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HomeMy WebLinkAboutORD 83-41 Ordinance ORDINANCE AUTHORIZING REDEMPTION PRIOR TO MATURITY OF CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM PRIOR LIEN REVENUE BONDS, SERIES 1982; AUTHORIZING THE EXECUTION AND DELIVERY OF AN ESCROW AGREEMENT TO PROVIDE FOR THE PAYMENT OF SUCH BONDS AND THE SUBSCRIPTION FOR CERTAIN ESr"JWED SECURITIES; AND CONTAINING OTHER MATTERS RELATING THERETO WHEREAS, the City of Beaumont, Texas (the "City") desires to refund, in advance of their maturities, the outstanding bonds of the City' s Waterworks and Sewer System Prior Lien Revenue Bonds, Series 1982 (the "Underlying Bonds") in order to terminate and discharge, and release the City from, the terms and provisions of the ordinances authorizing the issuance of the Underlying Bonds, which have been found to be onerous and unfavorable to the City, and also to effectuate a savings in cost to the City; and WHEREAS, the City is authorized by Article 717k, Vernon' s Texas Civil Statutes, as amended, to issue, sell and deliver refunding bonds in amounts suffic ' ant to provide for the payment of the principal of and interest on the Underlying Bonds; and WHEREAS, contemporaneously herewith, the City has adopted an ordinance (the "Bond Ordinance-".) authorizing the issuance of the City of Beaumont, Texas, pterworks and Sewer System Revenue Refunding Bonds, Series 1983 (the "Refunding Bonds") , for the purpose of providing funds to be used in refunding the Underlying Bonds; and WHEREAS, the City desires to call certain of the Underlying Bonds for redemption prior to their scheduled maturities; and WHEREAS, the City desires to enter into an Escrow Agree- ment with Citibank, N.A. , New York, New York, as escrow agent, pursuant to which provision will be made for the safekeeping, investment, reinvestment, administration and disposition of funds so as to make firm banking arrangements to provide for the full and timely payment of principal of and interest on the Refunded Bonds; and WHEREAS, the City desires to authorize the subscription for certain book entry United States Treasury certificates of indebtedness, notes and bonds and other obligations of the R United States of America to be purchased with the Refunding Bond proceeds for deposit into such escrow; Now, Therefore, BE IT ORDAINED BY THE CITY OF BEAUMONT: Section 1 : Redemption of Certain Underlying Bonds . The City hereby calls for redemption and authorizes the redemption of, and payment of tb- applicable redemption prices for, such of the Underlying Bonds at such dates prior to their scheduled maturities as shall be provided for in the Escrow Agreement described in the follou7 _ng section. Notice of such redemption in substantially the form attached hereto as Attachment "A" is hereby authorized and directed to be delivered to the paying agents for such Underlying Bonds and to be published in The Daily Bond Buyer, and notice of such redemption is further authorized and directed to be given in any other manner required by the ordinance authorizing the issuance of the Underlying Bonds. Section 2 : Escrow Agreement. The discharge and defea- sance of the Underlying Bonds shall be effectuated pursuant to the terms and provisions of an Escrow Agreement to be entered into by and between the City and Citibank, N.A. , New York, New York, as Es-.,ow Agent, which shall be substantially in the form attached hereto as Attachment "B" , the terms and provisions of which are hereby approved, subject to such insertions, additions a:1d modifications as shall be necessary (a) to carry out the program designed for the City by Underwood, Neuhaus & ^3. Incorporated, and which shall be certified as to mathematical accuracy by Price Waterhouse & Co. , Certified Public Accountants, whose Report (the "Report") shall be attached to the Escrow Agreement (b) to maximize the City' s present value savings and/or to minimize the City' s costs of refunding, (c) to comply with all applicable laws and regulations relating to the refunding of the Underlying Bonds and (d) to carry out the other intents and purposes of this Ordinance and the Bond Ordinance; and the Mayor or Mayor Pro-Tem is hereby authorized to execute and deliver such Escrow Agreement on behalf of the City in multiple counter- parts and the City Clerk is hereby authorized to attest thereto and affix the City' s seal. Section 3 : Transfer of Money In Reserve Fund Maintained for Underlying Bonds. On the date of issuance and delivery of the Refunding Bonds, amounts contained in the Reserve Fund for the Underlying Bonds shall be transferred as follows: (a) $460 , 000 to create the initial balance in the Reserve Fund created pursuant to the Refunding Bond Ordinance; and (b) $1 ,540 ,000 to