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HomeMy WebLinkAboutPACKET MAY 24 2005 MMK City of Beaumont REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS MAY 24,2005 1:30 P.M. CONSENT AGENDA * Approval of minutes * Confirmation of committee appointments Anthony J. Gibson would be appointed to the Historic Landmark Commission. The term would commence May 24, 2005 and expire May 23, 2007. (Mayor Pro Tem Becky Ames) Anthony J. Gibson would be appointed to the Community Development Advisory Committee. The term would commence May 24, 2005 and expire May 23, 2007. (Mayor Pro Tem Becky Ames) A) Approve a contract for the purchase of lubricants B) Authorize a grant application to provide a development plan for future improvements at the Beaumont Municipal Airport Q Approve an amendment to Resolution Numbers 05-110 and 05-117 to correct the type of deed stated A City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Kirby Richard, Internal Services Director MEETING DATE: May 24, 2005 AGENDA MEMO DATE: May 18, 2005 REQUESTED ACTION: Council approval of a contract for the purchase of lubricants. RECOMMENDATION Administration recommends award of a six(6)month contract for purchasing lubricants to Baxter Oil Co. of Beaumont at the unit costs reflected in the attached bid tabulation, with an estimated total expenditure for the contract period of$42,321. BACKGROUND The contract specifies that the awarded bidder shall provide approximately 11,000 gallons of various lubricants at fixed unit costs for use by various City departments in maintaining vehicles and equipment. Six (6) vendors were notified with two (2) submitting bids. The products bid by Baxter Oil Co. have been reviewed by Fleet personnel and meet the specifications set forth in the bid. Specifications allow for a six (6) month contract extension upon the expiration of the initial six (6) month period, at the same pricing as that awarded herein. BUDGETARY IMPACT Funds are available for this expenditure in user Departments' operating budgets. PREVIOUS ACTION None. SUBSEQUENT ACTION None. Six (6) Month Contract for Lubricants May 18, 2005 Page 2 RECOMMENDED BY City Manager and Internal Services Director. CITY OF BEAUMONT 31D TABULATION FOR LUBRICANTS BID OPENING DATE:APRIL 28,2005 BID NUMBER: RF0205-22 BAXTER OIL CO. TRI-CON,INC. BEAUMONT,TX BEAU MONT,TX Est. Description Unit I Total Unit I Total 5,000115W-40,engine oil(bulk) $3.7201 $18,600.00 1 _$3.7701 $18,850.00 1,000 15W-40,engine oil(55 gal drums) $4.270 $4,270.00 $4.880 $4,880.00 500 SAE 40 engine oil(55 gal drums) $3.810 $1,905.00 $3.500 $1,750.00 1,300 Dexron III(qt) $1.550 $2,015.00 $1.470 $1,911.00 600 Dexron III(bulk) $3.580 $2,148.00 $3.250 $1,950.00 100 Dexron 111(55 gal drums) $4.130 $413.00 $3.510 $351.00 100 Mercon 5(qt) $2.500 $250.00 $1.980 $198.00 2,500 Multi-purpose trans./hydraulic al(bulk) $3.200 $8,000.00 $3.670 $9,175.00 500 Multi-purpose trans/hydraulic oil(drum) $3.750 $1,875.00 $5.390 $2,695.00 500 Caterpillar TO-4 comp.hydraulic oil $5.690 $2,845.00 $4.010 $2,005.00 TOTAL BID $42,321.00 $43,765.00 Manufacturer KOST USA/Castrol Fina Delive time One 141 da One 1 day B . City of Beaumont Council Agenda Item M 1--imagwitemmilaw OL TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Kirby Richard, Internal Services Director MEETING DATE: May 24, 2005 AGENDA MEMO DATE: May 18, 2005 REQUESTED ACTION: Council consider authorizing a grant application to provide a development plan for future improvements at the Beaumont Municipal Airport. RECOMMENDATION Administration recommends authorizing the City Manager to execute grant application documents with the Texas Department of Transportation for a Development Plan to be used at the Beaumont Municipal Airport. BACKGROUND The Beaumont Municipal Airport is one of 100 airports in Texas eligible to apply for federal grant funds through a program administered by the Aviation Division of the Texas Department of Transportation. The City is eligible to apply for grant funds for engineering,design,and construction projects, with a match of 10 percent(10%) of total project costs. Staff is proposing to apply for $85,000 to fund a development plan, or planning study, that will provide the information needed to establish realistic goals and priorities for the Airport. The Plan will be used as the basis for future growth and construction projects, as well as support those subsequent grant applications and budget requests needed to fund them. Based on the results of the development plan,staffwill develop a listing ofproposed projects that will complement the growth and development of the Airport. An$8,500 local match is required for this portion ofthe project,the$76,500 balance will come from grant funds. No additional local funds will be spent without first bringing the plan and construction proposal back to Council. Development Plan-Beaumont Municipal Airport May 18, 2005 Page 2 The City has applied for and received similar grants in the past that have helped fund major improvements at the Airport. Most recently,improvements such as the resurfacing and extension of the asphalt runway, apron expansion, taxiway resurfacing and installation of new runway approach lights were funded with grant funds. Staff intends that this effort result in the formulation of strategic plan that will allow improvements to be targeted to maximize the full development potential that exists at the Municipal Airport. BUDGETARY IMPACT The City's $8,500 matching funds will be available from the Municipal Airport Fund. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Internal Services Director. ...... City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Kirby Richard, Internal Services Director MEETING DATE: May 24, 2005 AGENDA MEMO DATE: May 20, 2005 REQUESTED ACTION: Amendment to Resolution Nos. 05-110 and 05-117. RECOMMENDATION Administration recommends authorizing an amendment to Resolution Nos. 05-110 and 05-117 to correct the type of deeds stated. BACKGROUND The type of deeds specified in Resolution Nos. 05-110 and 05-117, approved by Council on May 10, 2005, was incorrect. The agenda item memos did not specify the type of deeds to be issued. The City retains General Warranty titles to these properties and General Warranty Deeds should be issued for the two properties. BUDGETARY IMPACT None. PREVIOUS ACTION Resolution Nos. 05-110 and 05-117 were approved May 10, 2005. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, Internal Services Director and City Attorney. RESOLUTION NO. 05-110 WHEREAS, the City of Beaumont has no objection to the disposal of surplus property located at Major Drive at LNVA Canal to Tu-Anh Tran and Brent Nichols as described below and in Exhibit"A"attached hereto and made a part hereof for all purposes: PURCHASER: Tu Anh Tran and Brent Nichols AMOUNT: $16,502 Address: Major Drive at LNVA Canal Legal: City Plat SP-08, Tract 26-A, C. Williams Survey,Abstract 59 Zoning: RS- Residential Acreage: 200'x 150' ; 0.689 acres less 0.1 acre highway right-of-way ; and, WHEREAS,the land is no longer needed for the use of citizens as a road, nor does it have a potential for park, conservation, recreation or similar purposes; and, WHEREAS, the City of Beaumont wishes to sell the above properties as shown; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Manager be, and he is hereby, authorized to execute a Special Warranty Deed for the sale of above-described property as shown. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 10th day of May, 2005. Of Ma r Evelyn M. Lord - S RESOLUTION NO. 05-117 WHEREAS, the City of Beaumont has no objection to the disposal of surplus property located at 1190 Grand Street to Jose Ruiz as described below and in Exhibit"A" attached hereto and made a part hereof for all purposes: PURCHASER: Jose Ruiz AMOUNT: $32,556 Address: 1190 Grand Street at Concord Legal: City Plat X, Tract 28, J. McFaddin Survey Zoning: GC-MD: General Commercial Multi-Family Dwelling Acreage: 0.1515 acres(70'x 94.3) ; and, WHEREAS,the land is no longer needed for the use of citizens as a fire station, nor does it have a potential for road, park, conservation, recreation or similar purposes; and, WHEREAS, the City of Beaumont wishes to sell the above properties as shown; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Manager be, and he is hereby, authorized to execute a Special Warranty Deed for the sale of above-described property as shown. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 10th day of May, 2005. yor Evelyn M. Lord - IU61 U- K, City of Beaumont REGULAR MEETING OF THE CITY COUNCIL COUNCIL CHAMBERS MAY 24,2005 1:30 P.M. AGENDA CALL TO ORDER * Invocation Pledge Roll Call * Presentations and Recognition * Public Comment: Persons may speak on scheduled agenda items 1-5/Consent Agenda * Consent Agenda GENERAL BUSINESS 1. Consider approving the issuance and sale of$20 million City of Beaumont, Texas, Certificates of Obligation, Series 2005; levying taxes to provide for payment thereof; and containing other matters related thereto 2. Consider approving the issuance of$15 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2005;and containing other matters related thereto 3. Consider authorizing the City Manager to increase the Water Treatment Plant 14 Million Gallons Per Day(MOD)Expansion and Miscellaneous Improvements Project amount for"extra work" 4. Consider approving a six(6)month contract to various vendors for the purchase of water treatment chemicals 5. Consider approving a request to change the name of Fletcher Mini.Park to Cesar E. Chavez Park COMMENTS * Councilmembers/City Manager comment on various matters * Public Comment(Persons are limited to 3 minutes) Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact Pat Buehrl{e at 880-3725 a day prior to the meeting. 1 May 24,2005 Consider approving the issuance and sale of$20 million City of Beaumont, Texas, Certificates of Obligation, Series 2005; levying taxes to provide for payment thereof; and containing other matters related thereto City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S.Duplant, Finance Officer MEETING DATE: May 24, 2005 AGENDA MEMO DATE: May 20,2005 REQUESTED ACTION: Council consider an ordinance authorizing the issuance and sale of $20 million City of Beaumont, Texas, Certificates of Obligation, Series 2005; levying taxes to provide for payment thereof-, and containing other matters related thereto. RECOMMENDATION Administration requests approval of an ordinance authorizing the issuance of$20 million City of Beaumont, Texas, Certificates of Obligation, Series 2005; levying taxes to provide for payment thereof, and containing other matters related thereto. BACKGROUND Results of the competitive bid process will be read by the City's Financial Advisor,Frank Ildebrando ofRBC Dain Rauscher. A recommendation will be made to award the certificates to the underwriter offering the lowest overall interest cost to the City. The certificates will mature March 1,2007 through March 1,2025 with interest payable semiannually in March and September beginning March 1, 2006. JP Morgan Chase Bank, N.A. will serve as paying agent/registrar- Delivery and receipt of proceeds by the City is scheduled for June 23, 2005. Proceeds will be used to provide funds for various street, drainage and general improvements. BUDGETARY IMPACT All debt shall be incurred in the Debt Service Fund which is supported by property taxes.The current debt service property tax rate of$.0282733 is expected to be sufficient to meet debt service requirements on the certificates. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Finance Officer. DPAFT ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF$20,000,000 THE CITY OF BEAUMONT,TEXAS,CERTIFICATES OF OBLIGATION, SERIES 2005; LEVYING TAXES TO PROVIDE FOR PAYMENT THEREOF; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS,the City Council of The City of Beaumont,Texas(the"City"),has heretofore authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on May 24, 2005,the date tentatively set for passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of certain revenues of the City's waterworks and sewer system, or as soon thereafter as may be practicable, for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) construction of a new City office building and visitor's center, (iii)renovations to the club house and parking lot at Henry Homberg golf course in Tyrell Park, (iv) building improvements, renovations and repairs to the Municipal Court Building, (v) improvements and repairs to other public park facilities, including but not limited to, construction of walking trails, new playground equipment, spray devices, sidewalks, landscaping, covered pavilion, and construction of a new passive park, (vi) purchase of radios, communication equipment, hardware and software and(vii)the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and the laws of the State of Texas and the United States of America, respectively, particularly Chapter 271,Texas Local Government Code,as amended; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; and WHEREAS, the City Council of the City has determined to authorize such certificates of obligation for the purposes set out in this Ordinance; and WHEREAS, the City is authorized,pursuant to Chapter 1502, Texas Government Code, as amended, to pledge not more than$10,000 of the net revenues of the City's waterworks and sewer system as security for the certificates of obligation authorized herein; NOW,THEREFORE,BE IT ORDAINED BY THE CITY OF BEAUMONT,TEXAS: 1. Preamble. The matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. T) •fiinitions. 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, Sunday, a legal holiday,or a day on which the Registrar is authorized by law or executive order to close. The term "Certificates" or "Series 2005 Certificates" shall mean the Certificates of Obligation, Series 2005, authorized in this Ordinance, unless the context clearly indicates otherwise. The term "Certificates 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 Certificates as provided therein. 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 "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Construction Fund" shall mean the construction 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 the DTC Participants. The term "Insurer" shall mean the issuer of the Certificates Insurance Policy. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 20 of this Ordinance. The term"Interest Payment Date",when used in connection with any Certificate, shall mean March 1,2006,and each March 1 and September 1 thereafter until maturity or earlier redemption. -2- The term "Net Revenues" shall mean the revenues of the System remaining after deduction of the reasonable and necessary expenses of operation and maintenance of the System. The term "Ordinance" as used herein and in the Certificates shall mean this Ordinance authorizing the Certificates. The term "Owner" or"Registered Owner", when used with respect to any Certificate, shall mean the person or entity in whose name such Certificate is registered in the Register. The term"Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the 15th day of the month next preceding such 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 registered to each Owner. The term "Registrar" shall mean JPMORGAN CHASE BANK, N.A., Dallas, Texas, and its successors in that capacity. The term "SEC" shall mean the United States Securities and Exchange Commission and its successors. The term"System" shall mean the City's waterworks and sewer system. The term"Underwriters" shall mean 3. Authorization. The Certificates shall be issued in fully registered form,without coupons, in the total authorized aggregate amount of Fifteen Million Dollars ($15,000,000), for the purpose of evidencing the indebtedness of the City for the cost of (i) authorized street and drainage improvements; (ii) construction of a new City office building and visitor's center, (iii)renovations to the club house and parking lot at Henry Homberg golf course in Tyrell Park, (iv) building improvements, renovations and repairs to the Municipal Court Building, (v) improvements and repairs to other public park facilities, including but not limited to, construction of walking trails, new playground equipment, spray devices, sidewalks, landscaping, covered pavilion, and construction of a new passive park, (vi) purchase of radios, communication equipment, hardware and software and(vii)the cost of professional services incurred in connection therewith. 4. Designation, Dote,, and Interest Pa=ent Tutee. The Certificates shall be designated as the "THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2005", and shall be dated May 15, 2005. The Certificates shall bear interest from the later of May 15, 2005,or the most recent Interest Payment Date to which interest has been paid or duly provided -3- for, calculated on the basis of a 360-day year of twelve 30-day months, which interest shall be payable on March 1, 2006, and semiannually thereafter on March 1 and September 1 of each year until maturity or earlier redemption. 5. C'.ertificatm, Numhem and Dennmin tions. The Certificates shall be issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Certificates shall mature, subject to prior redemption in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered upon transfer of or in exchange for other Certificates shall be numbered in order of their authentication by the Registrar, shall be in the denomination of$5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Certificate or Certificates in lieu of which they are delivered. Certificate Year Principal Interest Number of 1VMabm4 Amount Rate_ CR-1 2007 $ 100,000 % CR-2 2008 $ 190,000 % CR-3 2009 $ 145,000 % CR-4 2010 $ 100,000 % CR-5 2011 $ 195,000 % CR-6 2012 $ 220,000 % CR-7 2013 $ 275,000 % CR-8 2014 $ 325,000 % CR-9 2015 $1,150,000 % CR-10 2016 $1,220,000 % CR-11 2017 $1,305,000 % CR-12 2018 $1,360,000 % CR-13 2019 $1,775,000 % CR-14 2020 $1,810,000 % CR-15 2021 $1,855,000 % CR-16 2022 $1,900,000 % CR-17 2023 $1,960,000 % CR-18 2024 $2,020,000 % CR-19 2025 $2,095,000 % 6. Execution of Certificate-.- Scal. The Certificates 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal of the City had been manually -4- impressed upon each of the Certificates. If any officer of the City whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer before the authentication of such Certificates or before the delivery of such Certificates, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 7. Annrn� val by Attorney General; Rep drat_ ion by Comptroller. The Certificates to be initially issued shall be delivered to the Attorney General of the State 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 17 of this Ordinance shall be attached or affixed to the initial Certificates. 8. Authentication. Except for the Certificates to be initially issued,which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 17 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Certificates so authenticated were delivered by the Registrar hereunder. 9. Pa ent of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Certificates. The principal of the Certificates shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they become due and payable, at the designated corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register. At the request of the registered Owner of $1,000,000 or more in aggregate principal amount of Certificates,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 five (5)days before the Record Date for such payment. If the date for payment of the principal of or interest on any Certificate is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date payment was due. 10. Successor Repiskars. The City covenants that at all times while any Certificates are outstanding it will provide a bank, trust company, financial institution or other entity duly qualified and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the Registrar on not less than 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 Certificates. Promptly upon the appointment of any successor Registrar, the previous -5- 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. Rnecial Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen(15)days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) business 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; i M claim .d Principal and Interest. The City,the Registrar and any other person may treat the person in whose name any Certificate is registered as the absolute Owner of such Certificate for the purpose of making payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Certificate in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three (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. 13. Registration, Transfer, and Exchange- Special Election for Un c ertificated Certificates. So long as any Certificates remain outstanding,the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Certificates in accordance with the terms of this Ordinance. Each Certificate shall be transferable only upon the presentation and surrender thereof at the principal 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 Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Certificate or Certificates, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount -6- and bearing interest at the same rate as the Certificate or Certificates so presented. All Certificates shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Certificate or Certificates of the same maturity and interest rate in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 13. Each Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such Certificate is delivered. The City or the Registrar may require the Owner of any Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Certificate. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Neither the City nor the Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. Notwithstanding any other provision hereof,but at the sole election of the Underwriters,the ownership of the Certificates 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 Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriters shall elect to invoke the provisions of this Section,then the following provisions shall take effect with respect to the Certificates. With respect to Certificates 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 Certificates. 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 Certificates, (ii) the delivery to any DTC Participant or any other person, other than an Owner of a Certificate, as shown on the Register, of any notice with respect to the Certificates, including any notice of redemption, or(iii)the payment to any DTC Participant or any other person, other than an Owner of a Certificate, as shown in the Register,of any amount with respect to principal of,premium,if any,or interest on the Certificates. 