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HomeMy WebLinkAboutORD 92-23 ORDINANCE AUTHORIZING THE ISSUANCE OF $13,300,000 THE CITY OF BEAUMONT, TEXAS, PUBLIC IMPROVEMENT BONDS, SERIES 1992; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, at an election held in and throughout the City of Beaumont, Texas (the "City" ) on April 5, 1980, $33,000, 000 of tax bonds were duly and favorably voted for the purpose of constructing permanent public improvements in and for the City, to-wit: the construction and improvement of the roads, bridges and streets of the City, including, but not by way of limitation, related drainage facilities, related traffic control devices and the acquisition of rights-of-way; and WHEREAS, the City has issued, sold and delivered $31,000,000 of said street improvement bonds in two series, leaving $2,000,000 of bonds to be issued, sold and delivered at a later date; and WHEREAS, the City Council of the City has determined to issue and deliver $2,000,000 of street improvement bonds as the last installment of the total authorized $33,000,000 of street improvement bonds; and WHEREAS, at an election held in the City on March 22, 1983, $16 ,000,000 of tax bonds were duly and favorably voted for the purpose of constructing permanent public improvements in and for the City, to-wit: drainage improvements; and WHEREAS, the City Council of the City has issued, sold and delivered $4,700,000 of said drainage improvement bonds, leaving $11,300, 000 of bonds to be issued, sold and delivered at a later date; and WHEREAS, the City Council of the City has determined to issue and deliver $11, 300,000 of drainage improvement bonds as the last installment of the total authorized $16,000,000 of drainage improvement bonds; and WHEREAS, the City Council has decided to combine the $2,000,000 of street improvement bonds authorized at the April 5, 1980 election and the $11,300,000 of drainage improvement bonds authorized at the March 22, 1983 election into one issue of $13, 300, 000 bonds; Now, Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT: 1 . Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term "Bonds" or "Series 1992 Bonds" shall mean the Series 1992 Bonds authorized in this Ordinance, unless the context clearly indicates otherwise. The term "City" shall mean The City of Beaumont, Texas . The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants . The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 6 of this Ordinance. The term "Interest Payment Date" , when used in connection with any Bond, shall mean September 1, 1992, and each March 1 and September 1 thereafter until maturity of such Bond. The term "Ordinance" as used herein and in the Bonds shall mean this ordinance authorizing the Bonds . The term "Owner" shall mean any person or entity who shall be the registered owner of any outstanding Bonds . The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean August 15 for the interest payments due on September 1 and February 15 for the interest payments due on March 1. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term "Registrar" shall mean Ameritrust Texas, N.A. , Houston, Texas, and its successors in that capacity. 2 . The Bonds shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Thirteen Million Three Hundred Thousand Dollars ( $13,300,000. 00) for the following purposes : (i) $2,000,000 of bonds for the purpose of constructing permanent public improvements in and for the City, to-wit: -2- the construction and improvement of the roads, bridges and streets of the City, including, but not by way of limitation, related drainage facilities, related traffic control devices and the acquisition of rights-of-way; (ii) $11,300,000 of bonds for the purpose of constructing permanent public improvements in and for the City, to-wit: drainage improvements; and (iii) paying the costs of issuance of the Bonds, including professional services of the City's financial advisor and bond counsel but excluding any premiums for municipal bond insurance which shall be the sole responsibility of the purchaser of the Bonds . 3. (a) The Bonds shall be designated as the "THE CITY OF BEAUMONT, TEXAS, PUBLIC IMPROVEMENT BONDS, SERIES 1992, " and shall be dated April 1, 1992 . The Bonds shall bear interest from the later of April 1, 1992, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, interest payable on September 1, 1992, and semiannually thereafter on March 1 and September 1 of each year until maturity. (b) The Bonds shall be issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Bonds shall mature, in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Bonds delivered in transfer of or in exchange for other Bonds shall be numbered in order of their authentication by the Registrar, shall be in the denomination of $5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered. Bond Year of Principal Interest Number Maturity Amount Rate R-1 1993 $ 275,000 7 .75% R-2 1994 300,000 7 .75% R-3 1995 325,000 7 . 75% R-4 1996 350,000 7 . 75% R-5 1997 375,000 7 . 75% R-6 1998 400,000 7 . 75% R-7 1999 425,000 7 .75% R-8 2000 475,000 7 .75% R-9 2001 500,000 7 .75% R-10 2002 525,000 7 .75% R-11 2003 575,000 6 .25% ' R-12 2004 600,000 6 . 30% R-13 2005 675,000 6 .40% R-14 2006 1,500,000 6 .40% -3- R-15 2007 1,500,000 6 .45% R-16 2008 1,500,000 6 . 