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Home My WebLink AboutORD 16-023ORDINANCE NO. 16-023 AUTHORIZING THE ISSUANCE OF $1,600,000 CITY OF BEAUMONT, TEXAS TAX NOTE, SERIES 2016 Adopted: April 12, 2016 #5157717.5 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section1.01. Definitions................................................................................................................ l Section 1.02. Other Definitions.....................................................................................................4 Section1.03. Findings....................................................................................................................4 Section 1.04. Table of Contents, Titles and Headings................................................................... 5 Section1.05. Interpretation............................................................................................................5 ARTICLE II SECURITY FOR THE NOTE Section 2.01. Tax Levy for Payment of Note................................................................................5 Section 2.02. Use of Net Revenues................................................................................................6 ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE NOTE Section3.01. Authorization...........................................................................................................6 Section 3.02. Date, Denomination, Maturities, Numbers and Interest..........................................6 Section 3.03. Medium, Method and Place of Payment..................................................................7 Section 3.04. Execution and Initial Registration...........................................................................8 Section3.05. Ownership................................................................................................................8 Section 3.06. Registration, Transfer and Exchange.......................................................................9 Section 3.07. Cancellation and Authentication............................................................................10 Section 3.08. Replacement Note..................................................................................................10 #5157717.5 -1- ARTICLE IV REDEMPTION OF NOTE BEFORE MATURITY Section 4.01. Limitation on Redemption.....................................................................................1 1 Section 4.02. Optional Redemption.............................................................................................1 1 Section 4.03. Partial Redemption................................................................................................. l l Section 4.04. Notice of Redemption to Owners..........................................................................11 Section 4.05. Payment Upon Redemption...................................................................................12 Section 4.06. Effect of Redemption.............................................................................................12 Section 4.07. Lapse of Payment...................................................................................................13 ARTICLE V PAYING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paying Agent/Registrar.....................................................13 Section 5.02. Qualifications.........................................................................................................13 Section 5.03. Maintaining Paying Agent/Registrar.....................................................................13 Section5.04. Termination............................................................................................................13 Section 5.05. Notice of Change...................................................................................................13 Section 5.06. Agreement to Perform Duties and Functions.........................................................14 Section 5.07. Delivery of Records to Successor..........................................................................14 ARTICLE VI FORM OF THE NOTE Section 6.01. Form Generally......................................................................................................14 Section6.02. Form of Note..........................................................................................................14 Section6.03. Legal Opinion........................................................................................................19 #5157717.5 -11- ARTICLE VII SALE OF THE NOTE; CONTROL AND DELIVERY OF THE NOTE Section 7.01. Sale of Note; Private Placement Letter..................................................................20 Section 7.02. Control and Delivery of Note................................................................................20 ARTICLE VIII CREATION OF FUNDS AND ACCOUNTS; DEPOSIT OF PROCEEDS; INVESTMENTS Section 8.01. Debt Service Fund..................................................................................................21 Section 8.02. Deposit of Proceeds...............................................................................................21 ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of Note....................................................................................................21 Section9.02. Accounts................................................................................................................21 Section 9.03. Other Representations and Covenants...................................................................22 Section 9.04. Ordinance a Contract - Amendments.....................................................................22 Section 9.05. Federal Income Tax Exclusion..............................................................................22 ARTICLE X DEFAULT AND REMEDIES Section 10.01. Events of Default...................................................................................................25 Section10.02. Remedies................................................................................................................25 ARTICLE XI DISCHARGE Section11.01. Discharge...............................................................................................................26 #5157717.5 -111- ARTICLE XII MISCELLANEOUS Section 12.01. Changes to Ordinance............................................................................................26 Section 12.02. Partial Invalidity.....................................................................................................26 Section12.03. Repealer.................................................................................................................26 Section 12.04. Individuals Not Liable...........................................................................................26 Section 12.05. Related Matters......................................................................................................26 Section 12.06. Force and Effect.....................................................................................................27 #5157717.5 -1V- AN ORDINANCE OF THE CITY OF BEAUMONT, TEXAS, AUTHORIZING THE ISSUANCE AND SALE OF CITY OF BEAUMONT, TEXAS, TAX NOTE, SERIES 2016; LEVYING A TAX IN PAYMENT THEREOF; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT WHEREAS, pursuant to Chapters 1431 and 1502, Texas Government Code, as amended (the "Act"), the governing body of a municipality is authorized to issue the note hereinafter authorized (the "Note") to pay contractual obligations incurred or to be incurred for the purposes set forth in Section 3.01 hereof, and WHEREAS, this governing body (the "City Council") of the City of Beaumont, Texas (the "City"), hereby finds and determines that it is necessary and in the best interest of the City and its citizens to issue such Note for the purposes herein described and that such Note shall be payable from and secured by ad valorem taxes levied, within the limits prescribed by law, on all taxable property within the City; and WHEREAS, in addition to the City's pledge of ad valorem taxes, the City is hereby authorized to use the Net Revenues of the City's Solid Waste Fund to satisfy its obligation to repay the debt associated with such Note; and WHEREAS, the Note hereinafter authorized shall mature before the seventh anniversary of the date that the Attorney General of the State of Texas approves the Note, as required by the Act; and WHEREAS, it is affirmatively found that this City Council is authorized to proceed with the issuance and sale of such Note as authorized by the Constitution and laws of the State of Texas, particularly the Act; and WHEREAS, the City Council has found and determined that it is