 CONCRETE CURB&GUTTER COMBINED CL A MO 15.00 $2,200.00 $33,000.00 $3,640.00 $54,600.00 $2,O00.DO $30,000.00 ( LF 1,025.00 $24.00 $24,600.00 $20.00 $20,500.00 $19.00 $19,475.00 529 002 REINF.CONC.RESTRAINING BLOCK 6"x9")(CL A)(SIDEWALK) LF 9,348.00_ $10.00 $93,480.00 $13.50 $126,198.00 $15.50 $144,894.00 529 003 REINF.CONC.RESTRAINING BLOCK 6"x12")(CL A)(DRIVEWAYS) LF 1,457.40 $14.00 $20,403.60 $15.00 $21,86-1.00 $20.00 $29,148.00 529 004 CONCRETE CURB(I Y II)MONO LF 10,091.00 $3.50 $35,318.50 $4.30 $43,391.30 $3.30 $33,300.30 530 001 DRIVEWAYS 10" CL A) SY 208.00 001 $65.00 $13,520.00 $67.00 $13,936.00 $68.00 $14,144.00 531 SIDEWALK 4") SF 1,350.00 $4.00 $5,400.00 $7.65 $10,327.50 $6.50 $8,775.00 540 001 METAL BEAM GUARD FENCE LF 120.00 $42.00 $5,040.00 $33.00 $3,960.00 $45.00 $5,400.00 2010 001 TRENCH SAFETY SYSTEMS LF 4,760.00 $1.00 $4,760.00 $1.00 $4,760.00 $1.00 $4,760.00 5009 001 TEMP SEDIMENT CONTROL FENCE INSTALL LF 1,520.00 $2.25 $3,420.00 $3.30 $5,016.00 $1.60 $2,432.00 5009 002 TEMP SEDIMENT CONTROL FENCE REMOVE&REPLACE) LF 1,520.00 $2.75 $4,180.00 X$2 $3,952.00 $2.55 $3,876.00 5009 003 TEMP SEDIMENT CONTROL FENCE REMOVE LF 1,520.00 $0.50 $760.00 $2,584.00 $1.10 $1,672.00 9000 001 BRICK CL SAND FILLERS&BEDDING)(SIDEWALK) SF 61,437.00 $3.00 $184,311.00 230,388.75 $3.25 $199,670.25 9000 002 BRICK PAVERS(INCL SAND FILLERS&BEDDING)(W.C.RAMPS SF 2,34980 $700 $16,448.60 $8,811.75 $7.50 $17,623.50 9000 003 BRICK PAVERS INCL SAND FILLERS&BEDDING DRIVEWAYS) SF 15,243.75 $4.00 $60,975.00 $57,164.06 $4.20 $64,023.75 9000 004 BRICK PAVERS INCL SAND FILLERS&BEDDING MEDIANS) SF -7,040.00 $4.50 $31,680.00 $26,400.00 $5.00 $35,200.00 9000 005 ALT BRICK PAVERS INCL SAND FILLERS&BEDDING)CROSSWALKS SF 8,235.00 $D.DO $0.00 $30,881.25 $4.60 $37,881.00 9005 001 BUILDING WATER PROOFING LF 1,562.00 $1.00 $1,562.00 $28,116.00 $1.60 $2,499.20 9010 001 BOX DRAINS EA 25.00 $1,250.00 $31,250.00 $900.00 $22,500.00 $2,600.00 $65,000.00 9030 001 RAILROAD FLAGGING DAY 10.00 $5 0.001 $5,000.00 $1,150.001 $11,500.00 $1,340.00 $13,400.00 PUBLIC WORKS TOTAL $4,075,703.74 $4,649,278.63' $5,834,234.9 i TRANSPORTATION 12'FIBERGLASS LAMP POLE COMPLETE 610 001 INCLUDING ELEC.WIRINGS)(SINGLE FIXTURES) EA 92.00 $3,500.00 $322,000.00 $3,320.00 $305,440.00 $3,200.00 $294,400.00 611 001 REMOVE RDWY ILLUMINATION ASSEMBLIES EA 17.00 $625.00 $10,625.00 $310.00 $5,270.00 $290.00 $4,930.00 618 001 2"PVC SCHED 40 CONDUIT INCL.GEM.STAB SAND BKFL) LF 7,365.00 $7.50 $55,237.50 $10.00 $73,650.00 $10.00 $73,650.00 624 001 JUNCTION BOXES EA 47.00 $750.00 $35,250.00 $500.00 $23,500.00 $500.00 $23,500.00 629 001 REMOVE SERVICE POLE EA 2.00 $250.00 $500.00 $275.00 $550.00 $280.00 $560.00 644 001 SMALL ROADWAY SIGN ASSEMBLIES EA 31.00 $600.00 $18,600.00 $550.00 $17,050.00 $500.00 $15,500.00 CITY OF ONT BID MAIN STREET(CALDER TO BLANCHETTE)BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 3OF4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. r6556Item Unit Estimated Unit Total Unit Total Unit Total Code Alt Descri lion Measure Quantity Price Price Price 001 REMOVE ROADSIDE SIGN ASSEMBLIES EA 37.00 $50.00 $1,850.00 $98.00 $3,626.00 $60.00 $2,220.00 001 12'FIB SIGNAL FOUNDATION EA 19.00 $750.00 $14,250.00 $2,480.00 $47,120.00 $2,540.00 $48,260.00 002 12'FIBERGLASS LAMP POLE FOUNDATION(COMPLETE) EA 92.00 $300.00 $27,600.00 $330.00 $30,360.00 $336.00 $30,912.00 003 PEDESTRIAN SIGNAL FOUNDATION EA 7.00 $360.00 $2,520.00 $425.00 $2,975.00 $436.00 $3,052.00 004 TRAFFIC SIGNAL CONTROLLER FOUNDATION EA 5.00 $1,300.00 $6,500.00 $1,375.00 $6,875.00 $1,410.00 $7,050.00 001 REFL PAV MRKG TY II Y)(4")(SLD)REMOVABLE LF 5,862.00 $1.50 $8,793.00 $1.65 $9,672.30 $1.60 $9,379.20 002 REFL PAV MRKG TY II Y)(4")(SLD) NONREMOVABLE LF 5,910.00 $0.95 $5,614.50 $1.00 $5,910.00 $1.00 $5,910.00 001 REFL PAV MRKG TY-II Y)(4")(SLD) LF 5,350.00 $0.95 $5,082.50 $1.00 $5,350.00 $1.001 $5,350.00 666 002 REFL PAV MRKG TY-II(Y(4")(BRK LF 308.00 $1.00 $308.00 $1.10 $338.80 $1.05 $323.40 666 003 REFL PAV MRKG TY-II )4")SLD LF 295.00 $1.00 $295.00 $1.10 $324.50 $1.05 $309.75 666 004 REFL PAV MRKGTY-II )(4" BRK LF 1,493.00 $1.00 $1,493.00 $1.10 $1,642.30 $1.05 $1,567.65 666 005 REFL PAV MRKG TY-II(W)8")(SLD) LF 591.00 $1.25 $738.75 $1.35 $797.85 $1.30 $768.3C 666 006 REFL PAV MRKG TY-II W)(12")(SLD) LF 2,704.00 $1.95 $5,272.80 $2.00 $5,408.00 $2.00 $5,408.00 666 007 REFL PAV MRKG TY-II Y(12")(SLD) LF 20.00 $1.95 $39.00 $2.00 $40.00 $2.00 $40.00 666 008 REFL PAV MRKGTY-II W(24")(SLD) LF 567.00 $3.00 $1,701.00 $3:30 $1,871.10 $3.05 $1,729.35 666 009 REFL PAV MRKGTY-II(W)(WORD) EA 8.00 $150.00 $1,200.00 $163.00 $1,304.00 $160.00 $1,280.00 666 010 REFL PAV MRKG TY-II(W)(ARROW) EA 8.00 $75.00 $600.00 $82.00 $656:00 $82.00 $656.00 666 011 REFL PAV MRKG TY-II(R)(SLD CURB) LF 576.00 $0.95 $547.20 $1.00 $576.00 $1.00 $576.00 666 012 REFL PAV MRKG Y)SLD CURB) LF 1,584.00 $0.90 $1,425.60 $1.00 $1,584.00 $1.00 $1,584.00 666 013 RAILROAD CROSSING EA 4.00 $200.00 $800.00 $220.00 $880.00 $210.00 $840.00 672 001 RATS PV MRKR CL B(REFL TY I-C EA 144.00 $5.00 $720.00 $5.50 $792.00 $5.25 $756.00 672 002 RATS PV MRKR CL B REFL)TY II-A-A EA 161.00 $5.00 $805.00 $5.50 $885.50 $5.25 $845.25 677 001 REMOVE PAVEMENT MARKINGS(STRIPING LF 94.00 $3.00 $282.00 $3.25 $305.50 $3.10 $291.40 680 001 TRFFIC SIGNAL CONTROLLER EA 5.00 $43,000.00 $215,000.00 $6,100.00 $30,500.00 $5,040.00 $25,200.00 682 001 TRAFFIC SIGNAL HEADS EA 44.00 $1,200.00 $52,800.00 $800.00 $35,200.00 $830.00 $36,520.00 682 002 PEDESTRIAN SIGNAL HEADS EA 44.00 $900.00 $39,600.00 $590.00 $25,960.00 $600.00 $26,400.00 686 001 TRAFFIC SIGNAL POLE ASSEMBLY 686 002 PEDE EA 20.00 $15,000.00 $300,000.00 $10,300.00 $206,000.00 $9,800.00 $196,000.00 STAL POLE ASSEMBLY EA 9.00 $4,200.00 $37,800.00 $3,400.00 $30,600.00 $3,300.00 $29,700.00 9020 001 REMOVE PEDESTRIAN SIGNAL ASSEMBLIES EA 7.00 $400.00 $2,800.00 $200.00 $1,400.00 $200.00 $1,400.00 9020 002 REMOVE IKAFFIC SIGNAL ASSEMBLIES EA 23.00 $950.00 $21,850.00 $710.00 $16,330.00 $720.00 $16,560.00 9035 001 LED STREET LIGHTS EA 19.00 $4,200.00 $79,800.00 $3,150.00 $59,850.00 $3,000.00 $57,000.00 9045 001 VIDEO DETECTORS EA 12.00 $6,975.00 $83,700.00 $5,400.00 $64,800.00 $5,400.00 $64,800.00 TRANSPORTATION TOTAL $1,363,999.85 $1,025,393.85 WATER UTILITIES $995,228.30 702 001 6"PVC OPEN TRENCH SAN SEW) LF 100 $45.00 $4,500.00 $86.00 $8,600.00 $49.00 $4,900.00 708 001 MANHOLE(FIBERGLASS EA 3 $3,100.00 $9,300.00 $2,700.00 $8,100.00 $3,400.00 $10,200.00 807 003 16"XS"MJTEE EA 2 $1,550.00 $3,100.00 $975.00 $1,950.00 $1,700.00 $3,400.00 8)7 004 16"X 6"MJ TEE EA 3 $1,500.00 $4,500.00 $900.00 $2,700.00 $1,600.00 $4,800.00 807 005 16"X4"MJTEE EA 1 $1,450.00 $1,450.00 $950.00 $950.00 $1,550.00 $1,550.00 807 006 12"X12"MJTEE EA 2 $1,000.00 $2,000.00 $575.00 _ $1,150.00 $1,000.00 $2,000.00 807 007 12"X 8"MJ TEE EA 6 $900.00 $5,400.00 $500.00 $3,000.00 $95000 $5,700.00 807 008 12"X 6"MJTEE EA 9--1 850.001 $7,650.001 500.00 $4,500.00 900.00 $8,100.00 CITY BI*ONT BI MAIN STREET(CALDER TO BLANCHETTE) BRICK PAVED SIDEWALK AND ROADWAY RECONSTRUCTION PROJECT PAGE 4 OF 4 APAC-TEXAS BRYSTAR CONTRACTING ALLCO,LTD INC. Item Item - Unit Estimated Unit Total Unit Total Unit Total No. Code Alt Description Measure Quantitv Price 807 009 12"X 4"MJ TEE Price Price EA 2 $800.00 $1,600.00 $450.00 $900.00 $850.00 $1,700.00 807 010 8"X8"MJTEE EA 3 $500.00 $1,500.00 $335.00 $1,005.00 $510.00 $1,530.00 807 011 6"X 6"45 TEE EA 1 $350.00 $350.00 $285.00 $285.00 $360.00 $360.00 807 012 16"MJ 45 BEND 807 013 6"MJ 45 BEND EA 1 $1,200.00 $1,200.00 $800.00 $800.00. $1,300.00 $1,300.00 12"MJ D EA 2 $700000 $1,400.00 $400.00 $800.00 $750.00 $1,500,00 807 015 6" BEN 807 014 MJ 90 0 BEN D BEN EA 2 $600.00 $1,200.00 $285.00 $570.00 $630.00 $1,260.00 EA 1 $400.00 $400.00 $200.00 $200.00 $420.00 $420,00 807 016 8"MJ 22-1l2 BEND EA 4 $600.00 $2,400.00 $260.00 $1,040.00 $610.00 $2,440.00 807 017 16"X 8"MJ WYE EA 1 $2,000.00 $2,000.00 $1,425.00 $1,425.00 $2,100.00 $2,100.00 807 018 16"X6"MJWYE EA 1 $2,000.00 $2,000.00 $1,375.00 $1,375.00 $2,100.00 $2,100.00 807 019 16"X4"MJ WYE EA 1 $2,000.00 $2,000.00 $1,375.00 $1,375.00 $2,100.00 $2,100.00 807 021 16"X12"MJREDUCER EA 1 $1,000.00 $1,000.00 $550,00 $550.00 $1,050.00 $1,050.00 807 022 8"X E V REDUCER $400.00 $400.00 $200.00 $200.00 $420.00 807 023 12"SERVICE SADDLE EA 1 $420.00 $600.00 $6,600.00 $800.00 $8,800,00 $620.00 808 001 FIRE HYDRANT 19 $6,820.00 810 001 6"PVC OPEN TRENCH(WATER) $2,400.00 $21,600.00 $2,330.00 $20,970.00 $2,500.00 $22,500.00 810 002 8"PVC OPEN TRENCH(WATER) LF 331 $72.00 $23,832.00 $90.00 $29,790.00 $75.00 $24,825.00 810 003 12"PVC OPEN TRENCH WATER LF 1166 $75.00 $87,450.00 $92.00 $107,272.00 $80.00 $93,280,00 810 004 16"PVC OPEN TRENCH(WATER) LF 142 $85.00 $12,070.00 $105.00 $14,910.00 $90.00 $12,780.00 810 006 4"PVC SHORT SIDE SERVICE CONNECTION LF 1216 $80.00 $97,280.00 $115.00 $139,840.00 $87.00 $105,792.00 810 007 4"PVC LONG SIDE SERVICE CONNECTION LF 70 $50.00 $3,500.00 $21.66 $1,516.20 $52.00 $3,640.00 810 008 2"HDPE SHORT SIDE SERVICE CONNECTION LF 52 $85.00 $4,420.00--$27.66 $1,438.32--$90.00 $4,680.00 810 009 2"HDPE LONG SIDE SERVICE CONNECTION LF 195 $40.00 $7,800.00 $8.34 $1,626.30 $43.00 $8,385.00 810 010 1"HDPE LONG SIDE SERVICE CONNECTION LF 105 $70.00 $7,350.00 $17.34 $1,820.70 $75.00 $7,875.00 811 001 4"WATER VALVE LF 65 $60.00 $3,900.00 $16.74 $1,088.10 $65.00 $4,225.00 811 002 6"WATER VALVE 4 $500.00 $2,000.00 $725.00 $2,900.00 $540.00 $2,160.00 811 003 8"WATER VALVE EA 17 $650.00 $11,050.00 $800.00 $13,600.00 $700.00 $11,900.00 811 004 12"WATER VALVE EA 15 $1,000.00 $15,000.00 $1,350.00 $20,250.00 $1,050.00 $15,750.00 811 005 16"WATER VALVE EA 17 $1,800.00 $30,600.00 $1,785.00 $30,345.00 $1,900.00 $32,300.00 813 001 12"PVC WATER BORE) EA 11 $5,500.00 $60,500.00 $4,825.00 $53,075.00 $6,000.00 $66,000.00 LF 2774 $100.00 $277,400.00 $140.00 $388,360.00 $105.00 $291,270.00 2534 001 SAN SEW SERVICE STUB OR RECONNECT EA 1 $2,400,00 $2,400,00 $3,800.00 $3,800.00 $2,600.00 $2,600.00 3301 001 MANHOLE PRECAST EA 12 $3,100.00 $37,200.00 $5,300.00 $63,600.00 $3,200.00 $38,400.00 4020 001 6"HDPE PIPE BURST SAN SEW LF 608 $45.00 $27,360.00 $50.00 $30,400.00 $49.00 $29,792.00 4020 002 8"HDPE PIPE BURST SAN SEW LF 451 $70.00 $31,570.00 $99.00 $44,649.0D $75.00 $"x3,825.00 4020 003 12"HDPE PIPE BURST SAN SEW LF 860 $115.00 $98,900.00 $140.00 $120,400.00 $126.00 $108,360.00 4020 004 16"HDPE PIPE BURST SAN SEW LF 58 $225.00 $13,050.00 $218.00 $12,644.00 $240.00 $13,920.00 WATER UTILITIES TOTAL $938A82.001 $1,154.569.62 $1.00( 009.00 TOTAL CONTRACT AMOUNT $6,377,885.59 $6,829,242.10 $7,829,472:21 RESOLUTION NO. WHEREAS, bids were received for a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project; and, WHEREAS, Brystar Contracting, Inc. submitted a bid in the amount of $6,377,885.59; and, WHEREAS, City Council is of the opinion that the bid submitted by Brystar Contracting, Inc. should be accepted; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the bid submitted by Brystar Contracting, Inc. for a contract for the Main Street (Calder to Blanchette) Brick Paved Sidewalk and Roadway Reconstruction Project in the amount of $6,377,885.59 be accepted by the City of Beaumont. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson - 5 December 5, 2006 Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation City of Beaumont Council Agenda Item K g TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tom Warner, Director of Public Works MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council approve Change Order No. 2 for the Julie Rogers Theatre renovation. RECOMMENDATION Administration recommends authorizing the City Manager to execute Change Order No. 2 for the renovation of the Julie Rogers Theatre in the amount of$65,380.01. BACKGROUND Council awarded a contract to Bruce's General Construction for the interior renovations to the Julie Rogers Theatre on August 15, 2006 in the amount of$1,845,000. The project began in September and the renovations are proceeding as scheduled. Change Order No. 1 in the amount of$5,331.75 was executed on November 2, 2006. Change Order No. 2 consist of several projects stated below that are necessary because of either unforseen damage or modifications to enhance the building. 