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HomeMy WebLinkAboutORD 97-36 -- J. � No. 3 ORDINANCE AUTHORIZING THE ISSUANCE OF $3,100,000 THE CITY OF BEAUMONT,TEXAS, CONTRACTUAL OBLIGATIONS,SERIES 1997; 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") is a political subdivision of the State of Texas and was incorporated pursuant to the general laws of the State of Texas and is operating under the general laws relating to Home Rule Cities and the Home Rule Charter of the City; and WHEREAS, the Public Property Finance Act, Section 271.001, et seq., Texas Local Government Code (the "Act"), authorizes the City to execute, perform and make payments under contracts with any persons for the use, purchase or other acquisition of any personal property, as defined in the Act, on the terms considered by the City Council of the City to be appropriate;and WHEREAS, the City desires to purchase and acquire the personal property described in Exhibit"A" attached hereto (the "Property"), which the City Council of the City finds to be necessary, useful or appropriate to one or more purposes of the City; and WHEREAS, the City Council of the City finds it necessary, useful and appropriate to adopt this Ordinance and issue the Contractual Obligations herein authorized, as permitted by the Act; THAT:NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS, 1. Findings and Determinations. The City Council hereby finds and determines that the facts and recitations contained in the preamble of this Ordinance are 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 "Business Day" shall mean any day which is not a Saturday, a Sunday, a legal holiday or a day on which the Registrar is authorized by law or executive Ordinance to close. The term "City" shall mean The City of Beaumont,Texas. The term "Contractual Obligation" or "Contractual Obligations" shall mean any contractual obligation or all contractual obligations, as the case may be, of the City authorized in this Ordinance, unless the context clearly indicates otherwise. \\AUTUMN\C\FOX DOCUMENTS\BOND\BEAUMONT CONTRACTUAL OBLIG.1997XBOND ORDINANCE.DOC The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Comptroller"shall mean the Comptroller of Public Accounts of the State of Texas. The term "Debt Service Fund" shall mean the interest and sinking fund established by the City pursuant to Section 20 of this Ordinance. The term "DTC" shall mean The Depository Trust Company of New York, New York, or any successor securities depository. The term "DTC Participant" shall mean brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants. The term "Interest Payment Date", when used in connection with any Contractual Obligation, shall mean October 1, 1998, and each April 1 and October 1 thereafter until the maturity of such Contractual Obligation. The term "Ordinance" as used herein and in the Contractual Obligations shall mean this ordinance authorizing the issuance of the Contractual Obligations. The term "Owner" shall mean any person or entity who shall be the registered owner of any outstanding Contractual Obligations. The term "Paying Agent" shall mean the Registrar when acting in its capacity as paying agent for the Contractual Obligations. The term "Purchaser"shall mean First Bank and Trust. The term "Record Date" shall mean, for any Interest Payment Date, the last Business Day of the calendar month next preceding each Interest Payment Date. 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 of Contractual Obligations registered to, each Owner. The term "Registrar"shall mean Texas Commerce Bank National Association and its successors in that capacity. 3. Authorization. The Contractual Obligations shall be issued in fully registered form, without coupons, in the total aggregate principal amount of THREE MILLION ONE HUNDRED THOUSAND DOLLARS ($3,100,000.00) for the purpose of paying all or a portion of the City's contractual obligations to be incurred in connection with the acquisition or purchase of the Property, in accordance with the provisions of the Act. Proceeds of the Contractual Obligations shall also be used to pay the costs of issuance thereof and to reimburse the City for funds already spent on acquisition of the -2- Property. The City hereby certifies that all of the proceeds of the Contractual Obligations shall be expended to acquire the Property and to pay issuance costs within 3 years from the date hereof. The term "Contractual Obligations", as used in this Ordinance, shall mean and include, collectively, the contractual obligations initially issued and delivered pursuant to this Ordinance and all substitute contractual obligations exchanged therefor, as well as all other substitute contractual obligations and replacement obligations issued pursuant hereto, and the term "Contractual Obligation"shall mean any of the Contractual Obligations. 4. Designation, Date and Interest Payment Date. The Contractual Obligations shall be designated as "THE CITY OF BEAUMONT, TEXAS, CONTRACTUAL OBLIGATIONS, SERIES 1997', and shall be dated September 1, 1997. The Contractual Obligations shall bear interest payable on each Interest Payment Date, from the later of September 1, 1997, 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. 5. Initial Contractual Obligations, Numbers and Denominations. The Contractual Obligations 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 Contractual Obligations shall mature on October 1 in each of the years and in the amounts set out in such schedule. Contractual Obligations delivered in transfer of or in exchange for other Contractual Obligations shall be numbered in Ordinance 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 Contractual Obligation or Contractual Obligations in lieu of which they are delivered. Obligation Year of Principal Interest Number Maturily Amount Rate R-1 1998 $575,000 4.05% R-2 1999 $745,000 4.30% R-3 2000 $640,000 4.40% R-4 2001 $620,000 4.50% R-5 2002 $520,000 4.60% 6. Execution of Contractual Obligations: Seal. The Contractual Obligations shall be signed by the Mayor or Mayor Pro Tern of the City and countersigned by the City Clerk or Deputy 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 Contractual Obligations shall have the same effect as if each of the Contractual Obligations had been signed manually and in person by each of said officers, and such facsimile seal on the Contractual Obligations shall have the same effect as if the official seal of the City had been manually impressed upon each of the Contractual Obligations. If any officer or official of the City whose manual or facsimile signature shall appear on the Contractual Obligations shall cease to be such -3- officer or official before the authentication of such Contractual Obligations or before the delivery of such Contractual Obligations, 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 Contractual Obligations 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 18 of this Ordinance shall be attached or affixed to the Contractual Obligations to be initially issued. 