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 Certificate is registered in the Register as the absolute Owner of such Certificate for the purpose of payment of principal of, premium, if any, and interest on the Certificates, for the purpose of all matters with respect to such -7- Certificates, for the purpose of registering transfers with respect to such Certificates, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Certificates 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 Certificates to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a certificate for a 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 Representation and that it is in the best interest of the beneficial Owners of the Certificates that they be able to obtain certificated Certificates, or if DTC Participants owning at least 50% of the Certificates 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 such beneficial Owners of the Certificates, 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 Certificates to such successor securities depository or (ii) notify DTC of the availability through DTC of Certificates and transfer one or more separate Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event,the Certificates 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 Owners transferring or exchanging Certificates shall designate,in accordance with the provisions of this Ordinance. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Certificates 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 Certificates, and all notices with respect thereto,shall be made and given in the manner provided in the Letter of Representation. 14. Mutilated, Last, or Stolen C" .rtific-ates. Upon the presentation and surrender to the Registrar of a mutilated Certificate,the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount,bearing a number not contemporaneously outstanding. If any Certificate is lost, apparently destroyed, or wrongfully taken,the City,pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Certificate of like amount, bearing a number not contemporaneously outstanding. -8- The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other associated expenses,including the fees and expenses of the Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Certificate,before any replacement Certificate is issued,to: (1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss,destruction or theft of such Certificate; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to,printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed;and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Registrar shall be entitled to recover such replacement Certificate 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 Certificate has become or is about to become due and payable, the City, in its discretion may, instead of issuing a replacement Certificate,authorize the Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 15. Cancellattion of Certificates. All Certificates paid in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Certificates. 16. Optional Redemption. The City reserves the right, at its option, to redeem -9- Certificates having stated maturities on and after March 1, 2016, in whole or in part, on March 1, 2015, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates, or portions thereof,to be redeemed. Certificates may be redeemed only in integral multiples of$5,000. If a Certificate subject to redemption is in a denomination larger that $5,000, a portion of such Certificate may be redeemed, but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered. Not less than thirty(30) days prior to a redemption date for the Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each Owner of each Certificate to be redeemed in whole or in part,at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date,the redemption price,the place at which Certificates are to be surrendered for payment and, if less than all the Certificates are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice of redemption so mailed shall be conclusively presumed to have been duly given whether or not the Owner receives such notice. By the date fixed for redemption,due provision shall be made with the Registrar for payment of the redemption price of the Certificates or portions thereof to be redeemed. When Certificates have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 17. Farms. The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Certificates initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF JEFFERSON NUMBER DENOMINATION CR-_ $ -10- REGISTERED REGISTERED THE CITY OF BEAUMONT,TEXAS CERTIFICATE OF OBLIGATION SERIES 2005 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: May 15,2005 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 certificate at the designated corporate trust office of JPMORGAN CHASE BANK, N.A., Dallas, Texas (the "Registrar"), or at its principal payment office in Dallas, Texas, 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 the Dated Date specified above, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Certificate is payable by check on March 1,2006, and semiannually thereafter on each March 1 and September 1, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the 15th day of the month next preceding each interest payment date. At the request of the registered owner of$1,000,000 or more in aggregate principal amount of Certificates, the Registrar shall pay interest on such Certificates by wire transfer in immediately available funds to the account designated by such owner to the Registrar in writing at least five (5) days before the Record Date for such payment. THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $20,000,000 (the "Certificates"), issued in accordance with the Constitution and the laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended, for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, the purchase of equipment and the cost of issuance of the Certificates, pursuant to an ordinance duly adopted by the City Council of the City (the"Ordinance"),which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT,at its option,to redeem the Certificates having stated maturities on or after March 1, 2016, in whole or in part, on March 1, 2015, or any date thereafter, in integral multiples of $5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of -11- redeeming the Certificates. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior the date fixed for redemption by first class mail, addressed to the registered owner of each Certificate to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Certificates or portions thereof have been called for redemption and due provision has been made to redeem the same,the principal amounts so redeemed shall be payable solely from the funds provided for redemption and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS CERTIFICATE is transferable only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of this Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner of the unredeemed balance of a Certificate called for redemption in part. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Certificates and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Certificate have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures, have been levied, within the limits prescribed by law,against all taxable property in the City,and have been pledged irrevocably for such payment. -12- IT IS FURTHER certified, recited and represented that the net revenues (the "Net Revenues") to be derived from the operation of the City's waterworks and sewer system (the "System"), but only to the extent of and in an amount not to exceed Ten Thousand Dollars ($10,000.00) in the aggregate, are also pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose, all as set forth in the Ordinance to which reference is made for all particulars; provided, how-ever, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of this Certificate and that series of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments,bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System, secured by a pledge of the Net Revenues of the System that may be prior and superior in right to,on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile 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 Certificate. THE CITY OF BEAUMONT,TEXAS Mayor (SEAL) City Clerk Form of Registration Certificate of Comptroller of Pnblin Acrrnmt.-, COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this certificate has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this day of .2005. -13- XXXXXXXXX Comptroller of Public Accounts (Seal) of the State of Texas Form of Registrars Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. JPMorgan Chase Bank,N.A. Dallas,Texas By: Authorized Signature Date of Authentication Form of Acgia meet ASSIGNMENT For value received,the undersigned hereby sells,assigns,and transfers unto (Please print or type name,address,and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within certificate and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: -14- Signature Guaranteed: 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 Certificate in of the New York Stock Exchange every particular,without or a commercial bank or trust any alteration,enlargement company. or change whatsoever. 18. Fcn-n of qtstement of Insurance. The following statement of insurance shall be printed on the back of or attached to each of the Certificates: STATEMENT OF INSURANCE 19. Legal (pinion; nisin Numbers. The approving opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. 20. Interest and Sinking Fend; Taxes,, Pledge of Revenues; ['�nstrnrti�n Fund, The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance are hereby irrevocably pledged and shall be deposited, as collected,in a special fund to be designated "City of Beaumont, Texas, Certificates of Obligation, Series 2005, Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner within the limits prescribed by law, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax upon all taxable property in the City sufficient to pay the current interest on the Certificates as the same becomes due,and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures but in each year never less than 2% of the original principal amount of the Certificates, 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 the Certificates and to no other purpose. The Net Revenues of the System,but only to the extent of and in an amount not to exceed $10,000 in the aggregate, are hereby irrevocably pledged to the payment of the principal of and -15- interest on the Certificates as the same come due, to the extent that the taxes described in this Section of the Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to the payment of any obligation of the City, whether authorized heretofore or hereafter, which the City designates as having a pledge senior to the pledge of such Net Revenues to the payment of the Certificates; and the City also reserves the right to issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and other obligations of any kind payable in whole or in part from the Net Revenues of the System that may be prior and superior in right to,on a parity with,or junior and subordinate to the pledge of Net Revenues securing this series of Certificates. There is hereby created and there shall be established on the books of the City a separate account to be entitled the "City of Beaumont, Texas, Certificates of Obligation, Series 2005, Construction Fund". Immediately after the sale and delivery of the Certificates,that portion of the proceeds of the Certificates to be used for the cost of construction of authorized street improvements and the cost of issuance of the Certificates shall be deposited into the Construction Fund and disbursed for such purposes.Pending completion of construction of such projects,interest earned on such proceeds may be used, at the City's discretion, for such projects and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1201.043, Texas Government Code Annotated, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of such street improvements, the monies, if any, remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. 21. Further Pro . .edin a. After the Certificates shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas for examination and approval. After the Certificates to be initially issued shall have been approved by the Attorney General of the State of Texas, the Certificates shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Certificates to be initially issued,the Comptroller of Public Accounts(or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be affixed or attached to the Certificates to be initially issued, and the seal of the Comptroller shall be impressed, or placed in facsimile, thereon. In addition, the Mayor, the City Clerk and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the purposes of this Ordinance. ;ZO 22. Sale of C:ertifi . tea, The Certificates are hereby sold and shall be delivered to the Underwriters at the price of SJ*, '00,000.00, representing the principal amount of Certificates,plus a premium of$ . The purchase price of the Certificates will also include accrued interest to the date of delivery. The City finds that the bid of the Underwriters for the purchase of the Certificates and which bid has been accepted by the City was the best bid and the purchase price and terms are hereby found and determined to be the most advantageous reasonably obtainable by -16- the City. The Mayor and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Certificates.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 Certificate Insurance Policy, and the printing on the Certificates covered by the Certificate Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 23. Tax Exemption. (a) The City intends that the interest on the Certificates 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 Certificates 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 Certificates 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) The City covenants and agrees that its use of Net Proceeds of the Certificates will at all times satisfy the following requirements: (i) The City will use all of the Net Proceeds of the Certificates for the cost of construction of authorized street and drainage improvements, building repairs and improvements, public park facilities and improvements, equipment purchases and the cost of issuance of the Certificates. The City has limited and will limit with respect to the Certificates 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 Certificates ("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 Certificates 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; -17- (ii) The City has not permitted and will not permit more than 5% of the Net Proceeds of the Certificates 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 Certificates. Further, the amount of private-use proceeds of the Certificates in excess of 5% of the Net Proceeds thereof("excess private-use proceeds")did not and will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (iii) Principal of and interest on the Certificates shall be paid solely from ad valorem tax receipts collected by the City and from the Net Revenues of the System to the extent pledged hereunder. Further, no person using more than 10% of the Net Proceeds of the Certificates 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 Certificates an amount of proceeds thereof exceeding the lesser of(a) $5,000,000 or(b) 5% of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than a governmental unit; and (v) The City will use$100,000 of the Net Proceeds of the Certificates to pay the costs of issuance of the Certificates. When used in this Section 23, the term "Net Proceeds" of the Certificates shall mean the proceeds from the sale thereof to the Underwriters, including investment earnings on such proceeds, less accrued interest with respect to such issue. (c) The City covenants and agrees not to take any action,or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Certificates to be "federally guaranteed" within the meaning of Section 149(b)of the Code and applicable regulations thereunder,except as permitted by Section 149(b)(3)of the Code and such regulations. (d) The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates 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 Certificates, including interest or other investment income derived from the proceeds of the Certificates, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. -18- (e) The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the"gross proceeds" of the Certificates(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 Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates 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 Certificates 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 Certificates, and within sixty (60) days after retirement of the Certificates, 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 Certificates 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. (f) The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Certificates are issued, an information statement concerning the Certificates, all under and in accordance with Section 149(e)of the Code and applicable regulations thereunder. Section 24. Apnliestion of Pmeeedc. proceeds from the sale of the Certificates shall, promptly upon receipt by the City,be applied as follows: (a) Accrued interest shall be deposited into the Series 2005 Certificates of Obligation Interest and Sinking Fund;and (b) The remaining proceeds from the sale of the Certificates, together with investment earnings thereof, shall be deposited into the Series 2005 Certificates of Obligation Construction Fund and shall be used for the purposes set out in Section 3 of this Ordinance,with any remainder constituting a reserve to be deposited into the Series 2005 Certificates of Obligation Interest and Sinking Fund. 25. Open Meeting. 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, and such notice as given is hereby authorized,approved,adopted and ratified. 26. ReOsstrar. The form of agreement setting forth the duties of the Registrar is hereby -19- approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. 27. nffirial Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Certificates 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 Certificates by the Underwriters is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 2$. Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable,the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. 29. Related M tters. To satisfy in a timely manner all of the City's obligations under this Ordinance,the Mayor,the City Clerk,the City Treasurer, 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 Certificates, 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. 30. No Personal Liability. No recourse shall be had for payment of the principal of or premium, if any, or interest on Certificate, or for any claim based thereon, or under this Ordinance, against any official or employee of the City or any person executing any Certificate. 31. Additional Obligations- The City undertakes and agrees for the benefit of the holders of the Certificates 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 1,2006 which annual financial information and operating data shall be of the type included in the following listed sections contained in the Final Official Statement: SELECTED FINANCIAL INFORMATION DEBT STATEMENT -20- TAX DATA SELECTED FINANCIAL DATA ADMINISTRATION OF THE CITY Appendix`B" 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, 2005, 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 Certificates,if material within the meaning of the federal security laws to a decision to purchase or sell Certificates: 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 Certificates; vii. Modifications to rights of Certificate holders; viii. Calls; ix. Defeasances; X. Release,substitution or sale of property securing repayment of the Certificates; and xi. Rating changes. 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 -21- 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 regulations, 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, or 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 Certificates 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 CERTIFICATES MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS 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 32 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 Certificates 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 Certificates 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 Certificates. The City may also amend or repeal the obligations and agreement in this Section 35 if the SEC amends -22- 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 Certificates in the primary offering of the Certificates 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 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 Certificates. 32. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent herewith are hereby repealed to the extent of such inconsistency. 33. F.ffective Tate. This Ordinance shall be in force and effect from and after its final passage,and it is so ordered. [The remainder of this page has intentionally been left blank]. -23- PASSED AND APPROVED this 24th day of May,2005. Mayor,The City of Beaumont,Texas ATTEST: City Clerk, The City of Beaumont,Texas (SEAL) -24- -a.9 PRELIMINARY OFFICIAL STATEMENT DATED MAY 13, 2005 o This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase the Certificates. Upon the sale of the Certificates,the Official Statement will be completed and delivered to the Purchaser. IN THE OPINION OF BOND COUNSEL, INTEREST ON THE CERTIFICATES IS EXCLUDABLE FROM GROSS INCOME FOR g FEDERAL INCOME TAX PURPOSES UNDER EXISTING LAW, SUBJECT TO THE MATTERS DESCRIBED UNDER "LEGAL MATTERS—TAX EXEMPTION"HEREIN,INCLUDING THE ALTERNATIVE MINIMUM TAX ON CORPORATIONS. E a NEW ISSUE,—BOOK-ENTRY-ONLY rn o $2090009000 o N THE CITY OF BEAUMONT.) TEXAS (A political subdivision of the State of Texas located within Jefferson County) � o CERTIFICATES OF OBLIGATION, SERIES 2005 Dated: May 15,2005 Principal Due: March 1 a Principal and interest are payable at the principal corporate trust office of JPMorgan Chase Bank, N.A., Dallas, Texas, the paying a agent/registrar (the "Registrar"). Interest accrues from May 15, 2005, and is payable each March 1 and September 1 of each year, . ,`. .y commencing March 1, 2006, until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled g maturities on March 1, 2015 or any date thereafter, at the option of the City. Upon redemption the Certificates will be payable at a all price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates are issued in fully registered form in integral multiples of$5,000. Interest on the Certificates will be payable by check,dated as of the interest payment o date,and mailed by the Registrar to registered owners shown on the records of the Registrar on the fifteenth calendar day of the month next preceding each interest payment date (the "Record Date"). At the request of any registered owner of$1,000,000 or more in aggregate principal amount of Certificates,the Registrar shall pay interest thereon by wire transfer in immediately available funds to b � the account designated by such owner to the Registrar at least five days before the Record Date for such payment. 