purchase obligations of the United States of America for deposit pursuant to the Escrow Agreement all as more fully provided in the Report to be attached to the Escrow Agreement. Section 4 : Purchase of United States Treasury Obliga- tions. In order to assure the purchase of the Escrowed Securities referred 16,o in the Escrow Agreement, the Mayor or Mayor Pro Tem or Finance Officer is hereby authorized to sub- scribe for, agree to purchase and purchase, such obligations of the United States of America, in such amounts, maturities and bearing interest at such rates as may be provided for in the report to be attached to the Escrow Agreement, and to execute any and all subscriptions, purchase agreements, commitments, letters of authorization and other documents necessary to effectuate the foregoing, and any actions heretofore taken by the Mayor or Mayor Pro-Tem or Finance Officer for such pur.ose are hereby ratified and approved. Section 5 : Related Matters . In order that the City shall satisfy in a tiriF_ly manner all of its obligations under the Ordinance, the Escrow Agreement and the Bond Ordinance, the Mayor, City Clerk and Finance Officer of the City and all other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the refunding of the Underlying Bonds, including without limitation, executing and delivering on behalf of the City all certificates, consents, receipts, requests, and other documents as may be reasonably necessary to satisfy the City' s obligations under the Escrow Agreement and the Bond Ordinance and to direct the transfer and application of funds of the City consistent with the provisions of such Escrow Agreement and the Bond Ordinance. Section 6 : Open Meeting. It is hereby found, determined and declared that a sufficient written notice of the date, hour, place and subject of the meeting of the City at which this Ordinance was adopted was posted on a bulletin board located at a place convenient and readily accessible at all times to the general public at the City Hall of the City of Beaumont for the time required by law preceding this /7 -3- meeting, as required by the Open Meetings Law, Article 6252-17 , Vernon' s Texas Civil Statutes , as amended, and that this meeting has been open to the public as required by law at all times during which this Ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. Section 7 : Declaration of Emergency. It is hereby officially found and determined that a case of emergency and urgent public necessity exists which requires the holding of the meeting at which this Ordinance is passed and further requires that this Ordinance be passes. Linally and take effect immediately on the date of its introduction, such emergency and urgent public necessity being that the proceeds from the sale of the Bonds are required as soon as possible and without delay for the purposes set forth in the ordinance authorizing the issuance of the bonds. Section 8 : Repealer. All resolutions and ordinances,. or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. PASSED AND APPROVED THIS day of 1983 . Mayo , City of Beaumont, Texas ATTEST: City C erk, City of Beaumont, Texas (SEAL) Approved as to Form: * l City Attorney, City of Beaumont, Texas ATTACHMENT "A" NOTICE OF PRIOR REDEMPTION CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM PRIOR LIEN REVENUE BONDS, SERIES 1982 , Bond Nos. 1051 through 3000 , maturing on September 1 in each of the years 1992 through 1998 in the aggregate principal amount of $9 , 750 ,000 . NOTICE IS HEREBY GIVEN that the City of Beaumont, Texas, has called the above bonds for redemption on September 1 , 1991 . Such bona s will be redeemed at Citibank, N.A. , New York, New York, where due provision shall be made to pay the redemption price of the principal amount of such bonds plus accrued interest to the date fixed for redemption. Such bonds shall not bear interest after September 1 , 1991 . BY ORDINANCE of the City of Beaumont, Texas adopted April 19 , 1983 . William E. Neild, Mayor City of Beaumont, Texas A77PACHAIFINTm „B„ ESCROW AGREEMENT City of Beaumont, Texas , Waterworks and Sewer System Prior Lien Revenue Bonds , Series 1982 THIS ESCROW AGREEMENT, dated as of , 1983 (herein., together with any amendments or supplements hereto, called the "Agreement") , entered into by and between the CITY OF BEAUMONT, TEXAS (herein called the "City") and CITIBANK, N.A. , New York, New York, as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent") , W I T N E S S E T H: WHEREAS, the City has heretofore issued and there presently remain outstanding the City of Beaumont, Texas, Waterworks and Sewer System Prior Lien Revenue Bonds , Series 1982 , in the aggregate principal amount of $15 ,000 , 000 (the "Refunded Bonds") ; and - WHEREAS, the Refunded