1. Addition of rubber flooring in the elevator, stage door foyer, kitchen in Green Room, and both concession areas on the I' and 2'' floors and deletion of basic carpet in the meeting room and 2'floor women's lounge. Also deleted was a ceramic wainscot in all restrooms that was not available for shipment until February possibly delaying the building's completion. 2. Remove and replace glazing compound on all exterior windows. During the renovation, it was discovered that the exterior window glazing had failed. During heavy wind driven rains, water enters and damages interior work. Broken panes will also be replaced. i NUMBER iDIRECTION IDISTANCE / Zd L1 N 00'08'22" E 14.45 wc� L2 IS 89'36'40" E 14.36 W° L3 I N 65'32'00" E 150.19 1-4 S 00'04'35" W 9.41 EL L5 S 00'08'22" W 5.36 L6 S 65'51'18" W 50.03 o L7 N 89'36'40" W 114.40 z V) o> NOTE: BOTTOM OF SKYWAY 14.50' ABOVE GROUND. TOP OF SKYWAY 33.50' ABOVE'GROUND. = \ FOUND 5d8",,, � �D IRON RO J O O \ � C r 0� G / L2 ❑ 002 POINT OF BEGINNING - H w I � o q � 0. .�15— 30 I LU in a S s C A L I C)M NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o W THE BENEFIT OF A TITLE COMMITMENT. UO a0 ° NOT ALL EASEMENTS, WHETHER OF CIR 0 Z RECORD OR NOT, WERE RESEARCHED AT N O 0 THE TIME OF THIS SURVEY.uj I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND / I UNDER MY SUPERVISION DURING AUGUST 2006. I FOUND 1/2" I Q OF TFT Y IRON ROD I WALTER J. KSIAZEK *aje�G1STE2F�•cn* 5' STREET LIGHT EASEMENT I REGISTERED PROFESSIONAL L SURVEYOR O 5321 * • �' • WALTER J. KSIAZEK S 89'58'51" W 249.77' a,0 5321 r s (CALLED S 89'58'51" W 250.DO') COMMENCING .eq0 �P• (BASIS OF BEARINGS) POINT ` ••a•e e Dee Q` MEDICAL CENTER DRIVE IRON FOUND ROD 8" qM0 SIIA�11 � Fittz&ShIpI'Y an SKYWAY AERIAL ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST ConsultinsE4meers and Land SunNyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06 03379 T5 EXHIBIT "A" 's CS S Fittz & Shipman lug Consulting Engineers and Land Surveyors FIELD NOTE DESCRIPTION FOR A 65.01 SQUARE FOOT TRACT BEING A SKYWAY COLUMN ENCROACHMENT OUT OF THE DAVID BROWN SURVEY, ABSTRACT 5 JEFFERSON COUNTY, TEXAS AUGUST 18, 2006 That certain 65.01 square foot tract, being a Skyway Column Encroachment out of the David Brown Survey, Abstract 5, Jefferson County, Texas, said 65.01 square foot tract being more particularly described by metes & bounds as follows: Note: The Basis of Bearings is along the south line of a 2.421 acre tract conveyed to BHST - POB I LTD as recorded in Clerks File No. 2003041121 of the Official Public Records of Real Property of.Jefferson County, Texas-and the north right-of-way line of Medical Center Drive having been called South 89 058'51"West 250.00 feet,.- COMMENCING at a 5/8" iron rod found at the intersection of the north right-of-way line of Medical Center Drive with the west right-of-way line of Hospital Drive being the southeast corner of the said 2.421 acre tract from which a found %2" iron rod bears South 89°58'51" West 249.77 feet (called South 89 058'51" 250.00 feet); THENCE North 00°08'22" East along the said west right-of-way line of Hospital Drive and the east line of the said 2.421 acre tract a distance of 123.85 feet (called North 00 004'45" East) to a point from which a found 5/8" iron rod bears North 00 008'22" East 25.84 feet (called North 00°04'45" East); THENCE South 89 036'40" East a distance of 9.90 feet to the southwest corner of the said 65.01 square foot and the POINT OF BEGINNING; THENCE North 00°00'43" West along the west line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the northwest comer of the said 65.01 square foot tract; THENCE South 89 036'40" East along the north line of the said 65.01 square foot tract a distance of 4.50 feet to a point for the northeast corner of the said 65.01 square foot tract; THENCE South 00 000'43" East along the east line of the said 65.01 square foot tract a distance of 14.45 feet to a point for the southeast corner of the said 65.01 square foot tract; THENCE North 89 036'40" West along the south line of the said 65.01 square foot tract a distance of 4.50 feet to the POINT OF BEGINNING and containing 65.01 square feet of land, more or less. This Field Note Description is being submitted along with a plat of even date based on a survey performed by Fittz & Shipman, In on August 15, 2006. C..••, alter k �,o.�GISTE2 If Registered Profess' al Land Su eyor No. 5321 �•».»•«.. WALTER J, KSIAZEK Fittz&Shipman,Inc. ,,0 5321 „a Page 1 of 1 •'9�FES '� Plat Project and DesOcription5colurnn a ,goo SURV�ypQ • • 1405 Cornerstone Court, ,Beaumont,Texas 77706 (409) 832-7238 fax(409) 832-7303 EXHIBIT "A" 4 a-$ 5 i i i NUMBER IDIRECTION IDISTANCE zi L1 IS 89'36'40" E 19.90 / Lim 11-2 N 00'00'43" W 114.45 / a° L3 S 89'36'40" E 4.50 / L4 S 00'00'43" E 14.45 V) L5 N 89'36'40" W 4.50 I ~N Z aJ 0 O 0> e FOUND RON ROD 8"-,, 6 p 65.01.. S.F. ,t L3 � o / 1 M L5 POINT OF ( 1 BEGINNING � W wv i -�—�s 30 I ``'a U1 S C A L E NOTE: THIS SURVEY WAS COMPLETED WITHOUT N o THE BENEFIT OF A TITLE COMMITMENT. U) 00 Z NOT ALL EASEMENTS, WHETHER OF RECORD OR NOT, WERE RESEARCHED AT M O ° THE TIME OF THIS SURVEY. N O J I z � SURVEYOR'S CERTIFICATION: I DO HEREBY CERTIFY, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT THIS IS AN ACCURATE PLAT OF A SURVEY MADE ON THE GROUND UNDER MY SUPERVISION DURING AUGUST 2006. I 2 T . FOUND 1/ ' OF �' Q.` e e e e �•�' WALTER J. KSIAZEK �j�•°GISTE/�°.'9S IRON R00 I REGISTERED PROFESSIONAL LAND VEYOR N0. 5 * • �G Fir * • • 5' STREET LIGHT EASEMENT I WALTER J. KSIAZEK S $9'58'51" W 249.77' 0.0 5321 (CALLED S 89'58'51" W 250,00') COMMENCING 00'90 :• (BASIS OF BEARINGS) POINT •rFESS�00•Q MEDICAL CENTER DRIVE IRON ROD 8„ �NOSUME�� Fittz&3hip an SKYWAY COLUMN ENCROACHMENT SHEET NO. INC. PROJECT NAME: MEMORIAL HERMAN BAPTIST 1 ConsultintEngmeers and Land Surveyors BEAUMONT HOSPITAL 1405 CORNERSTONE COURT, BEAUMONT, TEXAS BEAUMONT, TEXAS PROJECT NO. (409) 832-7238 FAX (409) 832-7303 DATE:8-17-06, 03379 T5 EXHIBIT "A" 5 a 5 �r ML Cttq of Beaumont REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS DECEMBER 5,2006 1:30 P.M. AGENDA CALL TO ORDER * Invocation Pledge Roll Call * Presentations and Recognition * Public Comment: Persons may speak on scheduled agenda items 1-8/Consent Agenda * Consent Agenda GENERAL BUSINESS 1. Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto 2. Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto 3. Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department 4. Consider approving a contract for the Main Street(Calder to Blanchette)Brick Paved Sidewalk and Roadway Reconstruction Project 5. Consider approving Change Order No. 2 for the Julie Rogers Theatre renovation 6. Consider authorizing the City Manager to increase the Wiess Bluff Pump Station Neches River Bank Stabilization Project to increase the scope of work 7. Consider granting the City Manager authority to implement the contribution rate changes for retirees in the medical plans 8. Consider authorizing the reprogramming of Community Development Block Grant (CDBG) funds from FY2000-FY2005 into the FY2006 Clearance/Demolition line item for the demolition of dangerous structures 9. PUBLIC HEARING: Dangerous Structures Consider approval of an ordinance declaring certain structures to be dangerous structures and ordering their removal within 10 days or authorizing the property owner to enroll the dangerous structure in a work program COMMENTS * Councilmembers/City Manager comment on various matters * Public Comment (Persons are limited to 3 minutes) EXECUTIVE SESSION * Consider matters related to contemplated or pending litigation in accordance with Section 551.071 of the Government Code: Roy Cooper v. City of Beaumont, et al;No. 105324 Southwestern Bell Telephone v. City of Beaumont; Cause No. A-176610 Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact Lenny Caballero at 880-3716 three days prior to the meeting. 1 December 5, 2006 Consider authorizing the issuance and sale of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto City of Beaumont W Council Agenda Item ,jfj � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of $30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$30 million City of Beaumont, Texas, Certificates of Obligation, Series 2006; levying taxes to provide for payment thereof, and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara ofRBC Dain Rauscher. A recommendation will be made to award the certificates to the underwriter offering the lowest overall interest cost to the City. The certificates will mature March 1,2008 through March 1,2025 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for various street, drainage and general improvements. BUDGETARY IMPACT All debt shall be incurred in the Debt Service Fund which is supported by property taxes. The current debt service property tax rate of $.0264447 is expected to be sufficient to meet debt service requirements on the certificates. PREVIOUS ACTION Council authorized publication of notice of intention to issue Certificates of Obligation on October 31, 2006. SUBSEQUENT ACTION None, RECOMMENDED BY City Manager and Chief Financial Officer. PRI:LI NI[NARY OFFICIAL STATEMENT DATED NOVEMBER 13, 2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase the Certificates. Upon the sale of the Certificates,the Official Statement will be completed and delivered to the Purchaser. IN THE OPINION OF BOND COUNSEL, INTEREST ON THE CERTIFICATES IS EVCLUDABLE FROM GROSS INCO.AfE FOR FEDERAL I,NCOME TAX PURPOSES UNDER EXISTING LAW, SUBJECT TO THE MATTERS DESCRIBED UNDER "LEGAL MATTERS -TAX EXE.VPTION"HEREIN, INCLUDING THE ALTERNATII E AILNIMUlf TAX ON CORPOR=1 TIONS. NEW ISSUE-BOOK-ENTRY-ONLY _ - $30,000,000 _ - THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) CERTIFICATES OF OBLIGATION, SERIES 2006 Dated: December 1,2006 Principal Due: March 1 Principal of and interest on The City of Beaumont,Texas$30,000,000 Certificates of Obligation,Series 2006(the"Certificates")are payable at the principal corporate trust office of The Bank of New York Trust Company, N.A., Dallas, Texas, the paying agent/registrar (the "Registrar'). The Certificates are initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneficial owners L thereof. Interest accrues from December 1, 2006, and is payable each March 1 and September 1 of each year, commencing September 1, 2007,until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1,2016 or any date thereafter, at the option of the City. Upon redemption the Certificates will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates are issued in fully registered form in integral multiples of$5,000. Principal of and interest on the Certificates will be payable by the Registrar to Cede& Co.,which will make distribution of the amounts so - - paid to the beneficial owners of the Certificates. See"THE CERTIFICATES-Book-Entry-Only System"herein. Interest on the Certificates will be payable by check, dated as of the interest payment date, and mailed by the Registrar to registered owners (initially Cede & Co.) shown on the records of the Registrar on the fifteenth calendar day of the month next preceding each interest payment date (the "Record Date"). See"THE CERTIFICATES-Description of the Certificates." '- MATURITY SCHEDULE _ - (Due March 1) Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. Maturity Amount Rate Yield(a) 074561 (c) Maturity Amount Rate Yield(a) 074561(c) - - 2008 $2,775,000 % % 2017(b) $1,180,000 % % 2009 2,065,000 2018(b) 1,240,000 2010 1,570,000 2019(b) 1,435,000 2011 1,515,000 2020(b) 1,550,000 2012 1,610,000 2021(b) 1,665,000 2013 1,690,000 2022(b) 1,780,000 2014 1,745,000 2023(b) 1,890,000 2015 1,070,000 2024(b) 2,000,000 2016 1,125,000 2025(b) 2,095,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Certificates maturing on or after March 1, 2017 are subject to redemption, at the option of the City, at the par value thereof plus accrued interest,in whole or in part,on March 1,2016,or any date thereafter. (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the registered owners of the Bonds. Neither the City, the Financial r � , Advisor,nor the Purchasers are responsible for the selection or correctness of the CUSIP numbers set forth herein. = - The above certificates (the"Certificates") are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an - ordinance(the"Ordinance')adopted by the City Council (the"City Council")of the City on December 5,2006. Proceeds from the sale of _ the Certificates will be used to provide funds for street, drainage, building and park improvements. The proceeds will also be used to pay certain costs in connection with the issuance of the Certificates. (See`'THE CERTIFICATES-Use of Proceeds.") The Certificates, when issued,will constitute valid and binding obligations of The City of Beaumont,Texas(the"City")and will be payable from the proceeds of an = annual ad valorem tax,levied within the limits prescribed by law,against taxable property within the City and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks system but only to the extent of and not in an amount in excess of _ $10,000. = The Certificates are offered when, as and if issued subject to the approving opinion of the Attorney General of the State of Texas and the _ opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel to the City as to the validity of the issuance of the Certificates under the Constitution and the laws of the State of Texas. The Certificates are expected to be available for delivery on or about December 28, = 2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF $30,000,000 THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2006; LEVYING TAXES TO PROVIDE FOR PAYMENT THEREOF; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, the City Council of The City of Beaumont,Texas (the "City"), has heretofore authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on December 5, 2006, the date tentatively set for passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of certain revenues of the City's waterworks and sewer system, or as soon thereafter as may be practicable, for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations, repairs and construction of new restrooms, field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and the laws of the State of Texas and the United States of America, respectively, particularly Chapter 271, Texas Local Government Code, as amended; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; and WHEREAS, the City Council of the City has determined to authorize such certificates of obligation for the purposes set out in this Ordinance; and WHEREAS, the City is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to pledge not more than $10,000 of the net revenues of the City's waterworks and sewer system as security for the certificates of obligation authorized herein; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Preamble. The matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term 'Business Day" shall mean any day which is not a Saturday, Sunday, a legal holiday, or a day on which the Registrar is authorized by law or executive order to close. The term "Certificates" or "Series 2006 Certificates" shall mean the Certificates of Obligation, Series 2006, authorized in this Ordinance, unless the context clearly indicates otherwise. The term "Certificates Insurance Policy" shall mean the municipal bond guaranty insurance policy issued by the Insurer insuring the payment when due of the principal of and interest on the Certificates as provided therein. The term "City" shall mean The City of Beaumont, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. -2- The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Construction Fund" shall mean the construction fund established by the City pursuant to Section 20 of this Ordinance. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean 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 the DTC Participants. The term "Insurer" shall mean the issuer of the Certificates Insurance Policy. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 20 of this Ordinance. The term "Interest Payment Date", when used in connection with any Certificate, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption. The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term "Ordinance" as used herein and in the Certificates shall mean this Ordinance authorizing the Certificates. The term "Owner" or "Registered Owner", when used with respect to any Certificate, shall mean the person or entity in whose name such Certificate is registered in the Register. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th day of the month next preceding such Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term 'Registrar" shall mean THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas, and its successors in that capacity. -3- I The term "SEC" shall mean the United States Securities and Exchange Commission and its successors. The term "System" shall mean the City's waterworks and sewer system. The term "Underwriter" shall mean 3. Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Thirty Million Dollars ($30,000,000), for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) Alice Keith Park playground renovations and acquisition of new park equipment, (iii) renovations repairs and construction of new restrooms field lighting and other improvements at the Athletic Complex, (iv) renovations and improvements to City Hall, (v) replacement of rooftop air handler system at City Hall, (vi) renovations, repairs, replacement, construction and equipping of new community center facilities, including Central Park Community Center, Alice Keith Park Community Center, Rogers Park Community Center and North End Park Community Center, and replacement and construction of new restroom facilities at Sprott Park, and replacement of park spray devices (vii) demolition of public and commercial facilities, (viii) construction of a hike and bike recreational trail and parking facilities at the Drainage District 6 flood detention facility, (ix) construction and equipping of a new Downtown Event Center to replace the Harvest Club which will include an Event Center and a new park, lake, restroom and parking facilities, (x) construction of a new EMS Medic Station, (xi) repairs, renovations and improvements to existing Fire Station facilities, (xii) construction and equipping of a new Fire Fleet maintenance facility, (xiii) construction and equipping of a new Fire Fighting Administration Facility, (xiv) repairs and improvements o the Fleet parking lot, (xv) renovations, repairs and improvements to the JP Richardson Building, (xvi) repairs, renovations and improvements to Julie Rogers Theater, (xvii) replacement and construction and equipping of a surplus property storage facility, (xviii) replacement of carpet and furniture at the Main Library, (xix) construction of a new Martin Luther King, Jr. Park facility, (xx) renovations to the Municipal Court Building, (xxi) purchase of an existing building and renovations thereto and equipping thereof for use as a police department property and file storage building together, (xxii) construction of a new Public Health Department Building or purchase of an existing building and renovations thereto and equipping thereof for use as a Public Health Department Building, (xxiii) purchase of new public safety communications hardware and software, (xxiv) repairs, renovations and improvements to Riverfront Park, (xxv) repairs, renovations and improvements to Rogers Park, (xxvi) construction and equipping of a new Senior Center Facility), (xxvii) construction of an addition and improvements to the Tyrrell Historical Library, (xxviii) construction and equipping of a new Tyrell Park Community Building and (xxix) construction and equipping of a new visitor's center and office facility, and(xxx)the cost of professional services incurred in connection therewith. 4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES -4- 2006", and shall be December 1, 2006. The Certificates shall bear interest from the later of December 1, 2006, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30-day months, which interest shall be payable on September 1, 2007, and semiannually thereafter on March 1 and September 1 of each year until maturity or earlier redemption. 5. Certificates, Numbers and Denominations. The Certificates shall be 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 Certificates shall mature, subject to prior redemption in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered upon transfer of or in exchange an e f o r other ertifc tes shall be numbered in order of their authentication by the Registrar, , shall be in the denomination of$5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Year Principal Interest Number of Maturity Amount Rate CR-1 2008 $3,415,000 % CR-2 2009 $2,065,000 % CR-3 2010 $1,570,000 % CR-4 2011 $1,515,000 % CR-5 2012 $1,610,000 % CR-6 2013 $1,690,000 % CR-7 2014 $1,745,000 % CR-8 2015 $1,070,000 % CR-9 2016 $1,125,000 % CR-10 2017 $1,180,000 % CR-11 2018 $1,240,000 % CR-12 2019 $1,350,000 % CR-13 2020 $1,470,000 % CR-14 2021 $1,580,000 % CR-15 2022 $1,690,000 % CR-16 2023 $1,795,000 % CR-17 2024 $1,900,000 % CR-18 2025 $1,990,000 % 6. Execution of Certificates; Seal. The Certificates shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the -5- Certificates shall have the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, 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 Certificates to be initially issued shall be delivered to the Attorney General of the State 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 17 of this Ordinance shall be attached or affixed to the initial Certificates. 8. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 17 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 Certificates 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 Certificates. The principal of the Certificates 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 become due and payable, at the designated corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date,to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Certificate 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 payment was due. 10. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the Registrar on not less than sixty (60) days' written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding principal or interest payment date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the 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 -6- deemed to have agreed to the provisions of this Section. 11. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) business 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 Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate 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 Certificate in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three (3) years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the provisions of Texas law, including to the extent applicable,Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer, and Exchange; Special Election for Uncertificated Certificates. So long as any Certificates remain outstanding,the Registrar shall keep the 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 Certificates in accordance with the terms of this Ordinance. Each Certificate 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 Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Certificate or Certificates, 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 Certificate or Certificates so presented. All Certificates shall be exchangeable upon presentation and surrender thereof at the -7- principal corporate trust office of the Registrar for a Certificate or Certificates of the same maturity and interest rate in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13. Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate 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 Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Neither the City nor the Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. Notwithstanding any other provision hereof, but at the sole election of the Underwriter, the ownership of the Certificates shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Certificates. With respect to Certificates 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 Certificates. 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 Certificates, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Certificate, as shown on the Register, of any notice with respect to the Certificates, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner of a Certificate, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on the Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute Owner of such Certificate for the purpose of payment of principal of, premium, if any, and interest on the Certificates, for the purpose of all matters with respect to such Certificates, for the purpose of registering transfers with respect to such Certificates, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Certificates only to or upon the order of the respective Owners, as shown in the Register as -8- provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Certificates to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a certificate for a Certificate evidencing the obligation of the City 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 Ordinance shall refer to such new nominee of DTC. In the event that the City or the Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the Letter of Representation and that it is in the best interest of the beneficial Owners of the Certificates that they be able to obtain certificated Certificates, or if DTC Participants owning at least 50% of the Certificates outstanding based on current records of the DTC determine that continuation of the system of book-entry transfers through the DTC (or a successor securities depository) is not in the best interest of such beneficial Owners of the Certificates, or in the event DTC discontinues the services described herein, the City or the Registrar 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 of the appointment of such successor securities depository and transfer one or more separate Certificates to such successor securities depository or (ii) notify DTC of the availability through DTC of Certificates and transfer one or more separate Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event, the Certificates 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 Certificates shall designate, in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Certificates 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 the Certificates, and all notices with respect thereto, shall be made and given in the manner provided in the Letter of Representation. 14. Mutilated, Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate 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 Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection -9- therewith and any other associated expenses, 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 Certificate, before any replacement Certificate 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 Certificate; (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. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Registrar shall be entitled to recover such replacement Certificate 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 Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate, authorize the Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15. Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates 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 Certificates. 16. Optional Redemption. The City reserves the right, at its option, to redeem Certificates having stated maturities on and after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates, or -10- portions thereof,to be redeemed. Certificates may be redeemed only in integral multiples of$5,000. If a Certificate subject to redemption is in a denomination larger that $5,000, a portion of such Certificate may be redeemed, but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered. Not less than thirty (30) days prior to a redemption date for the Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each Owner of each Certificate to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Certificates are to be surrendered for payment and, if less than all the Certificates are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice of redemption so mailed 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 Certificates or portions thereof to be redeemed. When Certificates have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid 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 Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 17. Forms. , The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Certificates 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: -11- UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION CR- $ REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS CERTIFICATE OF OBLIGATION SERIES 2006 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THE CITY OF BEAUMONT, TEXAS (the "City"), promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this certificate at the designated corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, N.A., Dallas, Texas (the 'Registrar"), or at its principal payment office in Dallas, Texas, 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 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 Dated Date specified above, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on September 1, 2007, and semiannually thereafter on each March I and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $30,000,000 (the "Certificates"), issued in accordance with the Constitution and the laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended, for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, the purchase of equipment and the cost of issuance of the Certificates, pursuant to an ordinance duly adopted by the City Council of the City -12- (the "Ordinance"),which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT, at its option,to redeem the Certificates having stated maturities on or after March 1, 2017, in whole or in part, on March 1, 2016, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Certificates. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each Certificate to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Certificates 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 CERTIFICATE 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 CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of this Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, 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 Certificates 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 Certificate has been duly and -13- 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 Certificate have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied, within the limits prescribed by law, against all taxable property in the City, and have been pledged irrevocably for such payment. IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues") to be derived from the operation of the City's waterworks and sewer system (the "System"), but only to the extent of and in an amount not to exceed Ten Thousand Dollars ($10,000.00) in the aggregate, are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose, all as set forth in the Ordinance to which reference is made for all particulars; provided, how-ever, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certificate and that series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Clerk of the City and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. THE CITY OF BEAUMONT, TEXAS Mayor (SEAL) City Clerk Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. -14- I hereby certify that this certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this day of , 2006. xxxxxxxxx Comptroller of Public Accounts (Seal) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. The Bank of New York Trust Company,N.A. Dallas, Texas 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 certificate and all rights thereunder, and hereby irrevocably constitutes and appoints -15- attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: The signature above must correspond to the name of the registered NOTICE: Signature must be owner as shown on the face guaranteed by a member firm of this Certificate in of the New York Stock Exchange every particular, without or a commercial bank or trust any alteration, enlargement company. or change whatsoever. 18. Form of Statement of Insurance. The following statement of insurance shall be printed on the back of or attached to each of the Certificates: STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning -16- of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $30,000,000 THE CITY OF BEAUMONT, TEXAS CERTIFICATES OF OBLIGATION, SERIES 2006 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. -17- 19. Legal Opinion; Cusip Numbers. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 20. Interest and Sinking Fund; Tax Lew; Pledge of Revenues; Construction Fund. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance are hereby irrevocably pledged and shall be deposited, as collected, in a special fund to be designated "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in the City sufficient to pay the current interest on the Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures but in each year never less than 2% of the original principal amount of the Certificates, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of the Certificates and to no other purpose. To pay the interest coming due on the Certificates on September 1, 2007,there is hereby appropriated from current funds on hand, which are certified to be on hand and available for such purpose, an amount sufficient to pay such interest, and such amount shall be used for no other purpose. The Net Revenues of the System, but only to the extent of and in an amount not to exceed $10,000 in the aggregate, are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes described in this Section of the Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of the Certificates; and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Certificates of Obligation, Series 2006, Construction Fund". Immediately after the sale and delivery of the Certificates, that portion of the proceeds of the Certificates to be used for the cost of construction of authorized street -18- improvements and the cost of issuance of the Certificates shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of such projects, interest earned on such proceeds may be used, at the City's discretion, for such projects and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1201.043, Texas Government Code Annotated, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of such street improvements, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. 