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HomeMy WebLinkAboutORD 96-67 r � 7 No. 4 ORDINANCE AUTHORIZING THE ISSUANCE OF THE CITY OF BEAUMONT, TEXAS, REFUNDING BONDS, SERIES 1996A;AUTHORIZING THE ADVANCE REFUNDING OF CERTAIN 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 § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (the "City") has heretofore issued its City of Beaumont, Texas, Refunding Bonds, Series 1987, and its City of Beaumont, Texas, Refunding Bonds, Series 1993 (collectively the "Refunded Bonds") and now desires to refund certain maturities of 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 Bonds. In addition, 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 "Bonds" or "Series 1996 Bonds" shall mean The City of Beaumont, Texas, Refunding Bonds, Series 1996A 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 March 1, 1997, and each September 1 and March 1 thereafter until maturity of such Bond. The term "Municipal Bond Guaranty Insurance Policy" shall mean the municipal bond guaranty insurance policy issued by the Insurer 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. The term "Refunded Bonds" shall mean the City's Refunding Bonds, Series 1987, maturing on March 1 in the years 1998 through 2001 in the principal amounts of $5,875,000, $6,310,000, $6,795,000 and $7,315,000, respectively, and the City's Refunding Bonds, Series 1993, maturing on March 1 in the years 2002 through 2005 in the principal amounts of$350,000, $375,000, $400,000 and$425,000, respectively. -2- 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 Wells Fargo Bank (Texas), National Association, Houston, Texas, and its successors in that capacity. The term "Report" shall mean the report of Deloitte & Touche, L.L.P., 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 "SEC" shall mean the United States Securities and Exchange Commission, and its successors. The term 'Underwriters" shall mean 3. Authorization. The Bonds shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of TWENTY-EIGHT MILLION EIGHT HUNDRED EIGHTY THOUSAND and no/100 Dollars ($28,880,000.00) for the purpose of (i) refunding certain 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 1996a", and shall be dated December 1, 1996. The Bonds shall bear interest from the later of December 1, 1996, 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 March 1, 1997, and semiannually thereafter on September 1 and March 1 of each year until maturity or earlier redemption. 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 March 1 in each of the years and in the amounts set out in such schedule. Bonds delivered in transfer of or in exchange for other Bonds shall be numbered in order of their authentication by the Registrar, shall be in the denomination of $5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered. Bond Year of Principal Interest Number Maturity Amount Rate R-1 1997 $1,040,000 R-2 1998 $6,540,000 R-3 1999 $6,830,000 R-4 2000 $7,150,000 R-5 2001 $7,320,000 -3- The Bonds shall not be subject to redemption prior to their scheduled maturities. G. 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 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, -4- 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 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 three business days 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 -5- the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of such Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding, provided that the Owner thereof shall have: (1) furnished to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Bond; (2) furnished such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) paid all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) met any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the City and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or 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 -6- 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 responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an J 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 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 -7- 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 DENOMINATION R- REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS Refunding Bond Series 1996A INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: December 1, 1996 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Beaumont, in the County of Jefferson, State of Texas (the "City"), promises to pay to the Registered Owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this bond at the principal corporate trust office of Wells Fargo Bank (Texas), 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 December 1, 1996, 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 March 1, 1997, 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 -8- request of the registered holder of$1,000,000 or more in aggregate principal amount of Bonds, the Registrar shall pay interest on such Bonds by wire transfer in immediately available funds to the account designated by such holder to the Registrar in writing at least 5 days before the Record Date for such payment. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor of the City and countersigned 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, TEXAS Mayor City Clerk (Back Panel of Bond) THIS BOND is one of a duly authorized issue of Bonds, aggregating $28,880,000 (the "Bonds"), issued pursuant to an ordinance adopted by the City Council on November 12, 1996 (the "Ordinance") for the purpose of refunding prior to maturity (i) the City's Refunding Bonds, Series 1987, maturing on March 1 in the years 1998 through 2001 and (ii) the City's Refunding Bonds, Series 1993, maturing on March 1 in the years 2002 through 2005. THE BONDS are not subject to redemption prior to maturity. 