necessary and in the best interest of the City and its citizens that it authorize by this Ordinance the issuance and delivery of its Note at this time; and WHEREAS, it is officially found, determined, and declared that the meeting at which this Ordinance has been adopted was open to the public and public notice of the time, place and subject matter of the public business to be considered and acted upon at said meeting, including this Ordinance, was given, all as required by the applicable provisions of Chapter 551, Texas Government Code, as amended; Now Therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT, TEXAS: ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise, in this Ordinance the following terms shall have the meanings specified below: #5157717.5 -1- "Bond Counsel" means Bracewell LLP or any successor thereto. "Business Day" means a day that is not a Saturday, Sunday, legal holiday or other day on which banking institutions in the city where the Designated Payment/Transfer Office is located are required or authorized by law or executive order to close. "Code" means the Internal Revenue Code of 1986, as amended, and, with respect to a specific section thereof, such reference shall be deemed to include (a) the Regulations promulgated under such section, (b) any successor provision of similar import hereafter enacted, (c) any corresponding provision of any subsequent Internal Revenue Code and (d) the regulations promulgated under the provisions described in (b) and (c). "Debt Service Fund" means the Debt Service Fund established by Section 8.01(a). "Default Rate" means the per annum interest rate equal to the current per annum interest rate on the Note plus 4.00% "Designated Payment/Transfer Office" means (i) with respect to the initial Paying Agent/Registrar, its corporate trust office or such other location designated by the Paying Agent/Registrar, and (ii) with respect to any successor Paying Agent/Registrar, the office of such successor designated and located as may be agreed upon by the City and such successor. "Determination of Taxability" means and shall be deemed to have occurred on the first to occur of the following: (i) City Acknowledgment: on the date when the City files any statement, supplemental statement or other tax schedule, return or document which discloses that an Event of Taxability has occurred; (ii) Opinion of Counsel: sixty (60) days after the Owner or former Owner reasonably requests that the City provide a written opinion by a nationally recognized firm of attorneys of substantial expertise on the subject of tax-exempt municipal finance confirming that interest on the Bond is excludible from gross income for federal income tax purposes, unless the City shall deliver such an opinion to such Owner or former Owner within such time; (iii) IRS Notice to City: on the date when the City shall be advised in writing by the Internal Revenue Service (or any other government official or agent exercising the same or a substantially similar function from time to time) that, based upon filings of the City, or upon any review or audit of the City or upon any other ground whatsoever, an Event of Taxability shall have occurred; or (iv) IRS Notice to Owner: on the date when the City shall receive notice from an Owner or former Owner that the Internal Revenue Service (or any other government official or agency exercising the same or a substantially similar function from time to time) has assessed as includable in the gross income of such Owner or former Owner the interest on the Note due to the occurrence of an Event of Taxability; #5157717.5 -2- provided, however, no Determination of Taxability shall occur under clause (iii) or (iv) of this definition unless the City has been afforded the reasonable opportunity, at its expense, to contest any such assessment, and, further, no Determination of Taxability shall occur until such contest, if made, has been finally determined; provided further, however, that following any such final determination, upon demand from such Owner or former Owner, the City shall promptly reimburse such Owner or former Owner for any payments, including any taxes, interest, or penalties such Owner or former Owner, respectively, shall be obligated to make to any governmental entity as a result of the Determination of Taxability (for the avoidance of doubt, the Owner or former Owner, respectively, may only receive reimbursement for payments actually made by such Owner or former Owner and for which such Owner or former Owner provides documentation demonstrating that such payments were made). To the extent the City reaches an agreement with the Internal Revenue Service in order to allow the Bond to continue to be treated as tax-exempt, no Determination of Taxability shall be deemed to have occurred. "Event of Default" means the occurrence of an event described in Section 10.1 of this Ordinance. "Event of Taxability" means a (i) change in law or fact or the interpretation thereof, or the occurrence or existence of any fact, event or circumstance (including, without limitation, the taking of any action by the City, or the failure to take any action by the City, or the making by the City of any misrepresentation herein or in any certificate required to be given in connection with the issuance, sale or delivery of the Note) that has the effect of causing interest paid or payable on the Note to be includable, in whole or in part, in the gross income of any Owner or former Owner for federal income tax purposes with respect to the Note, or (ii) the entry of any decree or judgment by the court of competent jurisdiction, or the taking of any official action by the Internal Revenue Service or the Department of the Treasury, which decree, judgment or action shall be final under applicable procedural law, in either case, that has the effect of causing interest paid or payable on the Note to become includable, in whole or in part in the gross income of any Owner or former Owner for federal income tax purposes with respect to the Note. "Fiscal Year" means such fiscal year as shall from time to time be set by the City Council. "Initial Note" means the Note described in Section 3.04(d). "Interest Payment Date" means the date or dates upon which interest on the principal of the Note is scheduled to be paid until the maturity or prior redemption of the Note, such dates being March 1 and September 1 of each year commencing September 1, 2016, until maturity or prior redemption. "Issuance Date" means the date of the initial delivery of and payment for the Note. "Maximum Lawful Rate" means the lesser of (a) the maximum rate of interest allowed by Chapter 1204, Texas Government Code, or any successor provision of (b) the maximum nonusurious rate of interest permitted to be charged by applicable federal or Texas law from time to time in effect. "Note" means the City's Note entitled "City of Beaumont, Texas Tax Note, Series 2016" #5157717.5 -3- authorized to be issued by Section 3.01. "Ordinance" means this Ordinance. "Owner" means the person who is the registered owner of a Note, as shown in the Register. "Paying Agent/Registrar" means Wells Fargo Bank, National Association, or any successor thereto as provided in this Ordinance. "Paying Agent/Registrar Agreement" means the Paying Agent/Registrar Agreement between the Paying Agent/Registrar and the City relating to the Note. "Private Placement Letter" means that certain private placement letter between the City and the Purchaser, as described in Section 7.01 of this Ordinance. "Purchaser" means Wells Fargo Bank, National Association. "Record Date" means, for any Interest Payment Date, the close of business on the fifteenth day of the month next preceding an Interest Payment Date. "Redemption Price" means the principal amount of the Note being redeemed plus accrued interest to the date of redemption. "Register" means the Register specified in Section 3.06(a). "Regulations" means the applicable proposed, temporary or fmal Treasury Regulations promulgated under the Code or, to the extent applicable to the Code, under the Internal Revenue Code of 1954, as such regulations may be amended or supplemented from time to time. "Special Payment Date" means the Special Payment Date prescribed by Section 3.03(b). "Special Record Date" means the Special Record Date prescribed by Section 3.03(b). "Taxable Rate" means the per annum interest rate equal to the current per annum interest rate on the Certificates multiplied by a taxable rate factor of 1.55. "Unclaimed Payments" means money deposited with the Paying Agent/Registrar for the payment of the principal of or interest on the Note as the same become due and payable and remaining unclaimed by the Owners of such Note for 90 days after the applicable payment or redemption date. Section 1.02. Other