21. Further Proceedings. After the Certificates shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates 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 Certificates to be initially issued shall have been approved by the Attorney General of the State of Texas, the Certificates shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Certificates to be initially issued,the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of the Comptroller shall be impressed, or placed in facsimile, thereon. In addition, the Mayor, the City Clerk and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the purposes of this Ordinance. 22. Sale of Certificates. The Certificates are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of Certificates, plus a premium of$ The purchase price of the Certificates will also include accrued interest to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Certificates and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Certificates. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Certificate Insurance Policy, and the printing on the Certificates covered by the Certificate Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 23. Tax Exemption. (a) The City intends that the interest on the Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and applicable 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 Certificates 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 23; -19- provided, however, that the City shall not be required to comply with any particular requirement of this Section 23 if the City has received an opinion of nationally recognized bond counsel (a "Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 23 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 23. (b) The City covenants and agrees that its use of Net Proceeds of the Certificates will at all times satisfy the following requirements: (i) The City will use all of the Net Proceeds of the Certificates for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, equipment purchases and the cost of issuance of the Certificates. The City has limited and will limit with respect to the Certificates the amount of original or investment proceeds thereof to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10% of the Net Proceeds of the Certificates ("private-use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Certificates in any manner contrary to the guidelines set forth in Revenue Procedure 93-19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City has not permitted and will not permit more than 5% of the Net Proceeds of the Certificates to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates in excess of 5% of the Net Proceeds thereof("excess private-use proceeds") did not and will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (iii) Principal of and interest on the Certificates shall be paid solely from ad valorem tax receipts collected by the City and from the Net Revenues of the System to the extent pledged hereunder. Further, no person using more than 10% of the Net Proceeds of the Certificates in a trade or business, other than a governmental unit, has made or shall make payments (other than as a member of the general public), directly or indirectly, accounting for more than 10%of such receipts; -20- (iv) The City has not permitted and will not permit with respect to the Certificates an amount of proceeds thereof exceeding the lesser of(a) $5,000,000 or(b) 5% of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than a governmental unit; and (v) The City will use $100,000 of the Net Proceeds of the Certificates to pay the costs of issuance of the Certificates. When used in this Section 23, the term "Net Proceeds" of the Certificates shall mean the proceeds from the sale thereof to the Underwriter, including investment earnings on such proceeds, less accrued interest with respect to such issue. (c) 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 Certificates 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) 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 Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates 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 Certificates, including interest or other investment income derived from the proceeds of the Certificates, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (e) 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 Certificates (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 Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates 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 Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every 5th anniversary date of the delivery of the Certificates, and within sixty (60) days after retirement of the Certificates, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with -21- respect to the gross proceeds of the Certificates that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (f) 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 Certificates are issued, an information statement concerning the Certificates, all under and in accordance with Section 149(e)of the Code and applicable regulations thereunder. Section 24. Application of Proceeds. Proceeds from the sale of the Certificates shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest shall be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund; and (b) The remaining proceeds from the sale of the Certificates, together with investment earnings thereof, shall be deposited into the Series 2006 Certificates of Obligation Construction Fund and shall be used for the purposes set out in Section 3 of this Ordinance, with any remainder constituting a reserve to be deposited into the Series 2006 Certificates of Obligation Interest and Sinking Fund. 25. Open Meeting. 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 Chapter 551 of the Texas Government Code Annotated, Vernon's 1994, as amended, and such notice as given is hereby authorized, approved, adopted and ratified. 26. Re isg tray. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Certificates have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Certificates by the Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this -22- Ordinance. 29. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, the City Clerk, the City Treasurer, 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 issuance of the Certificates, 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 this Ordinance and to direct the application of funds of the City consistent with the provisions hereof. 30. No Personal Liability. No recourse shall be had for payment of the principal of or premium, if any, or interest on Certificate, or for any claim based thereon, or under this Ordinance, against any official or employee of the City or any person executing any Certificate. 31. Additional Obligations. The City undertakes and agrees for the benefit of the holders of the Certificates to provide directly, on or before six months after the end of the City's fiscal year,which fiscal year presently ends on September 30, a. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, annual financial information(which may be unaudited) and operating data regarding the City for fiscal years ending on or after January 1, 2006 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: SELECTED FINANCIAL INFORMATION DEBT STATEMENT TAX DATA SELECTED FINANCIAL DATA ADMINISTRATION OF THE CITY Appendix `B" b. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, audited financial statements for the City for fiscal years ending on or after January 1, 2006, when available, if the City commissions an audit and it is completed by the required time; provided that if audited statements are not commissioned or are not available by the required time, the City will provide unaudited statements when and if they become available. -23- C. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of any of the following events with respect to the Certificates, if material within the meaning of the federal security laws to a decision to purchase or sell Certificates: 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 Certificates; vii. Modifications to rights of Certificate holders; viii. Calls; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the Certificates; and xi. Rating changes. d. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of a failure of the City to provide required annual financial information and operating data, on or before six months after the end of the City's fiscal year. These undertakings and agreements are subject to appropriation of necessary funds and to applicable legal restrictions, if any. The accounting principles pursuant to which the City's financial statements are currently prepared are generally accepted accounting principles set out by the Government Accounting Standards Board, and, subject to changes in applicable law or regulations, such principles will be applied in the future. If the City changes its fiscal year, it will notify each nationally recognized municipal securities information repository and the appropriate state information depository of the change (and of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide annual financial information. -24- The City's obligation to update information and to provide notices of material events shall be limited to the agreements herein. The City shall not be obligated to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects and shall not be obligated to update any information that is provided, except as described herein. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Certificates at any future date. THE CITY DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL OWNERS OF CERTIFICATES MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS 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 paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The City may amend its continuing disclosure obligations and agreement in this Section 32 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 the agreement, as amended, would have permitted the Underwriter to purchase or sell the Certificates in compliance with SEC Rule 15c2-12, taking into account any amendments or interpretations of such Rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Certificates consent or 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 Certificates. The City may also amend or repeal the obligations and agreement in this Section 35 if the SEC amends or repeals the applicable provisions of Rule 15c2-12 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 the Underwriter from lawfully purchasing or reselling the Certificates in the primary offering of the Certificates in compliance with Rule 15c2-12. 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. The City's continuing obligation to provide annual financial information and operating data and notices of events will terminate if and when the City no longer remains an "obligated person" (as such term is defined in SEC Rule 15C2-12)with respect to the Certificates. 32. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. -25- 33. Effective Date. This Ordinance shall be in force and effect from and after its final passage, and it is so ordered. 34. 