Bonds were issued pursuant to an ordinance (the "Refunded Bond Ordinance") which provides that the Refunded Bonds shall mature serially in such years, bear interest at such rates and have debt service at the times and in the amounts set forth in Schedule of the Report attached hereto and made a part hereof; and WHEREAS, the Refunded Bond Ordinance provides that when firm banking arrangements have been made for the payment of principal and interest to maturity for all of the Refunded Bonds in the manner permitted by law, then such Refunded Bonds shall no longer be regarded as outstanding and unpaid except for the purpose of receiving payment from the funds provided for such purpose; and WHEREAS, Article 717k, Vernon' s Texas Civil Statutes , authorizes the City to issue refunding bonds and to deposit the proceeds from the sale thereof, and any other available funds or resources , directly with any place of payment (paying agent) or trustee for the Refunded Bonds , and such deposit, if made before such payment dates, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded' Bonds; and WHEREAS, Article 717k further authorizes the City to enter into an escrow agreement with any paying agent or trustee for the Refunded Bonds with respect to the safekeep- ing, investment, reinvestment, administration and disposition of any such deposit, upon such terms and conditions as the City and such paying agent or trustee may agree, provided that such deposits may be invested and reinvested only in direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which may be in book entry form, and which shall mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment of the Refunded Bonds; and WHEREAS, the Escrow Agent is a paying agent for all of the Refunded Bonds, and this Agreement constitutes an escrow agreement of the kind authorized and permitted by said Article 717k; and WHEREAS, the City has adopted an ordinance (the "Bond ordinance") authorizing the issuance of $16 , 110 ,000 City of Beaumont, Texas, Waterworks and Sewer System Revenue Refunding Bonds , Series 1983 (the "p:.funding Bonds" ) for the purpose of providing, together with other lawfully available funds provided by the City, amount; sufficient to provide for the payment of the principal of the Refunded Bonds at their respective maturities and.­in.r-erest thereon to maturity; and WHEREAS, the City desires that, concurrently with the delivery of the Refunding Bonds to the purchasers thereof, the proceeds of the Refunding Bonds, and other funds, shall be applied to purchase certain direct obligations of the United States of America, hereinafter defined as the Escrowed Securities, for deposit to the credit of the Escrow Fund created pursuant to this Agreement and to establish a beginning cash balance (if needed) in such Escrow Fund; and WHEREAS, the Escrowed Securities shall mature and the interest thereon shall be payable at such times and in such amounts so as to provide moneys which, together with cash balances from time to time on deposit in the Escrow Fund, will be sufficient to pay interest on the Refunded Bonds as it accrues and becomes payable and the principal of the Refunded Bonds as it matures; and -2- f<�� WHEREAS, in order to facilitate the receipt and transfer of proceeds of the Escrowed Securities, particularly those in book entry form, the City desires to establish the Escrow Fund at the principal corporate trust office of the Escrow Agent; NOW, THEREFORE, in consideration of the mutual under- takings, promises =>. d agreements herein contained, the sufficiency of which are hereby acknowledged, and in order to secure the full and timely payment of principal of and the interest on the P^funded Bonds, the City and the Escrow Agent mutually undertake, promise, and agree for themselves and their respective representatives and successors, as follows: ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1. 01. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: "City" means the City of Beaumont, Texas. "Code" means the Internal Revenue Code of 1954 , as amended, and the reguiations promulgated thereunder. "Escrow Agent" means Citibank, N.A. , New York, New York, and its successors as Escrow Agent under this Agreement. "Escrow Deposit" means the initial deposit into th.e_=_ m Escrow Fund, as more particularly described in Section 2 . 01 hereof. "Escrow Fund" means the fund created by this Agreement to be administered by the Escrow Agent pursuant to the provisions of this Agreement. "Escrowed Securities" means the Limited Yield Securities and the Open Market Securities. "Limited Yield Securities" means the noncallable United States Treasury Obligations - State and Local Government Series to be initially purchased with proceeds of the -3- Refunding Bonds , as more fully described in Schedule of the Report, together with all reinvestments of the proceeds thereof as contemplated and required in Schedule in accordance with the provisions of Section 4 . 