8. Authentication. Except for the Contractual Obligations to be initially issued, which need not be authenticated by the Registrar, only such Contractual Obligations which bear thereon a certificate of authentication, substantially in the form provided in Section 18 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 Contractual Obligations so authenticated were delivered by the Registrar hereunder. 9. Appointment of Registrar; Payment of Principal and Interest. The Registrar is hereby appointed as the registrar and paying agent for the Contractual Obligations. The principal of and premium, if any, on the Contractual Obligations 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 Contractual Obligation 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. Any accrued interest payable at maturity of a Contractual Obligation shall be paid upon presentation and surrender of such Contractual Obligation at the principal corporate trust office of the Registrar. At the request of the registered Owner of $1,000,000 or more in aggregate principal amount of Contractual Obligations, the Registrar shall pay interest thereon by wire transfer in immediately available funds to the account designated by such Owner to the Registrar in writing at least 5 days before the Record Date for such payment. If the date for payment of the principal of, premium, if any, or interest on any Contractual Obligation is not a Business Day, then the date for such payment shall be the next succeeding Business Day with the same force and effect as if made on the date such payment was originally due. 10. Successor Registrars. The City covenants that at all times while any Contractual Obligations are outstanding it will provide a national or state banking corporation organized and doing business under the laws of the United States or any State, with trust powers and subject to supervision or examination by Federal or State authority to act as Registrar for the Contractual Obligations. The City reserves the right to -4- change the Registrar for the Contractual Obligations on not less than 30 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 Contractual Obligations. 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 Contractual Obligation is not paid on any Interest Payment Date and continues unpaid for 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 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 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 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 Contractual Obligation is registered as the absolute owner of such Contractual Obligation for the purpose of making and receiving payment of principal of or interest on such Contractual Obligation and for all other purposes, whether or not such Contractual Obligation 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 Contractual Obligation in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Contractual Obligation to the extent of the sums paid. Amounts held by the Registrar which represent principal of, premium, if any, or interest on the Contractual Obligations 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 Registrar in accordance with the provisions of Texas law, including to the extent applicable, Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer and Exchange. So long as any Contractual Obligations 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 Contractual Obligations in accordance with the terms of this Ordinance. Each Contractual Obligation 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 or other transfer documentation duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar and the City. Upon due presentation of any Contractual Obligation in proper -5- form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within 3 Business Days after such presentation, a new Contractual Obligation or Contractual Obligations, 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 Contractual Obligation or Contractual Obligations so presented. All Contractual Obligations shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Contractual Obligation or Contractual Obligations of like maturity and interest rate and in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Contractual Obligation or Contractual Obligations presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Contractual Obligations in accordance with the provisions of this Section 13. Each Contractual Obligation delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Contractual Obligation or Contractual Obligations in lieu of which such Contractual Obligation is delivered. The City or the Registrar may require the Owner of any Contractual Obligation 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 Contractual Obligation. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. 14. Mutilated, Lost or Stolen Contractual Obligations. Upon the presentation and surrender to the Registrar of a mutilated Contractual Obligation, the Registrar shall authenticate and deliver in exchange therefor a replacement Contractual Obligation of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Contractual Obligation 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 Contractual Obligation has been acquired by a bona fide purchaser, shall authorize and the Registrar shall authenticate and deliver a replacement Contractual Obligation of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Contractual Obligation 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 Contractual Obligation, before any replacement Contractual Obligation 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 Contractual Obligation; (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 -6- 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 Contractual Obligation, a bona fide purchaser of the original Contractual Obligation in lieu of which such replacement Contractual Obligation was issued presents for payment such original Contractual Obligation, the City and the Registrar shall be entitled to recover such replacement Contractual Obligation 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 Contractual Obligation has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Contractual Obligation, authorize the Registrar to pay such Contractual Obligation. Each replacement Contractual Obligation delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Contractual Obligation or Contractual Obligations in lieu of which such replacement Contractual Obligation is delivered. 15. Cancellation of Contractual Obligations. All Contractual Obligations paid in accordance with this Ordinance, and all Contractual Obligations in lieu of which exchange Contractual Obligations or replacement Contractual Obligations are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment, exchange or replacement. The Registrar shall furnish the City with appropriate certificates of destruction of such Contractual Obligations. 16. Special Election for Uncertificated Contractual Obligations. Notwithstanding any other provision hereof, upon initial issuance of the Contractual Obligations but at the sole election of the Purchaser, the ownership of the Contractual Obligations 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 Contractual Obligations shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Contractual Obligations shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the purchaser shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Contractual Obligations. With respect to Contractual Obligations registered in the name of Cede & Co., as nominee of DTC, the City and the Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Contractual Obligations. 