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HomeMy WebLinkAboutORD 88-35 ORDINANCE AUTHORIZING THE ISSUANCE OF $3, 000, 000 CITY OF BEAUMONT, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1988 THE STATE OF TEXAS § COUNTY OF JEFFERSON § CITY OF BEAUMONT § WHEREAS, the City Council of the CITY OF BEAUMONT, a TEXAS (the "City" ) , authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on March 29, 1988, to adopt an ordinance and take such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and certain revenues of the City' s waterworks and sewer system, for the purpose of evidencing the indebtedness of the City for all or any part of the cost of purchasing equipment for author- ized needs and purposes and the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and laws of the State of Texas and of the United States of America, respec- tively, particularly Sections 271. 041-271 . 063, Texas Local Government Code, as amended; and WHEREAS, the City Council decided to postpone adoption of the ordinance authorizing the issuance of the certifi- cates of obligation from March .29, 1988, to April 19, 1988, in order to provide the City more time to determine how to apply the proceeds thereof consistent with the best inter- ests of the City; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT: 1 . The matters and facts contained in the preamble to this ordinance are hereby found to be true and correct. 2 . Definitions. Throughout this ordinance the following terms and expressions as used herein shall have the meanings set forth below: dv The term "Certificates" or "Series 1988 Certificates" shall mean the Series 1988 Certificates of Obligation authorized in this Ordinance, unless the context clearly indicates otherwise. The term "City" shall mean the City of Beaumont, Texas. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 18 of this Ordinance. The term "Interest Payment Date" , when used in connec- tion with any Certificate, shall mean September 1, 1988, and each March 1 and September 1 thereafter until maturity. The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term "Ordinance" as used herein and in the Certifi- cates shall mean this ordinance authorizing the Certifi- cates. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Certificates. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th calendar day of the month next pre- ceding such Interest Payment Date. The term "Register" shall mean the books of registra- tion 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 Texas Commerce Bank National Association, Houston, Texas, and its successors in that capacity. The term "System" shall mean the City' s waterworks and sewer system. 3 . Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total -2- authorized aggregate amount of Three Million Dollars ($3, 000, 000) for the purpose of evidencing the indebtedness of the City for all or any part of the cost of purchasing equipment for authorized needs and purposes and the cost of professional services incurred in connection therewith. 4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "CITY OF BEAUMONT, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1988" , and shall be dated May 1, 1988 . The Certificates shall bear interest from the later of May 1, 1988, 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, inter- est payable on September 1, 1988, and semiannually there- after on March 1 and September 1 of each year until maturi- ty. 5. Initial Certificates; Numbers and Denominations. The Certificates shall be issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Certificates shall mature on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered on transfer of or in exchange for other Certificates shall be numbered in order of their authentication by the Registrar, shall be in the denomination of $5, 000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Principal Interest Number Year Amount Rate R- 1 1989 $210, 000 7 . 70 R- 2 1990 225, 000 7 . 90 R- 3 1991 250, 000 7 . 90 R- 4 1992 260, 000 7 . 90 R- 5 1993 280, 000 6. 80 R- 6 1994 300, 000 6 . 40 R- 7 1995 325, 000 6. 50 R- 8 1996 350, 000 6 . 70 R- 9 1997 375, 000 6 . 80 R-10 1998 425, 000 6 . 90 -3- 6. Execution of Certificates; Seal . The Certificates shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, by their manual, litho- graphed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office . 7 . Approval by Attorney General; Registration by Comptroller. The Certificates to be initially issued shall be delivered to the Attorney General of 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 16 of this Ordinance shall be attached or affixed to the Certifi- cates to be initially issued. 8. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certifi- cate of authentication, substantially in the form provided in Section 16 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be en- titled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certifi- cate of authentication shall be conclusive evidence that the Certificates so authenticated were delivered by the Reg- istrar hereunder. 9 . Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Certifi- cates . The principal of the Certificates shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and -4- surrender as they become due and payable, at the principal corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register or, at the request of an Owner, and at the Owner' s risk and expense, in such other manner as may be acceptable to the Owner and the Registrar. Any accrued interest payable at maturity shall be paid upon presentation and surrender of the Certificate to which such interest apper- tains. If the date for payment of the principal of or interest on any Certificate is a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday, or a day on which banking institutions are autho- rized by law or executive order to close, and payment on such date shall have the same force and effect as if made on the original date payment was due. 10. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates . The City reserves the right to change the Registrar on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 11 . Special Record Date . If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date . The -5- Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen ( 15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5 ) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 12 . Ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Certificate in accordance with this Section 11 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Paying Agent and/or Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Paying Agent and/or Registrar in accordance with the provisions of Title 6 of the Texas Property Code, as amended, to the extent that such provisions are applicable to such amounts. 