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HomeMy WebLinkAboutORD 93-26 ORDINANCE AUTHORIZING THE ISSUANCE OF $6,530,000 THE CITY OF BEAUMONT, TEXAS, REFUNDING BONDS, SERIES 1993; AUTHORIZING THE ADVANCE REFUNDING OF CERTAIN CERTIFICATES OF OBLIGATION AND BONDS AND THE EXECUTION AND DELIVERY OF AN ESCROW AGREEMENT AND THE SUBSCRIPTION FOR AND PURCHASE OF CERTAIN ESCROWED SECURITIES; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS S COUNTY OF JEFFERSON S THE CITY OF BEAUMONT S WHEREAS, the City of Beaumont, Texas (the "City" ) has heretofore issued its City of Beaumont, Texas, Water System, Sanitary Landfill and Golf Course Certificates of Obligation, Series 1985, and its City of Beaumont, Texas, Combination Tax and Revenue Refunding Bonds, Series 1985-A (collectively the "Refunded Bonds") and now desires to refund the Refunded Bonds in advance of their maturities; and WHEREAS, Article 717k of Vernon' s Annotated Texas Civil Statutes, as amended, authorizes the City to issue refunding bonds for the purpose of refunding the Refunded Bonds in advance of their maturities, and to accomplish such refunding by depositing directly with any paying agent for the Refunded Bonds the proceeds of such refunding bonds, together with other available funds, in an amount sufficient to provide for the payment or redemption of the Refunded Bonds, and provides that such deposit shall constitute the making of firm banking and financial arrangements for the discharge and final payment or redemption of the Refunded Bonds; and WHEREAS, the City now desires to call certain of the Refunded Bonds for redemption prior to their maturities; and WHEREAS, the City also desires to authorize the execution of an escrow agreement in order to provide for the deposit of proceeds of the refunding bonds to pay and redeem the Refunded Bonds; and WHEREAS, upon issuance of the refunding bonds herein authorized and the deposit of funds referred to above, the Refunded Bonds shall no longer be regarded as being outstanding, except for the purpose of being paid pursuant to such deposits, and the pledges, liens, trusts and all other covenants, provisions, terms and conditions of the ordinances authorizing the issuance of the Refunded Bonds shall be discharged, terminated and defeased; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT: 1. Consideration. It is hereby found and determined that the transactions contemplated by this Ordinance will benefit the City by providing a savings in debt service, and that such benefit is sufficient consideration for the refunding of the Refunded D - 9-3-a4 Z--.2-57-9-3 Bonds. 2 . Definitions . Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below: The term "Bonds" or "Series 1993 Bonds" shall mean The City of Beaumont, Texas, Refunding Bonds, Series 1993 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 "Insurer" shall mean , the issuer of the Municipal Bond Guaranty Insurance Policy. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 17 of this Ordinance. The term "Interest Payment Date", when used in connection with any Bond, shall mean September 1, 1993, and each March 1 and September 1 thereafter until maturity of such Bond. The term "Municipal Bond Guaranty Insurance Policy" shall mean the municipal bond guaranty insurance policy issued by insuring the payment when due of the principal of and interest on the Bonds as provided therein. 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. -2- The term "Refunded Bonds" shall mean the City's Water System, Sanitary Landfill and Golf Course Certificates of Obligation, Series 1985, maturing on September 1 in the years 1999 through 2005 in the principal amounts of $120,000, $135,000; $150,000, $165,000, $180,000, $200,000, and $215,000, respectively, and the City' s Combination Tax and Revenue Refunding Bonds, Series 1985-A, maturing on September 1 in the years 1999 through 2005 in the principal amounts of $450,000, $475,000, $525,000, $580,000, $630, 000, $700,000, and $750,000, respectively. 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 , Houston, Texas, and its successors in that capacity. The term "Report" shall mean the report of KPMG Peat Marwick, Certified Public Accountants, certifying as to the mathematical accuracy of the program designed by Rauscher Pierce Refsnes, Inc. , for the City with respect to the defeasance of the Refunded Bonds. The term "Underwriters" shall mean , , and 3 . Authorization. The Bonds shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Six Million Five Hundred Thirty Thousand and no/100 Dollars ($6,530,000.00) for the purpose of (i) refunding all of the outstanding Refunded Bonds, and (ii) paying all costs of issuance of the Bonds. 4 . Designation, Date and Interest Payment Date. The Bonds shall be designated as the "THE CITY OF BEAUMONT, TEXAS, REFUNDING BONDS, SERIES 1993, " and shall be dated June 1, 1993 . The Bonds shall bear interest from the later of June 1, 1993, 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, 1993, and semiannually thereafter on March 1 and September 1 of each year until maturity. 5 . Initial Bonds, Numbers and Denominations. 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 September 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 -3- 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 $ 110,000 R-2 1994 120,000 R-3 1995 125,000 R-4 1996 130,000 R-5 1997 130,000 R-6 1998 140,000 R-7 1999 715,000 R-8 2000 735,000 R-9 2001 775,000 R-10 2002 820,000 R-11 2003 860,000 R-12 2004 920,000 R-13 2005 950,000 The Bonds shall not be subject to redemption prior to their scheduled maturities. 6 . Execution of Bonds; Seal. 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. 