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. In the event that,on the second Business Day, and again on the Business Day,prior to the payment date on the Obligations, the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent/Trustee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agenarustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such -26- principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agenarustee and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received), (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee, and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agenarustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments,directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, principal and interest shall be deemed past due and not to have been paid),Y p p p p ) interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document,if any,circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order which does not require the consent of the bondholders, and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. -27- J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations, and (ii) any consent, amendment, waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved,together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3%or the maximum interest rate permitted by law, whichever is less. In addition, the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37,Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment; and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. M. The Issuer/Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if. (1) the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii)the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days, and (iii) the Issuer declares bankruptcy. In the event of default under this Bond Order,the Bond Insurer shall have the right to direct all remedies and the Insuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures, the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing -28- w ` document executed in connection herewith. Other than the usual redemption provisions,any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the following types of investments that are approved by the Bond Insurer. [The remainder of this page has intentionally been left blank]. -29- •f PASSED AND APPROVED this 5th day of December, 2006. Mayor, The City of Beaumont, Texas ATTEST: City Clerk, The City of Beaumont, Texas (SEAL) -30- 2 December 5, 2006 Consider authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto t17EjJ-! City of Beaumont Council Agenda Item � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Chief Financial Officer MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A; and containing other matters related thereto. BACKGROUND Results ofthe competitive bid process will be presented by the City's Financial Advisor,Ryan O'Hara of RBC Dain Rauscher. A recommendation will be made to award the bonds to the underwriter offering the lowest overall interest cost to the City. The revenue bonds will mature September 1, 2008 through September 1, 2030 with interest payable semiannually in March and September beginning September 1, 2007. The Bank of New York Trust Company, N.A.. will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for December 28, 2006. Proceeds will be used to provide funds for the expansion, repair, renovation and related improvements to the waterworks and sewer system. BUDGETARY IMPACT All debt shall be incurred in the Water Fund which is supported by revenues of the waterworks and sewer system. I PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Chief Financial Officer. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 13,2006 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase = the Bonds. Upon the sale of the Bonds,the Official Statement will be completed and delivered to the Purchaser. f 2 IT IS ANTICIPATED THAT ON THE DELIVERY DATE FOR THE BONDS,BOND COUNSEL WILL RENDER AN OPINION THAT INTEREST ON THE BONDS IS EXCL UDABLE FRO:W GROSS LVCOa1E FOR FEDERAL LVCOME TAX PURPOSES UNDER EVISTING LAW AND THE BONDS ARE NOT PRIVATE ACTIVITY BONDS. SEE "LEGAL MATTERS- TAX EXEMPTION"HEREIN FOR A DISCUSSION OF BOND COUNSEL'S OPLVION,/:VCLU'DI,VG A DESCRIPTION OFALTERVATIYE M/,VZlfU.11 T.AJf CONSEQUENCES FOR CORPORATIONS. The City will not designate the Bonds as qualified tax-exempt obligations for financial institutions. NEW ISSUE-BOOK-ENTRY-ONLY $2090009000 THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) a WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A L Dated: December 1,2006 Principal Due: September 1 Principal of and interest on The City of Beaumont, Texas $20,000,000 Waterworks and Sewer System Revenue Bonds, Series 2006A (the ' "Bonds")are payable by The Bank of New York Trust Company,N.A., Dallas,Texas,the paying agentiregistrar(the"Registrar"). The Bonds ' are initially registered and delivered only to Cede&Co.,the nominee of The Depository Trust Company("DTC")pursuant to the Book-Entry- Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of$5,000 or integral multiples thereof. No -' physical delivery of the Bonds will be made to the beneficial owners thereof. Interest on the Bonds will accrue from December 1,2006 and is payable on March 1 and September 1 of each year,commencing September 1,2007,to the registered owners(initially Cede&Co.)appearing on the registration books of the Registrar on the 15th day of the month preceding each interest payment date(the "Record Date"). See THE y BONDS-Description." The Bonds are subject to redemption prior to their scheduled maturities on September 1,2016 or any date thereafter,at a price equal to the principal amount thereof plus accrued interest to the date of redemption. G The Bonds are special obligations of The City of Beaumont,Texas(the"City")and are payable solely from a first lien on and pledge of the Net - - Revenues (hereinafter defined) of the City's waterworks and sanitary sewer system. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OR GENERAL OBLIGATION OF THE CITY AND ARE NOT PAYABLE FROM FUNDS RAISED OR TO BE RAISED s BY TAXATION. The lien on Net Revenues securing the Bonds are on a parity with the liens securing the City's outstanding Prior Lien Bonds r (as defined in the Ordinance). See"THE BONDS-Source of Payment." The proceeds of the Bonds will be used to provide funds for water and sewer system improvements and to pay certain costs incurred in connection with the issuance of the Bonds. (See "THE BONDS - Use of Proceeds"and"THE BONDS-Sources and Uses of Funds.") PRINCIPAL AMOUNTS,MATURITIES,INTEREST RATES AND PRICES v (Due September 1) 5 - - Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. s Maturity Amount Rate Yield(a) 074561(c) Maturity Amount Rate Yield(a) 074561(c) 2008 $ 100,000 % % 2020(b) $ 225,000 % % = 2009 100,000 2021(6) 225,000 Lr 2010 200,000 2022(b) 225,000 2011 200,000 2023(b) 225,000 2012 200,000 2024(b) 2,075,000 - 2013 200,000 2025(b) 2,180,000 2014 200,000 2026(b) 2,290,000 2015 200,000 2027(b) 2,400,000 2016 200,000 2028(b) 2,525,000 2017(b) 200,000 2029(6) 2.650,000 - -_ 2018(b) 200,000 2030(b) 2,780,000 2019(b) 200,000 (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. (b) The Bonds maturing on or after September 1,2017 are subject to redemption,at the option of the City,at the par value thereof plus accrued = interest,in whole or in part,on September 1,2016,or any date thereafter. J L (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, A Division of the McGraw-Hill Companies,Inc.,and are included solely for the convenience of the registered owners of the Bonds. Neither the City,the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbers set forth herein. The Bonds are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an ordinance(the"Ordinance")adopted by the City Council (the "City Council") of the City on December 5, 2006. The Bonds are offered when, as and if issued, subject to the approving opinion of the Attorney General of the State of Texas and the opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel for the City, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of Texas. See "LEGAL MATTERS." The Bonds are expected to be available for delivery on or about December 28.2006. SELLING: TUESDAY, DECEMBER 5, 2006 AT 12:00 NOON HOUSTON TIME } No. 3 ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE OF $20,000,000 THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (herein referred to as the "City" or the "Issuer") is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue bonds payable from the net revenues of its waterworks and sewer system to provide money for acquisitions, extensions, construction, improvement or repair of such system; and WHEREAS, the City now desires to issue bonds in order to provide funds to finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system; Now, Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS: 1. Findings and Determinations. It is hereby found and determined that the matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 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 Chapter 1502, Texas Government Code, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance. The term "Blanket Issuer Letter of Representations" means the Blanket Issuer I V Letter of Representations between the City, the Registrar and DTC. The term "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment of principal and interest on the Bonds. The term "Bond Insurer" shall mean 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 $20,000,000 The City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006A 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 "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 2 (but excluding any utility deposits) and the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, and the Reserve Fund. The term "Interest Payment Date", when used in connection with any Bond, shall mean September 1, 2007, and each March 1 and September 1 thereafter until maturity or earlier redemption of such Bond. 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 City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2006, 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. 3 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 "Registrar" shall mean The Bank of New York Trust Company, N.A., Dallas, Texas, 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 time. The term "SEC" shall mean the United States Securities and Exchange Commission. 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 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 "Underwriter" shall mean 3. Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of TWENTY MILLION DOLLARS ($20,000,000) for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds (the "Project"). 4 4. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A" and shall be dated December 1, 2006. The Bonds shall bear interest at the rates set forth in Section 5 below from the later of December 1, 2006, 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, 2007, and semiannually thereafter on March 1 and September 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 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. Bond Principal Interest Number Year Amount Rate R-1 2008 $ 100,000 % R-2 2009 $ 100,000 % R-3 2010 $ 200,000 % R-4 2011 $ 200,000 % R-5 2012 $ 200,000 % R-6 2013 $ 200,000 % R-7 2014 $ 200,000 % R-8 2015 $ 200,000 % R-9 2016 $ 200,000 % R-10 2017 $ 200,000 % R-11 2018 $ 200,000 % R-12 2019 $ 200,000 % R-13 2020 $ 225,000 % R-14 2021 $ 225,000 % R-15 2022 $ 225,000 % R-16 2023 $ 225,000 % R-17 2024 $2,075,000 % R-18 2025 $2,180,000 % R-19 2026 $2,290,000 % 5 I a R-20 2027 $2,400,000 % R-21 2028 $2,525,000 % R-22 2029 $2,650,000 % R-23 2030 $2,780,000 % 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. 