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. -9- 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-5 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-5 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 , 1996. -10- 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: AUTHENTICATION CERTIFICATE This bond is one of the bonds described in and delivered pursuant to the within-mentioned Ordinance. Wells Fargo Bank (Texas), National Association, Registrar By Authorized Signature Date of Authentication: (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 NOTICE: The signature above must correspond to the name of the registered NOTICE: Signature must be owner as shown on the face guaranteed by a member firm of this Bond in every of the New York Stock Exchange particular, without any or a commercial bank or trust alteration, enlargement or company. change whatsoever. (e) The following statement of insurance shall be printed on the back of each of the Bonds: -11- STATEMENT OF INSURANCE (the "Insurer") has issued a policy containing the following provisions, such policy being on file at the principal corporate trust office of Wells Fargo Bank (Texas), National Association, Houston, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to Wells Fargo Bank (Texas), National Association, Houston, Texas, or its successor (the "Paying Agent") of an amount equal to (i) the principal of(either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amount referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts". "Obligations" shall mean: $28,880,000 The City of Beaumont, Texas, Refunding Bonds, Series 1996A Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer 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 State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to State Street Bank and Trust Company, N.A. State Street Bank and Trust Company, N.A., shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure -12- against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligation. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504, and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or other evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. (Name of Insurer) 16. Legal Opinions; CUSIP. The approving opinions of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and Heard, Goggan, Blair & Williams, Beaumont, Texas, Co-Bond Counsel, and CUSIP Numbers may be printed on the Bonds, but errors or omissions in the printing of such opinions 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 1996A 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 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. To pay the interest coming due on the Bonds on September 1, 1996, there -13- is hereby appropriated from current funds on hand, which are certified to be on hand and available for such purpose, an amount sufficient to pay such interest, and such amount shall be used for no other purpose. 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. The Bonds are hereby sold and shall be delivered to the Underwriters at a price of $ representing the principal amount of Bonds less original issue discount and underwriters' discount plus accrued interest to the date of delivery, 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 do any and all things necessary or desirable to satisfy the conditions set out herein and to provide for the issuance and delivery of the Bonds. The purchase of and payment of the premium for the Municipal Bond Guaranty Insurance Policy in accordance with the terms of the commitment for such insurance presented to the City Council are hereby approved and authorized. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Municipal Bond Guaranty Insurance Policy, and the printing on the Bonds covered by the Municipal Bond Guaranty Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 20. Tax Exemption. (a) General Tax Covenant. 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 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 -14- 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) Use of Proceeds. 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 tern "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 Procedure 93-19, 1993-1, 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 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 -15- 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 costs of issuance of the Bonds and the premium on the Municipal Bond Guaranty Insurance Policy and to serve as a rounding amount. 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) No Federal Guaranty. 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) No-Arbitrage Covenant. 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 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) Arbitrage Rebate. 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 -16- 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 the Code and applicable Treasury Regulation. M Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the 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. (g) Use of Proceeds of Refunded Bonds. The City warrants and represents that 85% of the spendable proceeds of each series of bonds of which the Refunded Bonds were a part were used to carry out the governmental purposes of such bonds within 3 years from the date each such series was issued, and not more than 50% of the proceeds of each series of bonds of which the Refunded Bonds were a part were invested in non-purpose investments (as defined in Section 148 (f)(G)(A) of the Code) having a substantially guaranteed yield of 4 years or more. (h) No Device. The City represents and warrants that the Bonds are being issued exclusively to refund the Refunded Bonds and that (i) less than 25% of the debt service on the Refunded Bonds has been secured or derived, either directly or indirectly, by payments made with respect to property used in the trade or business of any person other than the City, and no proceeds of any such series of bonds have been used directly or indirectly to make or finance loans to any such person, (ii) the Refunded Bonds are being called for redemption and will be redeemed not later than the earliest date on which they may be redeemed, (iii) the Bonds are being issued solely for the purposes stated in Section 1 of this Ordinance, and the debt service savings achieved by the City are a result solely of the interest rates on the Bonds being lower than the interest rates on the Refunded Bonds, and in issuance of the Bonds the City has employed no "device" to obtain a material financial advantage (based on arbitrage), within the meaning of Section 149(d)(4) of the Code, apart from savings attributable to lower interest rates, and (iv) any remaining unspent proceeds of the Refunded Bonds will be invested so as to produce a yield not greater than the yield on the issue of Refunded Bonds from which such proceeds were derived. Section 21. Application of Proceeds. Proceeds from the sale of the Bonds, together with the sum of $ contributed by the City out of the debt service funds for the Refunded Bonds which became available as a result of the defeasance thereof, shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest in the amount of$ shall be deposited into the Interest and Sinking Fund for the Bonds; (b) To establish the escrow fund to refund the Refunded Bonds as provided in Section 24 below, and to the extent not otherwise paid, to pay all costs and expenses arising in connection with establishment