13 . Registration, Transfer, and Exchange. So long as any Certificates remain outstanding, the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Certificates in accordance with the terms of this Ordinance. Each Certificate shall be transferable only upon the presentation and surrender thereof at the principal corpo- rate 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 -6- form satisfactory to the Registrar. Upon due presentation of any Certificate for transfer, the Registrar shall authen- ticate and deliver in exchange therefor, within three (3 ) business days after such presentation, a new Certificate or Certificates, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Certificate or Certificates so presented. All Certificates shall be exchangeable upon presenta- tion and surrender thereof at the principal corporate trust office of the Registrar for a Certificate or Certificates 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 Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13 . Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certif- icate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. 14. Mutilated, Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenti- cate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. -7- The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Certificate, before any replacement Certificate is issued, to: ( 1 ) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Certificate; (2 ) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3 ) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Regis- trar shall be entitled to recover such replacement Certifi- cate 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 there- with. If any such mutilated, lost, apparently destroyed or wrongfully taken Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate, authorize the Registrar to pay such Certificate . Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the -s- Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15 . Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Certificates. 16. Forms. The form of the Certificates, including the form of the Registrar' s Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Certificates initialy issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: (Face of Certificate) UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION R- $ REGISTERED REGISTERED CITY OF BEAUMONT, TEXAS Combination Tax and Revenue Certificate of Obligation, Series 1988 INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP: May 1, 1988 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS -9- THE CITY OF BEAUMONT, TEXAS (the "City" ) , promises to pay to the Registered Owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this certificate at the principal corporate trust office of Texas Commerce Bank National Association, 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 May 1, 1988, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on September 1, 1988, and semiannually thereafter on each March 1 and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th calendar date of the month next preceding each interest payment date or, at the request and at the risk and expense of the registered owner, in such other manner as may be acceptable to the registered owner and the Registrar. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS CERTIFICATE 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 Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signa- ture of the City Clerk of the City, and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. (AUTHENTICATION CERTIFICATE) (SEAL) CITY OF BEAUMONT, TEXAS Mayor City Clerk (Back Panel of Certificate) -10- THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $3 , 000, 000 (the "Certificates" ) , issued in accordance with the Constitution and laws of the State of Texas, particularly Sections 271 .041-271 . 063, Texas Local Government Code, as amended, for the purpose of evidencing the indebtedness of the City for all or any part of the cost of purchasing equipment for authorized needs and purposes and the cost of professional services incurred in connection therewith, pursuant to an ordinance duly adopted by the City Council of the City (the "Ordinance" ) , which Ordinance is of record in the official minutes of the City Council . THIS CERTIFICATE is transferable only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his au- thorized representative, subject to the terms and conditions of the Ordinance . THE CERTIFICATES are exchangeable at the principal cor- porate trust office of the Registrar for Certificates in the principal amount of $5, 000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordi- nance unless this Certificate either ( i ) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii ) is authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Certificates and will cause notice of any change of regis- trar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Certificate 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 Certificate have -11- been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied and ordered to be levied, within the limits prescribed by law, against all taxable property in the City. IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues" ) to be derived from the operation of the City' s waterworks and sewer system (the "System" ) , are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certif- icate and the series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System secured by a pledge of the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certif- icates of which it is a part. Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER' S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this certificate has been exam- ined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas. -12- WITNESS MY SIGNATURE AND SEAL this xxxxxxxxxx Comptroller of Public Accounts ( SEAL) of the State of Texas Form of Registrar' s Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate, in exchange for or in replacement of a Certificate, Certificates or a portion of a Certificate or Certificates of a Series which was originally approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Texas Commerce Bank National Association Houston, Texas By Authorized Signature Date of Authentication Form of Assignment ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee)the within certificate and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. -13- DATED: Signature Guaranteed: Registered Owner NOTICE: The signature above must correspond to the name of _ the registered owner as shown NOTICE: Signature must be on the face of this certifi- guaranteed by a member firm cate in every particular, of the New York Stock without any alteration, Exchange or a commercial enlargement or change bank or trust company. whatsoever. Statement of Insurance Municipal Bond Guaranty Insurance Policy No. (the "Policy" ) with respect to payments due for principal of and interest on this certificate has been issued by AMBAC Indemnity Corporation ( "AMBAC Indemnity" ) . The policy has been delivered to the United States Trust .Company of New York, New York, New York as the Insurance Trustee under said Policy and will be held by such Insurance Trustee or any successor insurance trustee. The policy is on file and available for inspection at the principal office of the Insurance Trustee and a copy thereof may be secured from AMBAC Indemnity or the Insurance Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owner of this certificate acknowledges and consents to the subrogation rights of AMBAC Indemnity as more fully set forth in the Policy. 17 . Legal Opinion; Cusip. The approving opinion of Vinson & Elkins, Houston, Texas, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 18. Interest and Sinking Fund; Tax Levy. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance shall be deposited, as collected, in a special fund to be designated "City of Beaumont, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1988, Interest and Sinking Fund" . While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be -14- annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in said City sufficient to pay the current interest on said Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures but never less than two percent (2%) of the original principal amount of the Certificates each year, 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 Certificates and to no other purpose. In addition, interest accrued from the date of the Certifi- cates until their delivery, and premium, if any, is to be deposited in such fund. To pay the interest coming due on the Certificates on September 1, 1988, there is hereby appropriated from current funds, which are hereby certified to be on hand and avail- able for such purpose, ari amount sufficient to pay such interest, and such amount shall be used for no other purpose . 19 . Pledge of Revenues. The Net Revenues of the System are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes mentioned in Section 18 of this Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of such Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of the Net Revenues to the payment of the Certificates, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and super- ior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. -15- 20. Further Proceedings. After the Certificates to be initially issued shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates to be initially issued and all pertinent records and proceed- ings to the Attorney General of Texas, for examination and approval . After the Certificates 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 Certificates to be initially issued, the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller' s Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. 21 . Sale. The sale of the Certificates to Griffin, Kubik, Stephens & Thompson, Inc . (the "Purchaser" ) , at the price of par plus accrued interest on the Certificates to date of delivery, plus a cash premium of $57 . 70, is hereby authorized, approved, ratified and confirmed, and the City Council hereby finds and determines that such price is the best reasonably obtainable by the City for the Certificates issued in accordance with this Ordinance . 22 . Books and Records . So long as any of the Certifi- cates are outstanding the City covenants and agrees that it will keep proper books of record and account in which full, true and correct entries will be made of all dealings, activities and transactions relating to the Certificates and the funds created pursuant to this Ordinance, and all books, documents and vouchers relating thereto shall at all reason- able times be made available for inspection upon request of any Owner. 23 . Tax Exemption. The City covenants that it shall make such use of the proceeds of the Certificates, regulate investments of proceeds thereof and take such other and further actions as may be required by Sections 103 and 141-150 of the Internal Revenue Code of 1986 (the "Code" ) and all applicable temporary, proposed and final regulations and procedures promulgated thereunder or promulgated under the Internal Revenue Code of 1954, to the extent applicable to the Code ( "Regulations" ) , necessary to assure that inter- est on the Certificates is excludable from gross income for federal income tax purposes. Without limiting the -16- generality of the foregoing covenant, the City hereby covenants as follows: (a) The City will not use, nor permit to be used, more than 10 percent of the net proceeds of the Certificates in the trade or business of any person (other than use as a member of the general public) other than a governmental unit ( "pri- vate-use proceeds" ) . For purposes of this Sec- tion, the term "net proceeds" means the proceeds derived from the sale of the Certificates, plus interest earnings thereon, less any amounts deposited in a reasonably required reserve or re- placement fund; the term "person" includes any individual, corporation, partnership, unincor- porated 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, means any activity other than an activity carried on by a governmental unit; (b) The City will not use, nor permit to be used, more than 5 percent of the net proceeds of the Certificates in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates ( "excess private-use proceeds" ) will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (c ) Principal and interest on the Certificates will be paid solely out of ad valorem taxes received by the City and Net Revenues of the System. Further, no person using more than 10 percent of the net proceeds of the Certificates 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 percent of such prin- cipal and interest; -17- ' A (d) The City will not use, or permit to be used, an amount exceeding the lesser of (i ) $5, 000, 000 or (ii ) 5 percent of the net proceeds of the Certificates to finance loans to persons other than governmental units, directly or indirectly; (e) Based upon all facts and estimates now known or