8 F MATURITY SCHEDULE o H (Due March 1) T Initial CUSIP Initial CUSIP Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. ° Maturity Amount Rate Yield(a) 074561(c) Maturity Amount Rate Yield(a) 074561(c) a 2007 $ 100,000 % % 2017 $1,305,000 % % w 2008 190,000 2018 1,360,000 r'- 9 2009 145,000 2019 1,775,000 2010 100,000 2020(b) 1,810,000 b:= 2011 195,000 2021(b) 1,855,000 2012 220,000 2022(b) 1,900,000 2013 275,000 2023(b) 1,960,000 o_ 2014 325,000 2024(b) 2,020,000 2015 1,150,000 2025(b) 2,095,000 s 2016(b) 1,220,000 A (a) The initial yields will be established by and are the sole responsibility of the Purchaser,and may subsequently be changed. R (b) The Certificates maturing on or after March 1,2016 are subject to redemption,at the option of the City,at the par value thereof T:1 N plus accrued interest,in whole or in part,on March 1,2015,or any date thereafter. ° o (c) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau,A Division of the McGraw- E_ a Hill Companies,Inc.,and are included solely for the convenience of the registered owners of the Bonds. Neither the City,the 8 v Financial Advisor,nor the Purchasers are responsible for the selection or correctness of the CUSIP numbers set forth herein. a� o The above certificates(the"Certificates")are being issued pursuant to the Constitution and laws of the State of Texas and provisions o of an ordinance(the"Ordinance")adopted by the City Council(the"City Council")of the City on May 24,2005. Proceeds from the a z sale of the Certificates will be used to provide funds for street, drainage, building and park improvements and the acquisition of equipment. The proceeds will also be used to pay certain costs in connection with the issuance of the Certificates. (See "THE 0. g CERTIFICATES — Use of Proceeds.") The Certificates, when issued, will constitute valid and binding obligations of The City of Beaumont,Texas(the"City")and will be payable from the proceeds of an annual ad valorem tax, levied within the limits prescribed ' by law,against taxable property within the City and will be further payable from a junior and subordinate pledge of the net revenues 9 2 of the City's waterworks system but only to the extent of and not in an amount in excess of$10,000. o' The Certificates are offered when,as and if issued subject to the approving opinion of the Attorney General of the State of Texas and y the opinion of Orgain, Bell &Tucker, L.L.P., Beaumont, Texas, Bond Counsel to the City as to the validity of the issuance of the o Certificates under the Constitution and the laws of the State of Texas. The Certificates are expected to be available for delivery on or �a ° about June 23,2005. c _4 E b s SELLING: TUESDAY,MAY 24, 2005 AT 12:00 NOON C.S.T. �w 1, This Official Notice of Sale does not alone constitute an offer to sell but is merely notice of sale of the certificates described herein. The offer to sell such certificates is being made by means of this Official Notice of Sale, the Official Bid Form and the Preliminary Official Statement. Ri 11 U OFFICIAL NOTICE OF SALE THE CITY OF BEAUMONT, TEXAS (Jefferson County) $2090009000 CERTIFICATES OF OBLIGATION,SERIES 2005 Sealed Bids Will Be Received Tuesday,May 24,2005 until 12:00 Noon, Central Standard Time i i i This Official Notice of Sale does not alone constitute an invitation for bids but is merely notice of sale of the obligations described herein. The invitation for bids on such Certificates is being made by means of this Official Notice of Sale, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully exatnine all the documents to determine investment quality of the Certificates. OFFICIAL NOTICE OF SALE $20,000,000 THE CITY OF BEAUMONT,TEXAS (Jefferson County,Texas) CERTIFICATES OF OBLIGATION, SERIES 2005 THE SALE CERTIFICATES OF OBLIGATION OFFERED FOR SALE AT COMPETITIVE BID: The City Council(the "Council") of The City of Beaumont, Texas (the "City") is offering for sale at competitive bid its $20,000,000 Certificates of Obligation,Series 2005(the"Certificates"). r PLACE AND TIME OF SALE: The financial advisor to the City, RBC Dain Rauscher Inc. (the "Financial Advisor")will receive sealed bids at the office of the Finance Officer of the City,801 Main Street,Beaumont,Texas 77701, until 12:00 Noon, C.S.T., Tuesday, May 24, 2005, and the bids will be opened and publicly read. Sealed bids,which must be submitted in duplicate on the Official Bid Form and plainly marked 'Bid for Certificates," are to be addressed to "Mayor and City Council, City of Beaumont, Texas." All bids must be delivered at the above address prior to the above-scheduled time. Any bid received after such scheduled time for bid opening will not be accepted and will be returned unopened. ELECTRONIC BIDDING PROCEDURE: Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY. Subscription to the i-Deal's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. By submitting an electronic bid, the bidder is representing they are a proper subscriber of BIDCOMP Competitive Bidding System and that the City is an expressed third party beneficiary of their license agreement and the bidder agrees, for the benefit of DALCOMP, municipal securities issuers and their financial advisors, for which it may submit bids, that its bids submitted through BIDCOMP and PARITY shall be irrevocable and shall constitute valid offers without a signature by an officer of the bidder. The City will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders must submit, prior to 12:00 Noon, C.S.T., May 24, 2005, SIGNED Official Bid Forms, in duplicate, to Frank Ildebrando, RBC Dain Rauscher Inc., 1001 Fannin, Suite 400, Houston, Texas 77002. Electronic bids may be received via PARITY in the manner described below,until 12:00 Noon, C.S.T., Houston time, on Tuesday, May 24,2005. Electronic bids must be submitted via PARITY in accordance with this Official Notice of Sale,until 12:00 Noon, C.S.T.,Houston time, but no bid will be received after the time for receiving bids specified above. To the extent any instructions or directions set forth in PARITY conflict with this Official Notice of Sale,the terms of this Notice of Sale shall control. For further information about PARITY,potential bidders may contact the financial advisor to the City or Dalcomp at 40 West 23rd Street,5th floor,New York,NY 10010,telephone(212)404-8102. For purposes of both the written bid process and the electronic bidding process, the time as maintained by PARITY shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the City,as described under"CONDITIONS OF THE SALE-Basis of Award" below. All electronic bids shall be deemed to incorporate the provisions of this Official Notice of Sale and the Official Bid Form. BIDS BY TELEPHONE OR FACSIMILE: Bidders must submit, prior to Tuesday, May 24, 2005, duplicate signed Official Bid Forms to Jan Bartholomew, RBC Dain Rauscher Inc., 1001 Fannin, Suite 400, Houston, Texas 77002 and submit their bid by telephone or facsimile (fax) on the date of sale by 12:00 Noon, C.S.T. Any bid received after such scheduled time will not be accepted and will be returned unopened. Frank Ildebrando of RBC Dain Rauscher Inc. will call telephone bidders who have submitted SIGNED Official Bid Forms prior to the date of the sale. Fax bids must be received by 12:00 Noon, C.S.T., on the date of the sale. Contact Frank Ildebrando of RBC Dain Rauscher Inc.,telephone(713)651-3370,on the day of the sale to obtain the fax phone numbers. RBC Dain Rauscher Inc. will not be responsible for the submission of any bids received after the above deadlines. RBC Dain Rauscher Inc. assumes no responsibility or liability with respect to any irregularities associated with the submission of any bids. AWARD OF THE CERTIFICATES: The Council will take action to award the Certificates(or reject all bids)at a regular meeting of the City Council scheduled to convene at 1:30 P.M., C.S.T. on the date of the bid opening, and will adopt an ordinance authorizing the Certificates and approving the Official Statement (the "Ordinance"). The City reserves the right to reject any or all bids and to waive any irregularities. THE CERTIFICATES DESCRIPTION: The Certificates will be dated May 15,2005 and interest will be calculated on the basis of a 360- day year of twelve 30-day months. Interest on the Certificates will be paid on March 1,2006, and semiannually on March 1 and September 1 of each year thereafter until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1, 2015, or any date thereafter, at the option of the City. Upon redemption the Certificates will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates will be issued in fully registered form in principal amounts of $5,000 or any integral multiple thereof. Principal and semiannual interest will be paid by JPMorgan Chase Bank, N.A.,Dallas,Texas,the Paying Agent/Registrar. Interest will be paid by check dated as of the interest payment date and mailed on or before each interest payment date by the Paying Agent/Registrar to the registered owner appearing on the Paying Agent/Registrar's books on the Record Date (hereinafter defined). Principal will be paid to the registered owners at maturity upon presentation of the Certificates to the Paying Agent/Registrar. The Certificates will mature March 1 in each year as follows: Principal Principal Maturity Date Amount Maturity Date Amount March 1,2007 $ 100,000 March 1,2017 $1,305,000 March 1,2008 190,000 March 1,2018 1,360,000 March 1,2009 145,000 March 1,2019 1,775,000 March 1,2010 100,000 March 1,2020 1,810,000 March 1,2011 195,000 March 1,2021 1,855,000 March 1,2012 220,000 March 1,2022 1,900,000 March 1,2013 275,000 March 1,2023 1,960,000 March 1,2014 325,000 March 1,2024 2,020,000 March 1,2015 1,150,000 March 1,2025 2,095,000 March 1,2016 1,220,000 PAYING AGENUREGISTRAR: The initial Paying Agent/Registrar shall be JPMorgan Chase Bank, N.A., Dallas,Texas,(see"Paying Agent/Registrar"in Official Statement). ll X I r SOURCE OF PAYMENT: The Certificates are direct obligations of the City,and the principal thereof and interest thereon are payable solely from the proceeds of an annual ad valorem tax levied upon all taxable property within the City, within the limits prescribed by law and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks and sewer system, but only to the extent of and in an amount not in excess of $10,000.00 of the net revenues of such system. Further details with reference to the Certificates are set forth in the Official Statement. ' CONDITIONS OF THE SALE TYPES OF BIDS AND INTEREST RATES: The Certificates will be sold in one block on an"All or None"basis, and at a price of not less than their par value plus accrued interest to the date of delivery of the Certificates. Bidders are invited to name the rate(s) of interest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/20 of 1% and the net effective interest rate for the Certificates(calculated in the manner required by Chapter 1204,Texas Government Code, as amended)must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 2%in rate. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Certificates of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in his bid the total interest cost in dollars and the net effective interest rate determined hereby,which shall be considered informative only and not as a part of the bid. BASIS OF AWARD: For the purpose of awarding sale of the Certificates, the interest cost of each bid will be computed by determining at the rate(s) specified therein,the total dollar cost of all interest on the Certificates from the date thereof to their respective maturities,using the table of Certificate Years herein,and deducting therefrom the premium bid, if any. Subject to the City's right to reject any or all bids and to waive any irregularities, the Certificates will be awarded to the bidder(the "Purchaser")whose complying bid,based on the above computation, produces the lowest net interest cost to the City. GOOD FAITH DEPOSIT: A Good Faith Deposit,payable to the"City of Beaumont" in the amount of$400,000, is required. Such Good Faith Deposit shall be in the form of a Cashier's Check,which is to be retained uncashed by the City pending the Purchaser's compliance with the terms of his bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately,it shall be made available to the City prior to the opening of the bids,and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Purchaser who shall be named in such instructions. Unless otherwise agreed, the Good Faith Deposit will be returned to the Purchaser on the date of delivery of the Certificates. No interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and pay for the Certificates in accordance with his bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened and an award of the Certificates has been made. FINANCIAL ADVISOR'S RIGHT TO BID: The City has given RBC Dain Rauscher Inc.,the Financial Advisor, the right to bid on the Certificates. INITIAL OFFERING PRICE CERTIFICATE: To provide the City with information to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exclusion of interest on the Certificates from gross income for federal income tax purposes, the successful bidder will be required to complete, execute, and deliver to the City,at the time that the Certificates are awarded,a certification regarding"issue price" substantially in the form attached hereto or accompanying this Notice of Sale. If the successful bidder will not reoffer the Certificates for sale or has not sold a substantial amount of the Certificates of any maturity by the date of delivery, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Certificates as a result of the successful bidder's inability to certify actual sales of Certificates at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate by iii i the date of the award of the Certificates, if its bid is accepted by the City. It will be the responsibility of the successful bidder to institute such syndicate reporting requirements, to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certifications with reasonable certainty. Any questions concerning,such certification should be directed to Bond Counsel. CONTINUING DISCLOSURE AGREEMENT: The City will agree in the Ordinance authorizing the Certificates to provide certain periodic information and notices of material events in accordance with the Securities and Exchange Commission Rule 15c2-12, as described in the Preliminary Official Statement under "Continuing Disclosure." The Purchaser's obligation to accept and pay for the Certificates is conditioned upon delivery to the Purchaser or its agent of a certified copy of the Ordinance containing the agreement described under such heading. DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS The delivery of the Certificates is subject to receipt of the opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas,Bond Counsel for the City,hereinafter described. CUSIP NUMBERS: It is anticipated that CUSIP identification numbers will appear on the Certificates,but neither the failure to print or type such number on any Certificates nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Certificates in accordance with the terms of this Notice of Sale and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Certificates shall be paid by the City; provided, however,that the CUSIP Service Bureau fee for the assignment of the numbers shall be the responsibility of and shall be paid for by the Purchaser. INITIAL DELIVERY OF INITIAL CERTIFICATES: Initial Delivery will be accomplished by the issuance of registered Certificates in the aggregate principal amount of$20,000,000, payable to the Purchaser, signed by the manual or facsimile signature of the Mayor and City Clerk of the City, approved by the Attorney General, and registered by the Comptroller of Public Accounts. Initial Delivery will be at the corporate trust office of the Paying Agent/Registrar. Payment for the Certificates must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Purchaser will be given five(5) business days' notice of the £ time fixed for delivery of the Certificates. It is anticipated that Initial Delivery of the Initial Certificates can be made on or about June 23,2005,and it is understood and agreed that the Purchaser will accept delivery and make payment for the Initial Certificates by 10:00 A.M.,on June 23,2005,or thereafter on the date the Certificates are tendered for delivery, up to and including July 26,2005. If for any reason the City is unable to make delivery on or before July 26, 2005, then the City shall immediately contact the Purchaser and offer to allow the Purchaser to extend its offer for an additional fifteen(15)days. If the Purchaser does not elect to extend its offer within six(6)days thereafter, then his Good Faith Deposit will be returned, and both the City and the Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages, whether direct, consequential or otherwise, by reason of its failure to deliver the Certificates. BOOK-ENTRY-ONLY SYSTEM: The definitive Certificates will be initially registered and delivered only to Cede&Co.,the nominee of the Depository Trust Company("DTC")pursuant to the Book-Entry-Only System of the DTC. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneficial owners thereof. Principal of, premium,if any,and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede&Co.,which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates. CONDITIONS TO DELIVERY: The obligation of the Purchaser to take up and pay for the Certificates is subject to the Purchaser's receipt of(a)the legal opinion of Orgain,Bell&Tucker,L.L.P.,Beaumont,Texas,Bond Counsel for the City("Bond Counsel"),(b)certificate of the City to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Certificates,and(c)the certification of the City as to the Official Statement,all as further described in the Official Statement. i iv LEGAL OPINIONS: The City will furnish the Purchaser a transcript of certain certified proceedings held incident to the authorization and issuance of the Certificates,including a certified copy of the unqualified approving opinion of the Attorney General of Texas, as recorded in the Bond Register of the Comptroller of Public Accounts of the State of Texas, to the effect that the Certificates, which the Attorney General will have examined, are valid and binding obligations of the City under the Constitution and laws of the State of Texas. The City also will furnish the approving legal opinion of Orgain, Bell & Tucker, L.L.P., Bond Counsel, to the effect that, based upon an examination of such transcript, the Certificates are valid and binding obligations of the City under the Constitution and laws of the State of Texas. The legal opinion of Bond Counsel will further state that taxable property in the City is subject to the levy of a continuing, direct annual ad valorem tax, within the limits prescribed by law, to pay the Certificates and interest thereon. The opinion of Bond Counsel is expected to be reproduced on the back panel of the Certificates over a certification by the City Clerk of the City attesting that such legal opinion was dated as of the date of delivery of and payment for the Certificates and is a true and correct copy of the original opinion. Errors or omissions in the printing of such legal opinion on the Certificates shall not affect the validity of the Certificates nor constitute cause for the failure or refusal by the Purchaser to accept delivery of and pay for the Certificates. NO-LITIGATION CERTIFICATE: The customary closing papers, including a certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Certificates, or, which would affect the provisions made for their payment or security, or in any manner questioning the validity of said Certificates will also be furnished. CHANGE IN TAX EXEMPT STATUS: At any time before the Certificates are tendered for delivery, the Purchaser may withdraw its bid if the interest received by private holders on certificates of the same type and character shall be declared to be taxable income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale. GENERAL CONSIDERATIONS i FINANCIAL ADVISOR: RBC Dain Rauscher Inc.is employed as Financial Advisor to the City in connection with § the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. RBC Dain Rauscher Inc.,in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documentation with respect to the federal income tax status of the Certificates. BLUE SKY LAWS: By submission of its bid, the Purchaser represents that the sale of the Certificates in states other than Texas will be made only pursuant to exemptions from registration or, where necessary,the Purchaser will register the Certificates in accordance with the securities law of the states in which the Certificates are offered or sold. The City agrees to cooperate with the Purchaser,at the Purchaser's written request and expense,in registering the Certificates or obtaining an exemption from registration in any state where such action is necessary,but the City will not consent to service of process in any such state. MUNICIPAL BOND INSURANCE: The City has submitted an application for municipal bond insurance under ithe bidder option program. The premium for such insurance,if any,will be paid by the Purchaser. I i { I v i' OFFICIAL STATEMENT By accepting the winning bid,the City agrees to the following representations and covenants to assist the Purchaser in complying with Rule 15c2-12 of the Securities and Exchange Commission("SEC"). FINAL OFFICIAL STATEMENT: The City has prepared the accompanying Official Statement for dissemination to potential purchasers of the Certificates, but will not prepare any other document or version for such purpose except as described below. The Purchaser will be responsible for informing the City of the initial offering yields. The City will prepare a final Official Statement describing these offering yields,the interest rates on the Certificates, the selling compensation, the final debt service schedule, the ratings assigned to the Certificates (if not currently included),and the terms of and obligor on any policy of municipal bond insurance. Accordingly,the City deems the accompanying Official Statement to be final as of its date,within the meaning of SEC Rule 15c2-12(b)(1),except for the omission of the foregoing items. By delivering the final Official Statement or any amendment or supplement thereto to the Purchaser on or after the sale date,the City represents the same to be complete as of such date,within the meaning of SEC Rule 15c2-12(e)(3). Notwithstanding the foregoing, the only representations concerning the absence of material misstatements or omissions from the Official Statement which are or will be made by the City are those described in the Official Statement under"CERTIFICATION OF THE OFFICIAL STATEMENT." DELIVERY OF OFFICIAL STATEMENTS: The City will furnish to the Purchaser (and to each other participating purchaser of the Certificates, within the meaning of SEC Rule 15c2-12(a), designated by the Purchaser), within seven days after the sale date, up to 250 Official Statements. The City will also furnish to the Purchaser a like number of any supplement or amendment prepared by the City for dissemination to potential purchasers of the Certificates as described above as well as such additional copies of the Official Statement or any supplement or amendment as the Purchaser may request prior to