Definitions. The terms "Act," "City Council" and "City" shall have the meanings assigned in the preamble to this Ordinance. Section 1.03. Findings. The declarations, determinations and findings declared, made and found in the preamble to this Ordinance are hereby adopted, restated and made a part of the operative provisions hereof. #5157717.5 -4- Section 1.04. Table of Contents, Titles and Headings. The table of contents, titles and headings of the Articles and 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 and shall never be considered or given any effect in construing this Ordinance or any provision hereof or in ascertaining intent, if any question of intent should arise. Section 1.05. Interpretation. (a) Unless the context requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. (b) Article and section references shall mean references to articles and sections of this Ordinance unless designated otherwise. (c) This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein to sustain the validity of this Ordinance. (d) Any action required to be taken on a date which is not a Business Day shall be taken on the next succeeding Business Day and have the same effect as if taken on the date so required. ARTICLE II SECURITY FOR THE NOTE Section 2.01. Tax Levy for Payment of Note. While the Note or any part of the principal thereof or interest thereon remains outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner, and at the same time other City taxes are levied, assessed and collected, in each year, a continuing direct annual ad valorem tax, within the limits prescribed by law, upon all taxable property in the City sufficient to pay the current interest on the Note as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Note as such principal matures, but never less than two percent (2%) of the original principal amount of the Note each year, full allowance being made for delinquencies and costs of collection, and such taxes when collected shall be applied to the payment of the interest on and principal of the Note and to no other purpose. The proceeds from all taxes levied, assessed and collected for and on account of the Note authorized by this Ordinance shall be deposited into the Debt Service Fund created pursuant to Section 8.01 herein. Said ad valorem tax, the collections therefrom, and all amounts on deposit in or required hereby to be deposited to the Debt Service Fund are hereby pledged and committed irrevocably to the payment of the principal of and interest on the Note when and as due and payable in accordance with their terms and this Ordinance. #5157717.5 -5- To pay debt service coming due on the Note prior to receipt of the taxes levied to pay such debt service, there is hereby appropriated from current funds on hand, which are hereby certified to be on hand and available for such purpose, an amount sufficient to pay such debt service, and such amount shall be used for no other purpose. Section 2.02. Use of Net Revenues. In addition to the City's pledge of ad valorem taxes, the City is hereby authorized to use the Net Revenues of the City's Solid Waste Fund to satisfy its obligation to repay the debt associated with the Note. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE NOTE Section 3.01. Authorization. The City's note to be designated "City of Beaumont, Texas Tax Note, Series 2016," is hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State of Texas, particularly the Act, in the aggregate principal amount of $1,600,000 for the purpose of providing funds to pay contractual obligations incurred or to be incurred (i) for the construction of a landfill cell and related appurtenances and (ii) to pay the costs of issuance related thereto. Section 3.02. Date, Denomination, Maturities, Numbers and Interest. (a) The Certificates shall be in fully registered form, without coupons, in the denomination of $250,000 and any integral multiple of $1,000 in excess thereof and shall be numbered separately from R-1 upward, except the Initial Certificate, which shall be numbered I- 1. (b) The Certificates shall mature on March 1 in the years and in the principal amounts set forth in the following schedule: (c) Interest shall accrue and be paid on each Certificate respectively until the principal amount thereof has been paid or provision for such payment has been made, from the #5157717.5 -6- Principal Interest Year Amount Rate 2017 $266,000 1.84% 2018 324,000 1.84 2019 330,000 1.84 2020 337,000 1.84 2021 343,000 1.84 (c) Interest shall accrue and be paid on each Certificate respectively until the principal amount thereof has been paid or provision for such payment has been made, from the #5157717.5 -6- later of the Issuance Date or the most recent Interest Payment Date to which interest has been paid or provided for at the rate per annum for each respective maturity specified in the schedule contained in subsection (b) above. Such interest shall be payable semiannually on each Interest Payment Date, computed on the basis of a 360 -day year composed of twelve 30 -day months. If a Determination of Taxability occurs, the per annum interest rate on the Certificates shall increase to the Taxable Rate beginning on the date of the Determination of Taxability. Upon the occurrence and continuation of any Event of Default, from and after the effective date of such Event of Default, the interest rate on the Note shall be established at a rate equal to the Default Rate. In no event, however, may the rate of interest on the Certificates exceed the Maximum Lawful Rate. Section 3.03. Medium, Method and Place of Payment. (a) The principal of and interest on the Note shall be paid in lawful money of the United States of America as provided in this Section. (b) Interest on the Note shall be payable to the Owners whose names appear in the Register at the close of business on the Record Date; provided, however, that in the event of nonpayment of interest on a scheduled Interest Payment Date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date"), which shall be at least 15 days after the Special Record Date) shall be sent at least five Business Days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of the Owner of the Note appearing on the books of the Paying Agent/Registrar at the close of business on the last Business Day next preceding the date of mailing of such notice. Interest on the Note shall be paid by wire or check (dated as of the Interest Payment Date) or by such other method as agreed to by the City, the Purchaser and the Paying Agent, and sent by the Paying Agent/Registrar to the person entitled to such payment, United States mail, first class postage prepaid, to the address of such person as it appears in the Register or by such other customary banking arrangements acceptable to the Paying Agent/Registrar and the person to whom interest is to be paid; provided, however, that such person shall bear all risk and expenses of such other customary banking arrangements. (c) The principal of the Note shall be paid to the person in whose name such Note is registered on the due date thereof (whether at the maturity date or the date of prior redemption thereof) upon presentation and surrender of such Note at the Designated Payment/Transfer Office; provided, however, that for so long as the Note is held by a single Owner, mandatory sinking fund redemption or optional redemption payments made prior to final maturity will be noted by the Paying Agent/Registrar in their official records but will not require the presentation and surrender of the Note. (d) If a date for the payment of the principal of or interest on the Note is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and #5157717.5 -7- payment on such date shall have the same force and effect as if made on the original date payment was due. (e) Subject to any applicable escheat, unclaimed property, or similar law, including Title 6 of the Texas Property Code, Unclaimed Payments remaining unclaimed by the Owners entitled thereto for three years after the applicable payment or redemption date shall be paid to the City and thereafter neither the City, the Paying Agent/Registrar, nor any other person shall be liable or responsible to any Owners of such Note for any further payment of such unclaimed moneys or on account of any such Note. Section 3.04. Execution and Initial Registration. (a) The Note shall be executed on behalf of the City by the Mayor or City Manager and City Clerk of the City, by their manual or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Note shall have the same effect as if the Note had been signed manually and in person by each of said officers, and such facsimile seal on the Note shall have the same effect as if the official seal of the City had been manually impressed upon the Note. (b) In the event that any officer of the City