reasonably expected to be in existence on the date the Certificates are delivered, the City reasonably expects that the proceeds of the Certificates will not be used in a manner that would cause the Certificates or any portion thereof to be an "arbitrage bond" within the meaning of Section 148 of the Code; (f) The City will monitor the yield on the in- vestment of the proceeds of the Certificates and moneys pledged to the repayment of the Certifi- cates and will restrict the yield on such invest- ments to the extent required by the Code or the Regulations. Without limiting the generality of the foregoing, the City will take appropriate steps to restrict the yield on all proceeds of the Certificates on hand on a date that is three years from the date of delivery of the Certificates to a yield which is not materially higher than the yield on the Certificates (in both cases calcu- lated in accordance with the Code and Regula- tions) ; (g) The City will not cause the Certificates to be treated as "federally guaranteed" obligations for purposes of Section 149(b) of the Code ( as may be modified in any applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department of the Treasury or the Internal Revenue Service with respect to "federally guaranteed" obligations described in Section 149(b) of the Code) ; and (h) The City will take all necessary steps to comply with the requirement that "excess arbitrage profits" earned on the investment of the "gross proceeds" of the Certificates (within the meaning of Section 148(f) ( 6) (B) of the Code) , if any, be rebated to the federal government. Specifically, the City will ( i ) maintain records regarding the -18- investment of the gross proceeds of the Certifi- cates as may be required to calculate such "excess arbitrage profits" separately from records of amounts on deposit in the funds and accounts of the City which allocable to other certificate issues of the City or moneys which do not repre- sent gross proceeds of any certificate of the City, (ii ) calculate, not less often than annual- ly, the .amount of "excess arbitrage profits, " if any, earned from the investment of the gross pro- ceeds of the Certificates and ( iii ) pay, not less often than every fifth anniversary date of the delivery of the Certificates, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount other- wise 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 Certificates that might result in a "prohibited payment" within the meaning of Temp. Treas. Reg. §1 . 103-15AT. (i ) The City will timely file a statement with the federal government setting forth the informa- tion required pursuant to section 149 (e) of the Code . All officers, employees and agents of the City are autho- rized and directed to provide certifications of facts and estimates that are material to the reasonable expectations of the City regarding the foregoing as of the date the Certificates are delivered. In complying with the foregoing covenants, the City may rely from time to time upon an opinion issued by nationally-recognized bond counsel to the effect that any action by the City in reliance upon any interpretation of the Code or Regulations contained in such opinion will not cause interest on the Certificates to be includable in gross income for federal income tax purposes under existing law. 24. Qualified Tax-Exempt Obligations. The City hereby designates the Certificates as "qualified tax-exempt obliga- tions" for purposes of section 265(b) of the Code. In connection therewith, the City represents ( a) that the aggregate amount of tax-exempt obligations issued by the City during calendar year 1988, including the Certificates, -19- which have been designated as "qualified tax-exempt obligations" under section 265(b) (3 ) of the Code does not exceed $10, 000, 000, and (b) that the reasonably anticipated amount of tax-exempt obligations which will be issued by the City during calendar year 1988, including the Certificates, will not exceed $10, 000, 000. For purposes of this section 24, the term "tax-exempt obligation" does not include "private activity bonds" within the meaning of section 141 of the Code, other than "qualified 501(c ) (3 ) bonds" within the meaning of section 145 of the Code. In addition, for purposes of this section 24, the City includes all governmental units which are "subordinate entities" of the City, within the meaning of section 265(b) of the Code. 25 . Official Statement. The City ratifies and confirms its prior approval of the form and content of the Official Statement prepared in the initial offering and sale of the Certificates. The use of such Official Statement in the reoffering of the Certificates by the Purchser is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 26. Further Proceedings. The Mayor, City Clerk and other appropriate officials of the City. are hereby author- ized and directed to do any and all things necessary and/or convenient to carry out the terms and purposes of this Ordinance. 27 . Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. 28. Emergency; Open Meeting. It is hereby officially found and determined that an emergency exists relating to the immediate preservation of the public peace, health, safety and welfare, because of the necessity of reviewing bids for purchase of the Certificates and acceptance of a bid or rejection of all bids on the day bids are received; that such emergency requires the adoption of this Ordinance and the holding of the meeting, or meetings, at which this Ordinance is adopted at the time or times and place held; -20- r the meeting, or meetings, at which this Ordinance was adopted was or were open to the public, and public notice of the time, place and purpose of said meeting, or meetings, was given, all as required by Vernon' s Ann. Tex. Civ. St. Article 6252-17, as amended; and that such notice or notices as given are hereby authorized, approved, adopted and ratified. 31 . Effective Date. This Ordinance shall be in force and effect from and after its final passage, and it is so ordered. 