the 90th day after the end of the underwriting period referred to in SEC Rule 15c2-12(e)(2). The City will pay the expense of preparing up to 250 copies of the Official Statement and all copies of any supplement or amendment issued on or before the delivery date, but the Purchas er must pay for all other copies of the Official Statement or any supplement or amendment thereto. OFFICIAL STATEMENT: Upon the award of the sale of the Certificates,the Preliminary Official Statement will be amended to conform to the terms of the Purchaser's bid and, if necessary, to make certain other changes. In connection therewith, the Purchaser will be required to furnish information concerning the initial resale offering prices and yields of the Certificates as well as the names of the members of the underwriting syndicate. The Purchaser will be furnished with such copies of the Official Statement for distribution to purchasers from the Purchaser as he may reasonably request. Copies in excess of 250 or additional copies will be made available at the Purchaser's request and expense. The City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement to anyone other than the Purchaser. ADDITIONAL COPIES OF NOTICE,BID FORM AND STATEMENT: A limited number of additional copies of this Notice of Sale, the Official Bid Form and the Official Statement, as available over and above the normal mailing,may be obtained at the offices of RBC Dain Rauscher Inc., 1001 Fannin, Suite 400,Houston,Texas,77002, Financial Advisor to the City. On the date of the sale, the Council will, in the Ordinance authorizing the issuance of the Certificates, confirm its approval of the form and content of the Official Statement,and any addenda,supplement or amendment thereto,and authorize its use in the reoffering of the Certificates by the Purchaser. /s/ Mayor The City of Beaumont,Texas May 13,2005 I vi r OFFICIAL BID FORM May 24,2005 1 Mayor and City Council City of Beaumont 801 Main Street Beaumont,Texas 77701 Ladies and Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated May 13, 2005, which are incorporated herein by reference, we hereby submit the following bid for the $20,000,000 THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2005, dated May 15, 2005. This offer is being made for all said Certificates and for not less than all. For said legally issued Certificates of Obligation, we will pay you the par value thereof, plus accrued interest from their date to the date of delivery to us, plus a cash premium of $ for Certificates of Obligation maturing and bearing interest per annum as follows: Principal Interest Principal Interest Maturity Date Amount Rate Maturity Date Amount Rate March 1,2007 $ 100,000 % March 1,2017(a)(b) $1,305,000 % March 1,2008 190,000 March 1,2018(a)(b) 1,360,000 March 1,2009 145,000 March 1,2019(a)(b) 1,775,000 March 1,2010 100,000 March 1,2020(a)(b) 1,810,000 March 1,2011 195,000 March 1,2021(a)(b) 1,855,000 March 1,2012 220,000 March 1,2022(a)(b) 1,900,000 March 1,2013 275,000 March 1,2023(a)(b) 1,960,000 March 1,2014 325,000 March 1,2024(a)(b) 2,020,000 March 1,2015 1,150,000 March 1,2025(a)(b) 2,095,000 March 1,2016(a)(b) 1,220,000 (a) At the option of the Initial Purchaser, any or all of such serial maturities may be designated as term bonds subject to mandatory sinking fund redemption as follows;provided that the mandatory sinking fund amount in each year shall equal the amounts shown above as maturing in such year. Term Bonds Years of First Maturity Date Mandatory Principal Amount Interest (March 1) Redemption of Term Bonds Rate $ % (b) Subject to optional redemption and payment, at the option of the City, in whole or, from time to time, in part, on March 1, 2015, or on any date thereafter at a price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption. Interest cost,in accordance with the above bid,is: GrossInterest Cost....................................................................................................... $ Less: Premium............................................................................................................. $ NETINTEREST COST.............................................................................................. $ EFFECTIVE INTEREST RATE................................................................................ % The Initial Certificates shall be registered in the name of (syndicate manager). We will advise JPMorgan Chase Bank,N.A.,Dallas,Texas,the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the Bank, ,Texas,in the amount of$400,000 which represents our Good Faith Deposit(is attached hereto)or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the "Official Notice of Sale" and "Official Statement." We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office,JPMorgan Chase Bank,N.A.,Dallas,Texas,not later than 10:00 A.M.,on June 23,2005,or thereafter on the date the Certificates are tendered for delivery,pursuant to the terms set forth in the Official Notice of Sale. The undersigned agrees to complete, execute and deliver to the City, by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale,with such changes thereto as may be acceptable to the City. Respectfully submitted, 3 G By Authorized Representative ACCEPTED this 24th day of May,2005,by the City Council,The City of Beaumont,Texas. Mayor ATTEST: City Clerk (For your information you will find attached a list of the group of purchasers associated with us in this proposal) OFFICIAL BID FORM May 24,2005 Mayor and City Council City of Beaumont 801 Main Street V Beaumont,Texas 77701 Ladies and Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated May 13, 2005, which are incorporated herein by reference, we hereby submit the following bid for the $20,000,000 THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2005, dated May 15, 2005. This offer is being made for all said Certificates and for not less than all. For said legally issued Certificates of Obligation, we will pay you the par value thereof, plus accrued interest from their date to the date of delivery to us, plus a cash premium of $ for Certificates of Obligation maturing and bearing interest per annum as follows: Principal Interest Principal Interest Maturity Date Amount Rate Maturity Date Amount Rate March 1,2007 $ 100,000 % March 1,2017(a)(b) $1,305,000 % March 1,2008 190,000 March 1,2018(a)(b) 1,360,000 March 1,2009 145,000 March 1,2019(a)(b) 1,7759000 March 1,2010 100,000 March 1,2020(a)(b) 19810,000 March 1,2011 195,000 March 1,2021(a)(b) 1,855,000 March 1,2012 220,000 March 1,2022(a)(b) 1,900,000 March 1,2013 275,000 March 1,2023(a)(b) 1,960,000 March 1,2014 325,000 March 1,2024(a)(b) 29020,000 March 1,2015 1,150,000 March 1,2025(a)(b) 2,095,000 March 1,2016(a)(b) 1,2209000 (a) At the option of the Initial Purchaser, any or all of such serial maturities may be designated as term bonds subject to mandatory sinking fund redemption as follows;provided that the mandatory sinking fund amount in each year shall equal the amounts shown above as maturing in such year. Term Bonds Years of First Maturity Date Mandatory Principal Amount Interest (March 1) Redemption of Term Bonds Rate (b) Subject to optional redemption and payment, at the option of the City, in whole or, from time to time, in part, on March 1, 2015, or on any date thereafter at a price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption. i Interest cost,in accordance with the above bid,is: GrossInterest Cost....................................................................................................... $ Less: Premium............................................................................................................. $ NET INTEREST COST.............................................................................................. $ EFFECTIVE INTEREST RATE................................................................................ % The Initial Certificates shall be registered in the name of (syndicate manager). We will advise JPMorgan Chase Bank,N.A.,Dallas,Texas,the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the Bank, ,Texas,in the amount of$400,000 which represents our Good Faith Deposit(is attached hereto)or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the "Official Notice of Sale" and "Official Statement." We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office,JPMorgan Chase Bank,N.A.,Dallas,Texas,not later than 10:00 A.M.,on June 23,2005,or thereafter on the date the Certificates are tendered for delivery,pursuant to the terms set forth in the Official Notice of Sale. The undersigned agrees to complete, execute and deliver to the City, by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale,with such changes thereto as may be acceptable to the City. Respectfully submitted, By Authorized Representative ACCEPTED this 24`s day of May,2005,by the City Council,The City of Beaumont,Texas. i Mayor ATTEST: City Clerk (For your information you will find attached a list of the group of purchasers associated with us in this proposal) i� ii N v CERTIFICATE OF UNDERWRITER The undersigned hereby certifies with respect to the sale of$20,000,000 The City of Beaumont, Texas, Certificates of Obligation,Series 2005(the"Certificates"): 1. The undersigned is the underwriter or the manager of the syndicate of underwriter (the "Underwriters") which has purchased the Certificates from The City of Beaumont, Texas (the "Issuer") at competitive sale. 2. The initial offering price to the public for the Certificates (expressed as a dollar amount, yield percentage,or percentage of principal amount and exclusive of accrued interest)is as set forth below: Principal Principal Amount Year of Offering Amount Year of Offering Maturing Maturity Price Maturing Maturity Price $ 100,000 3-1-2007 % $1,305,000 3-1-2017 % 190,000 3-1-2008 % 1,360,000 3-1-2018 % 145,000 3-1-2009 % 1,775,000 3-1-2019 % 100,000 3-1-2010 % 1,810,000 3-1-2020 % 195,000 3-1-2011 % 1,855,000 3-1-2021 % 220,000 3-1-2012 % 1,900,000 3-1-2022 % 275,000 3-1-2013 % 1,960,000 3-1-2023 % 325,000 3-1-2014 % 2,020,000 3-1-2024 1,150,000 3-1-2015 % 2,095,000 3-1-2025 1,220,000 3-1-2016 % 3. The Underwriters have made a bona fide offering to the public of all of the Certificates of each maturity at the initial offering prices to the public, as set out above. The initial offering price set forth above is the price at which the Underwriters expected, on the date the Certificates were purchased by the Underwriters, to offer such Certificates to the general public and such price has not been adjusted to take into account actual facts after such date. 4. The initial offering prices described above for each maturity of the Certificates reflect current market prices at the time such prices were established. 5. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 6. If any or all of the obligations constituting the Certificates are to be guaranteed then the premium paid for such guarantee in an amount equal to $ is a reasonable amount payable solely for the transfer of credit risk for the payment of debt service on the Certificates and does not include any amount payable for a cost other than such guarantee, e.g., a credit rating fee. The Underwriter has represented that the present value of the premium paid for the guarantee for each obligation constituting the Certificates to which such premium is properly allocated and which are insured thereby is less than the present value of the interest reasonably expected to be saved as a result of the insurance on each obligation constituting the Certificates. The premium has been paid to a person which is not exempt from federal income taxation and which is not a user or related to the user of any proceeds of the Certificates. In determining present value for this purpose, the yield of the Certificates (determined with regard to the payment of the guarantee fee)has been used as the discount rate. i 1 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in complying with the conditions imposed by the Internal Revenue Code of 1986, as amended, on the exclusion of interest on the Certificates from the gross income of their owners for federal income tax purposes. EXECUTED and DELIVERED this ,2005. (Name of Underwriter or Manager) By: Title: !k F f 1 1 BOND YEARS $20,000,000 THE CITY OF BEAUMONT,TEXAS (Jefferson County,Texas) CERTIFICATES OF OBLIGATION SERIES 2005 Dated: May 15,2005 Due: As shown below Years Maturity Cumulative Date Amount Bond Years Bond Years March 1,2007 $ 100,000 179.4444 179.4444 March 1,2008 190,000 530.9444 710.3889 March 1,2009 145,000 550.1944 1,260.5833 March 1,2010 100,000 479.4444 1,740.0278 March 1,2011 195,000 1,129.9167 2,869.9444 March 1,2012 220,000 1,494.7778 4,364.7222 March 1,2013 275,000 2,143.4722 6,508.1944 March 1,2014 325,000 2,858.1944 9,366.3889 March 1,2015 1,150,000 11,263.6111 20,630.0000 March 1,2016 1,220,000 13,169.2222 33,799.2222 March 1,2017 1,305,000 15,391.7500 49,190.9722 March 1,2018 1,360,000 17,400.4444 66,591.4167 March 1,2019 1,775,000 24,485.1389 91,076.5556 March 1,2020 1,810,000 26,777.9444 117,854.5000 March 1,2021 1,855,000 29,298.6944 147,153.1944 March 1,2022 1,900,000 31,909.4444 179,062.6389 March 1,2023 1,960,000 34,877.1111 213,939.7500 March 1,2024 2,020,000 37,964.7778 251,904.5278 March 1,2025 2,095,000 41,469.3611 293,373.8889 AVERAGE MATURITY—14.563 YEARS 2 May 24,2005 Consider approving the issuance of$15 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2005; and containing other matters related thereto 4 City of Beaumont •�• Council Agenda Item M IL TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Finance Officer MEETING DATE: May 24, 2005 AGENDA MEMO DATE: May 20, 2005 REQUESTED ACTION: Council consider an ordinance authorizing the issuance of$15 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2005;and containing other matters related thereto. RECOMMENDATION Administration requests approval of an ordinance authorizing the issuance of$15 million City of Beaumont,Texas,Waterworks and Sewer System Revenue Bonds,Series 2005;and containing other matters related thereto. BACKGROUND Results of the competitive bid process will be read by the City's Financial Advisor,Frank lldebrando of RBC Dain Rauscher. A recommendation will be made to award the bonds to the underwriter offering the lowest overall interest cost to the City. The revenue bonds will mature September 1,2007 through September 1,2028 with interest payable semiannually in March and September beginning March 1,2006. JP Morgan Chase Bank,N.A..will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for June 23, 2005. Proceeds will be used to provide funds for the expansion,repair,renovation and related improvements to the waterworks and sewer system. BUDGETARY IMPACT All debt shall be incurred in the Water Fund which is supported by revenues of the waterworks and sewer system. Water and Sewer rates approved through June 2007 are sufficient to meet debt service requirements on the Revenue Bonds. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Finance Officer. DRAFT r No. 3 ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE OF THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2005; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (herein referred to as the "City" or the "Issuer") is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue bonds payable from the net revenues of its waterworks and sewer system to provide money for acquisitions, extensions, construction, improvement or repair of such system; and WHEREAS, the City now desires to issue bonds in order to provide funds to finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system; Now,Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT,TEXAS: 1. Findings and Determinations. It is hereby found and determined that 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"Act"shall mean Chapter 1502, Texas Government Code, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance. The term `Blanket Issuer Letter of Representations" means the Blanket Issuer 1 Letter of Representations between the City,the Registrar and DTC. The term `Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment of principal and interest on the Bonds. The term `Bond Insurer" shall mean , or any successor thereto or assignee thereof. The term 'Bond 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 the Bonds registered to,each Owner. The term 'Bonds" shall mean the $15,000,000 The City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2005 authorized in this Ordinance,unless the context clearly indicates otherwise. The term"Business Day" shall mean any day which is not a Saturday, Sunday, a day on which banking institutions in the city where the principal corporate trust office of the Registrar is located are authorized by law or executive order to close, or a legal holiday. The term "City" shall mean The City of Beaumont,Texas. The term "Closing Date"means the date of the initial delivery of and payment for the Bonds. The term"Code"means the Internal Revenue Code of 1986, as amended. The term"Comptroller"means the Comptroller of Public Accounts of the State of Texas. The term"DTC"means The Depository Trust Company of New York,New York, or any successor securities depository. The term "DTC Participant" means 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 "Gross Revenues" shall mean all revenues, income and receipts of every nature derived or received by the City from the operation and ownership of the System 2 (but excluding any utility deposits) and the interest income from the investment or deposit of money in the Revenue Fund,the Interest and Sinking Fund,and the Reserve Fund. The term "Interest Payment Date", when used in connection with any Bond, shall mean March 1, 2006, and each March 1 and September 1 thereafter until maturity or earlier redemption of such Bond. The term "Maintenance and Operation Expenses" shall mean the reasonable and necessary expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service, and all payments under contracts now or hereafter defined as operating expenses by the Legislature of the State of Texas. Depreciation shall never be considered as a Maintenance and Operation Expense. The term"MSRB"shall mean the Municipal Securities Rulemaking Board. The term "Net Revenues" shall mean all Gross Revenues remaining after deducting the Maintenance and Operation Expenses. The term "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. The term "Ordinance" as used herein and in the Bonds shall mean this ordinance authorizing the Bonds and all amendments and supplements hereto. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Bonds. The term "Parity Bonds" shall mean the Bonds, the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1999, and the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, and the City's outstanding Waterworks and Sewer System Adjustable Rate Revenue Bonds, Series 2002, and the City's outstanding Waterworks and Sewer Sysem Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and each series of Additional Parity Bonds from time to time hereafter issued, but only to the extent such Parity Bonds remain outstanding within the meaning of this Ordinance. The term"Paying Agent" shall mean the Registrar. 3 The term "Record Date" shall mean, for any Interest Payment Date, the fifteenth (15th) calendar day of the month next preceding each Interest Payment Date. The term "Registrar" shall mean JPMorgan Chase Bank, N.A., Dallas, Texas, and its successors in that capacity. The term "Reserve Fund Requirement" shall mean an amount equal to the average annual principal and interest requirement on the Parity Bonds, which may be determined and redetermined each year by the City but in no event less frequently than upon the issuance of each series of Parity Bonds. The term"Rule" shall mean SEC Rule 15c-12, as amended from time to ge. The term "SEC" shall mean the United States Securities and Exchange Commission. The term "SID" shall mean the Municipal Advisory Council of Texas, which has been designated by the State of Texas as, and determined by the SEC staff to be, a state information depository within the meaning of the Rule. The term "Special Project" shall mean, to the extent permitted by law, any property, improvement or facility declared by the City not to be part of the System and substantially all of the costs of the acquisition, construction and installation of which is paid from proceeds of a financing transaction other than the issuance of bonds payable from ad valorem taxes or Net Revenues of the System, and for which all maintenance and operation expenses are payable from sources other than revenues of the System, but only to the extent that and for so long as all or any part of the revenues or proceeds of which are or will be pledged to secure the payment or repayment of such costs of acquisition, construction and installation under such financing transaction. The term "System" shall mean all properties, facilities, improvements, equipment, interests and rights constituting the waterworks and sewer system of the City, including all future extensions, replacements, betterments, additions, improvements, enlargements, acquisitions,purchases and repairs to the System,but excluding all Special Projects. The term"Underwriter" shall mean 3. Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of FIFTEEN MILLION DOLLARS ($15,000,000) for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and(ii)paying all costs of issuance of the Bonds(the"Project"). 4 4. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2005" and shall be dated May 15, 2005. The Bonds shall bear interest at the rates set forth in Section 5 below from the later of May 15, 2005, or the most recent Interest Payment Date to which such interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, payable on March 1, 2006, and semiannually thereafter on September 1 and March 1 of each year until maturity or prior redemption. 5. Initial Bonds; Numbers and Denominations. The Bonds shall be initially issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Bonds shall mature, in accordance with this Ordinance, on September 1 in each of the years and in the amounts set out in such schedule. Bonds delivered on transfer of or in exchange for other Bonds shall be numbered(with appropriate prefix) 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 Principal Interest Number Year Amount Rate R-1 2007 $ 100,000 % R-2 2008 $ 100,000 % R-3 2009 $ 250,000 % R4 2010 $ 260,000 % R-5 2011 $ 265,000 % R-6 2012 $ 265,000 % R-7 2013 $ 280,000 % R-8 2014 $ 270,000 % R-9 2015 $ 255,000 % R-10 2016 $ 250,000 % R-11 2017 $ 235,000 % R-12 2018 $ 215,000 % R-13 2019 $ 135,000 % R-14 2020 $ 120,000 % R-15 2021 $1,190,000 % R-16 2022 $1,415,000 % R-17 2023 $1,645,000 % R-18 2024 $1,495,000 % R-19 2025 $1,510,000 % 5 R-20 2026 $1,540,000 % R-21 2027 $1,580,000 % R-22 2028 $1,625,000 % 6. Execution of Bonds; Seal. The Bonds shall be signed by the Mayor and countersigned by the City Clerk or Deputy City Clerk, 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 18 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 18 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the 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 and premium, if any, on 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 respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check 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 Bond Register. Any accrued interest payable at maturity on 6 a Bond shall be paid upon presentation and surrender of such Bond at the principal corporate trust office of the Registrar. If the date for payment of the principal of or interest on any Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date such payment was due. 10. Successor Registrars. The City covenants that at all times while any Bonds are outstanding it will provide a legally qualified bank, trust company, financial institution or other agency to act as Registrar for the Bonds. The City reserves the right to change the Registrar for the Bonds on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Bonds. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Bond 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 Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special. Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 12. Ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment of principal of and premium, if any, or interest on such Bond, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the owner of any Bond in accordance with this Section 12 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 7 Bonds 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 applicable provisions of Texas law, including Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer, and Exchange. So long as any Bonds remain outstanding, the Registrar shall keep the Bond Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. If the Registrar does not maintain its principal offices in the State of Texas, the City agrees to keep a Bond Register at its offices which is identical to the Bond Register maintained by the Registrar and the Registrar will notify the City as to any changes in the Bond Register within 1 business day. 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 in proper form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within 72 hours after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds of the same type, maturity and interest rate and in any authorized denomination, in an aggregate 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 13. Each 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 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. 14. Mutilated Lost or Stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond,the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding. If any Bond is lost, apparently destroyed, 8 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 or Maturity Amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated 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. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Bond, before any replacement Bond 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 Bond; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement 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 14 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- 9 15. 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 fiarnish the City with appropriate certificates of destruction of such Bonds. 16. Book-Enty System. (a) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriter,the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Bonds. (b) With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence,the City and the Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii)the delivery to any DTC Participant or any other person, other than an Owner of a Bond, as shown on the Register, of any notice with respect to the Bonds, including any notice of redemption,or(iii)the payment to any DTC Participant or any other person, other than an Owner of a Bond, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Register as the absolute Owner of such Bond for the purpose of payment of principal of,premium, if any, and interest on the Bonds, for the purpose of all matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the Register as provided in this Order, 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 District 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 Order shall refer to such new nominee of DTC. 10 (c) In the event that the City in its sole discretion determines that the beneficial owners of the Bonds be able to obtain certificated Bonds, or in the event DTC discontinues the services described herein, the City 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 and DTC Participants, as identified by 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 and DTC Participants, as identified by DTC,of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC , as identified by DTC. 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 Owners transferring or exchanging Bonds shall designate,in accordance with the provisions of this Ordinance. (d) The execution and delivery of the Blanket Letter of Representations is hereby approved with such changes as may be approved by the Mayor or City Manager of the City and the Mayor is hereby authorized and directed to execute such Blanket Letter of Representations. (e) 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 such Bonds, and all notices with respect to such Bonds, shall be made and given, respectively, in the manner provided in the Blanket Letter of Representations. 17. Optional Redemption and Mandatory Redemption. The City reserves the right, at its option, to redeem Bonds having stated maturities on and after September 1, 2016, in whole or in part,on September 1,2015, or any date thereafter,at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed,the City shall determine the Bonds,or portions thereof,to be redeemed. Bonds may be redeemed only in integral multiples of$5,000. If a Bond subject to redemption is in a denomination larger that $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond,so surrendered. . Not less than thirty(30)days prior to a redemption date for the Bonds,the City shall cause a notice of redemption to be sent by United States mail, first class,postage prepaid,to each Owner of each Bond to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the 11 date of the mailing of such notice. Such notice shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed shall be conclusively presumed to have been duly given whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed. When Bonds have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. 18. Form. The form of the Bonds, including the form of the Registrar's Authentication Certificate, the form of Assignment, the form of Statement of Insurance, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Bonds initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: FORM OF BOND United States of America State of Texas NUMBER DENOMINATION R- $ REGISTERED REGISTERED THE CITY OF BEAUMONT,TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2005 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: May 15, 2005 REGISTERED OWNER: 12 PRINCIPAL AMOUNT: DOLLARS The City of Beaumont, Texas (the "City")promises to pay,but solely from certain Net Revenues as hereinafter provided, to the Registered Owner identified above, or registered assigns, on the maturity date specified above, upon presentation and surrender of this bond at the principal corporate trust office of JPMorgan Chase Bank,N.A.,Dallas, 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, solely from such Net Revenues, interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30 day months, from the later of May 15, 2005, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this bond is payable by check on March 1 and September 1, beginning on March 1, 2006, mailed to the registered owner of record as shown on the books of registration kept by the Registrar as of the fifteenth day of the month next preceding each interest payment date. Any accrued interest due at maturity shall be paid upon presentation and surrender of this Bond at the principal corporate trust office of the Registrar. THIS BOND is one of a duly authorized issue of Bonds, aggregating$15,000,000 (the "Bonds"), issued for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and(ii)paying all costs of issuance of the Bonds,pursuant to an ordinance adopted by the City Council on May 24, 2005 (the "Ordinance"), and in accordance with the authority of Chapter 1502, Texas Government Code, as amended, and all other applicable law. THIS BOND AND ALL OF THE BONDS OF THIS SERIES are special obligations of the City, and together with the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1999, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, the City's outstanding Waterworks and Sewer System Adjustable Rate Revenue Bonds, Series 2002, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, are equally and ratably payable from and secured by a first lien on the "Net Revenues" collected and received by the City from the operation and ownership of those properties, facilities, improvements, equipment, interests, rights and powers constituting the waterworks and sewer system of the City which are defined in the Ordinance as the "System", which Net Revenues are required to be set aside for and pledged to the payment of this series of bonds, the outstanding bonds and all additional bonds issued on a parity therewith, in the Interest and Sinking Fund and the Reserve Fund required to be 13 maintained for the payment of all such bonds, all as more fully described and provided for in and subject to the restrictions and limitations imposed by the Ordinance. This Bond and the series of which it is a part, together with the interest thereon, are payable solely from such Net Revenues and do not constitute an indebtedness or general obligation of the City. THE HOLDER OF THIS OBLIGATION IS NOT ENTITLED TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY REVENUE BONDS, subject to the restrictions and limitations contained in the Ordinance,which shall be equally and ratably payable from, and secured by a first lien on and pledge of, the aforesaid Net Revenues in the same manner and to the same extent as this Bond and the series of which it is a part. THE CITY RESERVES THE RIGHT, at its option, to redeem the Bonds having stated maturities on or after September 1, 2016, in whole or in part, on September 1, 2015, or any date thereafter, in integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. NOTICE OF ANY REDEMPTION shall be given at least thirty(30) days prior to the date fixed for redemption by first class mail, addressed to the registered owner of each Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Bonds or portions thereof have been called for redemption and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. 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 attached or affixed hereto or (ii)is authenticated by the Registrar by due execution of the authentication certificate 14 endorsed hereon. THE REGISTERED OWNER of this Bond, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Bonds and will cause notice of any change of registrar to be mailed to each registered owner. 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; that the bonds of this series do not exceed any statutory limitation; and that provision has been made for the payment of principal and interest on this bond and all of the bonds of this series by the aforesaid lien on and pledge of the Net Revenues of the System. IN WITNESS WHEREOF, this bond has been signed with the manual or facsimile signature of the Mayor and countersigned with the manual or facsimile signature of the City Clerk, and the official seal of the City has been duly impressed, or placed in facsimile,on this bond. (AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT, TEXAS (SEAL) Mayor City Clerk Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this bond has been examined, certified as to validity, and 15 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 Comptroller of Public Accounts (SEAL) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this bond has been delivered pursuant to the Bond Ordinance described in the text of this Bond. JPMorgan Chase Bank,N.A. By: Authorized Signature Date of Authentication: Form of Assigm,_ Went ASSIGNMENT For value received,the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within bond and all rights thereunder, 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 16 Signature Guaranteed: Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown NOTICE: Signature must be on the face of this bond in guaranteed by a member firm every particular,without of the New York Stock any alteration, enlargement Exchange or a commercial or change whatsoever. bank or trust company. STATEMENT OF INSURANCE 18. 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 Bonds,but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Bonds. 19. (a) Pledge and Source of Payment. The City hereby covenants and agrees that all Gross Revenues of the System shall, as collected and received by the City, be deposited and paid into the special funds established in this Ordinance, and shall be applied in the manner hereinafter set forth, in order to provide for (i) the payment of all Maintenance and Operation Expenses, and (ii) the payment of principal, interest and any redemption premiums on the Parity Bonds, and all expenses of paying, securing and insuring the same. The Parity Bonds shall constitute special obligations of the City that shall be payable solely from, and shall be equally and ratably secured by a first lien on, the Net Revenues, as collected and received by the City from the operation and ownership of the System,which Net Revenues shall, in the manner hereinafter provided,be set aside for and are hereby pledged by the City to the payment of the Parity Bonds in the Interest and Sinking Fund and the Reserve Fund as hereinafter provided, and except as otherwise expressly provided herein,the Parity Bonds shall be in all respects on a parity with and of equal dignity with one another. The holders of the Parity Bonds shall never have the right to demand payment of either the principal of or interest on the Parity Bonds out of any 17 funds raised or to be raised by taxation. (b) Construction Fund. There is hereby created and there shall be established on the books of the City a separate account to be entitled the"City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2005, Construction Fund". Immediately after the sale and delivery of the Bonds, that portion of the proceeds of the Bonds to be used for the cost of the Project and the cost of issuance of the Bonds shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of the Project, interest earned on such proceeds may be used, at the City's discretion, for the Project and shall be accounted for, maintained, deposited and expended as permitted by the provisions of Section 1202.043 of the Texas Government Code,as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of the Project, the monies,if any,remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. (c) Rates and Charges. So long as any Parity Bonds remain outstanding, there shall be fixed, charged and collected rates and charges for the use and services of the System,which may be fully sufficient at all times: (i) to pay all Maintenance and Operation Expenses; and (ii) to produce Net Revenues in each fiscal year at least equal to 110 percent of the principal and interest requirements scheduled to occur in such fiscal year on all Parity Bonds then outstanding plus an amount equal to the sum of all deposits required to be made to the Reserve Fund in such fiscal year, but in no event less than the amount required to establish and maintain the Interest and Sinking Fund, the Reserve Fund as hereinafter provided, and, to the extent that funds for such purpose are not otherwise available, to pay all other outstanding obligations payable from the Net Revenues of the System as and when the same become due. The City covenants that it will not grant or permit any free service from the System except for public buildings and institutions operated by the City. (d) Special Funds. The following special funds shall be maintained and accounted for as hereinafter provided so long as any of the Parity Bonds remain outstanding: (i) Waterworks and Sewer System Revenue Fund (the "Revenue Fund"); 18 (ii) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund(the "Interest and Sinking Fund"); and (iii) Waterworks and Sewer System Revenue Bond Reserve Fund (thee "Reserve Fund"). The Revenue Fund shall be maintained as a separate account on the books of the City. The Interest and Sinking Fund and the Reserve Fund shall be maintained at an official depository bank of the City, separate and apart from all other funds and accounts of the City, and shall constitute trust funds which shall be held in trust for the benefit of the holders of the Parity Bonds, and the proceeds of which(except for interest income,which shall be transferred to the Revenue Fund) shall be and are hereby pledged to the payment of the Parity Bonds. All of the Funds named above shall be used solely as provided in this Ordinance so long as any Parity Bonds remain outstanding. (e) Flow of Funds. All Gross Revenues of the System shall be deposited as collected into the Revenue Fund. Moneys from time to time on deposit to the credit of the Revenue Fund shall be applied as follows in the following order of priority: (i) First, to pay Maintenance and Operation Expenses and to provide by encumbrance for the payment of all obligations incurred by the City for Maintenance and Operation Expenses which may include an operating reserve equal to one month's estimated Maintenance and Operation Expenses. (ii) Second, to make all deposits into the Interest and Sinking Fund required by this Ordinance and any ordinance authorizing the issuance of any outstanding Parity Bonds and any ordinance authorizing the issuance of Additional Parity Bonds. (iii) Third, to make all deposits into the Reserve Fund required by this Ordinance and any ordinance authorizing the issuance of any outstanding Parity Bonds and any ordinance authorizing the issuance of Additional Parity Bonds. (iv) Fourth, to pay any amounts due to any bond insurer of Parity Bonds not paid pursuant to subsections(ii)or(iii)above. (v) Fifth, for any lawful purpose, including transfers to the General Fund as permitted by law. Whenever the total amounts on deposit to the credit of the Interest and Sinking Fund and the Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all 19 outstanding Parity Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Interest and Sinking Fund or the Reserve Fund. (f) Interest and Sinking Fund. On or before the last Business Day of each month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, there shall be transferred into the Interest and Sinking Fund from the Revenue Fund the following amounts: (i) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the interest scheduled to become due on the Parity Bonds on the next interest payment date; and (ii) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the next maturing principal of the Parity Bonds, including the principal amounts of, and any redemption premiums on, any Parity Bonds payable as a result of the exercise or operation of any redemption provision contained in this Ordinance or in any ordinance authorizing the issuance of Parity Bonds. Moneys deposited to the credit of the Interest and Sinking Fund (except for interest income, which shall be transferred to the Revenue Fund) shall be used solely for the purpose of paying principal (either at maturity or prior redemption or to purchase Parity Bonds in the open market to be credited against mandatory redemption requirements), interest and redemption premiums on the Parity Bonds, plus all bank charges and other costs and expenses relating to such payment, on a pro rata basis among all series of Parity Bonds. On or before each principal and/or interest payment date for the Parity Bonds,the City shall transfer from the Interest and Sinking Fund to the paying agents for the Parity Bonds an amount equal to the principal,interest and redemption premiums payable on the Parity Bonds on such date, together with an amount equal to all bank charges and other costs and expenses relating to such payment. The paying agents for the Parity Bonds shall totally destroy all paid Parity Bonds and coupons (if any) and shall provide the City with an appropriate certificate of destruction. (g) Reserve Fund. Unless the Reserve Fund is fully funded, on or before the last Business Day of each month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, and after making the transfers into the Interest and Sinking Fund required in the preceding Section, there shall be transferred into the Reserve Fund from the Revenue Fund an amount at least equal to one-sixtieth(1/6&) of the average annual principal and interest requirements on the Parity Bonds, so that the 20 Reserve Fund shall contain, in no more than 60 months after the issuance of each such issue of Parity Bonds,money and investments in an aggregate amount at least equal to the average annual principal and interest requirements on all Parity Bonds then outstanding. After such amount has accumulated in the Reserve Fund and so long thereafter as such Fund contains such amount, no further deposits shall be required to be made into the Reserve Fund, and any excess amounts may be transferred to the Revenue Fund. But if and whenever the balance in the Reserve Fund is reduced below such amount, monthly deposits into such Fund shall be resumed and continued in amounts at least equal to one- sixtieth (1/60th) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount; provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below,then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. The Reserve Fund shall be used to pay the principal of and interest on the Parity Bonds at any time when there is not sufficient money available in the Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Parity Bonds to mature or be redeemed. To the extent permitted by law,the City expressly reserves the right at any time to satisfy all or any part of the amounts required to be on deposit in the Reserve Fund (the "Reserve Fund Requirement") by obtaining for the benefit of the Reserve Fund one or more Reserve Fund Surety Policies (a "Reserve Fund Surety Policy"). In the event the city elects to substitute at any time a Reserve Fund Surety Policy for any funded amounts in the Reserve Fund, it may apply any bond proceeds thereby released, to the greatest extent permitted by law, to any purposes for which the bonds were issued, and if all such purposes have been satisfied, to the payment of debt service on such bonds, and it may apply any other funds thereby released to any of the purposes for which such funds may lawfully be applied including the payment of debt service on the Panty Bonds.A Reserve Fund Surety Policy shall be an insurance policy or other similar guarantee in a principal amount equal to the portion of the Reserve Fund Requirement to be satisfied which is issued by a financial institution or insurance company with a rating for its long term unsecured debt or claims paying ability in the highest