02 hereof or as may be permitted in Section 4 . 03 hereof. "Open Market Securities" means the United States Treasury seci? -;ties to be purchased in the open market with funds other than proceeds of the Refunding Bonds, as more fully described in Schedule of the Report. "Paying Agent" means Citibank, N.A. , New York, New York. "Refunded Bonds" means the City' s Waterworks and Sewer System Prior- Lien Revenue Bonds, Series 1982 , more fully described in the first recital on page 1 of this Agreement. "Refunding Bonds" means the City of Beaumont, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1983 , dated May 1 , 1983 . "Refunding Bond Ordinance" means the City Ordinance authorizing the issuance, sale and delivery of the Refunding Bonds. "Report" means the report dated as of the date hereof prepared by Price. Waterhouse & Co. , Certified Public Accoun- tants, a copy of which is attached hereto and incorporated herein for alb: purposes. "Texas Paying Agent" means Texas Commerce Bank - Beaumont, N.A. , Beaumont, Texas. _ Section _1 .02 . Interpretations. The titles and headings of the articles and sections of this Agreement 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 the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the intended purpose of providing for the refunding of the Refunded Bonds in accordance with applicable law. -4- ARTICLE II DEPOSIT OF FUNDS AND ESCROWED SECURITIES Section 2 . 01. Deposits in the Escrow Fund. The City has deposited, or caused to be deposited, in the Escrow Fund the Es-.:ow Deposit consisting of the following: (a) $ as the beginning cash balance for the Escrow Fund as shown in Schedule of the Report attached hereto; (b) the initial Limited Yield Securities, which have been purchased at their par value on behalf of the City with proceeds of the Refunding Bonds; (c) the initial Open Market Securities , which have been purchased in the open market on behalf of the City with funds other than proceeds of the Refunding Bonds. ARTICLE III CREATION AND OPERATION OF ESCROW FUND Section 3 . 01. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the City of Beaumont, Texas, Waterworks and Sewer System Prior Lien Revenue Bonds, Series 1982 Escrow Fund (the "Escrow Fund") . The Escrow Fund shall consist of two accounts: the Limited Yield Securities Account and the Open Market Securities Account. The Escrow Agent hereby acknowledges that the Escrow Deposit described in Section 2 . 01 has been deposited to the credit of such Escrow Fund, and that the beginning cash balance and the Limited Yield Securities have been credited to the Limited Yield Securities Account and the Open Market Securities to the Open Market Securities Account. The Escrow Deposit and all proceeds therefrom shall be the property of the Escrow Fund, and shall be applied only in strict conformity with the terms and con- ditions of this Agreement. All of the Escrowed Securities, all proceeds therefrom and all cash balances from time to time on deposit in the Escrow Fund are hereby irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds, which payment shall be made by timely -5- transfers to the Paying Agent of such amounts at such times as are provided for in Section 3 . 02 hereof. When the final transfers have been made to the Paying Agent for the payment of such principal of and interest on the Refunded Bonds, any balance then remaining in the Escrow Fund shall be trans- ferred to the City, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3. 02. Payment of Principal and Interest. (a) The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from the cash balances from time to time on deposit in the Limited Yield Securities Account in the Escrow Fund and, to the extent necessary (but only to the extent necessary) from the cash balances on deposit from time to time in the Open Market Securities Account in the Escrow Fund, the amounts required to pay the principal of and interest on the Refunded Bonds in the amounts and at the times shown in Schedules of the Report attached hereto. (b) The Escrow Agent, in its capacity as Paying Agent for the Refunded Bonds, agrees to apply all funds transferred to it pursuant to Section 3 .02 (a) above, solely for the purpose of paying the principal of and interest on the Refunded Bonds in the manner provided in this Agreement. Except for amounts transferred to the Paying Agent pursuant to Section 3 . 