7 . Approval by Attorney General; Registration. by Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller of Public Accounts of the State of Texas. The manually executed registration certificate of the Comptroller of Public Accounts substantially in the form provided in Section 15 of this Ordinance shall be attached or affixed to the Bonds to be initially issued. 8. Authentication. Except for the Bonds to be initially issued, which need not be authenticated by the Registrar, only such Bonds which bear thereon a certificate of authentication, substantially in the form provided in Section 15 of this Ordinance, manually executed by an authorized officer of the Registrar, shall -4- be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificates of authentication shall be conclusive evidence that the Bonds so authenticated were delivered by the Registrar hereunder. 9 . Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Bonds . The principal of 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. 10 . Ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment of 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 10 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. 11 . Registration, Transfer and Exchange. 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 -5- 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 11. Each Bond delivered in accordance with this Section 11 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. The City or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. 12 . Cancellation of Bonds . All Bonds paid in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds. 13. Mutilated, Lost or Stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. 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 -6- 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 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 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. 14 . Special Election for Uncertificated Bonds . Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriters, the ownership of the Bonds shall be registered in the name of Cede & Co. , as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co. , as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the purchaser shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Bonds. With respect to Bonds registered in the name of Cede & Co. , as nominee of DTC, the City and the Registrar shall have no -7- 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 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. 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 -8- 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. 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. 15. Form. (a) The Bonds shall be in substantially the following form, including the form of Registrar' s Certificate of Authentication, the form of Assignment, the form of Statement of Insurance, and the form of Registration Statement of the Comptroller of Public Accounts, with such additions, deletions and variations as may be necessary or desirable and permitted by this Ordinance: (Face of Bond) United States of America State of Texas County of Jefferson NUMBER DENO IIMTION R- $ REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS Refunding Bond, Series 1993 INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP: June 1, 1993 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 -9- principal corporate trust office of 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 June 1, 1993, 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, 1993, 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. This Bond is not subject to redemption prior to its scheduled maturity. 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 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 $6,530,000 (the "Bonds") , issued pursuant to an ordinance adopted by the City Council on May 25, 1993 (the "Ordinance" ) for the purpose of refunding prior to maturity (i) the City's Water System, Sanitary Landfill and Golf Course Certificates of Obligation, Series 1985, maturing on September 1 in the years 1999 through 2005 and (ii) the City's Combination Tax and Revenue Refunding Bonds, Series 1985-A, maturing on September 1 in the years 1999 through 2005 . -10- 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-13 shall be registered by the Comptroller of Public Accounts of the State of Texas, as provided by law. The registration certificate of the Comptroller of Public Accounts shall be printed on Bonds R-1 through R-13 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 , 1993. 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: -il- Registration Date: AUTHENTICATION CERTIFICATE This bond is one of the bonds described in and delivered pursuant to the within-mentioned Ordinance. 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 (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, Refunding Bonds, Series 1993 (the "Bonds") , such policy being on file at the principal office of the Paying Agent/Registrar, as paying agent (the "Paying Agent") : , 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 -12- 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 16 . Legal Opinion; CUSIP. The approving opinion of Orgain, Bell & Tucker, L.L.P. , 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 . 17. Interest and Sinking Fund; Levy, Assessment and Collection of Taxes. There is hereby established a separate fund of the City to be known as the "Series 1993 Refunding Bonds Interest and Sinking Fund" which shall be kept separate and apart from all other funds of the City. 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 the Interest and Sinking Fund. While the 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 -13- 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. 18. Further Proceedings. 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. 