letter category by two major municipal securities evaluation sources. The premium for any such policy shall be paid from bond proceeds or other funds of the City lawfully available for such purpose. The City reserves the right to fund any increase in the Reserve Fund Requirement caused by the issuance of Additional Parity Bonds by the purchase of a Reserve Fund Surety Policy in the amount of such increase or by making transfers from the Revenue Fund to the Reserve Fund, in approximately equal monthly installments, in amounts sufficient to accumulate the increase in the Reserve Fund Requirement within sixty(60)months of the issuance of such Additional Parity Bonds. If the Reserve Fund contains only cash and the balance in the Reserve Fund is reduced below the Reserve Fund Requirement at any time, the City shall make monthly transfers from the Revenue Fund to the Reserve Fund, 21 in approximately equal monthly installments, in amounts sufficient to restore the balance in the Reserve Fund to the Reserve Fund Requirement within twelve (12) months of the date on which the balance in the Reserve Fund was so reduced. If the Reserve Fund contains a Reserve Fund Surety Policy (and no cash) and a draw is made against such policy, the City shall make monthly transfers from the Revenue Fund, in approximately equal monthly installments, in amounts sufficient to reimburse the amount drawn under such policy within twelve (12) months. If the Reserve Fund contains a combination of cash and a Reserve Fund Surety Policy, and the balance in the Reserve Fund is reduced below the Reserve Fund Requirement by a combination of cash withdrawals and draws against the Reserve Fund Surety Policy, the City shall make monthly transfers from the Revenue Fund, in approximately equal monthly installments, in amounts sufficient to restore the cash balance in the Reserve Fund and reimburse the amount drawn under such policy within twelve (12) months, with reimbursement to be made for all amounts drawn under such policy before any cash deposits are made into the Reserve Fund. Any reimbursement of amounts drawn against a Reserve Fund Surety Policy shall be limited to the amounts actually paid under such policy, and the City shall have no obligation to make any reimbursement payment with respect to any such policy except as provided herein. (h) Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Section 19 the full amounts required herein, amounts equivalent to such deficiency shall be set apart and paid into such Fund or Funds from the first available and unallocated money in the Revenue Fund, and such payment shall be in addition to the amounts otherwise required to be paid into such Funds during the succeeding month or months. To the extent necessary, the rates and charges for the System shall be increased to make up for any such deficiencies. (i) Investment of Funds, Transfer of Investment Income. Money in each Fund maintained pursuant to this Section of this Ordinance may, at the option of the City, be invested as permitted by law, provided that all such deposits and investments shall be made in such manner that the money required to be expended from any Fund will be available at the proper time or times, and provided further that in no event shall deposits or investment of money in the Reserve Fund mature later than the final maturity date of the Parity Bonds. Any obligation in which money is so invested shall be kept and held in the Fund from which the investment was made. All such investments shall be promptly sold when necessary to prevent any default in connection with the Parity Bonds. All interest and income derived from such deposits and investments shall be transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 22 20. Additional Bonds. (a) Additional Pgdty Pad, Bonds. The City reserves the right to issue, for any lawful purpose, including the refunding of any previously issued Parity Bonds or any other bonds or obligations of the City issued in connection with the System, one or more series of Additional Parity Bonds payable from, and secured by a first lien on and pledge of, the Net Revenues of the System, on a parity with the Bonds and any other Additional Parity Bonds then outstanding; provided, however, that no Additional Parity Bonds may be issued unless: (i) The Additional Parity Bonds mature on September 1, and interest is payable on March 1 and September 1; (ii) The Interest and Sinking Fund and the Reserve Fund each contain the amount of money then required to be on deposit therein; (iii) For either the preceding Fiscal Year or any consecutive 12-month calendar period ending no more than 90 days prior to adoption of the ordinance authorizing such Additional Parity Bonds, Net Revenues were equal to at least 125% of the average annual principal and interest requirements on all Parity Bonds that will be outstanding after the issuance of the series of Additional Parity Bonds then proposed to be issued, as certified by the City's Finance Officer or by an independent certified public accountant or firm of independent certified public accountants;or (iv) If the City cannot meet the test described in (iii) above, but a change in the rates and charges applicable to the System becomes effective at least sixty (60) days prior to the adoption of the ordinance authorizing Additional Parity Bonds and the City's Finance Officer certifies that, had such change in rates and charges been effective for the preceding fiscal year or 12 consecutive calendar month period ending no more than 90 days prior to adoption of said ordinance,the Net Revenues for such period would have met the test described in(iii)above. (b) Subordinate Lien Obligations. The City reserves the right to issue, for any lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on and pledges of the Net Revenues that are junior and subordinate to the lien on and pledge of Net Revenues securing payment of the Parity Bonds. Such subordinate lien obligations may be further secured by any other source of payment lawfully available for such purposes. (c) Special Project Bonds. The City reserves the right to issue revenue 23 bonds secured by liens on and pledges of revenues and proceeds derived from Special Projects. 21. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parity Bonds. The City will punctually pay or cause to be paid the interest on and principal of all Parity Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipulations and provisions contained in this Ordinance and in any ordinance authorizing the issuance of Additional Parity Bonds. (b) Maintenance of System. So long as any Parity Bonds remain outstanding, the City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles. In operating and maintaining the System, the City will comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or order of any governmental, administrative or judicial body promulgating same, noncompliance with which would materially an adversely affect the operation of the System. (c) Sale or Encumbrance of S. s�tem. So long as any Parity Bond remain outstanding, the City will not sell, dispose of or, except as permitted in this Ordinance, further encumber the System; provided, however, that this provision shall not prevent the City from disposing of any portion of the System which is being replaced or is deemed by the City to be obsolete, worn out, surplus or no longer needed for the proper operation of the System. Any agreement pursuant to which the City contracts with a person, corporation, municipal corporation or political subdivision to operate the System or to lease and/or operate all or part of the System shall not be considered as an encumbrance of the System. (d) Insurance. The City further covenants and agrees that it will keep the System insured with insurers of good standing against risks, accidents or casualties against which and to the extent insurance is customarily carried by political subdivisions of the State of Texas operating similar properties, to the extent that such insurance is available. The cost of all such insurance,together with any additional insurance, shall be a part of the Maintenance and Operation Expenses. All net proceeds of such insurance shall be applied to repair or replace the insured property that is damaged or destroyed, or to make other capital improvements to the System, or to redeem Parity Bonds. 24 (e) Accounts, Records and Audits. So long as any Parity Bonds remain outstanding, the City covenants and agrees that it will maintain a proper and complete system of records and accounts pertaining to the operation of the System in which full, true and proper entries will be made of all dealings, transactions,business and affairs which in any way affect or pertain to the System or the Gross Revenues or the Net Revenues thereof. The City shall after the close of each of its Fiscal Years cause an audit report of such records and accounts to be prepared by an independent certified public accountant or independent firm of certified public accountants. Each year promptly after such audit report is prepared, the City shall furnish a copy thereof without cost to the Municipal Advisory Council of Texas and any holders of Parity Bonds who shall request same. All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses. (f) Competition. To the extent it legally may, the City will not grant any franchise or allow for the acquisition, construction or operation of any competing facilities which might be used as a substitute for the System and will prohibit the operation of any such competing facilities. (g) Pledge and Encumbrance of Net Revenues. The City covenants and represents that it has the lawful power to pledge the Net Revenues to the payment of the Parity Bonds and has lawfully exercised such power under the Constitution and laws of the State of Texas. The City further covenants and represents that, other than to the payment of the Parity Bonds, the Net Revenues are not and will not be pledged to the payment of any debt or obligation of the City, or in any other manner encumbered unless such pledge or encumbrance is junior and subordinate to the lien and pledge securing payment of the Parity Bonds. (h) Remedies. This Ordinance shall constitute a.contract between the City and the holders of the Parity Bonds from time to time outstanding, and the Bond Insurers, and shall remain in effect until the Parity Bonds and the interest thereon and all amounts owing to the Bond Insurers under any Bond Insurance Policy shall be fully paid or discharged or provision therefor shall have been made as provided herein. In the event of a default in the payment of the principal of or interest on any of the Parity Bonds or a default in the performance of any duty or covenant provided by law or in this Ordinance or a default in respect of any Bond Insurance Policy, the holder or holders of any of the Parity Bonds or any Bond Insurer, as appropriate, may pursue all legal remedies afforded by the Constitution and laws of the State of Texas to compel the City to remedy such default and to prevent further default or defaults. Without in any way limiting the generality of the foregoing, it is expressly provided that any holder of any of the Parity Bonds or any Bond Insurer may at law or in equity, by suit, action, mandamus, or other proceedings, enforce and compel performance of all duties required to be performed by the City under this Ordinance, including the making and collection of reasonable and 25 sufficient rates and charges for the use and services of the System, the deposit of the Gross Revenues thereof into the special funds as herein provided, and the application of such Gross Revenues and Net Revenues in the manner required in this Ordinance. (i) Defeasance. The City may defease the provisions of this Ordinance and discharge its obligation to the holders of any or all of the Parity Bonds to pay principal, interest and redemption premium (if any) thereon in any manner permitted by law, including, without limitation, by depositing with any paying agent for such Parity Bonds or with the State Treasurer of the State of Texas either: (i)cash in an amount equal to the principal amount and redemption premium, if any, of such Parity Bonds plus interest thereon to the date of maturity or redemption, or (ii)pursuant to an escrow or trust agreement, direct obligations of, or obligations the principal and interest of 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 amount and redemption premium, if any,of such Parity Bonds plus interest thereon to the date of maturity or redemption; provided,however,that if any of such Parity Bonds are to be redeemed prior to their respective dates of maturity, provision shall have been made for giving notice of redemption as provided in the ordinance authorizing such Parity Bonds. Upon such deposit, such Parity Bonds and coupons appertaining thereto shall no longer be regarded to be outstanding or unpaid, and the lien on and pledge of Net Revenues securing such Parity Bonds shall thereupon cease and terminate. 0) Legal Holidays. In any case where the date fixed for payment of interest on or principal of the Parity Bonds or the date fixed for redemption of any Parity Bonds shall be a legal holiday or a day on which a paying agent for the Parity Bonds is authorized by law to close, then payment of interest or principal by such paying agent need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date fixed for such payment and no interest shall accrue for the period from such date to the date of actual payment. (k) Unavailability of Authorized Publication. If, because of the temporary or permanent suspension of any newspaper,journal or other publication,or, for any reason, publication of notice cannot be made meeting any requirements herein established, any notice required to be published by the provisions of this Ordinance shall be given in such other manner and at such time or times as in the judgment of the City shall most effectively approximate such required publication and the giving of such notice in such manner shall for all purposes of this Ordinance be deemed to be in compliance with the requirements for publication thereof. (1) Obligations Owing to Insurers. The City stipulates and agrees that it shall make full and timely payment of all amounts owing to any Insurer under any Financial Guaranty Agreements and there shall be no termination of this Ordinance or 26 redemption, refunding or defeasance of the Parity Bonds unless and until all of such amounts owing under the Financial Guaranty Agreement in respect of those Bonds shall have been paid in full. 22. Further Proceedings. After the Bonds to be initially issued shall have been executed, it shall be the duty of the Mayor and other appropriate officials and agents 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. 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 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 said Comptroller shall be impressed or placed in facsimile,thereon. 23. Sale of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriter at the price of$15,000,000.00,representing the principal amount of the Bonds, plus a premium of $ . In addition thereto, at the time of delivery the Underwriter shall pay to the City the accrued interest on the Bonds to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Bonds and which bid has been accepted by the City was the best bid and the purchase 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 desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Bonds. 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 Bond Insurance Policy, and the printing on the Bonds covered by the Bond Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 24. 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 the applicable Income Tax Regulations (the "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; provided, however, that the City shall not be required to comply with any 27 particular requirement of this Section if the City has received an opinion of nationally recognized bond counsel ("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 Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 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. The City represents and warrants that the City shall realize present value debt service savings(determined without regard to administrative expenses) in connection with issuance of the Bonds to the extent that the proceeds thereof are used to refund the Refunded Bonds. (b) No Private Use or Payment and No Private Loan Financing. The City shall certify, through an authorized officer, employee or agent that based upon all facts and circumstances known or reasonably expected to be in existence on the date the Bonds are delivered, that the proceeds of the Refunded Bonds have not been used, and that proceeds of the Refunded Bonds and the Bonds will not be used in a manner that would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Refunded Bonds and the Bonds including interest or other investment income derived from Bond proceeds, regulate the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (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 from the Reserve Fund for the Refunded Bonds pursuant to Section 26 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 so transferred from said Reserve Fund(including interest or other investment income derived therefrom), regulate investments of such proceeds and 28 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. If the City does not qualify for an exception to the requirements of Section 148(f) of the Code relating to rebate to the United States, 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 fifth anniversary date of the delivery of the Bonds, and within sixty days after the retirement of the Bonds, or on such other date as may be permitted under applicable regulations with respect to "gross proceeds" in the Escrow Fund, 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 an investment arrangement with respect to the gross proceeds of the Bonds 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 a larger loss than would have resulted if the arrangment had been at arm's length and had the yield on the issue not been relevant to either party. (f) 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) Continuing_Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of this Section shall survive the defeasance and discharge of the Bonds. 25. Application of Proceeds. Proceeds from the sale of the Bonds shall, promptly upon receipt by the City,be applied as follows: (i) Accrued interest, if any, shall be deposited into the Interest and 29 Sinking Fund; (ii) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds, with any remaining portion thereof to be deposited into the Construction Fund and used to pay the costs of the Project; and (iii) The sum of$ from the sale of the Bonds shall be deposited into the Construction Fund and used to pay the costs of the Project; and (iv) Any proceeds from the Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 26. Regis tray. The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. 27. Official Statement. The Official Notice of Sale, 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 Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. No Personal Liability. No recourse shall be had for payment of the principal of 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. 29. Continuing Disclosure Undertaking. (a) Annual Reports. The City shall provide annually to each NRMSIR and the SID, within six months after the end of each fiscal year, financial information and operating data with respect to the City of the general type included in the final Official Statement authorized in this Ordinance (i) under the headings "SELECTED FINANCIAL INFORMATION", "DEBT STATEMENT", "TAX DATA", "SELECTED FINANCIAL DATA", "ADMINISTRATION OF THE CITY", and in APPENDIX B. The information to be provided shall include the financial statements of the City prepared in accordance with the accounting principles the City may be required to employ from time to time pursuant to State law or regulation and audited, if the audit is completed within the period during which they must be provided. If the audit of such financial statements is not completed within such period, then the City shall provide unaudited financial statements for the applicable fiscal year to each NRMSI and the SID within such six month period, and audited financial statements when the audit report on 30 such statement becomes available. If the City changes its fiscal year, it will notify each NMSIR and the SID of the change(and of the date of the new fiscal year end)prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB)that theretofore has been provided to each NRMSIR and the SID or filed with the SEC. (b) Material Event Notices. The City shall notify the SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds,if such event is material within the meaning of the federal securities laws: 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 Bonds; vii. Modifications to rights of Bondholders; viii. Bond calls; ix. Defeasances; X. Release,substitution or sale of property securing repayment of the securities;and xi. Rating changes. The City shall notify the SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with section(a) above.. (c) Limitations. Disclaimers and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the City remains an "obligated person" with respect to the Bonds within the 31 meaning of the Rule, except that the City in any event will give notice of any deposit made in accordance with Texas law that causes Bonds no longer to be outstanding. The provisions of this Section are for the sole benefit of the holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION. 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 Section is intended or shall act to disclaim,waive,or otherwise limit the duties of the City under federal and state securities laws. The provisions of this Section may be amended by the City from time to time 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(i) the agreement, as amended, would have permitted the Underwriter to purchase or sell the Bonds in the initial primary offering in compliance with the Rule, taking into account any amendments or interpretations of such rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Bonds consent to such amendment,or(b)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 if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction 32 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 an underwriter from lawfully purchasing or reselling the Bonds in the primary offering of the Bonds in compliance with the Rule. 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. 30. 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. 31. Interpretations. All terms defined herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Ordinance and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Parity Bonds. 