02 (a) above, the Escrow Agent agrees that it shall never make any withdrawals from the Escrow Fund or i assert any claims, liens or charges against the Escrow Fund. (c) The City has called for redemption on September 1 , 1991 , the Refunded Bonds maturing in the years 1992 through 1998 , both inclusive, for a price equal to the principal amount thereof plus accrued interest to September 1 , 1991 , and has caused notice of such redemption to be given in the manner required by the Refunded Bond Ordinance. Section 3 . 03 . Sufficiency of Escrow Fund. The City represents that the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide moneys for transfer to the Paying Agent at the times and in the amounts required to pay the interest on the Refunded Bonds as such interest comes due and the principal of the Refunded Bonds as the Refunded Bonds mature, all as more fully set forth in Schedule of the Report attached hereto. If, for any reason, at any time, the cash balances on deposit or -6- scheduled to be on deposit in the Escrow Fund shall be insufficient to transfer the amounts required by the Paying Agent to make the payments set forth in Section 3 . 02 hereof, the City shall timely deposit into the Escrow Fund, from lawfully available funds, additional funds in the amounts required to make such payments. Notice of any such insuffi- ciency shall be given promptly as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the City' s failure to make additional deposits thereto. Section 3 . 04 . Trust Fund. The Escrow Agent shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of such Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the holders of the Refunded Bonds; and a special account therefor shall at all times be maintained on the books of the Escrow Agent. The holders of the Refunded Bonds shall be entitled to the same preferred claim and lien on the Escrowed Securities , the proceeds thereof, and all other assets of the Escrow Fund to which they were entitled as holders of the Refunded Bonds. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the City, and the Escrow Agent shall have no right or title with respect thereto except as a trustee and escrow agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts or checks drawn by `" �ie �iy or -excepo` fie-�exent"' expressly herein provided, by the Paying Agent. Section 3 . 05. Security for Cash Balances. Cash balances from time to time on deposit in the Escrow Fund shall, to the extent not insured by the Federal Deposit Insurance Corporation or its successor, be continuously secured by a pledge of direct obligations of, or obligations unconditionally guaranteed by, the United States of America, having a market value at least equal to such cash balances. -7- ARTICLE IV LIMITATION ON INVESTMENTS Section 4 . 01. General. Except as herein otherwise expressly provided, the Escrow Agent shall not have any power or duty to invest any money held hereunder; or to make substitutions of the Escrowed Securities; or to sell, transfer or otherwise dispose of the Escrowed Securities. In particular, cash balances on deposit in the Limited Yield Securities Account in the Escrow Fund shall not be reinvested or bear interest, and the Escrow Agent shall be entitled to retain any benefit from the "float" (if any) resulting therefrom as additional compensation for its services hereunder. Section 4 .02. Reinvestment of Proceeds of Open Market Securities. At the written request of the City, the Escrow Agent is hereby authorized and directed to reinvest the proceeds of Open Market Securities, including interest received and maturing principal, in direct obligations of the United States of America maturing no later than the March 1 or September 1 next following the date of receipt of such interest or principal so that- amounts at least equal to such interest -received and maturing principal are available on the next succeeding March 1 or September 1 for transfer to the Paying Agent as contemplated on Schedule of the Report. Any income or increment earned from such reinvestment which is not required according to the foregoing schedules for the payment of the Refunded Bonds (that is, any amount which on any March 1 or September 1 , after making all required transfers to the Paying Agent for the Refunded Bonds, is in excess of the amount shown for such date in the column entitled "Balance at End of Period" on Schedule of the Report) shall be transferred to the City. Section 4 . 