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 -7- to any ownership interest in the Contractual Obligations, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Contractual Obligation, as shown on the Register, of any notice with respect to the Contractual Obligations, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner of a Contractual Obligation, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on the Contractual Obligations. 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 Contractual Obligation is registered in the Register as the absolute Owner of such Contractual Obligation for the purpose of payment of principal of, premium, if any, and interest on the Contractual Obligations,for the purpose of all matters with respect to such Contractual Obligation, for the purpose of registering transfers with respect to such Contractual Obligation, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Contractual Obligations only to or upon the Ordinance 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 Contractual Obligations to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a Contractual Obligation 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 Contractual Obligations that they be able to obtain certificated Contractual Obligations, or if DTC Participants owning at least 50% of the Contractual Obligations 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 Contractual Obligations, 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 Contractual Obligations to such successor securities depository or (ii) notify DTC of the availability through DTC of Contractual Obligations and transfer one or more separate Contractual Obligations to DTC Participants having Contractual Obligations credited to their DTC accounts. In such event, the Contractual Obligations 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 Contractual Obligations shall designate, in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Contractual Obligations 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 Contractual Obligations, and all notices with respect to the Contractual Obligations, shall -8- be made and given, respectively, in the manner provided in the Letter of Representations from the City to DTC. 17. Redemption. The Contractual Obligations shall not be subject to redemption prior to maturity. 18. Form. (a) The Contractual Obligations shall be in substantially the following form, including the form of Registrar's Certificate of Authentication, the form of Assignment, the form of Registration Certificate of the Comptroller of Public Accounts, and the form of the statement of insurance shall be, respectively,substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: FORM OF CONTRACTUAL OBLIGATION UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION R- $ REGISTERED REGISTERED THE CITY OF BEAUMONT,TEXAS CONTRACTUAL OBLIGATION, SERIES 1997 INTEREST RATE: MATURITY DATE: DATED DATE: September 1, 1997 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS 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 Contractual Obligation at the principal corporate trust office of Texas Commerce Bank National Association, Houston, Texas, or its successor (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 September 1, 1997, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Contractual Obligation shall be paid by check payable on April 1 and October 1, beginning on October 1, 1998, mailed to the registered owner of record as shown on the books of registration -9- kept by the Registrar as of the last business day of the calendar month next preceding each interest payment date (the "Record Date"). At the request of the registered owner of $1,000,000 or more in aggregate principal amount of Contractual Obligations, the Registrar shall pay any interest on such Contractual Obligations by wire transfer in immediately available funds to the account designated by such Owner to the Registrar in writing at least 5 days before the Record Date for such payment. IN CONSIDERATION of the Registered Owner's acceptance hereof, which acceptance shall constitute the Registered Owner's assent hereto and to the terms and conditions of the Ordinance of the City Council of the City dated August 5, 1997, authorizing the issuance of this Contractual Obligation (the "Ordinance"), the City hereby unilaterally contracts with such Registered Owner that it will utilize the net proceeds of the Contractual Obligations, after payment of the costs of issuance related thereto, to acquire or purchase the Property (as defined in the Ordinance) in accordance with the provisions of the Ordinance. The City covenants with the Registered Owner of this Contractual Obligation that on or before each date for the payment of principal of or interest on this Contractual Obligation it will make available to the Registrar, from the debt service fund created by the Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Contractual Obligations, when due. THIS CONTRACTUAL OBLIGATION is one of a duly authorized issue of contractual obligations, aggregating $3,100,000, issued pursuant to the Ordinance and Section 271.001 et seq., Texas Local Government Code, as amended (the "Act"), for the purpose of paying all or a portion of the City's contractual obligations to be incurred in connection with the acquisition or purchase of the Property in accordance with the provisions of the Act. Proceeds of the Contractual Obligations also shall be used to pay the costs of issuance thereof and to reimburse the City for funds already spent on acquisition of the Property. THIS CONTRACTUAL OBLIGATION is not subject to redemption prior to maturity. THIS CONTRACTUAL OBLIGATION 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 CONTRACTUAL OBLIGATIONS ARE EXCHANGEABLE at the principal corporate trust office of the Registrar for contractual obligations in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THIS CONTRACTUAL OBLIGATION SHALL NOT BE VALID OR OBLIGATORY for any purpose or be entitled to any benefit under the Ordinance unless this Contractual Obligation 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 Contractual Obligation, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. -10- THE CITY HAS COVENANTED in the Ordinance that it will at all times provide a legally qualified registrar for the Contractual Obligations and will cause notice of any change of registrarto be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Contractual Obligation 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 Contractual Obligation 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 Contractual Obligation, 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. IN WITNESS WHEREOF, this Contractual Obligation 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 Contractual Obligation. THE CITY OF BEAUMONT,TEXAS Mayor City Clerk (SEAL) -11- Form of Registration Certificate of Comptrollerof Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Contractual Obligation has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Contractual Obligation has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this 11997_ Comptrollerof Public Accounts (SEAL) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE This Contractual Obligation is one of the Contractual Obligations described in and delivered pursuant to the within-mentioned Ordinance. Texas Commerce Bank National Association Paying Agent/Registrar 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 Tax Identification Number of Transferee) the within Contractual Obligation and hereby irrevocably constitutes and appoints attorney to transfer -12- said Contractual Obligation 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 owner as shown on the NOTICE: Signature must be face of this Contractual Obligation guaranteed by a member in every particular,without any firm of the New York Stock alteration,enlargement or change Exchange or a commercial whatsoever. bank or trust company. 