whose manual or facsimile signature appears on the Note ceases to be such officer before the authentication of such Note or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Note shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Note delivered on the Issuance Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Ordinance, manually executed by the Comptroller of Public Accounts of the State of Texas or by her duly authorized agent, which certificate shall be evidence that the Initial Note has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the City, and has been registered by the Comptroller of Public Accounts of the State of Texas. (d) On the Issuance Date, one Note (the "Initial Note"), executed by manual or facsimile signature of the Mayor or City Manager and City Clerk of the City, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas, will be delivered to the Purchaser or its designee against payment therefor. Section 3.05. Ownership. (a) The City, the Paying Agent/Registrar and any other person may treat the person in whose name any Note is registered as the absolute Owner of such Note for the purpose of making and receiving payment of the principal thereof and premium, if any, thereon, for the further purpose of making and receiving payment of the interest thereon (subject to the #5157717.5 -8- provisions herein that interest is to be paid to the person in whose name the Note is registered on the Record Date or Special Record Date, as applicable), and for all other purposes, whether or not such Note is overdue, and neither the City nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. (b) All payments made to the person deemed to be the Owner of any Note in accordance with this Section shall be valid and effectual and shall discharge the liability of the City and the Paying Agent/Registrar upon such Note to the extent of the sums paid. Section 3.06. Registration, Transfer and Exchange. (a) So long as the Note remains outstanding, the City shall cause the Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a register (the "Register") in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of the Note in accordance with this Ordinance. Subject to the restrictions contained in the Private Placement Letter, the ownership of a Note may be transferred only upon the presentation and surrender of the Note at the Designated Payment/Transfer Office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar. No transfer of any Note shall be effective until entered in the Register. A new Note or Notes will be delivered by the Paying Agent/Registrar, in lieu of the Note being transferred or exchanged, at the Designated Payment/Transfer Office, or sent by United States mail, first class, posted prepaid, to the Owner or his designee. (b) The Notes shall be exchangeable upon the presentation and surrender thereof at the Designated Payment/Transfer Office for Notes of the same maturity and interest rate and in any denomination or denominations of any integral multiple of $250,000 and any integral multiple of $1,000 in excess thereof, and in an aggregate principal amount equal to the unpaid principal amount of the Notes presented for exchange. The Paying Agent/Registrar is hereby authorized to authenticate and deliver Notes transferred or exchanged for other Notes in accordance with this Section. (c) Each exchange Note delivered by the Paying Agent/Registrar in accordance with this Section shall constitute an original contractual obligation of the City and shall be entitled to the benefits and security of this Ordinance to the same extent as the Note in lieu of which such exchange Note is delivered. (d) No service charge shall be made to the Owner for the initial registration, subsequent transfer, or exchange for any different denomination of the Note. The Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection with the registration, transfer or exchange of a Note. (e) Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer, or exchange any Note called for redemption, in whole or in part, where such redemption is scheduled to occur within 45 calendar days after the transfer or exchange date; provided, #5157717.5 -9- however, such limitation shall not be applicable to an exchange by the Owner of the uncalled principal balance of a Note. Section 3.07. Cancellation and Authentication. A Note paid or redeemed before scheduled maturity in accordance with this Ordinance, and a Note in lieu of which an exchange Note or a replacement Note is authenticated and delivered in accordance with this Ordinance, shall be cancelled upon the making of proper records regarding such payment, redemption, exchange or replacement. The Paying Agent/Registrar shall dispose of the cancelled Note in accordance with the Securities Exchange Act of 1934. Section 3.08. Replacement Note. (a) Upon the presentation and surrender to the Paying Agent/Registrar, at the Designated Payment/Transfer Office, of a mutilated Note, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. The City or the Paying Agent/Registrar may require the Owner of such Note to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected therewith. (b) In the event that any Note is lost, apparently destroyed or wrongfully taken, the Paying Agent/Registrar, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Note has been acquired by a bona fide purchaser, shall authenticate and deliver a replacement Note of like tenor and principal amount, bearing a number not contemporaneously outstanding, provided that the Owner first: (i) furnishes to the Paying Agent/Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction or theft of such Note; (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar and the City to save them harmless; (iii) pays all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Paying Agent/Registrar and any tax or other governmental charge that is authorized to be imposed; and (iv) satisfies any other reasonable requirements imposed by the City and the Paying Agent/Registrar. (c) If, after the delivery of such replacement Note, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the City and the Paying Agent/Registrar shall be entitled to recover such replacement Note 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 Paying Agent/Registrar in connection therewith. #5157717.5 -10- (d) In the event that any such mutilated, lost, apparently destroyed or wrongfully taken Note has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Note, may pay such Note. (e) Each replacement Note delivered in accordance with this Section shall constitute an original contractual obligation of the City and shall be entitled to the benefits and security of this Ordinance to the same extent as the Note in lieu of which such replacement Note is delivered. ARTICLE IV REDEMPTION OF NOTE BEFORE MATURITY Section 4.01. Limitation on Redemption. The Note shall be subject to redemption before scheduled maturity only as provided in this ARTICLE IV. Section 4.02. Optional Redemption. The Note is subject to optional redemption prior to maturity, in whole or in part on any date after the Issuance Date, at the Redemption Price. Section 4.03. Partial Redemption. (a) If less than all of the Notes are to be redeemed pursuant to Section 4.02 hereof, the City shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot, or other customary method that results in random selection, the Notes, or portions thereof, within such maturity or maturities and in such principal amounts for redemption. (b) A portion of a single Note of a denomination greater than $250,000 may be redeemed, but only in a principal amount equal to $250,000 or any integral multiple of $1,000 in excess thereof. If such a Note is to be partially redeemed, the Paying Agent/Registrar shall treat each integral multiple of $250,000 or any integral multiple of $1,000 in excess thereof of the Note as though it were a single Note for purposes of selection for redemption. (c) The Paying Agent/Registrar shall promptly notify the City in writing of the principal amount to be redeemed of the Note as to which only a portion thereof is to be redeemed. Section 4.04. Notice of Redemption to Owners. (a) The Paying Agent/Registrar shall give notice of any redemption of the Note by sending notice by first class United States mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the Owners of the Note (or portions thereof) to be redeemed, at the address shown on the Register at the close of business on the Business Day next preceding the date of mailing such notice. #5157717.5 -11- (b) The City reserves the right to give notice of its election or direction to redeem the Note under Section 4.02 conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or authorized securities, in an amount equal to the amount necessary to effect the redemption, with