03. Substitution of Securities. At the written request of the City, and upon compliance with the conditions hereinafter stated, the Escrow Agent shall sell, transfer, otherwise dispose of or request the redemption of the Escrowed Securities and apply the proceeds therefrom to purchase Refunded Bonds or direct obligations of, or obligations the principal of and interest on which is unconditionally guaranteed by, the United States of America which do not permit the redemption thereof at the option of the obligor. Any such transaction may be effected by the Escrow Agent only if (a) the Escrow Agent shall have received a written opinion from a nationally recognized firm of -8- certified public accountants that such transaction will not cause the amount of money and securities in the Escrow Fund to be reduced below an amount sufficient to provide for the full and timely payment of principal of, redemption premium on and interest on all of the remaining Refunded Bonds as they become due; and (b) the Escrow Agent shall have received the unqualified written legal opinion of nationally recog- nized bond counsel or tax counsel to the effect that such transaction will not cause any of the Refunding Bonds to be an "arbitrage bond" within the meaning of Section 103 (c) of the Code. Section 4 . 04. Arbitrage. The City hereby covenants and agrees that it shall never request the Escrow Agent to exercise any power hereunder or permit any part of the money in the Escrow Fund or proceeds from the sale of Escrowed Securities to be used directly or indirectly to acquire any securities or obligations if the exercise of such power or the acquisition of such securities or obligations would cause any Refunding Bonds to be an "arbitrage bond" within the meaning of Section 103 (c) of the Code. ARTICLE V RECORDS AND REPORTS Section 5 . 01. Records. The Escrow Agent will keep books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection at reasonable hours and under reasonable conditions by the City and the holders of the Refunded Bonds. Section 5 . 02. Reports. For the period beginning on the date hereof and ending on September 1 , 1984 , and for each twelve (12) month period thereafter while this Agreement remains in effect, the Escrow Agent shall prepare and send to the City within thirty (30) days following the end of such period a written report summarizing all transactions relating to the Escrow Fund during such period, including without limitation credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund to the Paying Agent for -9- payments on the Refunded Bonds or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. ARTICLE VI CONCERNING THE PAYING AGENT AND ESCROW AGENT Section 6 .01. Representations. The Escrow Agent hereby represents that it is a paying agent for the Refunded Bonds, and that it has all necessary power and authority to enter into this Agreement and undertake the obligations aaad responsibilities imposed upon it herein, and that it will carry out all of its obligations hereunder. Section 6 . 02. Limitation on Liability. The liability of the Escrow Agent to transfer funds to the Paying Agent for the payment of the principal of and interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, neither the Escrow Agent nor ` ie Paying Agent shall have any liability whatsoever for the insufficiency of funds from time to time in the Escrow Fu: td or any failure of the obligors of the Escrowed Securities ; to make timely payment thereon, except for the obligaticnc -to notify the City promptly of any such occurrence. The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken as the statements of the City and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. The Escrow Agent is not a party to the Refunding Bond Ordinance or the Refunded Bond Ordinance and is not responsible for nor bound by any of the provisions thereof (except as a paying agent) . In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement. The Escrow Agent does not make any representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the City thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. -10- It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers as Escrow Agent hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good fai th in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own action, neglect or default, nor for any loss unless the same shall have been t1ir Hugh its negligence or want of good faith. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the City with respect to arrangements or contracts with others, with the Escrow Agent' s sole duty hereunder being to safeguard the Escrow Fund and to dispose of and deliver the same in accor- dance with this Agreement. If, however, the Escr-w Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, . Dnly to exercise reasonable care and diligence, and in even-` of error in making such determination the Escrow Agent shall be liable only for its own misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the City or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with, among others , the City at any time. Section 6 .03 . Compensation. The City has paid the Escrow Agent, as a fee for performing the services