19. Legal Opinion; CUSIP. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Contractual Obligations, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Contractual Obligations. 20. Debt Service Fund: Tax Lew. A special fund to be designated "The City of Beaumont, Texas, Contractual Obligations, Series 1997 Debt Service Fund" is hereby created, and the proceeds from all taxes levied, assessed and collected for and on account of the Contractual Obligations authorized by this Ordinance shall be deposited, as collected, in such fund. While the Contractual Obligations 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 Contractual Obligations as the same becomes due and to pay each installment of the principal of the Contractual Obligations as same matures, full allowance being made for delinquencies and costs of collections, and said taxes are hereby irrevocably pledged to the payment of the interest on and principal of the Contractual Obligations, within the limits prescribed by law, and to no other purpose. Such rate and amount of the ad valorem tax is hereby levied and ordered to be levied, within the limits prescribed by law, against all taxable property in the City for each year while any of the Contractual Obligations are outstanding and unpaid; and such tax shall be assessed and collected each such year. 21. Further Proceedings. After the Contractual Obligations to be initially issued have been executed, it shall be the duty of the Mayor of the City to deliver the Contractual Obligations 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 Contractual Obligations to be initially issued 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 Contractual Obligations to be -13- initially issued, the Comptroller of Public Accounts (or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein and the seal of the Comptroller shall be impressed, or placed in facsimile,thereon. 22. Sale. Subject to the approving opinion as to the legality of the Contractual Obligations of the Attorney General of the State of Texas, and of Orgain, Bell & Tucker, L.L.P., Bond Counsel, the Contractual Obligations are hereby sold and approved and authorized to be sold to the Purchaser pursuant to the terms of that certain Purchase Contract attached hereto as Exhibit "B" and incorporated herein by reference (the "Purchase Contract"). As provided in the Purchase Contract, the Contractual Obligations are hereby sold and shall be delivered to the Purchaser for a price of $3,100,000.00, representing the principal amount of the Contractual Obligations, plus the Purchaser shall also pay to the City the accrued interest to the date of delivery. The purchase price and terms of the Purchase Contract 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 in the Purchase Contract and to provide for the issuance and sale of the Certificates. The City's execution and delivery of the Purchase Contract with the Purchaser is hereby approved, authorized and ratified. 23. Tax Exemption. (a) General Tax Covenant. The City intends that the interest on the Contractual Obligations 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 Contractual Obligations 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 23; provided, however, that the City shall not be required to comply with any particular requirement of this Section 23 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 Contractual Obligations or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 23 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 23. (b) Use of Proceeds. The City covenants and agrees that its use of Net Proceeds of the Contractual Obligations(as hereinafter defined)will at all times satisfy the following requirements: (i) The City will limit the amount of original or investment proceeds of the Contractual Obligations 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 Contractual -14- Obligations ("private-use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association,or any other entity capable of carrying on a trade or business; and the term "trade.or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Contractual Obligations in any manner contrary to the guidelines set forth in Revenue Procedure 93-19, 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 will not permit more than 5% of the Net Proceeds of the Contractual Obligations 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 for which the Contractual Obligations have been issued. Further, the amount of private-use proceeds of the Contractual Obligations in excess of 5% of the Net Proceeds thereof("excess private-use proceeds")will not exceed the proceeds of the Contractual Obligations expended for the governmental purpose of the Contractual Obligations to which such excess private-use proceeds relate. (iii) The City will not permit an amount of proceeds of the Contractual Obligations exceeding the lesser of (a) $5,000,000 or (b) 5% of the Net Proceeds of the Contractual Obligations to be used, directly or indirectly, to finance loans to persons other than a governmental unit. When used in this Section 23, the term "Net Proceeds of the Contractual Obligations" shall mean the proceeds from the sale of the Contractual Obligations, including investment earnings on such proceeds, less accrued interest. (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 Contractual Obligations 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) Contractual Obligations Are Not Hedge Contractual Obligations. The City covenants and agrees that not more than 50 percent of the proceeds of the Contractual Obligations will be invested in nonpurpose investments(as defined in Section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of Section 149(g)(3)(A)(ii)of the Code, and the City reasonably expects that at least 85 percent of the spendable proceeds of the Contractual Obligations will be used to carry out the governmental purposes of the Contractual Obligations within the three-year period beginning on the date of issuance thereof. (e) 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 Contractual Obligations are delivered, the City will reasonably expect that the proceeds of the Contractual Obligations will not be used in a manner that would cause the