32. Special Provisions Relating to the Bond Insurance Policy. If and so long as the Bond Insurance Policy is in effect, the following provisions shall apply and be applicable: 33. Special Provisions Relating to the Reserve Policy. To the extent permissible by applicable law, the City is authorized at any time hereafter to obtain a Qualified Surety Bond to fund the Reserve Fund Requirement. Hereinafter such Qualified Surety Bond shall be referred to as the "Reserve Policy". If and so long as a Reserve Policy is in effect, and to the extent the following provisions are not in conflict with the provisions of Section 19 of this Ordinance, the following provisions shall apply and be applicable: 33 PASSED AND APPROVED this 20 day of May,2005. Mayor The City of Beaumont ATTEST: City Clerk The City of Beaumont (SEAL) 34 T PRELIMINARY OFFICIAL STATEMENT DATED MAY 13,2005 u This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial ' bids to purchase the Bonds. Upon the sale of the Bonds, the Official Statement will be completed and delivered to the Underwriter(hereinafter defined). U N IT IS ANTICIPATED THAT ON THE DELIVERY DATE FOR THE BONDS, BOND COUNSEL WILL RENDER AN OPINION 2- THAT INTEREST ON THE BONDS IS EXCLUDABLE FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES 3 UNDER EXISTING LAW AND THE BONDS ARE NOT PRIVATE ACTIVITY BONDS. SEE "LEGAL MATTERS - TAX EXEMPTION" HEREIN FOR A DISCUSSION OF BOND COUNSEL'S OPINION, INCLUDING A DESCRIPTION OF ALTERNATIVE MINIMUM TAX CONSEQUENCES FOR CORPORATIONS. E. The City will not designate the Bonds as qualified tax-exempt obligations for financial institutions. NEW ISSUE–BOOK-ENTRY-ONLY RATINGS: Moody's Investors Service,Inc. ..................."—" ° = j Standard&Poor's Ratings Services............" ` N o " 0.2 $15,0009000 THE CITY OF BEAUMONT, TEXAS (A political subdivision of the State of Texas located within Jefferson County) o WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2005 o T Dated: May 15,2005 Principal Due: September 1 0r' Principal of and interest on The City of Beaumont, Texas $15,000,000 Waterworks and Sewer System Revenue Bonds, Series .0 2005 (the "Bonds") are payable by JPMorgan Chase Bank, N.A., Dallas, Texas, the paying agent/registrar (the "Registrar"). E s Interest on the Bonds will accrue from May 15, 2005 and be payable on March 1 and September 1 of each year, commencing c March 1, 2006, to the registered owners appearing on the registration books of the Registrar on the 15th day of the month ti 9 preceding each interest payment date (the "Record Date"). See "THE BONDS - Description." The Bonds are subject to f S redemption prior to their scheduled maturities on September 1,2015 or any date thereafter,at a price equal to the principal amount o a thereof plus accrued interest to the date of redemption. The Bonds are special obligations of The City of Beaumont, Texas (the "City") and are payable solely from a first lien on and ' E G pledge of the Net Revenues (hereinafter defined) of the City's waterworks and sanitary sewer system. THE BONDS DO NOT G 'b CONSTITUTE AN INDEBTEDNESS OR GENERAL OBLIGATION OF THE CITY AND ARE NOT PAYABLE FROM o FUNDS RAISED OR TO BE RAISED BY TAXATION. The lien on Net Revenues securing the Bonds are on a parity with the e liens securing the City's outstanding Prior Lien Bonds(as defined in the Ordinance). See "THE BONDS - Source of Payment." I The proceeds of the Bonds will be used to finance the expansion,repair,renovation and related improvements to the waterworks G and sewer system and to pay certain costs incurred in connection with the issuance of the Bonds. (See "THE BONDS - Use of E 1 s Proceeds.") C o PRINCIPAL AMOUNTS,MATURITIES,INTEREST RATES AND PRICES > g R (Due September 1) 0 Initial CUSIP a 3 Initial CUSIP o^ Principal Interest Reoffering Nos. Principal Interest Reoffering Nos. W .« Maturity Amount Rate Yield(a) 074561(c) Maturity Amount Rate Yield(a) 074561(c) 2007 $ 100,000 % % 2018(b) $ 215,000 % 2008 100,000 2019(6) 135,000 4' 2009 250,000 2020(b) 120,000 w 8� 2010 260,000 2021(b) 1,190,000 E v = 2011 265,000 2022(b) 1,415,000 y 1 2012 265,000 2023(6) 1,645,000 s 2013 280 s 000 2024(b) 1,495,000 o•ait 2014 270,000 2025(6) 1,510,000 B O s 2015 255,000 2026(b) 1,540,000 2016(6) 250,000 2027(b) 1,580,000 E 2017(6) 236,000 2028(6) 1,625,000 G 'u e(a) The initial yields will be established by and are the sole responsibility of the Underwriters, and may subsequently be M= changed. 9 (b) The Bonds maturing on or after September 1, 2016 are subject to redemption, at the option of the City, at the par value thereof plus accrued interest,in whole or in part,on September 1,2015,or any date thereafter. E �s The Bonds are being issued pursuant to the Constitution and laws of the State of Texas and provisions of an ordinance (the ., d ;, "Ordinance")adopted by the City Council(the"City Council")of the City on May 24,2005. The Bonds are offered when,as and mot; if issued,subject to the approving opinion of the Attorney General of the State of Texas and the opinion of Orgain,Bell&Tucker, L.L.P., Beaumont, Texas, Bond Counsel for the City, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of Texas. See"LEGAL MATTERS." The Bonds are expected to be available for delivery on or about June 23, 2005. T E w. SELLING: TUESDAY,MAY 24, 2005 y ° AT 12:00 NOON C.S.T. . r' This Official Notice of Sale does not alone constitute an offer to sell but is merely notice of sale of the Bonds described herein. The offer to sell such Bonds is being made by means of this Official Notice of Sale, the Official Bid Form and the Preliminary Official Statement. OFFICIAL NOTICE OF SALE CITY OF BEAUMONT (Jefferson County,Texas) $1590009000 WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2005 Sealed Bids Will Be Received Tuesday,May 24,2005 at 12:00 Noon Central Standard Time s 8 4 g� J This Official Notice of Sale does not alone constitute an invitation for bids but is merely notice of sale of the obligations described herein. The invitation for bids on such Bonds is being made by means of this Official Notice of Sale,the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine all the documents to determine investment quality of the Bonds. OFFICIAL NOTICE OF SALE $15,000,000 CITY OF BEAUMONT,TEXAS . (Jefferson County,Texas) WATERWORKS AND SEWER SYSTEM REVENUE BONDS,SERIES 2005 THE SALE OFFERED FOR SALE AT COMPETITIVE BID: The City Council (the "Council") of The City of Beaumont, Texas (the "City") is offering for sale at competitive bid its $15,000,000 Waterworks and Sewer System Revenue Bonds,Series 2005(the"Bonds"). PLACE AND TIME OF SALE: The financial advisor to the City, RBC Dain Rauscher Inc. (the "Financial Advisor")will receive sealed bids at the office of the Finance Officer of the City, 801 Main Street,Beaumont,Texas 77701, until 12:00 Noon, C.S.T., Tuesday, May 24, 2005, and the bids will be opened and publicly read. Sealed bids, which must be submitted in duplicate on the Official Bid Form and plainly marked "Bid for Bonds," are to be addressed to "Mayor and City Council,City of Beaumont,Texas." All bids must be delivered at the above address prior to the above-scheduled time. Any bid received after such scheduled time for bid opening will not be accepted and will be returned unopened. ELECTRONIC BIDDING PROCEDURE: Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY. Subscription to the i-Deal's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. By submitting an electronic bid, the bidder is representing they are a proper subscriber of BIDCOMP Competitive Bidding System and that the City is an expressed third party beneficiary of their license agreement and the bidder agrees, for the benefit of DALCOMP, municipal securities * issuers and their financial advisors, for which it may submit bids, that its bids submitted through BIDCOMP and 1 PARITY shall be irrevocable and shall constitute valid offers without a signature by an officer of the bidder. The City will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders must submit, prior to 12:00 Noon, C.D.S.T., May 24, 2005, SIGNED Official Bid Forms, in duplicate, to Frank Ildebrando, RBC Dain Rauscher Inc., 1001 Fannin, Suite 400, Houston, Texas 77002. Electronic bids may be received via PARITY in the manner described below,until 12:00 Noon, C.S.T., Houston time,on Tuesday, May 24,2005. Electronic bids must be submitted via PARITY in accordance with this Official Notice of Sale,until 12:00 Noon, C.D.S.T.,Houston time,but no bid will be received after the time for receiving bids specified above. To the extent any instructions or directions set forth in PARITY conflict with this Official Notice of Sale,the terms of this Notice of Sale shall control. For further information about PARITY,potential bidders may contact the financial advisor to the City or Dalcomp at 40 West 23rd Street,5th floor,New York,NY 10010,telephone(212)404-8102. For purposes of both the written bid process and the electronic bidding process, the time as maintained by PARITY shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the City,as described under"CONDITIONS OF THE SALE-Basis of Award" below. All electronic bids shall be deemed to incorporate the provisions of this Official Notice of Sale and the Official dr Bid Form. BIDS BY TELEPHONE OR FACSIMILE: Bidders must submit, prior to Tuesday, May 24, 2005, duplicate signed Official Bid Forms to Frank Edebrando, RBC Dain Rauscher Inc., 1001 Fannin, Suite 400, Houston, Texas 77002 and submit their bid by telephone or facsimile (fax) on the date of sale by 12:00 Noon, C.D.S.T., Houston Time. Any bid received after such scheduled time will not be accepted and will be returned unopened. 6 3 3 Frank Ildebrando of RBC Dain Rauscher Inc. will call telephone bidders who have submitted SIGNED Official Bid Forms prior to the date of the sale. Fax bids must be received by 12:00 Noon,C.S.T.,Houston Time,on the date of the sale. Contact Frank Ildebrando of RBC Dain Rauscher Inc.,telephone(713)651-3370,on the day of the sale to obtain the fax phone numbers. RBC Damn Rauscher Inc. will not be responsible for the submission of any bids received after the above deadlines. RBC Dain Rauscher Inc. assumes no responsibility or liability with respect to any irregularities associated with the submission of any bids. AWARD OF THE BONDS: The Council will take action to award the Bonds (or reject all bids) at a regular meeting of the City Council scheduled to convene at 1:30 P.M., C.D.S.T. on the date of the bid opening, and will adopt an ordinance authorizing the Bonds and approving the Official Statement (the "Ordinance"). The City reserves the right to reject any or all bids and to waive any irregularities. THE BONDS DESCRIPTION: The Bonds will be dated May 15, 2005 and interest will be calculated on the basis of a 360-day year of twelve 30-day months. Interest on the Bonds will be paid on March 1,2006,and semiannually on March 1 and September 1 of each year thereafter until maturity or prior redemption. The Bonds are subject to redemption prior to their scheduled maturities on September 1, 2015, or any date thereafter, at the option of the City. Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Bonds will be issued in fully registered form in principal amounts of$5,000 or any integral multiple thereof. Principal and semiannual interest will be paid by JPMorgan Chase Bank,N.A.,Dallas,Texas, the Paying Agent/Registrar. Interest will be paid by check dated as of the interest payment date and mailed on or before each interest payment date by the Paying Agent/Registrar to the registered owner appearing on the Paying Agent/Registrar's books on the Record Date(hereinafter defined). Principal will be paid to the registered owners at maturity upon presentation of the Bonds to the Paying Agent/Registrar. The Bonds will mature September 1 in each year as follows: Principal Principal Year Amount Year Amount 2007 $ 100,000 2018 $ 215,000 2008 100,000 2019 135,000 2009 250,000 2020 120,000 2010 260,000 2021 1,190,000 2011 265,000 2022 1,415,000 2012 265,000 2023 1,645,000 2013 280,000 2024 1,495,000 2014 270,000 2025 1,510,000 2015 255,000 2026 1,540,000 2016 250,000 2027 1,580,000 2017 235,000 2028 1,625,000 PAYING AGENT/REGISTRAR: The initial Paying Agent/Registrar shall be JPMorgan Chase Bank, N.A., Dallas,Texas,(see"Paying Agent/Registrar"in Official Statement). SOURCE OF PAYMENT: The Bonds are special obligations of the City, and the principal thereof and interest thereon are payable solely from the first lien on and pledge of the net revenues of the City's waterworks and sewer system, which lien is on a parity with the lien and pledge of the net revenues that secures the City's outstanding Series 1998 Waterworks and Sewer System Revenue Refunding Bonds, the City's outstanding Series 1999 Waterworks and Sewer System Revenue Refunding Bonds, the City's outstanding Series 2000 Waterworks and Sewer System Revenue Bonds, the City's outstanding Series 2002 Waterworks and Sewer System Adjustable Rate Revenue Bonds, the City's outstanding Series 2004 Waterworks and Sewer System Revenue Bonds, and the City's Series 2005 Waterworks and Sewer System Revenue Refunding Bonds. The City may issue additional Bonds secured by a lien on the net revenues of the system that are on a parity with the Bonds and it may issue subordinate lien obligations. Further details with reference to the Bonds are set forth in the Official Statement. ii CONDITIONS OF THE SALE TYPES OF BIDS AND INTEREST RATES: The Bonds will be sold in one block on an"All or None"basis,and at a price of not less than their par value plus accrued interest to the date of delivery of the Bonds. Bidders are invited'to name the rate(s)of interest to be borne by the Bonds,provided that each rate bid must be in a multiple of 1/8 of 1% or 1/20 of 1% and the net effective interest rate for the Bonds (calculated in the manner required by Section 1204.005, Texas Government Code, as amended) must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 2%in rate. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Bonds of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in his bid the total interest cost in dollars and the net effective interest rate determined hereby, which shall be considered informative only and not as a part of the bid. BASIS OF AWARD: For the purpose of awarding sale of the Bonds,the interest cost of each bid will be computed by determining at the rate(s) specified therein,the total dollar cost of all interest on the Bonds from the date thereof to their respective maturities,using the table of Bond Years herein,and deducting therefrom the premium bid,if any. Subject to the City's right to reject any or all bids and to waive any irregularities,the Bonds will be awarded to the bidder(the"Purchaser")whose complying bid,based on the above computation,produces the lowest net interest cost to the City. GOOD FAITH DEPOSIT: A Good Faith Deposit,payable to the"City of Beaumont" in the amount of$300,000, is required. Such Good Faith Deposit shall be in the form of a Cashier's Check,which is to be retained uncashed by the City pending the Purchaser's compliance with the terms of his bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately,it shall be made available to the City prior to the opening of the bids,and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Purchaser who shall be named in such instructions. Unless otherwise agreed, the Good Faith Deposit will be returned to the Purchaser on the date of delivery of the Bonds. No interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and pay for the Bonds in accordance with his bid,then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned promptly after the bids are opened,and an award of the Bonds has been made. FINANCIAL ADVISOR'S RIGHT TO BID: The City has given RBC Dain Rauscher Inc.,the Financial Advisor, the right to bid on the Bonds. INITIAL OFFERING PRICE ERTIFICATE: To provide the City with information to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exclusion of interest on the Bonds from gross income for federal income tax purposes, the successful bidder will be required to complete, execute, and deliver to the City, at the time that the Bonds are awarded, a certification regarding "issue price" substantially in the form attached hereto or accompanying this Notice of Sale. If the successful bidder will not reoffer the Bonds for sale or has not sold a substantial amount of the Bonds of any maturity by the date of delivery, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Bonds as a result of the successful bidder's inability to certify actual sales of Bonds at a particular price prior to delivery. Each bidder, by submitting its bid,agrees to complete,execute,and deliver such a certificate by the date of the award of the Bonds,if its bid is accepted by the City. It will be the responsibility of the successful bidder to institute such syndicate reporting requirements,to make such investigation,or otherwise to ascertain the facts necessary to enable it to make such certifications with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. CONTINUING DISCLOSURE AGREEMENT: The City will agree in the Ordinance authorizing the Bonds to provide certain periodic information and notices of material events in accordance with the Securities and Exchange Commission Rule 15c2-12, as described in the Preliminary Official Statement under "Continuing Disclosure." The Purchaser's obligation to accept and pay for the Bonds is conditioned upon delivery to the Purchaser or its agent of a certified copy of the Ordinance containing the agreement described under such heading. E lll DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS The delivery of the Bonds is subject to receipt of an opinion of Orgain, Bell &Tucker, L.L.P., Beaumont, Texas, Bond Counsel for the City,hereinafter defined. CUSIP NUMBERS: It is anticipated that CUSIP identification numbers will appear on the Bonds, but neither the failure to print or type such number on any Bonds nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Bonds in accordance with the terms of this Notice of Sale and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Bonds shall be paid by the City; provided, however, that the CUSIP Service Bureau fee for the assignment of the numbers shall be the responsibility of and shall be paid for by the Purchaser. INITIAL DELIVERY OF INITIAL BONDS: Initial Delivery will be accomplished by the issuance of registered Bonds in the aggregate principal amount of$15,000,000,payable to the Purchaser,signed by the manual or facsimile signature of the Mayor and City Clerk of the City, approved by the Attorney General, and registered by the Comptroller of Public Accounts. Initial Delivery will be at the corporate trust office of the Paying Agent/Registrar. Payment for the Bonds must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Purchaser will be given five (5) business days' notice of the time fixed for delivery of the Bonds. It is anticipated that Initial Delivery of the Initial Bonds can be made on or about June 23, 2005,and it is understood and agreed that the Purchaser will accept delivery and make payment for the Initial Bonds by 10:00 A.M., on June 23, 2005, or thereafter on the date the Bonds are tendered for delivery,up to and including July 26, 2005. If for any reason the City is unable to make delivery on or before July 26, 2005, then the City shall immediately contact the Purchaser and offer to allow the Purchaser to extend its offer for an additional fifteen(15) days. If the Purchaser does not elect to extend its offer within six(6)days thereafter, then his Good Faith Deposit will be returned,and both the City and the Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages, whether direct, consequential or otherwise, by reason of its failure to deliver the Bonds. BOOK-ENTRY-ONLY SYSTEM: The definitive Bonds will be initially registered and delivered only to Cede& Co.,the nominee of the Depository Trust Company("DTC")pursuant to the Book-Entry-Only System of the DTC. Beneficial ownership of the Bonds may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and s interest on the Bonds will be payable by the Paying Agent/Registrar to Cede&Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. CONDITIONS TO DELIVERY: The obligation of the Purchaser to take up and pay for the Bonds is subject to the Purchaser's receipt of(a)the legal opinion of Orgain,Bell&Tucker,L.L.P.,Beaumont,Texas,Bond Counsel for the City("Bond Counsel"),(b)certificate of the City to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Bonds, and (c) the certification of the City as to the Official Statement,all as further described in the Official Statement. LEGAL OPINIONS: The City will furnish the Purchaser a transcript of certain certified proceedings held incident to the authorization and issuance of the Bonds,including a certified copy of the unqualified approving opinion of the Attorney General of Texas, as recorded in the Bond Register of the Comptroller of Public Accounts of the State of Texas, to the effect that the Bonds, which the Attorney General will have examined, are valid and binding obligations of the City under the Constitution and laws of the State of Texas. The City also will furnish the approving legal opinion of Orgain, Bell & Tucker, L.L.P., Bond Counsel, to the effect that, based upon an examination of such transcript, the Bonds are valid and binding obligations of the City under the Constitution and laws of the State of Texas. The opinion of Bond Counsel is expected to be reproduced on the back panel of the Bonds over a certification by the City Clerk of the City attesting that such legal opinion was dated as of the date of delivery of and payment for the Bonds and is a true and correct copy of the original opinion. Errors or omissions in the printing of such legal opinion on the Bonds shall not affect the validity of the Bonds nor constitute cause for the failure or refusal by the Purchaser to accept delivery of and pay for the Bonds. iv NO-LITIGATION CERTIFICATE: The customary closing papers, including a certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Bonds,or,which would affect the provisions made for their payment or security, or in any manner questioning the validity of said Bonds will also be furnished. CHANGE IN TAX EXEMPT STATUS: At any time before the Bonds are tendered for delivery, the Purchaser may withdraw its bid if the interest received by private holders on certificates of the same type and character shall be declared to be taxable income under present federal income tax laws,either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale. GENERAL CONSIDERATIONS FINANCIAL ADVISOR: RBC Dain Rauscher Inc.is employed as Financial Advisor to the City in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. RBC Dain Rauscher Inc., in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information,covenants and representations contained in any of the legal documentation with respect to the federal income tax status of the Bonds. BLUE SKY LAWS: By submission of its bid, the Purchaser represents that the sale of the Bonds in states other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Purchaser will register the Bonds in accordance with the securities law of the states in which the Bonds are offered or sold. The City agrees to cooperate with the Purchaser,at the Purchaser's written request and expense,in registering the Bonds or obtaining an exemption from registration in any state where such action is necessary,but the City will not consent