32 . Registrar. The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. PASSED AND APPROVED this 19th day of April, 1988. ayor J CITY OF BEAUMONT, TEXAS ATTEST: City Cle3tk CITY OF BEAUMONT, TEXAS (SEAL) du. -21- VINSON & ELKINS ATTORNEYS AT LAW THE WILLARD OFFICE BUILDING 3300 FIRST CITY TOWER FIRST CITY CENTRE 1455 PENNSYLVANIA AVE. N.W. 816 CONGRESS AVENUE WASHINGTON,D.C.20004-1007 1001 FANNIN AUSTIN,TEXAS 78701.2496 TELEPHONE 202 639-6500 TELEX 89580 HOUSTON,TEXAS 77002-6760 TELEPHONE 512 495-8400 TELEPHONE 713 651-2222 TELEX 762146 47 CHARLES ST.,BERKELEY SQUARE 2020 LTV CENTER LONDON W1X 7PB,ENGLAND 2001 ROSS AVENUE TELEPHONE OI 441 491-7236 DALLAS,TEXAS 75201-2916 CABLE VINELKINS LONDON WI-TELEX 24140 TELEPHONE 214 979-6600 April 21 , 1988 Mr. Lane Nichols City Attorney City of Beaumont P. O. Box 3827 Beaumont, Texas 77704 RE: $3,000, 000 City of Beaumont, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1988 Dear Lane, Enclosed please find a revised copy of the Ordinance adopted by the City Council authorizing the above-captioned Certificates. The Ordinance has been revised to reflect the interest rates as specified in the winning bid, a "Statement of Insurance" on the form of the Certificates, the Purchaser of the Certificates and the purchase price specified by the winning bid. The aforementioned changes have been made to pages 3 , 14 , and 16 . After the Mayor and City Clerk have signed the Ordinance and the seal of the City has been impressed thereon, this copy should be retained in the City' s records. If you have any questions regarding the enclosed, please call me at (713) 651-2907 . Respectfully, ,erg v James L. Shepherd 0830: 3841 Beau7:u Enclosure RECEIVED APR ORDINANCE AUTHORIZING THE ISSUANCE OF $3, 000, 000 CITY OF BEAUMONT, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1988 THE STATE OF TEXAS § COUNTY OF JEFFERSON § CITY OF BEAUMONT § WHEREAS, the City Council of the CITY OF BEAUMONT, TEXAS (the "City" ) , authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on March 29, 1988, to adopt an ordinance and take such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and certain revenues of the City' s waterworks and sewer system, for the purpose of evidencing the indebtedness of the City for all or any part of the cost of purchasing equipment for author- ized needs and purposes and the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and laws of the State of Texas and of the United States of America, respec- tively, particularly Sections 271 . 041-271 . 063, Texas Local Government Code, as amended; and WHEREAS, the City Council decided to postpone adoption of the ordinance authorizing the issuance of the certifi- cates of obligation from March 29, 1988, to April 19, 1988, in order to provide the City more time to determine how to apply the proceeds thereof consistent with the best inter- ests of the City; and WHEREAS, no petition or ether request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT: 1 . The matters and facts contained in the preamble to this ordinance are hereby found to be true and correct. 2 . Definitions. Throughout this ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term "Certificates" or "Series 1988 Certificates" shall mean the Series 1988 Certificates of Obligation authorized in this Ordinance, unless the context clearly indicates otherwise. The term "City" shall mean the City of Beaumont, Texas. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 18 of this Ordinance . The term "Interest Payment Date" , when used in connec- tion with any Certificate, shall mean September 1, 1988, and each March 1 and September 1 thereafter until,maturi.ty. The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term "Ordinance" as used herein and in the Certifi- cates shall mean this ordinance authorizing the Certifi- cates. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Certificates. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th calendar day of the month next pre- ceding such Interest Payment Date. The term "Register" shall mean the books of registra- tion 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 Texas Commerce Bank National Association, Houston, Texas, and its successors in that capacity. The term "System" shall mean the City' s waterworks and sewer system. 3 . Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total -2- authorized aggregate amount of Three Million Dollars ( $3, 000, 000) for the purpose of evidencing the indebtedness of the City for all or any part of the cost of purchasing equipment for authorized needs and purposes and the cost of professional services incurred in connection therewith. 4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "CITY OF BEAUMONT, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1988" , and shall be dated May 1, 1988. The Certificates shall bear interest from the later of May 1, 1988, 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, inter- est payable on September 1, 1988, and semiannually there- after on March 1 and September 1 of each year until maturi- ty. 5 . Initial Certificates; Numbers and Denominations. The Certificates shall be issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance . The Certificates shall mature on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered on transfer of or in exchange for other Certificates shall be numbered in order of their authentication by the Registrar, shall be in the denomination of $5, 000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Principal Interest Number Year Amount Rate R- 1 1989 $210, 000 -7-70 % R- 2 1990 225, 000 7 -70 R- 3 1991 250, 000 7, el 0 R- 4 1992 260, 000 -7-70 R- 5 1993 280, 000 4,ro R- 6 1994 300,000 6.40 R- 7 1995 325, 000 &.5-p R- 8 1996 350, 000 (0.70 R- 9 1997 375,000 G. ro R-10 1998 425, 000 6. 70 -3- 6. Execution of Certificates; Seal . The Certificates shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, by their manual, litho- graphed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal of the City had been manually impressed upon each of the Certificates . If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 7 . Approval by Attorney General; Registration by Comptroller. The Certificates to be initially issued shall be delivered to the Attorney General of 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 16 of this Ordinance shall be attached or affixed to the Certifi- cates to be initially issued. 8. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certifi- cate of authentication, substantially in the form provided in Section 16 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be en- titled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certifi- cate of authentication shall be conclusive evidence that the Certificates so authenticated were delivered by the Reg- istrar hereunder. 9 . Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Certifi- cates. The principal of the Certificates shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and -4- surrender as they become due and payable, at the principal corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register or, at the request of an Owner, and at the Owner' s risk and expense, in such other manner as may be acceptable to the Owner and the Registrar. Any accrued interest payable at maturity shall be paid upon presentation and surrender of the Certificate to which such interest apper- tains. If the date for payment of the principal of or interest on any Certificate is a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday, or a day on which banking institutions are autho- rized by law or executive order to close, and payment on such date shall have the same force and effect as if made on the original date payment was due. 10. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the Registrar on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 11 . Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The -5- Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen ( 15 ) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 12 . Ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Certificate in accordance with this Section 11 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Paying Agent and/or Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Paying Agent and/or Registrar in accordance with the provisions of Title 6 of the Texas Property Code, as amended, to the extent that such provisions are applicable to such amounts. 13 . Registration, Transfer, and Exchange. So long as any Certificates remain outstanding, the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Certificates in accordance with the terms of this Ordinance. Each Certificate shall be transferable only upon the presentation and surrender thereof at the principal corpo- rate 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 -6- form satisfactory to the Registrar. Upon due presentation of any Certificate for transfer, the Registrar shall authen- ticate and deliver in exchange therefor, within three (3 ) business days after such presentation, a new Certificate or Certificates, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Certificate or Certificates so presented. All Certificates shall be exchangeable upon presenta- tion and surrender thereof at the principal corporate trust office of the Registrar for a Certificate or Certificates 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 Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13 . Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certif- icate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. 14. Mutilated, Lost, or Stolen Certificates . Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenti- cate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. -7- The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Certificate, before any replacement Certificate is issued, to: ( 1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Certificate; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3 ) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Regis- trar shall be entitled to recover such replacement Certifi- cate 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 there- with. If any such mutilated, lost, apparently destroyed or wrongfully taken Certificate has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Certificate, authorize the Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the -8- Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15 . Cancellation of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Certificates. 16. Forms. The form of the Certificates, including the form of the Registrar' s Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts_ of the State of Texas which shall be attached or affixed to the Certificates initialy issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: (Face of Certificate) UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION R- $ REGISTERED REGISTERED CITY OF BEAUMONT, TEXAS Combination Tax and Revenue Certificate of Obligation, Series 1988 INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP: May 1, 1988 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS -9- THE CITY OF BEAUMONT, TEXAS (the "City" ) , promises to pay to the Registered Owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this certificate at the principal corporate trust office of Texas Commerce Bank National Association, 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 May 1, 1988, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on September 1, 1988, and semiannually thereafter on each March 1 and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th calendar date of the month next preceding each interest payment date or, at the request and at the risk and expense of the registered owner, in such other manner as may be acceptable to the registered owner and the Registrar. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS CERTIFICATE 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 Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signa- ture of the City Clerk of the City, and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. (AUTHENTICATION CERTIFICATE) (SEAL) CITY OF BEAUMONT, TEXAS Mayor City Clerk (Back Panel of Certificate) -10- THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $3, 000, 000 (the "Certificates" ) , issued in accordance with the Constitution and laws of the State of Texas, particularly Sections 271 . 041-271 . 063, Texas Local Government Code, as amended, for the purpose of evidencing the indebtedness of the City for all or any part of the cost of purchasing equipment for authorized needs and purposes and the cost of professional services incurred in connection therewith, pursuant to an ordinance duly adopted by the City Council of the City (the "Ordinance" ) , which Ordinance is of record in the official minutes of the City Council . THIS CERTIFICATE is transferable only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his au- thorized representative, subject to the terms and conditions of the Ordinance. THE CERTIFICATES are exchangeable at the principal cor- porate trust office of the Registrar for Certificates in the principal amount of $5, 000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordi- nance unless this Certificate either (i ) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii ) is authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Certificates and will cause notice of any change of regis- trar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Certificate 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 Certificate have -11- been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied and ordered to be levied, within the limits prescribed by law, against all taxable property in the City. IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues" ) to be derived from the operation of the City' s waterworks and sewer system (the "System" ) , are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in -all respects to the pledge of such Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certif- icate and the series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System secured by a pledge of the Net Revenues of the System that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certif- icates of which it is a part. Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER' S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this certificate has been exam- ined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas . CO -12- WITNESS MY SIGNATURE AND SEAL this xxxxxxxxxx _ Comptroller of Public Accounts (SEAL) of the State of Texas Form of Registrar' s Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate, in exchange for or in replacement of a Certificate, Certificates or a portion of a Certificate or Certificates of a Series which was originally approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Texas Commerce Bank National Association Houston, Texas By Authorized Signature Date of Authentication Form of Assignment ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee)the within certificate and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. -13- DATED: Signature Guaranteed: _ Registered Owner y NOTICE: The signature above must correspond to the name of the registered owner as shown NOTICE: Signature must be on the face of this certifi- guaranteed by a member firm cate in every particular, of the New York Stock without any alteration, Exchange or a commercial enlargement or change bank or trust company. whatsoever. 17 . Legal Opinion; Cusip. The approving opinion of Vinson & Elkins, Houston, Texas, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 18. Interest and Sinking Fund; Tax Levy. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance shall be deposited, as collected, in a special fund to be designated "City of Beaumont, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1988, Interest and Sinking Fund" . While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in said City sufficient to pay the current interest on said Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures but never less than two percent (2%) of the original principal amount of the Certificates each year, 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 Certificates and to no other purpose. In addition, interest accrued from the date of the Certifi- cates until their delivery, and premium, if any, is to be deposited in such fund. -14- To pay the interest coming due on the Certificates on September 1, 1988, there is hereby appropriated from current funds, which are hereby certified to be on hand and avail- able for such purpose, an amount sufficient to pay such interest, and such amount shall be used for no other purpose. 19 . Pledge of Revenues. The Net Revenues of the System are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes mentioned in Section 18 of this Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of such Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of the Net Revenues to the payment of the Certificates, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and super- ior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. 20 . Further Proceedings. After the Certificates to be initially issued shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates to be initially issued and all pertinent records and proceed- ings to the Attorney General of Texas, for examination and approval . After the Certificates 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 Certificates to be initially issued, the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller' s Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. -15- 21 . Sale . The sale of the Certificates to &MJ4,j1ILLt 61��- / 4T1AowpAuv, '];V t. (the "Purchaser" ) , at the price of E plus ccr ed interest on the Certificates to �iU-S date hereby authorized, approved, ratified and con lrme , and the City Council hereby finds and Cu5 V1 determines that such price is the best reasonably obtainable y� Y'{+t,A %AvA by the City for the Certificates issued in accordance with I S7 Z d 1 this Ordinance. 22 . Books and Records. So long as any of the Certifi- cates are outstanding the City covenants and agrees that it will keep proper books of record and account in which full, true and correct entries will be made of all dealings, activities and transactions relating to the Certificates and the funds created pursuant to this Ordinance, and all books, documents and vouchers relating thereto shall at all reason- able times be made available for inspection upon request of any Owner. 23 . Tax Exemption. The City covenants that it shall make such use of the proceeds of the Certificates, regulate investments of proceeds thereof and take such other and further actions as may be required by Sections 103 and 141-150 of the Internal Revenue Code of 1986 (the "Code" ) and all applicable temporary, proposed and final regulations and procedures promulgated thereunder or promulgated under the Internal Revenue Code of 1954, to the extent applicable to the Code ( "Regulations" ) , necessary to assure that inter- est on the Certificates is excludable from gross income for federal income tax purposes. Without limiting the general- ity of the foregoing covenant, the City hereby covenants as follows: (a) The City will not use, nor permit to be used, more than 10 percent of the net proceeds of the Certificates in the trade or business of any person (other than use as a member of the general public) other than a governmental unit ( "private-use proceeds" ) . For purposes of this Section, the term "net proceeds" means the proceeds derived from the sale of the Certificates, plus interest earnings thereon, less any amounts deposited in a reasonably required reserve or replacement fund; the term "person" includes any individual, corporation, partnership, unincorporated association or any other entity -16- 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, means any activity other than an activity carried on by a governmental unit; (b) The City will not use, nor permit to be used, more than 5 percent of the net proceeds of the Certificates in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates ( "excess private-use proceeds" ) will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (c) Principal and interest on the Certificates will be paid solely out of ad valorem taxes received by the City and Net Revenues of the System. Further, no person using more than 10 percent of the net proceeds of the Certificates 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 