Contractual Obligations to be "arbitrage bonds" -15- 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 Contractual Obligations, including interest or other investment income derived from Contractual Obligation proceeds, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Contractual Obligations will not be "arbitrage bonds"within the meaning of Section 148(a) of the Code and applicable regulations thereunder. (f) 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 Contractual Obligations (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 Contractual Obligations as may be required to calculate the amount earned on the investment of the gross proceeds of the Contractual Obligations 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 rebatable amount earned from the investment of the gross proceeds of the Contractual Obligations, and (iii) pay, not less often than every 5th anniversary date of the delivery of the Contractual Obligations,or on such other dates as are permitted or required by applicable regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Contractual Obligations that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (g) 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 Contractual Obligations are issued, an information statement concerning the Contractual Obligations, all under and in accordance with Section 149(e) of the Code and applicable regulations thereunder. (h) Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of this Section 23 shall survive the defeasance and discharge of the Contractual Obligations. 24. Qualified Tax-Exempt Obligations. The City hereby designates the Contractual Obligations as qualified tax-exempt obligations for purposes of Section 265(b)(3)of the Code. The Contractual Obligations issued are not"private activity bonds" as defined by Section 141 of the Code. After the Contractual Oblgations are issued, the City and any governmental entities controlled by it will not have designated more than $10,000,000.00 of obligations issued during calendar year 1997 as qualified tax-exempt obligations and the City and any governmental entities controlled by it reasonably anticipate that the total amount of tax-exempt obligations to be issued by the City during calendar year 1997 will not exceed $10,000,000.00. -16- 25. Use of Contractual Obligations Proceeds. The proceeds of the issuance of the Contractual Obligations, other than proceeds representing accrued interest, shall be used for the purposes for which the Contractual Obligations are authorized to be issued. Proceeds representing accrued interest shall be deposited in the Debt Service Fund and used to pay the first interest payment due on the Contractual Obligations. 26. Defeasance. The City may defease the provisions of this Ordinance and discharge its obligation to the Owners of any or all of the Contractual Obligations to pay the principal of and interest thereon in any manner permitted by law, including by depositing with the Registrar, with any national bank having trust powers and having combined capital and surplus of at least $50,000,000, or with the State Treasurer of the State of Texas, either(a) cash in an amount equal to the principal amount of and interest thereon to the date of maturity or (b) pursuant to an escrow or trust agreement, cash or direct obligations of the United States of America, including obligations the principal of and interest on which are guaranteed by the United States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal of and interest thereon to the date of maturity. Upon such deposit, the Contractual Obligations shall no longer be regarded as outstanding or unpaid. Any surplus amount not required to accomplish such defeasance shall be returned to the City. 27. Remedies of Owners. In addition to all rights and remedies of any Owner of the Contractual Obligations provided by the laws of the State of Texas, the City covenants and agrees that in the event the City defaults in the payment of the principal of or interest on the Contractual Obligations when due, or fails to make the payments required by this Ordinance, the Owners of the Contractual Obligations shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the City and other officers and officials of the City to observe and perform any covenant, contractual obligation or condition prescribed in this Ordinance. No delay or omission by any Owner to exercise any right or power accruing upon default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right or power may be exercised from time to time and as often as may be deemed expedient. The specific remedies set forth in this Ordinance shall be available to the Owners of the Contractual Obligations and shall be cumulative of all other existing remedies. 28. Security for Funds. All deposits authorized or required by this Ordinance shall be secured to the fullest extent required by law for the security of public funds. 29. Investments. (a) The City may invest the proceeds of the Contractual Obligations (including investment earnings thereon) as authorized by law; provided, however, that the City hereby covenants that the proceeds of the sale of the Contractual Obligations shall be used as soon as practicable for the purposes for which the Contractual Obligations are issued. (b) Amounts received from the investment of the proceeds of the Contractual Obligations,to the extent not required to be paid to the United States Treasury in respect of rebatable arbitrage as required by Section 148 of the Code, may be used for the -17- purposes for which the Contractual Obligations are issued or deposited to the Debt Service Fund. 30. City Officers' Duties. (a) The Mayor and City Clerk of the City are hereby instructed and directed to do any and all things necessary in reference to the operation of the City and to make money available for the payment of the Contractual Obligations in the manner provided by law. (b) The Mayor and City Clerk of the City and other officers and officials of the City are authorized to execute the Certificate to which this Ordinance is attached on behalf of the City and to do any and all things proper and necessary to carry out the intent hereof. 31. Contractual Undertaking with Registered Owner. The City hereby, and by the acceptance of each of the Contractual Obligations, contractually obligates and commits itself to utilize the net proceeds available from the issuance and delivery of the Contractual Obligations, after payment of costs of issuance related thereto, for the acquisition or purchase of the Property in accordance with terms and provisions of this Ordinance. 32. Notice. Any notice, demand, direction, request or other instrument authorized or required by this Ordinance to be given to or filed with the City shall be deemed to have been given only upon receipt. Any notice shall be sent by first class mail, postage prepaid, to the address specified below or, to such other address as may be designated in writing by the City: The City of Beaumont,Texas P.O. Box 3827 Beaumont,Texas 77704 Attention: City Manager 33. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor and City Clerk of the City and all other appropriate officers, officials and agents of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the terms and purposes of this Ordinance. 