the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the redemption date or (ii) that the City retains the right to rescind such notice at any time prior to the scheduled redemption date if the City delivers a certificate of the City to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice, and such notice and redemption shall be of no effect if such moneys and/or authorized securities are not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of redemption to the affected Owners. The Note subject to conditional redemption where redemption has been rescinded shall remain outstanding. (c) Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. Section 4.05. Payment Upon Redemption. (a) Before or on each redemption date, the City shall deposit with the Paying Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying Agent/Registrar shall make provision for the payment of the Note to be redeemed on such date by setting aside and holding in trust such amounts as are received by the Paying Agent/Registrar from the City and shall use such funds solely for the purpose of paying the principal of, redemption premium, if any, and accrued interest on the Note being redeemed. (b) Upon presentation and surrender of the Note called for redemption at the Designated Payment/Transfer Office of the Paying Agent/Registrar on or after the date fixed for redemption , the Paying Agent/Registrar shall pay the principal of, redemption premium, if any, and accrued interest on such Note to the date of redemption from the money set aside for such purpose; provided, however, that for so long as the Note is held by a single Owner, optional redemption payments made prior to final maturity will be noted by the Paying Agent/Registrar in their official records but will not require the presentation and surrender of the Note. Section 4.06. Effect of Redemption. (a) When the Note has been called for redemption in whole or in part and due provision has been made to redeem same as herein provided, the Note or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on the Note or portion thereof called for redemption shall terminate on the date fixed for redemption. If the City shall fail to make provision for payment of all sums due on a redemption date, then the Note or portion thereof called for redemption shall continue to bear interest at the rate stated on the Note until due provision is made for the payment of same. (b) If the City shall fail to make provision for payment of all sums due on a redemption date, then the Note or portions thereof called for redemption shall continue to bear #5157717.5 -12- interest at the rate stated on the Note until due provision is made for the payment of same by the City. Section 4.07. Lapse of Payment. Money set aside for the redemption of the Note and remaining unclaimed by the Owners thereof shall be subject to the provisions of Section 3.03(f) hereof. ARTICLE V PAYING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paving A eg nt/Re ig strar. Wells Fargo Bank, National Association is hereby appointed as the initial Paying Agent/Registrar for the Note. The form of Paying Agent/Registrar Agreement is hereby approved. Section 5.02. Qualifications. Each Paying Agent/Registrar shall be a commercial bank, a trust company organized under the laws of the State of Texas, or any other entity duly qualified and legally authorized to serve as and perform the duties and services of paying agent and registrar for the Note. Section 5.03. Maintaining Paying Agent/Regi strar. (a) At all times while the Note is outstanding, the City will maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. The Mayor or the City Manager is hereby authorized and directed to execute an agreement with the Paying Agent/Registrar specifying the duties and responsibilities of the City and the Paying Agent/Registrar. The signature of the Mayor or the City Manager shall be attested by the City Clerk. (b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the City will promptly appoint a replacement, provided, that such resignation shall not be effective until a successor Paying Agent/Registrar has been appointed and has accepted the duties of Paying Agent/Registrar for the Note. Section 5.04. Termination. The City, upon not less than 45 days' notice, reserves the right to terminate the appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to be terminated written notice of such termination, provided, that such termination shall not be effective until a successor Paying Agent/Registrar has been appointed and has accepted the duties of Paying Agent/Registrar for the Note. Section 5.05. Notice of Change. Promptly upon each change in the entity serving as Paying Agent/Registrar, the City will cause notice of the change to be sent to each Owner by first class United States mail, postage prepaid, at the address in the Register, stating the effective date of the change and the name and mailing address of the replacement Paying Agent/Registrar. #5157717.5 -13- Section 5.06. Agreement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar, and executing the Paying Agent/Registrar Agreement, the Paying Agent/Registrar is deemed to have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed hereby and thereby. Section 5.07. Delivery of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent/Registrar, promptly upon the appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent books and records relating to the Note to the successor Paying Agent/Registrar. ARTICLE VI FORM OF THE NOTE Section 6.01. Form Generally. (a) The Note, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the Assignment form to appear on the Note, (i) shall be substantially in the form set forth in this Article, with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance, and (ii) may have such letters, numbers, or other marks of identification and such legends and endorsements (including any reproduction of an opinion of counsel) thereon as, consistently herewith, may be determined by the City or by the officers executing such Note, as evidenced by their execution thereof. (b) Any portion of the text of any Note may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Note. (c) The Note, including the Initial Note submitted to the Attorney General of Texas, shall be typed, printed, lithographed, photocopied or engraved, and may be produced by any combination of these methods or produced in any other similar manner, all as determined by the officers executing such Note, as evidenced by their execution thereof. Section 6.02. Form of Note. The form of Note, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the form of Certificate of the Paying Agent/Registrar and the form of Assignment appearing on the Note, shall be substantially as follows: (a) Form of Note. THIS NOTE MAY NOT BE TRANSFERRED IN WHOLE OR IN PART EXCEPT AS PROVIDED IN SECTION 3.06 OF THE ORDINANCE AND AS PROVIDED HEREIN REGISTERED #5157717.5 -14- REGISTERED NO. I-1 INTEREST RATE: 1.84% UNITED STATES OF AMERICA STATE OF TEXAS CITY OF BEAUMONT, TEXAS TAX NOTE SERIES 2016 MATURITY DATE: 1, 2021 $1,600,000 ISSUANCE DATE: May _, 2016 The City of Beaumont (the "City"), in Jefferson County, State of Texas, for value received, hereby promises to pay to WELLS FARGO BANK, NATIONAL ASSOCIATION or registered assigns, on the Maturity Date specified above, the sum of ONE MILLION SIX HUNDRED THOUSAND DOLLARS unless the payment of the principal hereof shall have been paid or provision for such payment shall have been made, and to pay interest on the unpaid principal amount hereof from the later of the Issuance Date specified above or the most recent interest payment date to which interest has been paid or provided for until such principal amount shall have been paid or provided for, at the per annum rate of interest specified above, computed on the basis of a 360 -day year of twelve 30 -day months, such interest to be paid semiannually on March 1 and September 1 of each year, commencing on September 1, 2016. The principal of this Note (or so much thereof as shall not have been paid or deemed to have been paid upon prior redemption) shall be payable without exchange or collection charges in lawful money of the United States of America on the Maturity Date specified above (unless redeemed prior thereto as provided in this Note) upon presentation and surrender of this Note at the corporate trust office in San Antonio, Texas (the "Designated Payment/Transfer Office"), of Wells Fargo Bank, National Association, as initial Paying Agent/Registrar, or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office of such successor. Interest on this Note is payable by check dated as of the interest payment date, mailed by the Paying Agent/Registrar to the registered owner at the address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangements acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the person to whom interest is to be paid. For the purpose of the payment of interest on this Note, the registered owner shall be the person in whose name this Note is registered at the close of business on the "Record Date," which shall be the close of business on the fifteenth day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled interest payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying #5157717.5 -15- Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date," which shall be 15 days after the Special Record Date) shall be sent at least five Business Days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each Owner of a Note appearing on the books of the Paying Agent/Registrar at the close of business on the last Business Day preceding the date of mailing such notice. If a date for the payment of the principal of or interest on the Note is a Saturday, Sunday, legal holiday, or a day on which banking institutions in the city in which the Designated Payment/Transfer Office is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday, or day on which such banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. This Note is dated May 1, 2016 and is issued in the aggregate principal amount of $1,600,000 (herein referred to as the "Note"), pursuant to a certain ordinance approved by the City Council of the City (the "Ordinance") for the purpose of providing funds for the construction of a landfill cell and related appurtenances and to pay the costs of issuance related thereto. If a Determination of Taxability occurs, the per annum interest rate on the Note shall increase to the Taxable Rate beginning on the date of the Determination of Taxability. Upon the occurrence and continuation of any Event of Default, from and after the effective date of such Event of Default, the interest rate on the Note shall be established at a rate equal to the Default Rate. In no event, however, may the rate of interest on the Note exceed the Maximum Lawful Rate. This Note and the interest thereon are payable from the levy of a direct and continuing ad valorem tax levied, within the limit prescribed by law, against all taxable property in the City as described and provided in the Ordinance. In addition to the City's pledge of ad valorem taxes, the City is authorized to use the Net Revenues of the City's Solid Waste Fund to satisfy its obligation to repay the debt associated with the Note. The Note is subject to optional redemption prior to maturity, in whole or in part any date after the Issuance Date, at a redemption price of par plus accrued interest to such date of redemption. Not less than 30 days prior to a redemption date for the Note, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the Owners of the Note to be redeemed at the address of the Owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. The City reserves the right to give notice of its election or direction to redeem Note pursuant to an optional redemption conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or #5157717.5 -16- authorized securities, in an amount equal to the amount necessary to effect the redemption, with the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the redemption date, or (ii) that the City retains the right to rescind such notice at any time on or prior to the scheduled redemption date if the City delivers a certificate of the City to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice and such notice and redemption shall be of no effect if such moneys and/or authorized securities are not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of redemption to the affected Owners. Any Note subject to conditional redemption and such redemption has been rescinded shall remain Outstanding and the rescission of such redemption shall not constitute an Event of Default. Further, in the case of a conditional redemption, the failure of the City to make moneys and or authorized securities available in part or in whole on or before the redemption date shall not constitute an Event of Default. Any notice so mailed shall be conclusively presumed to have been duly given, whether or not the registered owner receives such notice. Notice having been so given and subject, in the case of an optional redemption, to any rights or conditions reserved by the City in the notice, the Note called for redemption shall become due and payable on the specified redemption date, and notwithstanding that any Note or portion thereof has not been surrendered for payment, interest on such Note or portions thereof shall cease to accrue. As provided in the Ordinance, and subject to certain limitations therein set forth, this Note is transferable upon surrender of this Note for transfer at the Designated Payment/Transfer Office, with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar, and, thereupon, one or more new fully registered Note of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Notwithstanding any of the foregoing, this Note may only be transferred in whole and not in part and only to (x) an affiliate of the Purchaser, (y) a trust or custodial arrangement established by the Purchaser or one of its affiliates, the owners of the beneficial interests in which are limited to qualified institutional buyers, as defined in Rule 144A promulgated under the Securities Act of 1933, as amended (the "1933 Act"), or (z) an entity that is both a qualified institutional buyer and a commercial bank having capital and surplus, determined as of the date of any transfer of the Note, of $10,000,000,000 or more that has executed and delivered to the City a Private Placement Letter in a form acceptable to the City. Notwithstanding the foregoing, if the outstanding principal amount of the Note is less than $250,000, the Note may not be transferred without the prior written consent of the City. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided (except interest shall be paid to the person in whose name this Note is registered on the Record Date or Special Record Date, as applicable) and for all other purposes, whether or not this Note be overdue, and neither the City nor the Paying Agent/Registrar shall be affected by notice to the contrary. #5157717.5 -17- IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Note is duly authorized by law; that all acts, conditions and things required to be done precedent to and in the issuance of the Note has been properly done and performed and have happened in regular and due time, form and manner, as required by law; and that the total indebtedness of the City, including the Note, does not exceed any constitutional or statutory limitation. IN WITNESS WHEREOF, this Note has been duly executed on behalf of the City, under its o ial seal, in=anceth law /&44 City Clerk Mayor City o�Beaumont, Texas City of Beaumont, Texas of Certificate of CERTIFICATE OF PAYING AGENT/REGISTRAR This Note was originally issued as one Initial Note which was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated: (c) Form of Assignment. WELLS FARGO BANK, NATIONAL ASSOCIATION as Paying Agent/Registrar I: ASSIGNMENT Authorized Signatory FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (print or typewrite name, address and ZIP Code of transferee): (Social Security or other identifying number: ) the within Note and all rights hereunder and hereby irrevocably constitutes and appoints attorney to transfer the within Note on the books kept for registration hereof, with full power of substitution in the premises. #5157717.5 -18- Date: Signature Guaranteed By: NOTICE: The signature on this Assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular and must be guaranteed in a manner acceptable to the Paying Agent/Registrar. Authorized Signatory (d) Form of Comptroller's Registration Certificate. The following Registration Certificate of Comptroller of Public Accounts shall appear on the Initial Note: REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS & REGISTER NO. THE STATE OF TEXAS I HEREBY CERTIFY THAT there is on file and of record in my office a certificate to the effect that the Attorney General of the State of Texas has approved this Note, and that this Note has been registered this day by me. WITNESS MY SIGNATURE AND SEAL OF OFFICE this Comptroller of Public Accounts of the State of Texas [SEAL] (e) The Initial Note shall be in the form set forth in paragraphs (a), (b), (c) and (d) of this Section, and shall be numbered "I-1". Section 6.03. Legal Opinion. The approving legal opinion of Bond Counsel may be printed on or attached to each Note over the certification of the City Clerk of the City, which may be executed in facsimile. #5157717.5 -19- ARTICLE VII SALE OF THE NOTE; CONTROL AND DELIVERY OF THE NOTE Section 7.01. Sale of Note; Private Placement Letter. (a) The