hereunder and for all expenses incurred or to be incurred by the Escrow Agent in the administration of this Agreement and for performing services in its capacity as Paying Agent for the Refunded Bonds for all future paying agency services in connection with the Refunded Bonds, the sum of $11 ,000 , the receipt and sufficiency of which are hereby acknowledged by the Escrow Agent. If the Escrow Agent is requested to -11- perform any extraordinary services hereunder, the City hereby agrees to pay reasonable fees to the Escrow Agent for such extraordinary services and to reimburse the Escrow Agent for all expenses incurred by the Escrow Agent in performing such extraordinary services, and the Escrow Agent hereby agrees to look only to the City for the payment of such fees and reimbursement of such expenses. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses. The Escrow Agent, in its capacity as Paying Agent, hereby agrees to indemnify the City and ho is it harmless from and against any charge or fee asserted, clamed or imposed for paying agency services in connection with the Refunded Bonds and the coupons appertaining thereto including, without limitation, any charge or fee asserted, claimed or imposed by the Texas Paying Agent, and the Escrow Agent agrees that it will pay on behalf of the City without additional compensation any such charge or fee promptly upon receipt of notice of same from the City or otherwise. Section 6 . 04. Successor Escrow Agents, If at any time the Escrow Agent or its legal successor or successors should become unable, through operation of law or otherwise, to act as escrow agent hereunder, or if its propert-3 and affairs shall be taken under the control of any stFte or federal court or administrative body because of insolven( y_ 'z)r bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the City, by appropriate resolution, shall promptly appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the City within 60 days, a successor may be appointed by the holders of a majority in principal amount of the Refunded Bonds then outstanding by an instrument or instruments in writing filed with the City, signed by such holders or by their duly authorized attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the holder of any Refunded Bond may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. -12- e Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Texas, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $5 ,000 ,000 and subject to supervision or examination by Federal or State authority. Any successor Escrow Agent shp" execute, acknowledge and deliver to the City and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights , powers and trusts of the Escrow Agent hereunder. Upon the request �,f any such successor Escrow Agent, the City shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights , powers and duties. The Escrow Agent shall pay over to its successor Escrow Agent a proportional part of the Escrow Agent' s fee hereunder. ARTICLE VII MISCELLANEOUS Section 7 .01. Notice. Any notice, authorization, request, or demand required or permit ad to be given hereunder shall be in writing and shall be d,:�eTaed to have been duly given when mailed by registered or certified mail, postage prepaid addressed as follows: To the Escrow Agent: Citibank, N.A. _ New York, New York Attn: To the City: City of Beaumont City Hall P. O. Box 3827 Beaumont, Texas 77511 Attn: Finance Officer -13- The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Either party hereto may change the address to which notices are to be delivered by giving to the other party not less than ten (10) days prior notice thereof. Section 7 . 02 . Terminat .-n of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obliga- tions or responsibilities hereunder to the City, the holders of the Refunded Bonds or to any other person or persons in connection with this Agreement. Section 7 . 03 . Binding Agreement. This Agreement shall be binding upon the City and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the holders of the Refunded Bonds, the City, the Escrow Agent and their respective successors and legal representatives. Section 7 . 04 . Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid - illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provi�iions of this Agreement, but this Agreement shall be constroad as if such invalid or illegal or unenforceable provision had never been contained herein. Section 7 . 05 . Texas Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. -14- �o�lT/ D Section 7. 06 . Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. EXECUTED as of the date first written above. CITY OF BEAUMONT, TEXAS By Mayor ATTEST: i y lerk (SEAL) By Title: ATTEST: Title: (SEAL) -15- X7 _i�/