34. Registrar. The form of agreement setting forth the duties of the Registrar has been presented to the City Council and is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City, with such changes and modifications thereto as any officers and agents of the City may determine to be necessary or appropriate. 35. No Personal Liability. No recourse shall be had for payment of the principal of or interest on any Contractual Obligations or for any claim based thereon, or on this Ordinance, against any City Council member or employee of the City or any person executing any Contractual Obligations. -18- 36. 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 the Texas Government Code. 37. Additional Obligations. To the extent required by applicable law, the City undertakes and agrees for the benefit of the holders of the Contractual Obligations 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, 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; b. 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 Contractual Obligations, if material within the meaning of the federal securities laws to a decision to purchase or sell the Contractual Obligations: i. Principal and interest payment delinquencies; ii. Non-payment related defaults; iii. 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; vi. Adverse tax opinions or events affecting the tax-exempt status of the Contractual Obligations; vii. Modifications to rights of the owners of the Contractual Obligations; viii. Bond calls; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the securities; xi. Rating changes; and 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 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. -19- 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 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 CONTRACTUAL OBLIGATIONS 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 37 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 Purchaser to purchase or sell the Contractual Obligaitons 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 Contractual Obligations 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 Contractual Obligations. The City may also amend or repeal the obligations and agreement in this Section 37 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 Purchaser from lawfully purchasing or reselling the Contractual Obligations in the primary offering of the Contractual Obligations 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, -20- 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 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 Contractual Obligations. -21- PASSED AND APPROVED this 5th day of August, 1997. MAYOR, THE CITY OF BEAUMONT, TEXAS ATTEST: DEPUTY CITY CLERK THE CITY OF BEAUMONT,TEXAS (SEAL) '.t�Qp.UMONj' -22- EXHIBIT"A" Use of Proceeds $3,100,000 The City of Beaumont,Texas Contractual Obligations, Series 1997 Payoff on Existing Leases: Original Payoff Payoff Issue Date Amount 1994 Excavating &Grading Machines 264,642 12/08/97 55,942 1995 (14) unit nested T-Hangar 313,650 03/09/98 210,993 1995 Spartan Fire Pumper 270,010 4/24/98 57,818 1995 (2) Street Sweepers 238,457 01/01/98 97,443 1996 Ambulance 74,610 11/01/97 25,045 1996 Air Condensing Unit 97,946 11/01/97 32,887 1996 (2) Dump Trucks 152,548 11/26/97 50,944 1997 Platform Fire Truck 590,052 04/25/98 356,828 Subtotal 887,900 Estimated Equipment Purchases: Estimated Cost 1997 Frazer Type I Ambulance 77,900 1997 (2) Dump Trucks (Volvo WG64 with 14 yd dump body) 150,000 1997 International 2764 6 x 4 Winch Truck 85,000 1997 Window replacement in Municipal Building 135,000 1997 Sound System at Julie Rogers Theater&Civic Center 273,000 1997 Digger- Derrick 110,000 1997 Pumper Truck 290,000 1997 45 ft. Overcenter Bucket Truck 74,000 1997 SCBA Air Compressor 37,200 1998 (500) Banquet Chairs with Dollies 30,000 1998 (17) Patrol Vehicles 340,000 1998 Clean Community Bus 47,000 1998 Police Bus 45,000 1998 Ambulance 79,000 1998 Tractor Loader Backhoe 48,000 1998 Lowboy 55,000 1998 Track Loader 116,000 1998 Dump Truck 76,000 1998 Winch Truck 81,000 1998 1 ton 4wd Service Truck 38,000 1998 1 ton Crew Cab Pickup with service body 25,000 Subtotal 2,212,100 Total 3,100 000 8/5/97 No. 4 CONTRACTUAL OBLIGATION PURCHASE AGREEMENT August 5, 1997 City Council The City of Beaumont, Texas 801 Main Beaumont, Texas 77701 RE: $3,100,000 THE CITY OF BEAUMONT,TEXAS, CONTRACTUAL OBLIGATIONS,SERIES 1997 (herein referred to as the "Contractual Obligations") Ladies and Gentlemen: First Bank and Trust (the "Purchaser") offers to enter into this Contractual Obligation Purchase Agreement with The City of Beaumont,Texas (the "Issuer"). 1. Terms of Offer. This offer is made on the condition that the Issuer accept it at or before 10:00 p.m., on August 5, 1997. If the Issuer accepts this offer by that time, this Contractual Obligation Purchase Agreement will become legally binding upon the Issuer and the Purchaser; otherwise it will expire at that time. 2. Background and Purpose. The Issuer is issuing the above referenced Contractual Obligations (the "Contractual Obligations") pursuant to an Ordinance in substantially the form attached hereto as Exhibit "A" (the "Contractual Obligation Ordinance") adopted by the City Council of the Issuer for the purpose of financing the acquisition and purchase of certain Property (as defined in the Contractual Obligation Ordinance). 3. Purchase and Sale of Contractual Obligations. On the terms and conditions and in reliance on the representations, warranties and covenants of the Issuer stated herein, the Purchaser will purchase from the Issuer, and the Issuer will sell to the Purchaser, all (but not less than all) of the Contractual Obligations for an aggregate purchase price equal to $3,100,000.00, plus accrued interest to the date of delivery. The Contractual Obligations will be dated September 1, 1997, and shall bear interest payable on April 1 and October 1 of each year, beginning October 1, 1998, and will mature on October 1 of each year and bear interest as follows: Year of Maturity Principal Amount Interest Rate 1998 $575,000 4.05% 1999 $745,000 4.30% 2000 $640,000 4.40% 2001 $620,000 4.50% 2002 $520,000 4.60% EXHIBIT 13 The Contractual Obligations will have such additional terms and will be issued pursuant to the terms and conditions of the Contractual Obligation Ordinance, subject only to those changes as may be approved and reasonably acceptable to the Purchaser. 