19 . Sale of Bonds; Bond Purchase Agreement. The Bonds are hereby sold and shall be delivered to the Underwriters at a price of $ . plus accrued interest to the date of delivery, in accordance with the terms of a Bond Purchase Agreement of even date herewith, presented to and hereby approved by the City Council, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City. The Mayor and other appropriate officials of the City are hereby authorized and directed to execute the Bond Purchase Agreement on behalf of the City and the Mayor and all other officers, agents and representatives of the City are hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Bonds . 20. Tax Exemption. (a) The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and 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 20; provided, however, that the City shall not be required to comply with any particular requirement of this Section 20 if the City has received an opinion of nationally recognized bond counsel (a "Counsel 's Opinion" ) that such noncompliance will -14- not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received a Counsel 's Opinion to the effect that compliance with some other requirement set forth in this Section 20 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 20. The City represents and warrants that the City shall realize present value debt service savings (determined without regard to administrative expenses) in connection with issuance of the Bonds to the extent that the proceeds thereof are used to refund the Refunded Bonds. (b) The City covenants and agrees that its use of Net Proceeds of the Bonds and the Refunded Bonds (as hereinafter defined) will at all times satisfy the following requirements : (i) The City will use $ of the Net Proceeds of the Bonds to acquire Escrowed Securities (as hereinafter defined) sufficient to pay the principal of and interest and premium, if any, on the Refunded Bonds except for amounts, if any, described in the Report as the rounding amount and the ending cash balance in the Escrow Fund (as hereinafter defined) . The City has limited and will limit with respect to the Refunded Bonds and the Bonds, the amount of original or investment proceeds thereof to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10% of the Net Proceeds of the Bonds and the Refunded 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. Any use of proceeds of the Refunded Bonds or the Bonds in any manner contrary to the guidelines set forth in Revenue Procedures 82-14, 1982-1 C.B. 459, and 82-15, 1982-1 C.B. 460, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City has not permitted and will not permit with respect to the Refunded Bonds and the Bonds more than 5% of the Net Proceeds thereof 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 Refunded Bonds or the Bonds. Further, the amount of private-use proceeds of the Refunded Bonds and the Bonds in excess of 5% of the Net -15- Proceeds thereof ( "excess private-use proceeds") did not and will not exceed the proceeds of the Refunded Bonds and the Bonds expended for the governmental purpose of the Refunded Bonds and the Bonds to which such excess private-use proceeds relate; (iii) Principal of and interest on the Refunded Bonds has been, and 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 Proceeds of the Bonds or the Refunded Bonds in a trade or business, other than a governmental unit, has made or shall make payments (other than as a member of the general public) , directly or indirectly, accounting for more than 10% of such receipts; (iv) The City has not permitted and will not permit with respect to the Refunded Bonds and the Bonds an amount of proceeds thereof exceeding the lesser of (a) $5,000,000 or (b) 5% of the Net Proceeds of the Bonds and the Refunded Bonds to be used, directly or indirectly, to finance loans to persons other than a governmental unit; (v) The City will use $ of the Net Proceeds to pay the cost of issuance of the Bonds; and (vi) The City covenants and agrees that the monies on deposit in the Interest and Sinking Funds for the Refunded Bonds shall be transferred and applied as provided in Section 22 of this Ordinance. When used in this Section 20, the term "Net Proceeds" of the Bonds and the Refunded Bonds shall mean the proceeds from the sale of each respective issue of the bonds, including investment earnings on such proceeds, less accrued interest with respect to such issue, and shall also include any issue of bonds which was refunded as a separate issue by the Refunded Bonds . (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 and the amounts transferred pursuant to Section 22 of this Ordinance will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the -16- Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds and the amounts transferred pursuant to Section 22 of this Ordinance, including interest or other investment income derived from Bond proceeds, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (e) 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, and within 60 days after retirement of the Bonds, 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 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. Section 21 . Application of Proceeds. Proceeds from the sale of the Bonds shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest shall be deposited into the Interest and Sinking Fund for the Bonds; (b) $ from the sale of the Bonds shall be applied to establish an escrow fund to refund the Refunded Bonds, as more fully provided in Section 24 below and, to the extent not otherwise paid, to pay all costs and expenses arising in connection -17- with establishment of such escrow fund and the refunding of the Refunded Bonds; (c) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds not later than 90 days after such issuance; and (d) Any proceeds from the Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 22 . Transfer of Money in Interest and Sinking Funds Maintained for the Refunded Bonds . On the date of delivery of the Bonds, amounts contained in the Interest and Sinking Funds for the Refunded Bonds shall be transferred to the Interest and Sinking Fund for the Bonds and shall be applied as herein provided. 