375% R-17 2009 1,500,000 6 .25% R-18 2010 1,500,000 6 .25% (c) The Bonds shall be subject to redemption prior to maturity as provided in the Form of Bond set out in Section 4 of this Ordinance. (d) The Bonds shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. If any officer of the City whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. (e) Only such Bonds as shall bear thereon either (i) the manually executed registration certificate of the Comptroller of Public Accounts of the State of Texas substantially in the form provided in Section 5(b) of this Ordinance or (ii) a certificate of authentication, substantially in the form provided in Section 5(c) of this Ordinance, manually executed by an authorized officer of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Bond so authenticated was delivered by the Registrar hereunder. ( f) The Registrar is hereby appointed as the paying agent for the Bonds . The principal of the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they become due and payable, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register.. At the request of the registered holder of $1,000,000 or more in aggregate principal amount of Bonds, the Registrar shall pay interest on such ` Bonds by wire transfer in immediately available funds to the account designated by such holder to the Registrar in writing at least 5 days before the Record Date for such payment. -4- (g) The City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment of the principal thereof and for the further purpose of making and receiving payment of the interest thereon, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Bond in accordance with this Section 3(g) shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Bond to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of 3 years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the provisions of Texas law, including to the extent applicable, Title 6 of the Texas Property Code, as amended. (h) So long as any Bonds remain outstanding, the Registrar shall keep the Register at its principal corporate trust office in which, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond for transfer, the Registrar shall authenticate and deliver in exchange therefor, within 72 hours after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds of the same maturity and interest rate and in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions of this Section 3(h) . Each Bond delivered in accordance with this Section 3(h) shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. The City or the Registrar may require the Owner of any Bond to • pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of -5- such Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. (i) All Bonds paid in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds . ( j ) Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of such Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant. to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding, provided that the Owner thereof shall have: ( 1) furnished to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Bond; (2) furnished such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) paid all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4 ) met any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond; the City and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or -6- the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Bond, authorize the Registrar to pay such Bond. Each replacement Bond delivered in accordance with this Section 3( j ) shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. (k) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the purchaser named in Section 8 of this Ordinance, the ownership of the Bonds shall be registered in the name of Cede & Co. , as nominee of DTC, and except as provided in Section 3(m) hereof, all of the outstanding Bonds shall be registered in the name of Cede & Co. , as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof . If the purchaser shall elect to invoke the provisions of this Section. 3(k) , then Sections 3(1) , (m) and (n) shall take effect with respect to the Bonds . (1) With respect to Bonds registered in the name of Cede & Co. , as nominee of DTC, the City and the Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds . Without limiting the immediately preceding sentence, the City and the Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Bond, as shown on the Register, of any notice with respect to the Bonds, including any notice of redemption, or ( iii) the payment to any DTC Participant or any other person, other than an Owner of a Bond, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on the Bonds . Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Register as the absolute Owner of such Bond for the purpose of payment of principal of, premium, if any, and interest on the Bonds, for the purpose of all matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the Register as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of -7- principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a Bond certificate evidencing the obligation of the City to make payments of amounts due pursuant to this Ordinance. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co. , the word "Cede & Co. " in this Ordinance shall refer to such new nominee of DTC. (m) In the event that the City or the Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the Letter of Representations of the City to DTC, and that it is in the best interest of the beneficial Owners of the Bonds that they be able to obtain certificated Bonds, or if DTC Participants owning at least 50% of the Bonds outstanding based on current records of the DTC determine that continuation of the system of book-entry transfers through the DTC (or a successor securities depository) is not in the best interest of the beneficial Owners of the Bonds, or in the event DTC discontinues the services described herein, the City or the Registrar shall ( i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934; as amended, and notify DTC of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or ( ii) notify DTC of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts . In such event, the Bonds shall no longer be restricted