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 6 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 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 7 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. 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, 8 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. 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. 9 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-EntySystem. (a) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriter,the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Bonds. (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 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. 10 (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. (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 and Mandatory Redemption. The City reserves the right, at its option, to redeem Bonds having stated maturities on and after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed,the City shall determine the Bonds, or portions thereof,to be redeemed. The Bonds maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms set out in the form of Bonds in this Order, at a price of par plus accrued interest to the date fixed for redemption. Bonds may be redeemed only in integral multiples of$5,000. If a Bond subject to redemption is in a denomination larger that $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. 11 Not less than thirty(30)days prior to a redemption date for the Bonds, the City shall cause a notice of redemption to be sent by United States mail, first class,postage prepaid, to each Owner of each Bond to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed 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. When Bonds have been called for redemption in whole or in part and due provision 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 being paid 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. 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 BONDS, SERIES 2006A 12 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 2006 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 The Bank of New York Trust Company, N.A., Dallas, Texas (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 December 1, 2006, 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, 2007, mailed to the registered owner of record as shown on the books of registration kept by the Registrar as of the fifteenth day of the month next preceding each interest payment date. 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 $20,000,000 (the "Bonds"), issued for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and (ii)paying all costs of issuance of the Bonds, pursuant to an ordinance adopted by the City Council on December 5, 2006 (the "Ordinance"), and in accordance with the authority of Chapter 1502, Texas Government Code, 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 Refunding Bonds, Series 1998, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's outstanding 13 Waterworks and Sewer System Revenue Bonds, Series 2005, 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 Interest and Sinking 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 HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY REVENUE BONDS, 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 the Bonds having stated maturities on or after September 1, 2017, in whole or in part, on September 1, 2016, or any date thereafter, in integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. THE BONDS maturing in the year 2030 (the "Term Bonds") are also subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the principal amount to be redeemed plus accrued interest to the redemption date: TERM BONDS DUE SEPTEMBER 1, Date ` Amount 9/1/2028 $2,525,000 9/1/2029 $2,650,000 9/1/2030 (Maturity) $2,780,000 14 I I The Paying Agent shall select for redemption by lot, or by any other customary method that results in random selection, a principal amount of Term Bonds equal to the aggregate principal 'amount of such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled mandatory redemption date, and shall give notice of such redemption in accordance with the Bond Order. The principal amount of Term Bonds required to be mandatorily redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall have been optionally redeemed and not previously credited against a mandatory redemption requirement. 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 owner 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 15 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. 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. (AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT, TEXAS (SEAL) Mayor City Clerk 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 16 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. The Bank of New York Trust Company,N.A. 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 to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED Signature Guaranteed: Registered Owner 17 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. STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Bank of New York Trust Company, N.A., Dallas, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York Trust Company, N.A., or its successor (the "Paying Agent") of an amount equal to (i) the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $20,000,000 THE CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2006A 18 1 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. 19 18. Legal Opinion; Cusip. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond 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. 19. (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, and (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) Construction Fund. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2006, Construction Fund". Immediately after the sale and delivery of the Bonds, that portion of the proceeds of the Bonds to be used for the cost of the Project and the cost of issuance of the Bonds shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of the Project, interest earned on such proceeds may be used, at the City's discretion, for the Project and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1202.043 of the Texas Government Code, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of the Project, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. (c) 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: (i) to pay all Maintenance and Operation Expenses; and 20 (ii) 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. 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. (d) 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: (i) Waterworks and Sewer System Revenue Fund (the "Revenue Fund"); (ii) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund (the "Interest and Sinking Fund"); and (iii) 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. (e) 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: (i) First, to pay Maintenance and Operation Expenses and to provide 21 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. (ii) 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. (iii) 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 Additional Parity Bonds. (iv) Fourth, to pay any amounts due to any bond insurer of Parity Bonds not paid pursuant to subsections (ii) or(iii) above. (v) 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. (f) 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: (i) 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 (ii) 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. 22 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. (g) 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 (1/60 1h) 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 (1/601h) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount; provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below, then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. 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 23 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 bonds, 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 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 (and 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. (h) Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Section 19 the full amounts required herein, 24 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. (i) 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 transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 20. Additional Bonds. (a) Additional Parily 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 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 25 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. (b) 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. (c) 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. 21. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parily 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. (b) 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 26 operation of the System. (c) 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. (d) 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. 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. (e) 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. (f) 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. (g) 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 27 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. (h) 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 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. (i) 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. 28 (j) 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. (k) 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. (1) Obligations 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 of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of the Bonds, plus a premium of $ . In addition thereto, at the time of delivery the Underwriter shall pay to the City the accrued interest on the Bonds to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Bonds 29 and which bid has been accepted by the City was the best bid and the purchase 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 do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Bonds. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Bond Insurance Policy, and the printing on the Bonds covered by the Bond Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 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 30 use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal 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 31 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 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: (i) Accrued interest, if any, shall be deposited into the Interest and Sinking Fund; (ii) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds, with any remaining portion thereof to be deposited into the Construction Fund and used to pay the costs of the Project; and (iii) The sum of $ from the sale of the Bonds shall be deposited into the Construction Fund and used to pay the costs of the Project; and (iv) Any proceeds from the Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 26. Re istrar. 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. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Underwriter is hereby approved, authorized and ratified. The proper officials 32 of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. 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. 29. 