Note is hereby sold and shall be delivered to the Purchaser at a price of $1,600,000, representing the par amount of the Note in accordance with the terms of the Private Placement Letter, presented to and hereby approved by the City Council, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City. The Mayor or City Manager and other appropriate officials of the City are hereby authorized to execute the Private Placement Letter on behalf of the City and to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Note and the approving opinion of the Attorney General of Texas. (b) All officers and officials of the City are authorized to take such actions and to execute such documents, certificates and receipts, and to make such elections with respect to the tax-exempt status of the Note, as they may deem necessary and appropriate in order to consummate the delivery of the Note. Further, in connection with the submission of the record of proceedings for the Note to the Attorney General of the State of Texas for examination and approval of such Note, the appropriate officer of the City is hereby authorized and directed to issue a check of the City payable to the Attorney General of the State of Texas as a nonrefundable examination fee in the amount required by Chapter 1202, Texas Government Code (such amount to be the lesser of (i) 1/10th of 1% of the principal amount of the Note or (ii) $9,500, but in no case less than $750). (c) The obligation of the Purchaser to accept delivery of the Note is subject to the Purchaser being furnished with the final, approving opinion of Bond Counsel, which opinion shall be dated as of and delivered on the Issuance Date. Section 7.02. Control and Delivery of Note. (a) The Mayor or her designee is hereby authorized to have control of the Initial Note and all necessary records and proceedings pertaining thereto pending investigation, examination and approval of the Attorney General of the State of Texas, registration by the Comptroller of Public Accounts of the State of Texas, and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Accounts, delivery of the Note shall be made to the Purchaser under and subject to the general supervision and direction of the Mayor or City Manager, against receipt by the City of all amounts due to the City under the terms of sale. (c) In the event the Mayor is absent or otherwise unable to execute any document or take any action authorized herein, the City Manager shall be authorized to execute such documents and take such actions, and the performance of such duties by the City Manager shall for the purposes of this Ordinance have the same force and effect as if such duties were performed by the Mayor. #5157717.5 -20- ARTICLE VIII CREATION OF FUNDS AND ACCOUNTS; DEPOSIT OF PROCEEDS; INVESTMENTS Section 8.01. Debt Service Fund. (a) The City hereby establishes a special fund or account to be designated the "City of Beaumont, Texas, Tax Notes, Series 2016, Debt Service Fund" (the "Debt Service Fund") with said fund to be maintained at an official depository bank of the City separate and apart from all other funds and accounts of the City. The taxes levied under Section 2.01 shall be deposited to the credit of the Debt Service Fund at such times and in such amounts as necessary for the timely payment of the principal of and interest on the Note. (b) If the amount of money in the Debt Service Fund is at least equal to the aggregate principal amount of the outstanding Note plus the aggregate amount of interest due and that will become due and payable on such Note, no further deposits to that fund need be made. (c) Money on deposit in the Debt Service Fund shall be used to pay the principal of and interest on the Note as such become due and payable. Section 8.02. Deposit of Proceeds. Proceeds from the sale of the Note are appropriated for the purposes and shall, promptly upon receipt by the City, be applied as follows: (a) Note proceeds in the amount of $1,411,638 shall be used for for the construction of a landfill cell and related appurtenances. (b) Note proceeds in the amount of $188,362 shall be used to pay the costs of issuance. (c) Any amounts remaining after paying costs of issuance may be used for the purposes described in subsection (a). Any amounts remaining after accomplishing such purposes and paying costs of issuance shall be deposited to the Debt Service Fund and applied to the payment of debt service on the Note. ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of Note. While the Note is outstanding and unpaid, there shall be made available to the Paying Agent/Registrar, out of the Debt Service Fund, money sufficient to pay the interest on and the principal of the Note, as applicable, as will accrue or mature on each applicable Interest Payment Date and principal payment date. Section 9.02. Accounts. For so long as the Purchaser is the sole Owner of the Note, the City agrees to maintain an account with the Purchaser to facilitate the payment of debt service on the Notes. #5157717.5 -21- Section 9.03. Other Representations and Covenants. (a) The City is a duly organized and existing political subdivision of the State of Texas under the Constitution and laws of the State of Texas. (b) The City is duly authorized under the laws of the State of Texas to issue the Note; all action on its part for the creation and issuance of the Note has been duly and effectively taken; and the Note in the hands of the Owners thereof are and will be valid and enforceable obligations of the City in accordance with their terms. (c) The City will faithfully perform, at all times, any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance and in the Note; the City will promptly pay or cause to be paid the principal of and interest on the Note on the dates and at the places and manner prescribed in the Note; and the City will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance. Section 9.04. Ordinance a Contract - Amendments. This Ordinance shall constitute a contract with the Owners from time to time, be binding on the City, and shall not be amended or repealed by the City so long as the Notes remain outstanding except as permitted in this Section. The City may, without the consent of or notice to any Owners, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Owners, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the consent of the Owners holding a majority in aggregate principal amount of Notes then Outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the written consent of all Owners, no such amendment, addition, or rescission shall (a) extend the time or times of payment of the principal of and interest on the Notes, reduce the principal amount thereof, the Redemption Price therefor, or the rate of interest thereon, or in any other way modify the terms of payment of the principal and interest thereon; (b) give any preference to any Notes over any other Notes; or (c) reduce the aggregate principal amount of Notes required to be held by Owners for consent to any such amendment, addition, or rescission. Section 9.05. Federal Income Tax Exclusion. (a) General. The City intends that the interest on the Notes be excludable from gross income for federal income tax purposes pursuant to sections 103 and 141 through 150 of the Code. The City covenants and agrees not to take any action, or omit to take any action within its control, that if taken or omitted, respectively, would (i) cause the interest on the Notes to be includable in gross income, as defined in section 61 of the Code, for federal income tax purposes or (ii) result in the violation of or failure to satisfy any provision of Section 103 and 141 through 150 of the Code and the applicable Regulations promulgated thereunder. In particular, the City covenants and agrees to comply with each requirement of this Section 9.05; provided, however, that the City will not be required to comply with any particular requirement of this Section 9.05 if the City has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that (i) such noncompliance will not adversely affect the exclusion from gross income for federal #5157717.5 -22- income tax purposes of interest on the Notes or (ii) compliance with some other requirement set forth in this Section 9.05 will satisfy the applicable requirements of the Code and the Regulations, in which case compliance with such other requirement specified in such Counsel's Opinion will constitute compliance with the corresponding requirement specified in this Section 9.05. (b) No Private Use or Payment and No Private Loan Financing. The City covenants and agrees that it will make such use of the proceeds of the Notes, including interest or other investment income derived from Note proceeds, regulate the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Notes will not be "private activity bonds" within the meaning of section 141 of the Code and the Regulations promulgated thereunder. Moreover, the City will certify, through an authorized officer, employee or agent, based upon all facts and estimates known or reasonably expected to be in existence on the date the Notes are delivered, that the proceeds of the Notes will not be used in a manner that would cause the Notes to be "private activity bonds" within the meaning of section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal Guarantee. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the Notes to be "federally guaranteed" within the meaning of section 149(b) of the Code and the applicable Regulations promulgated thereunder, except as permitted by section 149(b)(3) of the Code and such Regulations. (d) No Hedge Bonds. 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 Notes to be "hedge bonds" within the meaning of section 149(g) of the Code and the applicable Regulations promulgated thereunder. (e) No Arbitrage. The City covenants and agrees that it will make such use of the proceeds of the Notes, including interest or other investment income derived from Note proceeds, regulate investments of proceeds of the Notes, and take such other and further action as may be required so that the Notes will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and the applicable Regulations promulgated thereunder. Moreover, the City will certify, through an authorized officer, employee or agent, based upon all facts and estimates known or reasonably expected to be in existence on the date the Notes are delivered, that the proceeds of the Notes will not be used in a manner that would cause the Notes to be "arbitrage bonds" within the meaning of section 148(a) of the Code and the applicable Regulations promulgated thereunder. (f) Arbitrage Rebate. If the City does not qualify for an exception to the requirements of Section 148(f) of the Code relating to the required rebate to the United States, the City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Notes (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 Notes as may be required to calculate the amount earned on the investment of the gross proceeds of the Notes separately from records of amounts on deposit in the funds and accounts of the City allocable to #5157717.5 -23- other debt issue of the City or moneys that do not represent gross proceeds of any bonds of the City, (ii) determine at such times as are required by applicable Regulations, the amount earned from the investment of the gross proceeds of the Notes 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 Notes, or on such other dates as may be permitted under applicable Regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Notes 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 arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (g) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Notes are issued, an information statement concerning the Notes, all under and in accordance with section 149(e) of the Code and the applicable Regulations promulgated thereunder. (h) Record Retention. The City will retain all pertinent and material records relating to the use and expenditure of the proceeds of the Notes until three years after the last Note is redeemed, or such shorter period as authorized by subsequent guidance issued by the Department of Treasury, if applicable. All records will be kept in a manner that ensures their complete access throughout the retention period. For this purpose, it is acceptable that such records are kept either as hardcopy books and records or in an electronic storage and retrieval system, provided that such electronic system includes reasonable controls and quality assurance programs that assure the ability of the City to retrieve and reproduce such books and records in the event of an examination of the Notes by the Internal Revenue Service. (i) Registration. The Notes will be issued in registered form. 0) Deliberate Actions. The City will not take a deliberate action (as defined in section 1.141-2(d)(3) of the Regulations) that causes the Notes to fail to meet any requirement of section 141 of the Code after the issue date of the Notes unless an appropriate remedial action is permitted by section 1.141-12 of the Regulations, the City takes such action, and an opinion of Bond Counsel is obtained that such remedial action cures any failure to meet the requirements of section 141 of the Code. (k) Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of this Section 9.05 will survive the defeasance and discharge of the Notes for as long as such matters are relevant to the exclusion from gross income of interest on the Notes for federal income tax purposes. #5157717.5 -24- ARTICLE X DEFAULT AND REMEDIES Section 10.01. Events of Default. In addition to the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City: (a) fails to make payment of the interest and principal when the same becomes due and payable; or (b) defaults in the observance or performance of any of the other covenants, conditions or obligations set forth in this Ordinance, which default materially and adversely affects the rights of the Owners, including but not limited to their prospect or ability to be repaid in accordance with the Ordinance, and the continuation thereof for a period of thirty days after notice of such default is given by any Owner to the City; or (c) An order of relief shall be issued by the Bankruptcy Court of the United States District Court having jurisdiction, granting the City any relief under any applicable law, or any other court having valid jurisdiction shall issue an order or decree under applicable federal or state law providing for the appointment of a receiver, liquidator, assignee, trustee, sequestrator, or other similar official for the City as applicable, of any substantial part of its property, affairs or assets, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days. Section 10.02. Remedies. (a) Upon the occurrence of an Event of Default, any Owner or an authorized representative thereof, including but not limited to, a trustee or trustees therefor, may proceed against the City for the purpose of protecting and enforcing the rights of the Owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Owners hereunder or any combination of such remedies. It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Owners of Notes then outstanding. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power shall be exercised from time to time and as often as may be deemed expedient. (b) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Notes or now or hereafter existing at law or in equity; provided, however, the right to accelerate the debt evidence by the Notes shall not be available as a remedy under this Ordinance. #5159717.5 -25- ARTICLE XI DISCHARGE Section 11.01. Discharge. The City reserves the right to defease, discharge or refund the Note in any manner permitted by applicable law. ARTICLE XII MISCELLANEOUS Section 12.01. Changes to Ordinance. Bond Counsel is hereby authorized to make changes to the terms of this Ordinance if necessary or desirable to carry out the purposes hereof or in connection with the approval of the issuance of the Note by the Attorney General of Texas. Section 12.02. 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 Ordinance. Section 12.03. Repealer. All ordinances or resolutions, or parts thereof, heretofore adopted by the City and inconsistent with the provisions of this Ordinance are hereby repealed to the extent of such conflict. Section 12.04. Individuals Not Liable. No covenant, stipulation, obligation or agreement herein contained shall be deemed to be a covenant, stipulation, obligation or agreement of any member of City Council or agent or employee of City Council or of the City in his or her individual capacity and neither the members of City Council nor any officer thereof, nor any agent or employee of City Council or of the City, shall be liable personally on the Note, or be subject to any personal liability or accountability by reason of the issuance thereof. Section 12.05. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, City Manager or the City Clerk and all other appropriate officers and agents of the City are hereby authorized and directed to do any and all things necessary and/or convenient to carry out the terms and purposes of this Ordinance. #5157717.5 -26- Section 12.06. Force and Effect. This Ordinance shall be in full force and effect from and after its final passage, and it is so ordained. [Signature Page Follows] #5157717.5 -27- PASSED, APPROVED AND EFFECTIVE on this day of April, 2016. City Clerk City of Beaumont, Texas •eaumont, Signature Page to Ordinance Authorizing City of Beaumont, Texas Tax Note, Series 2016 #5157717.5