4. Representations and Warranties of Issuer. The Issuer represents and warrants to the Purchaser that: (a) Due Organization: The Issuer is a political subdivision of the State of Texas duly created, organized, and existing under the Constitution and laws of the State of Texas; (b) Due Authority and Authorization: The Issuer has requisite legal right, power, and authority (i) to adopt the Contractual Obligation Ordinance, (ii) to enter into this Contractual Obligation Purchase Agreement, (iii) to issue the Contractual Obligations to the Purchaser as provided herein, and (iv) to carry out and consummate all other transactions and perform all other obligations on its part; and the Issuer has complied or, at or before the Closing, will comply with all provisions of applicable law relating to such actions; (c) Valid Obligations: The Contractual Obligation Ordinance has been duly adopted by the governing body of the Issuer; as of the Closing, the Contractual Obligation Ordinance will be in full force and effect and constitute a legal and valid act of the Issuer; this Contractual Obligation Purchase Agreement has been duly executed and delivered by the Issuer; and when delivered to and paid for by the Purchaser at the Closing, the Contractual Obligations will have been duly approved by the Attorney General of Texas, registered by the Comptroller of Public Accounts of the State of Texas, and duly executed and delivered by the Issuer and will constitute legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their terms; (d) No Other Approvals Required: Except for approval of the Contractual Obligations by the Attorney General of Texas and registration of the Contractual Obligations by the Comptroller of Public Accounts of the State of Texas, all approvals, permits. consents, licenses, and authorizations of, registrations or filings with, and notices to any government authority which are required for the Issuer's due execution, delivery, and performance of its obligations under the Contractual Obligations and this Contractual Obligation Purchase Agreement have been made or obtained; (e) Non-Contravention: Neither the adoption of the Contractual Obligation Ordinance nor the execution, delivery, and performance by the Issuer of its obligations under this Contractual Obligation Purchase Agreement and the Contractual Obligations will conflict with or constitute a breach of or default under any existing constitution, law, governmental regulation, judicial or administrative decree or order, or indenture, agreement, or other instrument to which the Issuer is a party or by which it or its properties are bound; (f) No Default: The Issuer has never defaulted in the payment of any contractual obligation, bond, note, or other obligation of the Issuer; (g) No Litigation: No action, suit, proceeding, inquiry, or investigation,at -2- law or in equity, before or by any court or public board or body is pending against or, to the knowledge of the Issuer, threatened against the Issuer (nor to the knowledge of the Issuer is there any basis therefor) wherein an unfavorable decision, ruling, or finding would impose a material financial liability on the Issuer or in any way adversely affect (i) the creation, organization, existence, boundaries, or material authority of the Issuer, (ii) the levy or collection of taxes or other revenues of the Issuer to any material extent, (iii) the transactions contemplated by this Contractual Obligation Purchase Agreement, (iv) the validity or enforceability of the Contractual Obligations, the Contractual Obligation Ordinance, or this Contractual Obligation Purchase Agreement, or (v) the excludability of the interest on the Contractual Obligations from the gross income of the owners thereof; (h) Use of Proceeds. The Issuer will use the proceeds of the Contractual Obligations to pay the issuance costs of the Contractual Obligations and to purchase the Property in accordance with the terms of the Contractual Obligation Ordinance; and (i) Officers' Certificates: Any certificate signed by any officer, official or representative of the Issuer and delivered to the Purchaser shall be deemed a representation and warranty by the Issuer to the Purchaser as to the truth of the statements therein contained. 5. Closing. (a) Time and Place. The Issuer will deliver the Contractual Obligations to the Purchaser, and the Purchaser will pay for the Contractual Obligations, at 10:00 a.m., Houston time, on September 3, 1997, or as soon as reasonably practicable thereafter after obtaining approval for the issuance of the Contractual Obligations from the Texas Attorney General's Office, but in no event later than September 30, 1997. Such actions are herein referred to as the "Closing". The Closing will occur at the offices of the Texas Commerce Bank National Association (herein referred to as the "Paying Agent") in Houston, Texas, or at such other location as may be agreed to by both the Issuer and the Purchaser. (b) Delivery of Contractual Obligations. At the Closing, the Issuer will deliver one duly executed initial Contractual Obligation for each maturity in either typed or printed form, payable to the Purchaser or registered assigns, and bearing a registration certificate manually signed by an authorized representative of the Comptroller of Public Accounts of the State of Texas. The Issuer will cause the Paying Agent to exchange such initial Contractual Obligations at Closing for definitive Contractual Obligations, duly authenticated by the Agent, immediately upon payment for and surrender for exchange of such initial Contractual Obligations by the Purchaser. (c) Payment of Purchase Price. The Purchaser will pay the purchase price for the Contractual Obligations by wire transfer of immediately available funds to the Paying Agent for the account of the Issuer. (d) Time of Essence. Time is of the essence in the performance of this Contractual Obligation Purchase Agreement. Tender of the initial Contractual Obligations (and the definitive Contractual Obligations, if timely requested) at the time and place specified in this Contractual Obligation Purchase Agreement is a condition to the -3- Purchaser's obligations hereunder. If the Issuer is unable to perform its obligations hereunder at such time and place, the Purchaser may, at its option, either extend the time or change the place of performance or terminate its obligations hereunder. 6. Conditions to Closing. (a) General Conditions. The obligations of the Purchaser hereunder are subject to the conditions precedent that (i) the Issuer will have performed all of its obligations to be performed under this Contractual Obligation Purchase Agreement at or before the Closing and (ii) the representations and warranties of the Issuer herein are accurate in all material respects as if made again as of the Closing. (b) Delive[y of Documents. The obligations of the Purchaser herein are subject to the further condition precedent that the Purchaser will have received at or before the Closing a duly executed copy or counterpart of each of the following documents in form and substance reasonably acceptable to the Purchaser: (i) Contractual Obligation Ordinance: a duly certified copy of the Contractual Obligation Ordinance and such amendments, modifications, or supplements thereto as may have been agreed to by the Purchaser; (ii) Attorney General Opinion and Comptroller's Certificate: the approving opinion of the Attorney General of Texas relating to the Contractual Obligations,certified by a certificate of the Comptroller of Public Accounts of the State of Texas; (iii) Contractual Obligation Counsel Opinion: an approving opinion of Orgain, Bell & Tucker, L.L.P., Bond Counsel for the Issuer, to the effect that interest payable on the Contractual Obligations is not subject to federal income taxes; (iv) No Arbitrage Certificate: a certificate signed by an officer of the Issuer charged with issuing