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 "SELECTED FINANCIAL INFORMATION", "CITY REVENUE DEBT", "ADMINISTRATION OF THE CITY", "THE SYSTEM-Water and Sewer Rates" 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. (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; 33 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. Modifications to 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, 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. 34 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 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 underwriter 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. 30. 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 Chapter 551 of the Texas Government Code. 31. 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. 35 32. 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. In the event that on the second Business Day,and again on the Business Day,prior to the payment date on the Obligations,the Paying AgentTrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following,as the case may be,Business Day,the Paying Agent/Trustee shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent/Trustee shall so notify the Insurer or its designee. C. In addition, if the Paying Agent/Trustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws,then the Paying Agent/Tnistee shall notify the Insurer or its designee of such fact by telephone or telegraphic notice,confirmed in writing by registered or certified mail. D. The Paying Agent/Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attomey-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to U.S. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance Paying Agent/Trustee,an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned,and(c)disburse the same to such respective Holders;and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent/Trustee shall (a) execute and deliver to the Insurance Paying Agent/Trustee in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating 36 to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying Agent/Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent/Trustee and available for such payment(but such assignment shall be delivered only if payment from the Insurance Paying Agent/Trustee is received),(b)receive as designee of the respective Holders (and not as Paying Agent/Trustee) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent/Trustee,and(c)disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent/Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations,and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent/Trustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent/Trustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations;and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid),with interest thereon as provided in this Indenture and the Obligation,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders,and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Obligations,the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. The Issuer shall give the Insurer notice of any amendment to this Bond Order 37 which does not require the consent of the bondholders,and the Issuer shall obtain the Insurer's prior consent before any amendment is made to this Bond Order that requires the consent of the bondholders. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent/Trustee and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and,on an annual basis,copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying Agent/Trustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Insured Poprtfolio Management. K. The Issuer/Obligor agrees to reimburse the Insurer immediately and unconditionally upon demand,to the extent permitted by law,for all reasonable expenses,including attorneys' fees and expenses, incurred by the Insurer in connection with(i)the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this Resolution/Indenture and any other document executed in connection with the issuance of the Obligations,and(ii)any consent,amendment,waiver or other action with respect to the Resolution/Indenture or any related document, whether or not granted or approved, together with interest on all such expenses from and including the date incurred to the date of payment at Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law, whichever is less. In addition,the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved. The obligation of the City to make the payments and reimbursements required under this Section 37, Paragraph K, is subject to appropriation of funds by the City. L. The Issuer/Obligor agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in public documents issued in connection with the current Obligations to be issued in accordance with the terms of the Commitment;and provided further such prohibition shall not apply to the use of the Insurer's name in order to comply with public notice,public meeting or public reporting requirements. 38 M. The Issuer /Obligor shall not enter into any agreement nor shall it consent to or participate in any arrangement pursuant to which Bonds are tendered or purchased for any purpose other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of the Bond Insurer. N. The Issuer shall be in default under this Bond Order if:(1)the Issuer fails to pay any principal or interest payment under the Bonds when due, (ii) the Issuer fails to observe any other covenant or condition under this Bond Order and such failure continues from 30 days,and(iii)the Issuer declares bankruptcy. In the event of default under this Bond Order, the Bond Insurer shall have the right to direct all remedies and the Issuer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures,the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of this Bond Order and any financing document executed in connection herewith. Other than the usual redemption provisions, any acceleration of principal payments are subject to the Bond Insurer's prior written consent. O. Any defeasance of the Bonds by the Issuer by depositing into escrow a sufficient sum of cash or escrowed securities to legally discharge and defease the Bonds shall require that only the types of investments that are approved by the Bond Insurer be used for such purpose. 33. Special Provisions Relating to Reserve Policy. The purchase of and payment of the premium for a Surety Policy to be issued by the Insurer to fund the Reserve Fund requirement under Section 19(f) of this Ordinance in accordance with the terms of a commitment for such policy presented to and hereby approved by the City Council is hereby authorized. Hereinafter such Surety Policy shall be referred to as the "Reserve Policy". So long as the Reserve Policy is in effect, the following provisions shall apply and be applicable: A. In setting the rates and charges for use and services of the System pursuant to Section 19(b) above, the City agrees to establish sufficient rates so as to generate sufficient revenues to pay all amounts owed to the Bond Insurer. B. The Paying Agent/Registrar shall deliver a demand for payment to the Bond Insurer in the form required by the Bond Insurer at least three days prior to the date on which funds are required. C. The Bond Insurer must be paid all amounts owed to it under the terms of the Financial Guaranty Agreement or any other documents before this Bond Order and any financing documents executed in connection herewith may be terminated. D. It shall be the responsibility of the Paying Agent/Registrar to maintain 39 adequate records, verified with the Bond Insurer,as to the amount available to be drawn at an given time udner the Reserve Policy and as to amounts paid and owing to the Bond Insurer under the terms of the Financial Guaranty Agreement. E. There may be no optional redemption of the Bonds or distribution of any funds to the Issuer unless all amounts owed to the Bond Insurer under the terms of the Financial Guaranty Agreement or any other documents have been paid. [The remainder of this page has intentionally been left blank.] 40 PASSED AND APPROVED this 5th day of December, 2006. Mayor The City of Beaumont ATTEST: City Clerk The City of Beaumont (SEAL) 41 3 December 5,2006 Consider amending Section 21-75 of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department �4~- " City of Beaumont •� Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Tyrone E. Cooper, City Attorney MEETING DATE: December 5, 2006 AGENDA MEMO DATE: November 29, 2006 REQUESTED ACTION: Council consider Amendments to Section 21-75, of the Code of Ordinances, changing the total number of Grade II and Grade III positions in the Beaumont Police Department. RECOMMENDATION Council consider amendments to Section 21-75, of the Code of Ordinances, increasing Grade III positions from 12 to 16 and reducing the number of Grade II positions from 44 to 40. BACKGROUND In an effort to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al, involving the promotion of several Grade II Sergeants to the position of Lieutenant, it is recommended that four (4)Lieutenant positions be added to the Police Department. However, the intent of the settlement is not increase the total number of positions in the Department. To achieve the intended purpose, it is necessary to reduce the total number of Grade II positions by four (4). By doing so, the total number of positions in the Department will remain unchanged. These positions are not needed for the orderly and efficient operation of the department. It is also intended and agreed that the four(4) new Lieutenant positions will be reduced by attrition as the positions become vacant in the future. BUDGETARY IMPACT The above changes will cost an estimated $22,000 if spread over a twelve(12) month period. PREVIOUS ACTION None. TO: Kyle Hayes DATE: November 29, 2006 FROM: Tyrone E. Cooper MEETING DATE: December 5, 2006 SUBJECT: Amend Ord. No. 06-055 Page 2/2 SUBSEQUENT ACTION None RECOMMENDED BY City Manager, Chief of Police and City Attorney ORDINANCE NO. ENTITLED AN ORDINANCE AMENDING SECTION 21-75,OF THE CODE OF ORDINANCES, CHANGING THE TOTAL NUMBER OF GRADE II AND GRADE III POSITIONS IN THE BEAUMONT POLICE DEPARTMENT; PROVIDING FOR SEVERABILITY AND PROVIDING FOR REPEAL. WHEREAS, the City Council of the City of Beaumont has agreed to settle the lawsuit, Curtis Breaux, et al v. The City of Beaumont, et al; and, WHEREAS, settlement will require the addition of four(4) new Lieutenant positions in the Police Department and the abolishing of four(4) Sergeant positions in order that the total number of positions in the Department remain unchanged. The four (4) Sergeant positions are not needed for the orderly and efficient operation of the Department. BE IT ORDAINED BY THE CITY OF BEAUMONT: Section 1. THAT Chapter 21, Section 21-75 of the Code of Ordinances of the City of Beaumont be and the same is hereby amended to read as follows: Section 21-75. Grades and Classifications - Police Department The following grades and classifications are hereby established within the Police Department. Grade Classification Positions I Officers 199 II Sergeants 40 III Lieutenants 16 IV Captains 3 Assistant Chief 1 Total 259 Section 2. That if any section, subsection, sentence, clause or phrase of this ordinance, or the application of same to a particular set of persons or circumstances, should for any reason be held to be invalid, such invalidity shall not affect the remaining portions of this ordinance, and to such end the various portions and provisions of this ordinance are declared to be severable. Section 3. All ordinances or parts of ordinances in conflict herewith, including conflicting portions of the City Budget, are repealed to the extent of the conflict only. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 5th day of December, 2006. - Mayor Guy N. Goodson -