percent of such prin- cipal and interest; (d) The City will not use, or permit to be used, an amount exceeding the lesser of (i ) $5, 000, 000 or (ii ) 5 percent of the net proceeds of the Certificates to finance loans to persons other than governmental units, directly or indirectly; (e) Based upon all facts and estimates now known or reasonably expected to be in existence on the date the Certificates are delivered, the City reasonably expects that the proceeds of the Certificates will not be used in a manner that would cause the Certificates or any portion thereof to be an "arbitrage bond" within the meaning of Section 148 of the Code; -17- (f) The City will monitor the yield on the in- vestment of the proceeds of the Certificates and moneys pledged to the repayment of the Certifi- cates and will restrict the yield on such invest- ments to the extent required by the Code or the Regulations. Without limiting the generality of the foregoing, the City will take appropriate steps to restrict the yield on all proceeds of the Certificates on hand on a date that is three years from the date of delivery of the Certificates to a yield which is not materially higher than the yield on the Certificates (in both cases calcu- lated in accordance with the Code and Regula- tions) ; (g) The City will not cause the Certificates to be treated as "federally guaranteed" obligations for purposes of Section 149(b) of the Code ( as may be modified in any applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department of the Treasury or the Internal Revenue Service with respect to "federally guaranteed" obligations described in Section 149(b) of the Code) ; and (h) The City will take all necessary steps to comply with the requirement that "excess arbitrage profits" earned on the investment of the "gross proceeds" of the Certificates (within the meaning of Section 148(f) (6) (B) of the Code) , if any, be rebated to the federal government. Specifically, the City will ( i ) maintain records regarding the investment of the gross proceeds of the Certifi- cates as may be required to calculate such "excess arbitrage profits" separately from records of amounts on deposit in the funds and accounts of the City which allocable to other certificate issues of the City or moneys which do not repre- sent gross proceeds of any certificate of the City, (ii ) calculate, not less often than annual- ly, the amount of "excess arbitrage profits, " if any, earned from the investment of the gross pro- ceeds of the Certificates and ( iii ) pay, not less often than every fifth anniversary date of the delivery of the Certificates, all amounts required -18- to be rebated to the federal government. Further, the City will not indirectly pay . any amount other- wise 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 Certificates that might result in a "prohibited payment" within the meaning of Temp. Treas. Reg. §1 . 103-15AT. (i ) The City will timely file a statement with the federal government setting forth the informa- tion required pursuant to section 149(e) of the Code. All officers, employees and agents of the City are autho- rized and directed to provide certifications of facts and estimates that are material to the reasonable expectations of the City regarding the foregoing as of the date the Certificates are delivered. In complying with the foregoing covenants, the City may rely from time to time upon an opinion issued by nationally-recognized bond counsel to the effect that any action by the City in reliance upon any interpretation of the Code or Regulations contained in such opinion will not cause interest on the Certificates to be includable in gross income for federal income tax purposes under existing law. 24. Qualified Tax-Exempt Obligations. The City hereby designates the Certificates as "qualified tax-exempt obliga- tions" for purposes of section 265(b) of the Code. In connection therewith, the City represents (a) that the aggregate amount of tax-exempt obligations issued by the City during calendar year 1988, including the Certificates, which have been designated as "qualified tax-exempt obligations" under section 265 (b) (3 ) of the Code does not exceed $10, 000, 000, and (b) that the reasonably anticipated amount of tax-exempt obligations which will be issued by the City during calendar year 1988, including the Certificates, will not exceed $10, 000, 000. For purposes of this section 24, the term "tax-exempt obligation" does not include "private activity bonds" within the meaning of section 141 of the Code, other than "qualified 501 (c) (3 ) bonds" within the meaning of section 145 of the Code. In addition, for purposes of this section 24, the City includes all governmental units which are "subordinate entities" of the City, within the meaning of section 265 (b) of the Code. -19- 25 . Official Statement. The City ratifies and confirms its prior approval of the foam and content of the Official Statement prepared in the initial offering and sale of the Certificates. The use of such Official Statement in the reoffering of the Certificates by the Purchser is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 26. Further Proceedings . The Mayor, City Clerk and other appropriate officials of the City are hereby author- ized and directed to do any and all things necessary and/or convenient to carry out the terms and purposes of this Ordinance. 27 . Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. 28. Emergency; Open Meeting. It is hereby officially found and determined that an emergency exists relating to the immediate preservation of the public peace, health, safety and welfare, because of the necessity of reviewing bids for purchase of the Certificates and acceptance of a bid or rejection of all bids on the day bids are received; that such emergency requires the adoption of this Ordinance and the holding of the meeting, or meetings, at which this Ordinance is adopted at the time or times and place held; the meeting, or meetings, at which this Ordinance was adopted was or were open to the public, and public notice of the time, place and purpose of said meeting, or meetings, was given, all as required by Vernon' s Ann. Tex. Civ. St. Article 6252-17, as amended; and that such notice or notices as given are hereby authorized, approved, adopted and ratified. 29 . Effective Date . This Ordinance shall be in force and effect from and after its final passage, and it is so ordered. -20- 30. Registrar. The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. PASSED AND APPROVED this 19th day of April, 1988. Mayor CITY OF BEAUMONT, TEXAS ATTEST: City Cl rk ° CT,Y OF BEAUMONT, TEXAS (SEAT,)' -21-