the Contractual Obligations stating that the Issuer does not expect to use proceeds of the Contractual Obligations in a manner that would cause the Contractual Obligations to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and applicable regulations promulgated thereunder, setting forth facts, estimates and circumstances in existence at Closing sufficient to support such conclusion, and stating that to the best of the knowledge and belief of such officer there are no other facts, estimates, or circumstances that would materially affect such expectations; (v) Form 8038-G: evidence of the filing, as required by Section 149(e) of the Internal Revenue Code of 1986, as amended, of a statement concerning the Contractual Obligations with the Secretary of the Treasury; (vi) Officer's Certificate: a certificate, dated as of the Closing and signed by an authorized officer of the Issuer, solely in his or her official capacity, to the effect that (A) the representations, warranties, and covenants of the Issuer contained herein are true and correct in all material respects as of the Closing,with -4- the same effect as if made at the Closing; (B) the Issuer has performed all of its obligations hereunder to be performed at or before the Closing and has satisfied all material conditions on its part to be satisfied hereunder at or before the Closing; (C) the Contractual Obligation Ordinance has not been amended, modified, supplemented, or repealed since the date hereof, except as agreed to by the Purchaser, and is in full force and effect; and (D) there has been no material adverse change in the financial condition of the Issuer since the date of execution of this Contractual Obligation Purchase Contract; and (vii) Other: such additional certificates, instruments, or opinions as the Purchaser may reasonably request to evidence compliance with legal requirements, the accuracy of the representations and warranties of the Issuer contained herein, and due performance and satisfaction by the Issuer of all obligations on its part and conditions contained herein. 7. Term and Termination. (a) Term. This Contractual Obligation Purchase Agreement shall become effective when the Issuer accepts the offer made hereby before it expires by executing this Contractual Obligation Purchase Agreement in the place provided below and delivering an executed counterpart to the Purchaser and shall continue in full force and effect until the Contractual Obligations are delivered to the Purchaser. (b) Termination. The Purchaser may terminate its obligations under this Contractual Obligation Purchase Agreement at any time by notifying the Issuer of the Purchaser's election to do so in writing or by telegram, telex, or other electronic or wire communication,if after the date hereof: (i) Adverse Effect on Tax-Exempt Status: Legislation shall be favorably reported by a committee of the House of Representatives or the Senate of the Congress of the United States or be introduced (by committee, by amendment, or otherwise) in, or be enacted by, the House of Representatives or the Senate, or be recommended by committee to the Congress of the United States for signature by the President of the United States, or a decision by a court established under Article III of the Constitution of the United States, or the Tax Court of the United States, shall be rendered, or a release, ruling, regulation, or Ordinance of the Treasury Department of the United States or the Internal Revenue Service shall be made or proposed, in each case having the purpose or effect of imposing (or any other event shall have occurred which results in the imposition of) federal income taxation upon revenues or other income of the general character to be derived by the Issuer (or by any similar body) or upon interest accrued or received on the Contractual Obligations; (ii) Adverse Effect on Securities Law Exemptions: Legislation shall be introduced (by committee, by amendment, or otherwise) in, or be enacted by, the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop Ordinance, ruling, regulation, or official statement by or on behalf of the United States Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, in each case to the -5- effect that the offering or sale of obligations of the general character of the Contractual Obligations, as contemplated hereby, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or the Investment Company Act of 1940, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the offering or sale of obligations of the general character of the Contractual Obligations as contemplated hereby; (iii) Adverse Effect on Disclosure: Any information shall have become known which at any time, in the reasonable opinion of the Purchaser, makes untrue, incorrect, incomplete, or misleading in any material respect any statement or information contained herein; or (iv) Moratorium: A general banking moratorium shall have been established by federal or Texas authorities. 8. Expenses. The Issuer will pay the cost of issuing the Contractual Obligations, including the fees and disbursements of its Bond Counsel and Financial Advisor. The Purchaserwill pay its own out-of-pocket expenses. 9. Notices. Any notice to be given to the Issuer or Purchaser under this Contractual Obligation Purchase Agreement may be given by delivering the same to the following address: ISSUER: The City of Beaumont,Texas P.O. Box 3827 Beaumont,TX 77704 ATTENTION: City Manager PURCHASER: First Bank and Trust 4175 Phelan Blvd. Beaumont,TX 77706 ATTENTION: Steve M. Grantham 10. No Assignment or Third Party Beneficiaries. The obligations of the parties hereto may not be assigned or delegated to any other person without the consent of the other party hereto. This Contractual Obligation Purchase Agreement inures to the benefit of and is binding upon the Issuer, the Purchaser, and their respective successors and permitted assigns, and does not confer any rights upon any other person. 11. Survival of Representations. All of the representations, warranties, and covenants of the Issuer in this Contractual Obligation Purchase Agreement will remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Purchaser or(ii) delivery of and any payment for the Contractual Obligations. 12. Section Headings. The section, subsection, and other subdivision headings -6- herein are for convenience of reference only and do not affect the construction hereof. 13. Severability. If any provision of this Contractual Obligation Purchase Agreement or any application hereof is invalid, illegal, or unenforceable, the validity, legality and unenforceability of the remaining provisions will not in any way be affected or impaired thereby. 14. Counterparts. This Contractual Obligation Purchase Agreement may be executed in counterparts, each of which will be regarded as an original and all of which will constitute one and the same document. 15. Governing Law. This Contractual Obligation Purchase Agreement will be governed by and construed in accordance with the law of the State of Texas. Yours very truly, FIRST BANK AND TRUST By: Steven M. Grantham Executive Vice President ACCEPTED AT P.M. THIS 5TH DAY OF AUGUST, 1997. THE CITY OF BEAUMONT,TEXAS By: Mayor ATTEST: City Clerk -7-