of such escrow fund and the refunding of the Refunded Bonds: (i) $ from the sale of the Bonds shall be deposited with the -17- Escrow Agent pursuant to Section 24 below to purchase Restricted Acquired Obligations; (ii) $ , representing the sum contributed by the City out of the debt service funds for the Refunded Bonds shall be deposited with the Escrow Agent pursuant to Section 24 below to purchase Other Acquired Obligations; and (iii) $ from the sale of the Bonds shall be deposited with the Escrow Agent pursuant to Section 24 below as the initial cash deposit under the Escrow Agreement. (c) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds, including the premium of $ for the Municipal Bond Guaranty Insurance Policy, not later than 90 days after such issuance; and (d) The sum of $ from the sale of the Bonds shall be used as a rounding amount and shall be deposited in the Interest and Sinking Fund for the Bonds; and (e) 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, any 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 substantially the form attached hereto as Exhibit 'B" (with such changes to this form as any official of the City may approve): -18- Certificates of Bonds To Be Redeemed Redemption Date The City of Beaumont, Texas, Refunding Bonds, Series 1987, Maturities 1998 through 2001 The City of Beaumont, Texas, Refunding Bonds, Series 1993, Maturities 2002 through 2005 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 Wells Fargo Bank (Texas), National Association, Houston, Texas, as Escrow Agent, which shall be substantially in the form attached hereto as Exhibit "C", 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 Deloitte & Touche, L.L.P., in the Report, (b) to maximize the ity'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 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 Refundin . No money of the City other than proceeds of the Bonds and other than the contribution of $240,000.00 out of the debt service funds for the Refunded Bonds shall be used to refund the Refunded Bonds. 26. Purchase of Escrowed Securities. To assure the purchase of open market securities described as Escrowed Securities in the Escrow Agreement, the Mayor, the City's Finance Officer, and the Escrow Agent are hereby authorized to subscribe for, agree to purchase, and purchase such open market securities 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 Chapter 551 of the Texas Government Code Annotated, Vernon's 1994, 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 -19- 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. R_ egistrar. 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 covenants that at all times while any Bonds are outstanding, it will provide a bank, trust company, financial institution or other entity duly qualified and authorized to act as Registrar for the Bonds. The City reserves the right to replace the Registrar or its successor at any time on not less than sixty (60) days' written notice to the Registrar, so long as any such notice is effective not less than sixty (60) days prior to the next succeeding principal or interest payment date on the Bonds. 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, 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. Any successor Registrar shall be either a national or state banking institution and a corporation or association organized and doing business under the laws of the United States of America or any State authorized under such laws to exercise trust powers and subject to supervision or examination by Federal or State authority. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 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 shall agree to comply with the following provisions: (a) In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the Obligations, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent shall -20- immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. (b) If the deficiency is made up in whole or in part prior to or on the payment date, the Paying Agent shall so notify the Insurer or its designee. (c) In addition, if the Paying Agent has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligation to a trustee in Bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. (d) The Paying agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent shall (a) execute and deliver to State Street Bank and Trust Company, N.A., or its successors under the Policy (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Holders; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent shall (a) execute and deliver to the Insurance Paying Agent in the form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Holders (and not as Paying Agent) J accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent, and(c) disburse the same to such Holders. (e) Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligation and claims for the -21- interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. (f) Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments, directly or J (as by paying through the Paying Agent), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Insurer, with interest thereon as provided and solely from the sources stated in this Ordinance and the Obligations; and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Ordinance and the Obligation, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. (g) In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. (h) Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. (i) The Insurer shall receive notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. 0) The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis, copies of the Insurer's audited financial statements and Annual Budget. (k) Any notice that is required to be given to a holder of the Obligation or to the Paying Agent pursuant to the Ordinance shall also be provided to the Insurer. All notices required to be given to the Insurer under the Ordinance shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance. 0) All capitalized terms used in this Section 32 and not otherwise defined in this Ordinance shall have the meanings set forth in the Municipal Bond Guaranty Insurance Policy. 33. Severabilitv. If any Section, paragraph, clause or provision of this -22- 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. 34. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. 35. Additional Obligations The City undertakes and agrees for the benefit of the holders of the Bonds to provide directly, on or before six months after the end of the City's fiscal year, which fiscal year presently ends on September 30, a. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, annual financial information (which may be unaudited) and operating data regarding the City for fiscal years ending on or after January 1, 1996 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: THE BONDS - Description of the Bonds SELECTED FINANCIAL INFORMATION PRO-FORMA DEBT SERVICE STATEMENT DEBT STATEMENT- General - Bonded Indebtedness - Revenue Support of Ad Valorem Tax Debt - Estimated Overlapping Debt - Debt Ratios - Short Term Debt TAX DATA - General - Authority for Ad Valorem Taxation - Historical Analysis of Ad Valorem Taxation - Estimated Overlapping Taxes Taxation - Sales Tax - Industrial District Contracts - Tax Increment Reinvestment Zone SELECTED FINANCIAL DATA- Historical Operations of the City's General Fund - General Fund and Debt Service Fund Balance for the Past Six Fiscal Years - Financial Statements (Appendix B) -23- ADMINISTRATION -Mayor and City Council OF THE CITY - Administration - Consultants b. to each nationally recognized municipal securities information repository and to the appropriate state information depository, if any, audited financial statements for the City for fiscal years ending on or after January 1, 1996, when available, if the City commissions an audit and it is completed by the required time; provided that if audited statements are not commissioned or are not available by the required time, the City will provide unaudited statements when and if they become available; C. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of any of the following events with respect to the Bonds, if material within the meaning of the federal securities laws to a decision to purchase or sell Bonds: L Principal and interest payment delinquencies; ii. Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; IV. Unscheduled draws on credit enhancements reflecting financial difficulties; V. Substitution of credit or liquidity providers, or their failure to perform; V1_ Adverse tax opinions or events affecting the tax-exempt status of the Bonds; vii. Modifications to rights of Bondholders; viii. Bond calls; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the securities; xi. Rating changes; and d. in a timely manner, to each nationally recognized municipal securities information repository or to the Municipal Securities Rulemaking Board, and to the appropriate state information depository, if any, notice of a failure of the City to provide required annual financial information and operating data, on or before six months after the end of the City's fiscal year. These undertakings and agreements are subject to appropriation of necessary funds and to applicable legal restrictions, if any. The accounting principles pursuant to which the City's financial statements are currently prepared are generally accepted accounting principles set out by the Government Accounting Standards Board, and, subject to changes in applicable law or -24- regulation, such principles will be applied in the future. If the City changes its fiscal year, it will notify each nationally recognized municipal securities information repository and the appropriate state information depository of the change (and of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide annual financial information. The City's obligation to update information and to provide notices of material events shall be limited to the agreements herein. The City shall not be obligated to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, prospects and shall not be obligated to update any information that is provided, except as described herein. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds at any future date. THE CITY DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL OWNERS OF BONDS MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH ITS AGREEMENT. No default by the City with respect to its continuing disclosure agreement shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The City may amend its continuing disclosure obligations and agreement in this Section 35 to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status or type of operations of the City, if the agreement, as amended, would have permitted the Underwriter to purchase or sell the Bonds in compliance with SEC Rule 15c2-12, taking into account any amendments or interpretations of such rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Bonds consent or any person unaffiliated with the City (such as nationally recognized bond counsel) determines the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. The City may also amend or repeal the obligations and agreement in this Section 35 if the SEC amends or repeals the applicable provisions of Rule 15c2-12 or a court of final jurisdiction determines that such provisions are invalid, and the City may amend the agreement in its discretion in any other circumstance or manner, but in either case only to the extent that its right to do so would not prevent the Underwriters from lawfully purchasing or reselling the Bonds in the primary offering of the Bonds in compliance with Rule 15c2-12. If the City amends its agreement, it must include with the next financial information and operating data provided in accordance with its agreement an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of information and operating data so provided. The City's continuing obligation to provide annual financial information and -25- operating data and notices of events will terminate if and when the City no longer remains an 'obligated person" (as such term is defined in SEC Rule 15c2-12) with respect to the Bonds. -26- PASSED AND APPROVED this 12th day of November, 1996. VV Mayor THE CITY OF BEAUMONT, TEXAS ATTEST: City Clerk THE CITY OF BEAUMONT, TEXAS (C- TOM M -27- Exhibit "A" - Form of Notice of Redemption Exhibit "B" - Escrow Agreement -28- EXHIBIT "A" FORM OF NOTICE OF REDEMPTION NOTICE OF PRIOR REDEMPTION THE CITY OF BEAUMONT, TEXAS, REFUNDING BONDS, SERIES 1987, maturing on March 1 in each of the years 1998 through 2001 in the aggregate principal amount of$ THE CITY OF BEAUMONT, TEXAS, REFUNDING BONDS, SERIES 1993, maturing on March 1 in each of the years 2002 through 2005 in the aggregate principal amount of$ NOTICE IS HEREBY GIVEN that the City of Beaumont, Texas, has called the above bonds for redemption on . Such bonds will be redeemed at Wells Fargo Bank (Texas), National Association, Houston, Texas, where due provision shall be made to pay the redemption price of the principal amount of such bonds plus accrued interest to the date fixed for redemption. Such bonds shall not bear interest after BY ORDINANCE of the City of Beaumont, Texas, adopted November 12, 1996. David W. Moore, Mayor The City of Beaumont, Texas EXHIBIT 'B" ESCROW AGREEMENT