to being registered in the Register in the name of Cede & Co. , as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging Bonds shall designate, in accordance with the provisions of this Ordinance. (n) Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bonds are registered in the name of Cede & Co. , as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on the Bonds, and all notices with respect to the Bonds, shall be made and given, respectively, in the manner provided in the Letter of Representations from the City to DTC. 4 . (a) The Bonds shall be in substantially the following form, with such additions, deletions and variations as may be necessary or desirable and permitted by this Ordinance: -8- r (Face of Bond) United States of America State of Texas County of Jefferson NUMBER DIINOMINATION R- $ REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS Public Improvement Bond, Series 1992 INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP: April 1, 1992 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Beaumont, in the County of Jefferson, State of Texas (the "City" ) , promises to pay to the Registered Owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this bond at the principal corporate trust office of Ameritrust Texas, N.A. , Houston, Texas (the "Registrar" ) , the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30 day months, from the later of April 1, 1992, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this bond shall be paid by check payable on September 1 and March 1, beginning on September 1, 1992, mailed to the registered owner of record as of the previous August 15 and February 15 as shown on the books of registration kept by the Registrar. At the request of the registered holder of $1,000,000 or more in aggregate principal amount of Bonds, the Registrar shall pay interest on such Bonds by wire transfer in immediately available funds to the account designated by such holder to the Registrar in writing at least 5 days before the Record Date for such payment. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE. ` IN WITNESS WHEREOF, this bond has been signed with the manual or facsimile signature of the Mayor of the City and countersigned -9- with the manual or facsimile signature of the City Clerk of the City, and the official seal of the City has been duly impressed, or placed in facsimile, on this bond. (AUTHENTICATION CERTIFICATE) (SEAL) THE CITY OF BEAUMONT Mayor City Clerk (Back Panel of Bond) THIS BOND is one of a duly authorized issue of Bonds, aggregating $13,300,000 (the "Bonds") , issued for the following purposes : $2,000,000 bonds for the purpose of constructing permanent public improvements in and for the City, to-wit: the construction and improvement of the roads, bridges and streets of the City, including, but not by way of limitation, related drainage facilities, related traffic control devices and the acquisition of rights-of-way; and $11,300,000 of bonds for the purpose of constructing permanent public improvements in and for the City, to-wit: drainage improvements; and pursuant to an ordinance adopted by the City Council on March 3, 1992, (the "Ordinance") . The City reserves the right, at its option, to redeem, prior to their maturity, Bonds maturing on or after March 1, 2003, in whole or in part, on March 1, 2002, or on any date thereafter, for an amount equal to the principal amount thereof, plus accrued interest to the date fixed for redemption. Bonds may be redeemed in part only in integral multiples of $5,000 . If a Bond subject to redemption is in a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000 . In selecting portions of Bonds for redemption, each Bond shall be treated as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond by $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in -10- accordance with the provisions of the Ordinance, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Notice of any such redemption, identifying the Bonds or portions thereof to be redeemed, shall be sent by first class mail to the Registered Owners thereof at their addresses as shown on the books of registration kept by the Registrar, not less than 30 days before the date fixed for such redemption. By the date fixed for redemption, due provision shall be made with the Registrar for the payment of the redemption price of the Bonds called for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above, the Bonds which are to be so redeemed thereby automatically shall be redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the purpose of being paid with the funds so provided for such payment. This Bond is transferable only upon presentation and surrender at the principal corporate trust office of the . Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. The Bonds are exchangeable at the principal corporate trust office of the Registrar for bonds in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. This Bond shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Bond either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate endorsed hereon or ( ii) is authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes within the limits prescribed by law sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the City and have been pledged irrevocably for such payment. (b) Bonds No. R-1 through R-18 shall be registered by the Comptroller of Public Accounts of the State of Texas, as provided -11- by law. The registration certificate of the Comptroller of Public Accounts shall be printed on Bonds R-1 through R-18 and shall be in substantially the following form: COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this bond has been registered by the Comptroller of Public Accounts of the State of Texas . WITNESS MY SIGNATURE AND SEAL this , 1992 . xxxxxxxxxxx