23. Redemption of Refunded Bonds. The City hereby irrevocably calls the following bonds of the City for redemption prior to maturity on the date set forth below, and authorizes and directs notice of such redemption to be given as provided in the form attached hereto as Exhibit "A" : Certificates of Bonds To Be Redeemed Redemption Date The City of Beaumont, Texas, Water System, Sanitary Landfill and Golf Course Certificates of Obligation, Series 1985, Maturities 1999 through 2005 September 1, 1998 The City of Beaumont, Texas, Combination Tax and Revenue Refunding Bonds, Series 1985-A, Maturities 1999 through 2005 September 1, 1998 24 . Escrow Agreement. The discharge and defeasance of the Refunded Bonds shall be effectuated pursuant to the terms and provisions of an Escrow Agreement to be entered into by and between the City and Texas Commerce Bank National Association, Houston, Texas, as Escrow Agent, which shall be substantially in the form attached hereto as Exhibit "B", the terms and provisions of which are hereby approved, subject to such insertions, additions and modifications as shall be necessary (a) to carry out the program which has been designed for the City by Rauscher Pierce Refsnes, Inc. , and which shall be certified as to mathematical accuracy by KPMG Peat Marwick in the Report, (b) to maximize the City' s present value savings and minimize the City' s costs of refunding, (c) to comply with all applicable laws ,and regulations relating to the refunding of the Refunded Bonds and (d) to carry out the other intents and purposes of this Ordinance, and the Mayor is hereby authorized to execute and deliver the Escrow Agreement on behalf of -18- the City in multiple counterparts and the City Clerk or an Assistant City Clerk is hereby authorized to attest thereto and affix the City' s seal . 25 . Source of Funds Used in Refunding. No money of the City other than proceeds of the Bonds shall be used to refund the Refunded Bonds . 26 . Purchase of United States Treasury Obligations. To assure the purchase of the Escrowed Securities referred to in the Escrow Agreement, the Mayor, the City's Chief Financial Officer, and the Escrow Agent are hereby authorized to subscribe for, agree to purchase, and purchase non-callable obligations of the United States of America, in such amounts and maturities and bearing interest at such rates as may be provided for in the Report, and to execute any and all subscriptions, purchase agreements, commitments, letters of authorization and other documents necessary to effectuate the foregoing, and any actions heretofore taken for such purpose are hereby ratified and approved. 27 . Open Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Article 6252- 17, Vernon's Annotated Texas Civil Statutes, as amended. 28. Official Statement. The Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Purchaser is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. 29 . Registrar. The Registrar, by undertaking the performance of the duties of the Registrar and in consideration of the payment of fees 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. 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 -19- under such laws to exercise trust powers and subject to supervision or examination by Federal or State authority. 30 . Related Matters . To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, the Mayor Pro Tem, the 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. 31. No Personal Liability. 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 . 32 . Payment Pursuant to Municipal Bond Guaranty Insurance Policy. As long as the Municipal Bond Guaranty Insurance Policy shall be in full force and effect, the City and the Registrar agree to comply with the following provisions: (a) If payment of principal or interest due on the Bonds has not been made to the Registrar, the Registrar or any Owner to whom such payment is due, shall so notify the Insurer by telephonic or telegraphic notice, subsequently confirmed in writing, or written notice by registered or certified mail . Such notice shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable and whether such Bonds will be deficient as to principal or interest, or both. The Insurer, on the later of the date due for payment or within on Business Day after receipt of notice of nonpayment, will deposit sufficient moneys with Citibank, N.A. , as insurance trustee for the Insurer or any successor insurance trustee (the "Insurance Trustee" ) . (b) The Registrar shall, after giving notice to the Insurer as provided in (a) above, make available to the Insurer and, at the Insurer's direction, to the Insurance Trustee, the Bond Register and all records relating to the funds and accounts maintained under this Ordinance. (c) The Registrar shall provide the Insurer and the Insurance Trustee with a list of registered Owners of Bonds entitled to receive principal or interest payments from the Insurer under the terms of the Municipal Bond Guaranty Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the -20- registered Owners of Bonds entitled to receive full or partial interest payments from the Insurer and (ii) to pay principal upon Bonds surrendered to the Insurance Trustee by the registered Owners of Bonds entitled to receive full or partial principal payments from the Insurer. (d) The Registrar shall, at the time it provides