Comptroller of Public Accounts of the State of Texas (SEAL) (c) The following form of authentication certificate shall be printed on the face of each of the Bonds: Registration Date: . AUTHENTICATION CERTIFICATE This bond is one of the bonds described in and delivered pursuant to the within-mentioned Ordinance. Ameritrust Texas, N.A. , Registrar By Authorized Signature (d) The following form of assignment shall be printed on the back of each of the Bonds : ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto the within bond and hereby irrevocably constitutes and appoints attorney to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises . DATED: Signature Guaranteed: Registered Owner -12- (e) The following statement of insurance shall be printed on the back of each of the Bonds: STATEMENT OF INSURANCE Financial Guaranty Insurance Company ( "Financial Guaranty" ) has issued a policy containing the following provisions with respect to The City of Beaumont, Texas, Public Improvement Bonds, Series 1992 (the "Bonds" ) , such policy being on file at the principal office of the Paying Agent/Registrar, as paying agent (the "Paying Agent" ) : Ameritrust Texas, N.A. , 5599 San Felipe, Houston, Texas 77056 . Financial Guaranty hereby unconditionally and irrevocably agrees to pay for disbursement to the Bondholders that portion of the principal of and interest on the Bonds which is then due for payment and which the issuer of the Bonds (the "Issuer") shall have failed to provide. Due for payment means, with respect to the principal, the stated maturity date thereof, or the date on which the same shall have been duly called for mandatory sinking fund redemption, but not any earlier date on which the payment of principal of the Bonds is due by reason of acceleration, and with respect to interest, the stated date for payment of such interest. Upon receipt of telephonic or telegraphic notice, subsequently confirmed in writing, or written notice by registered or certified mail, from a Bondholder or the Paying Agent to Financial Guaranty that the required payment of principal or interest has not been made by the Issuer to the Paying Agent, Financial Guaranty on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A. , or its successor as its agent (the "Fiscal Agent") , sufficient to make the portion of such payment not paid by the Issuer. Upon presentation to the Fiscal Agent of evidence satisfactory to it of the Owner's right to receive such payment and any appropriate instruments of assignment required to vest all of such Bondholder's right to such payment in Financial Guaranty, the Fiscal Agent will disburse such amount to the Owner. As used herein, the term "Bondholder" means the person other than the Issuer who at the time of nonpayment of a Bond is entitled under the terms of such Bond to payment thereof. The policy is non-cancellable for any reason. FINANCIAL GUARANTY INSURANCE COMPANY 5. The approving opinion of Orgain, Bell & Tucker, Beaumont, Texas, and CUSIP Numbers may be printed on the Bonds, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Bonds . -13- 6 . The proceeds from all taxes levied, assessed and collected for and on account of the Bonds authorized by this Ordinance shall be deposited, as collected, in a special fund to be designated "The City of Beaumont, Texas, Public Improvement Bonds, Series 1992, Interest and Sinking Fund. " While said Bonds or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually assessed and collected in due time, form and manner, and at the same time other City taxes are assessed, levied and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in said City sufficient to pay the current interest on said Bonds as the same becomes due, and to create and provide a sinking fund of not less than two percent (2%) of the original principal amount of the Bonds or of not less than the amount required to pay each installment of the principal of said Bonds as the same matures, whichever is greater, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of said Bonds and to no other purpose. In addition, interest accrued from the date of the Bonds until their delivery and premium, if any, is to be deposited in such fund. 7 . After the Bonds to be initially issued shall have been executed, it shall be the duty of the Mayor of the City to deliver the Bonds to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas, for examination and approval by the Attorney General . After the Bonds to be initially issued shall have been approved by the Attorney General, they shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Bonds to be initially issued, the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller' s Registration Certificate prescribed herein to be printed and endorsed on the Bonds to be initially issued, and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. 8 . The Bonds, having been advertised for public sale in accordance with the terms and provisions of Section 4 , Article IX of the City' s Charter, and bids having been received pursuant thereto, it is hereby found and determined that the bid of Rauscher Pierce Refsnes, Inc. , at a price equal to the principal amount thereof plus accrued interest thereon from the date of such Bonds to date of actual delivery, plus a premium of $-0-, is the best bid received, and the sale of the Bonds to such bidder at such price is hereby approved, subject to the approving opinions of the Attorney General of the State of Texas and Orgain, Bell & Tucker, Beaumont, Texas, Bond Counsel . • 9 . (a) The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income -14- taxation pursuant to Sections 103 and 141 through 150 of the Code, and applicable regulations . The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in Section 61 of the Code, of the holders thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 9; provided, however, that the City shall not be required to comply with any particular requirement of this Section 9 if the City has received an opinion of nationally recognized bond counsel (a "Counsel ' s Opinion" ) that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City as received a Counsel ' s Opinion to the effect that compliance with some other requirement set forth in this Section 9 will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel 's Opinion shall constitute compliance with the corresponding requirement specified in this Section 9 . (b) The City covenants and agrees that its use of Net Proceeds of the Bonds (as hereinafter defined) will at all times satisfy the following requirements : ( i) The City will limit the amount of original or investment proceeds of the Bonds to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10% of the Net Proceeds of the Bonds ( "private-use proceeds" ) . For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit; (ii) The City will not permit more than 5% of the Net Proceeds of the Bonds to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Bonds . Further, the amount of private-use proceeds of the Bonds in excess of 5% of the Net Proceeds of the Bonds ( "excess private-use proceeds" ) will not exceed the proceeds of the Bonds expended for the governmental purpose of the Bonds to which such excess private-use proceeds relate; (iii) Principal of and interest on the Bonds shall be . paid solely from ad valorem tax receipts collected by the City. Further, no person using more than 10% of the Net -15- Proceeds of the Bonds in a trade or business, other than a governmental unit, shall make payments (other than as a member of the general public) , directly or indirectly, accounting for more than 10% of the principal of and interest on the Bonds; and (iv) The City will not permit an amount of proceeds of the Bonds exceeding the lesser of (a) $5, 000,000 or (b) 5% of the Net Proceeds of the Bonds to be used, directly or indirectly, to finance loans to persons other than a governmental unit. When used in this Section 9, the term Net Proceeds of the Bonds shall mean the proceeds from the sale of the Bonds, including investment earnings on such proceeds, less accrued interest. (c) The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Bonds to be "federally guaranteed" within the meaning of Section 149 (b) of the Code and applicable regulations thereunder, except as permitted by Section 149(b) (3) of the- Code and such regulations. (d) The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on . the date the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds, including interest or other investment income derived from Bond proceeds, regulate investments of proceeds of the Bonds, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (e) The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the meaning of Section 148( f) (6) (B) of the Code) , be rebated to the federal government. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Bonds which is required to be rebated to the federal government, and (iii) pay, not less often than every 5th anniversary date of the delivery of the Bonds, all -16- 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 Bonds that might result in a "prohibited payment" within the meaning of Temp. Treas . Reg. S 1. 103-15AT. ( f) The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in accordance with Section 149 (e) of the Code and applicable regulations thereunder. 10 . It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Article 6252-17, Vernon' s Annotated Texas Civil Statutes, as amended. 11 . The Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to the form and content. The use of such Preliminary Official Statement and such Official Statement in the reoffering of the Bonds by the Purchaser is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Preliminary Official Statement and such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. 12 . (a) The Registrar, by undertaking the performance of the duties of the Registrar and in consideration of the payment of fees and/or deposits of money pursuant to this Ordinance and a Paying Agent/Registrar' s Agreement, accepts and agrees to abide by the terms of this Ordinance and such Agreement. The City hereby approves the Paying Agent/Registrar's Agreement. (b) The City reserves the right to replace the Registrar or its successor at any time. If the Registrar is replaced by the City, the new Registrar shall accept the previous Registrar's records and act in the same capacity as the previous Registrar. Any successor Registrar shall be either a national or state banking institution and a corporation or association organized and doing business under the laws of the United States of America or any State authorized under such laws to exercise trust powers and subject to supervision or examination by Federal or State authority. • 13. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, the Mayor Pro Tem, the -17- City Clerk, or Assistant City Clerk, and all other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that are reasonably necessary to provide for issuance of the 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 this Ordinance and to direct the application of funds of the City consistent with the provisions hereof. 14 . No recourse shall be had for payment of the principal of or premium, if any, or interest on any Bonds, or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Bonds . 15 . 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. 16 . All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. PASSED AND APPROVED this 3rd day of March, 1992 . Mayor CITY OF BEAUMONT, TEXAS ATTEST: r Z City Cl rk CITY OF BEAUMONT, TEXAS (CITY -18