notice to the Insurer pursuant to (a) above, notify registered Owners of Bonds entitled to receive the payment of principal or interest thereon from the Insurer (i) as to the fact of such entitlement, (ii) that the Insurer will remit to them all or a part of the interest payments next coming due, (iii) that should they be entitled to receive full payment of principal from the Insurer, they must present and surrender their Bonds together with any appropriate instrument of asignment for payment to the Insurance Trustee and not the Registrar, and (iv) that should they be entitled to receive partial payment of principal from the Insurer, they must present and surrender their Bonds for payment thereon first to the Registrar, who shall note on such Bonds the portion of the principal paid by the Registrar, and then, along with an appropriate instrument of assignment, to the Insurance Trustee, which will then pay the unpaid portion of principal. The Insurance Trustee shall disburse to registered Owners of Bonds or the Registrar, the payment due less any amount held by the Registrar for payment of principal of or interest on Bonds and legally available therefor. (e) In the event that the Registrar has notice that any payment of principal of or interest on a Bond which has become due for payment and which is made to an Owner by and on behalf of the City has been deemed a preferential transfer and theretofore recovered from its registered Owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Registrar shall, at the time the Insurer is notified pursuant to (a) above, notify all registered Owners that in the event that any registered Owner's payment is so recovered, such registered Owner will be entitled to payment from the Insurer to the extent of such recovery if sufficient funds are not otherwise available, and the Registrar shall furnish to the Insurer its records evidencing the payments of principal of and interest on the Bonds which have been made by the Registrar and subsequently recovered from registered Owners and the dates on which such payments were made. (f) In addition to those rights granted the Insurer under this Ordinance, the Insurer shall, upon remittance and transfer of Bonds and appropriate instruments of assignment, become the Owner thereof, and to evidence such ownership (i) in the case of claims for past due interest, the Registrar -21- shall note the Insurer' s right as Owner on the Register upon receipt from the Insurer of proof of the payment of interest thereon to the registered Owners of the Bonds and (ii) in the case of claims for past due principal, the Registrar shall note the Insurer' s rights as Owner on the Register upon surrender of the Bonds by the registered Owners thereof together with proof of the payment of principal thereof. 33. Insurer' s Consent. Any provision of this Ordinance expressly recognizing or granting rights in or to the Insurer may not be amended in any manner which affects the rights of the Insurer hereunder without the prior written consent of the Insurer (which shall not be unreasonably withheld) . 34 . Insurer' s Subrogation. In the event that the principal or interest due on the Bonds shall be paid by the Insurer pursuant to the Municipal Bond Guaranty Insurance Policy, the Bonds shall remain outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the City and all covenants, agreements and other obligations of the City to the Owners shall continue to exist and shall run to the benefit of the Insurer, and the Insurer shall be subrogated to the rights of such Owners. 35 . Notices and Reports. The City covenants that it will provide the Insurer with the following: (a) a copy of the City's annual audited financial statement for each fiscal year and the City' s budget for the following fiscal year, within 120 days of the end of each of the City's fiscal years; (b) notice of any issue of debt obligations by the City and a copy of any disclosure document prepared in connection therewith, within 30 days after the issuance of such obligations; (c) such other information as the Insurer may reasonably request; and (d) copies of all notices which the City provides or is obligated to provide hereunder at the same time and in the same manner as each such notice is given hereunder. In addition, the City agrees that any amendment of or modification to this Ordinance shall be sent to Standard & Poor's Corporation, Inc. , Moody's Investors Service, Inc. , and any other rating agency reasonably designated by the Insurer. For purposes of this Ordinance, the City shall provide the Insurer with all notices and reports required hereunder at the following address unless and until the Insurer notifies the City in writing as to a different address: _22_ The Municipal Bond Investors Assurance Corporation 113 King Street Armonk, NY 10504 Attention: Surveillance Department 36 . Severability. 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. 37 . Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. 38. Designation. The City hereby designates the Bonds as qualified tax-exempt obligations for purposes of Section 265(b) (3) of the Code. The Bonds issued are not "private activity bonds" as defined by Section 141 of the Code. After the Bonds are issued, the City and any governmental entities controlled by it will not have designated more than $10,000,000 .00 of obligations issued during calendar year 1993 as qualified tax-exempt obligations and the City and any governmental entities controlled by it reasonably anticipate that the total amount of tax-exempt obligations to be issued by the City during calendar year 1993 will not exceed $10,000,000.00 . PASSED AND APPROVED this 25th day of May, 1993. Mayor CITY OF BEAUMONT, TEXAS ATTEST: City Clerk if CITY OF BEAUMONT, TEXAS (CITY :SEAL) w, } ;� -23-