to service of process in any such state. MUNICIPAL BOND INSURANCE: The City has submitted an application for municipal bond insurance under the bidder option program. The premium for such insurance,if any,will be paid by the Purchaser. OFFICIAL STATEMENT By accepting the winning bid,the City agrees to the following representations and covenants to assist the Purchaser in complying with Rule 15c2-12 of the Securities and Exchange Commission("SEC"). FINAL OFFICIAL STATEMENT: The City has prepared the accompanying Official Statement for dissemination to potential purchasers of the Bonds, but will not prepare any other document or version for such purpose except as described below. The Purchaser will be responsible for informing the City of the initial offering yields. The City will prepare a final Official Statement describing these offering yields, the interest rates on the Bonds, the selling compensation, the final debt service schedule, the ratings assigned to the Bonds(if not currently included), and the terms of and obligor on any policy of municipal bond insurance. Accordingly, the City deems the accompanying Official Statement to be final as of its date, within the meaning of SEC Rule 15c2-12(b)(1),except for the omission of the foregoing items. By delivering the final Official Statement or any amendment or supplement thereto to the Purchaser on or after the sale date,the City represents the same to be complete as of such date,within the meaning of SEC Rule 15c2-12(e)(3). Notwithstanding the foregoing, the only representations concerning the absence of material misstatements or omissions from the Official Statement which are or will be made by the City are those described in the Official Statement under"CERTIFICATION OF THE OFFICIAL STATEMENT." DELIVERY OF OFFICIAL STATEMENTS: The City will furnish to the Purchaser (and to each other participating purchaser of the Bonds, within the meaning of SEC Rule 15c2-12(a), designated by the Purchaser), within seven days after the sale date,up to 250 Official Statements. The City will also furnish to the Purchaser a like number of any supplement or amendment prepared by the City for dissemination to potential purchasers of the Bonds as described above as well as such additional copies of the Official Statement or any supplement or amendment as the Purchaser may request prior to the 90th day after the end of the underwriting period referred to in SEC Rule 15c2-12(e)(2). The City will pay the expense of preparing up to 250 copies of the Official Statement and all copies of any supplement or amendment issued on or before the delivery date, but the Purchaser must pay for all other copies of the Official Statement or any supplement or amendment thereto. v OFFICIAL STATEMENT: Upon the award of the sale of the Bonds, the Preliminary Official Statement will be amended to conform to the terms of the Purchaser's bid and, if necessary, to make certain other changes. In connection therewith, the Purchaser will be required to furnish information concerning the initial resale offering prices and yields of the Bonds as well as the names of the members of the underwriting syndicate. The Purchaser will be furnished with such copies of the Official Statement for distribution to purchasers from the Purchaser as he may reasonably request. Copies in excess of 250 or additional copies will be made available at the Purchaser's request and expense. The City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement to anyone other than the Purchaser. ADDITIONAL COPIES OF NOTICE BID FORM AND STATEMENT: A limited number of additional copies of this Notice of Sale, the Official Bid Form and the Official Statement, as available over and above the normal mailing,may be obtained at the offices of RBC Dain Rauscher Inc., 1001 Fannin,Suite 400,Houston,Texas,77002, Financial Advisor to the City. On the date of the sale,the Council will,in the Ordinance authorizing the issuance of the Bonds,confirm its approval of the form and content of the Official Statement,and any addenda,supplement or amendment thereto,and authorize its use in the reoffering of the Bonds by the Purchaser. /s/ Mayor City of Beaumont,Texas May 13,2005 Vi OFFICIAL BID FORM May 24,2005 Mayor and City Council City of Beaumont 801 Main Street Beaumont,Texas 77701 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated May 13, 2005, which are incorporated herein by reference, we hereby submit the following bid for the $15,000,000 THE CITY OF BEAUMONT,TEXAS,WATERWORKS AND SEWER SYSTEM REVENUE BONDS,SERIES 2005,dated May 15,2005. This offer is being made for all said Bonds and for not less than all. For said legally issued Bonds,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ for Bonds maturing and bearing interest per annum as follows: Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate 9-1-2007 $ 100,000 % 9-1-2018(a)(b) $ 215,000 % 9-1-2008 100,000 9-1-2019(a)(b) 135,000 9-1-2009 250,000 9-1-2020(a)(b) 120,000 9-1-2010 260,000 9-1-2021(a)(b) 1,190,000 9-1-2011 265,000 9-1-2022(a)(b) 1,415,000 9-1-2012 265,000 9-1-2023(a)(b) 1,645,000 9-1-2013 280,000 9-1-2024(a)(b) 1,495,000 9-1-2014 270,000 9-1-2025(a)(b) 1,510,000 9-1-2015 255,000 9-1-2026(a)(b) 1,540,000 9-1-2016(a)(b) 250,000 9-1-2027(a)(b) 1,580,000 9-1-2017(a)(b) 235,000 9-1-2028(a)(b) 1,625,000 (a) At the option of the Initial Purchaser, any or all of such serial maturities may be designated as term bonds subject to mandatory sinking fund redemption as follows;provided that the mandatory sinking fund amount in each year shall equal the amounts shown above as maturing in such year. Term Bonds Years of First Maturity Date Mandatory Principal Amount Interest (September 1) Redemption of Term Bonds Rate (b) Subject to optional redemption and payment, at the option of the City, in whole or, from time to time, in part, on September 1, 2015, or on any date thereafter at a price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption. Interest cost,in accordance with the above bid,is: GrossInterest Cost.................................................................................................... $ Less: Premium......................................................................................................... $ NETINTEREST COST........................................................................................... $ EFFECTIVE INTEREST RATE............................................................................. % The Initial Bonds shall be registered in the name of (syndicate manager). We will advise JPMorgan Chase Bank, N.A., Dallas, Texas, the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the Bank, ,Texas,in the amount of$300,000 which represents our Good Faith Deposit(is attached hereto)or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the "Official Notice of Sale" and "Official Statement." Upon delivery of the Bonds, said check will be cashed and applied to the purchase price of the Bonds on the date of delivery of the Bonds. We agree to accept delivery of and make payment for the Initial Bonds in immediately available funds at the Corporate Trust Office,JPMorgan Chase Bank,N.A.,Dallas,Texas,not later than 10:00 A.M.,on June 23,2005,or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. The undersigned agrees to complete, execute and deliver to the City, by the date of delivery of the Bonds, a certificate relating to the "issue price" of the Bonds in the form and to the effect attached to or accompanying the Official Notice of Sale,with such changes thereto as may be acceptable to the City. Respectfully submitted, By Authorized Representative ACCEPTED this 24th day of May 2005,by the City Council,City of Beaumont,Texas. Mayor ATTEST: City Clerk (For your information you will find attached a list of the group of purchasers associated with us in this proposal) OFFICIAL BID FORM May 24,2005 Mayor and City Council City of Beaumont 801 Main Street Beaumont,Texas 77701 Y Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated May 13, 2005, which are incorporated herein by reference, we hereby submit the following bid for the $15,000,000 THE CITY OF BEAUMONT,TEXAS,WATERWORKS AND SEWER SYSTEM REVENUE BONDS,SERIES 2005,dated May 15,2005. This offer is being made for all said Bonds and.for not less than all. For said legally issued Bonds, we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ for Bonds maturing and bearing interest per annum as follows: Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate 9-1-2007 $ 100,000 % 9-1-2018(a)(b) $ 215,000 % 9-1-2008 100,000 9-1-2019(a)(b) 135,000 9-1-2009 250,000 9-1-2020(a)(b) 120,000 9-1-2010 260,000 9-1-2021(a)(b) 1,190,000 9-1-2011 265,000 9-1-2022(a)(b) 1,415,000 9-1-2012 265,000 9-1-2023(a)(b) 1,645,000 9-1-2013 280,000 9-1-2024(a)(b) 1,495,000 9-1-2014 270,000 9-1-2025(a)(b) 1,510,000 9-1-2015 255,000 9-1-2026(a)(b) 1,540,000 9-1-2016(a)(b) 250,000 9-1-2027(a)(b) 1,580,000 9-1-2017(a)(b) 235,000 9-1-2028(a)(b) 1,625,000 (a) At the option of the Initial Purchaser, any or all of such serial maturities may be designated as term bonds subject to mandatory sinking fund redemption as follows;provided that the mandatory sinking fund amount in each year shall equal the amounts shown above as maturing in such year. Term Bonds Years of First Maturity Date Mandatory Principal Amount Interest (September 1) Redemption of Term Bonds Rate (b) Subject to optional redemption and payment, at the option of the City, in whole or, from time to time, in part, on September 1, 2015, or on any date thereafter at a price equal to the principal amount thereof,plus accrued interest to the date fixed for redemption. Interest cost,in accordance with the above bid,is: GrossInterest Cost.................................................................................................... $ Less: Premium......................................................................................................... $ NETINTEREST COST........................................................................................... $ EFFECTIVE INTEREST RATE............................................................................. % The Initial Bonds shall be registered in the name of (syndicate manager). We will advise JPMorgan Chase Bank, N.A., Dallas, Texas, the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the Bank, ,Texas,in the amount of$300,000 which represents our Good Faith Deposit(is attached hereto)or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the "Official Notice of Sale" and "Official Statement." Upon delivery of the Bonds, said check will be cashed and applied to the purchase price of the Bonds on the date of delivery of the Bonds. We agree to accept delivery of and make payment for the Initial Bonds in immediately available funds at the Corporate Trust Office,JPMorgan Chase Bank,N.A.,Dallas,Texas,not later than 10:00 A.M.,on June 23,2005,or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. The undersigned agrees to complete, execute and deliver to the City, by the date of delivery of the Bonds, a certificate relating to the "issue price" of the Bonds in the form and to the effect attached to or accompanying the Official Notice of Sale,with such changes thereto as maybe acceptable to the City. Respectfully submitted, By Authorized Representative ACCEPTED this 24th day of May 2005,by the City Council,City of Beaumont,Texas. Mayor ATTEST: City Clerk (For your information you will find attached a list of the group of purchasers associated with us in this proposal) CERTIFICATE OF UNDERWRITER The undersigned hereby certifies with respect to the sale of$15,000,000 The City of Beaumont,Texas,Waterworks and Sewer System Revenue Bonds,Series 2005(the'Bonds"): 1. The undersigned is the underwriter or the manager of the syndicate of underwriters (the "Underwriters")which has purchased the Bonds from The City of Beaumont,Texas at competitive sale. 2. The initial offering price to the public for the Bonds(expressed as a dollar amount,yield percentage, or percentage of principal amount and exclusive of accrued interest)is as set forth below: Principal Principal Amount Year of Offering Amount Year of Offering Maturing Maturity Price Maturing Maturity Price $ 100,000 9-1-2007 % $ 215,000 9-1-2018 10 100,000 9-1-2008 % 135,000 9-1-2019 % 250,000 9-1-2009 % 120,000 9-1-2020 % 260,000 9-1-2010 % 1,190,000 9-1-2021 % 265,000 9-1-2011 % 1,415,000 9-1-2022 % 265,000 9-1-2012 % 1,645,000 9-1-2023 % 280,000 9-1-2013 % 1,495,000 9-1-2024 % 270,000 9-1-2014 % 1,510,000 9-1-2025 % 255,000 9-1-2015 % 1,540,000 9-1-2026 % 250,000 9-1-2016 % 1,580,000 9-1-2027 % 235,000 9-1-2017 % 1,625,000 9-1-2028 % 3. The Underwriters have made a bona fide offering to the public of all of the Bonds of each maturity at the initial offering prices to the public, as set out above. The initial offering price set forth above is the price at which the Underwriters expected,on the date the Bonds were purchased by the Underwriters,to offer such Bonds to the general public and such price has not been adjusted to take into account actual facts after such date. 4. The initial offering prices described above for each maturity of the Bonds reflect current market prices at the time such prices were established. 5. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 6. If any or all of the obligations constituting the Bonds are to be guaranteed then the premium paid for such guarantee in an amount equal to$ is a reasonable amount payable solely for the transfer of credit risk for the payment of debt service on the Bonds and does not include any amount payable for a cost other than such guarantee, e.g., a credit rating fee. The Underwriter has represented that the present value of the premium paid for the guarantee for each obligation constituting the Bonds to which such premium is properly allocated and which are insured thereby is less than the present value of the interest reasonably expected to be saved as a result of the insurance on each obligation constituting the Bonds. The premium has been paid to a person which is not exempt from federal income taxation and which is not a user or related to the user of any proceeds of the Bonds. In determining present value for this purpose, the yield of the Bonds (determined with regard to the payment of the guarantee fee)has been used as the discount rate. 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in complying with the conditions imposed by the Internal Revenue Code of 1986, as amended, on the exclusion of interest on the Bonds from the gross income of their owners for federal income tax purposes. EXECUTED and DELIVERED this ,2005. (Name of Underwriter or Manager) By: Title: BOND YEARS $15,000,000 THE CITY OF BEAUMONT,TEXAS (Jefferson County,Texas) WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2005 Dated: May 15,2005 Due: As shown below Years Maturity Accumulated Date Amount Bond Years Bond Years 2007 $ 100,000 229.4444 229.4444 2008 100,000 329.4444 558.8889 2009 250,000 1,073.6111 1,632.5000 2010 260,000 1,376.5556 3,009.0556 2011 265,000 1,668.0278 4,677.0833 2012 265,000 1,933.0278 6,610.1111 2013 280,000 2,322.4444 8,932.5556 2014 270,000 2,509.5000 11,442.0556 2015 255,000 2,625.0833 14,067.1389 2016 250,000 2,823.6111 16,890.7500 2017 235,000 2,889.1944 19,779.9444 2018 215,000 2,858.3056 22,638.2500 2019 135,000 1,929.7500 24,568.0000 2020 120,000 1,835.3333 26,403.3333 2021 1,190,000 19,390.3889 45,793.7222 2022 1,415,000 24,471.6389 70,265.3611 2023 1,645,000 30,094.3611 100,359.7222 2024 1,495,000 28,845.1944 129,204.9167 2025 1,510,000 30,644.6111 159,849.5278 2026 1,540,000 32,793.4444 192,642.9722 2027 1,580,000 35,225.2222 227,868.1944 2028 1,625,000 37,853.4722 265,721.6667 AVERAGE MATURITY—17.609 YEARS 3 May 24,2005 Consider authorizing the City Manager to increase the Water Treatment Plant 14 Million Gallons Per Day(MGD) Expansion and Miscellaneous Improvements Project amount for"extra work" City of Beaumont Council Agenda Item � c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Hani J. Tohme,Water Utilities Director MEETING DATE: May 24, 2005 AGENDA MEMO DATE: May 17, 2005 REQUESTED ACTION: Council approval of a resolution authorizing the City Manager to increase the Water Treatment Plant 14 Million Gallons Per Day(MGD)Expansion and Miscellaneous Improvements Project amount for "extra work." RECOMMENDATION Administration recommends approval of increasing the Water Treatment Plant 14 MGD Expansion and Miscellaneous Improvements Project amount by$249,396.54 to slope pulsator slabs to the drains,install a concrete plug for the 36-inch drain pipe located at the south clearwell, stabilize fill material and 27-inch pipe under 72-inch pipe,investigate leak south of the clearwell and fill sink hole in access road, provide additional hatches and lifting hooks along the filter gallery roof,provide and install compressed air piping and related appurtenances from the existing chemical building to the chemical storage area,apply a NSF rated coating on all wet surfaces at the pulsators and rapid mix basin,provide and install five 30-inch insert magnetic flow meters at the pulsators instead of five 30-inch flanged magnetic flow meters,add galvanized steel access ladder at fluoride storage area, provide and install Altivia chlorine dioxide generators and control revisions,provide additional circuit breakers,conduits,and wire for pipe heat trace,install Marsh- McBimey insert magnetic flow meter instead of polysonic flow meter at CF-V2, extend pulsator basin sample piping to the existing filter gallery,reroute existing 4-inch sanitary sewer force main to the existing manhole on Pine Street, repair items on the final punch list of the 5 MG Clearwell Project. BACKGROUND The proposed additions and modifications to the original contract documents and design are due to unforseen conditions prior to commencing construction. The changes will improve the future operation and increase the efficiency of the Water Treatment Plant, and will help the City meet required state and federal regulations. BUDGETARYIMPACT Funds for the project are available in the Capital Improvement Funds. PREVIOUS ACTION Resolution 03-271 in the amount of$11,029,000 was passed by City Council on December 16, 2003, Resolution 04-143 in the amount of$1,377,912.01 was passed by City Council on June 29, 2004. Resolution 05-003 in the amount of$28,475.60 was passed by City Council on January 4, 2005. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, and Water Utilities Director. FREESE•NICHOLS CHANGE ORDER (4.43 / 003) PROJECT: Water Treatment Plant 14 MGD Expansion PROJECT NUMBER OWNER: City of Beaumont CONTRACTOR: Craig, Sheffield and Austin ENGINEER: Freese and Nichols, Inc. BMT01435C CHANGE ORDER NO.: CO-003 DATE: May 12, 2005 Make the following additions, modifications or deletions to the work described in the Contract Documents: 1) REF: CMR-005 - Slope Pulsator slabs to the drains $ 4,360.92 2) REF: CMR-006 - Install a concrete plug for the 36" Drain pipe located at $ 1,155.50 South Clearwell. 3) REF: CMR-007 - Stabilized fill material & 27" pipe under 72" pipe $ 21,601.21 4) REF: CMR-008 - Investigate Leak South of Clearwell and Fill Sink Hole in $ 11,694.70 Access Road. 5) Punchlist Items from Previous Project b. Remove Replace Rusting Screens $ 9,131.00 c. Rework Thresholds at Elec Bldg $ 1,742.25 d. Repair Sloped Grade near Clearwell $ 18,503.50 e. Re-Plumb Overflow Flap Gate $ 1,347.80 f. Clean Pipe Sleeves at Level Instruments $ 542.80 h. Label All Exposed Chemical Lines $ 1,325.28 i. Rework Pipe Supports to SS $ 12,811.00 j. Trim Through Bolts on Manway Covers $ 339.25 k. Replace WL Support at Chlorine Booster $ 228.85 I. Insulate Heat Traced Lines $ 2,189.60 m. Repair Stairs NE of Clearwell $ 374.90 6) REF: PCM-008 - Provide additional hatches and lifting hooks along the $ 6,578.00 Filter gallery roof to allow for maintenance of valves within the Filter Pipe Gallery. 7) REF: PCM-009 - Provide and install compressed air piping from the $ 15,420.98 existing Chemical Building to the Chemical Storage Area. Provide and install a hose bib and associated 1"waterline at the Chemical Storage Area. Provide and install a stainless steel safety cable in the Filter Pipe Gallery. 8) REF: PCM-010 - Apply a NSF rated coating on all wet surfaces at the $ 22,620.40 Pulsators and Rapid Mix basin. 9) REF: PCM-011 - Provide and install five (5) 30" insert magnetic flow $ 52,267.6Q meters at the Pulsators in lieu of five (5) 30"flanged magnetic flow meters. 10) REF: PCM-012 -Add Galvanized Steel Access Ladder at Flouride $ 977.50 Storage Area. 11) REF: PCM-0130 Provide and Install Altivia Chlorine Dioxide Generators $ 7,708.15 and Control Revisions FREESE Ncon ICHOLS CHANGE ORDER (4.43 / 003) 12) REF: PCM-014- Provide Additional Circuit Breakers, Conduit, and Wire $ 15,056.80 for Pipe Heat Trace 13) REF: CMR-009 - Install Marsh-McBirney Insert Magnetic Flow Meter in $ 21,458.80 Lieu of Polysonic Flow Meter at CF-V2 14) REF: CMR-010 - Extend Pulsator Basin Sample Piping to the Existing $ 9,338.42 Filter Gallery 15) REF: CMR-011 - Reroute Existing 4-Inch Sanitary Sewer Force Main to $ 10,621.33 the Existing Manhole in Pine Street TOTAL CHANGE IN CONTRACT AMOUNT $ 249,396.54 TOTAL CHANGE IN CONTRACT TIME "7-,0'- DAYS The compensation agreed upon in this Change Order is full, complete and final payment for all costs the Contractor may incur as a result of or relating to this change whether said costs are known, unknown, foreseen or unforseen at this time, including without limitation, any cost for delay, extended overhead, ripple or impact cost, or any other effect on changed or unchanged work as a result of this Change Order. Original Contract Amount $ 11,029,000.00 Previously Approved Change Order Amount $ 1,406,387.61 Adjusted Contract Amount $ 12,435,387.61 Proposed Change Order Amount $ 249,396.54 Revised Contract Amount $ 12,684,784.15 Previous Contract Time 638 Calendar Days Previous Substantial Completion Date November 1, 2005 Previous Final Completion Date December 1, 2005 Net Change in Contract Time 0 Calendar Days Revised Contract Time 638 Calendar Days Revised Substantial Completion Date November 1, 2005 Revised Final Completion Date December 1, 2005 Recommended by Approved by FREESE AND NICHOLS, INC. CRAIG HEFFIELD, AND AUSTIN /�JJ By "f. S i Z-/os By Date Date OF Approved by ,:�f' CITY OF BEAUMONT _ LAWRENCE P. ECKERSLEY .1..°..................... By :� 55972 Date °�'.CIS TEq.`�c'�'� P O E 4 May 24,2005 Consider approving a six(6)month contract to various vendors for the purchase of water treatment chemicals City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Kirby Richard, Internal Services Director MEETING DATE: May 24, 2005 AGENDA MEMO DATE: May 18, 2005 REQUESTED ACTION: Council approval of a six (6) month contract to various vendors for the purchase of water treatment chemicals. RECOMMENDATION Administration recommends award of a six (6) month contract to various vendors as reflected below for purchasing water treatment chemicals at the unit costs stated below with an estimated total contract expenditure of$118,375. BACKGROUND Bids were requested for an annual contract for water treatment chemicals for use by the Public Works Department, Water Utilities Division. The chemicals included in this bid are liquid chlorine, sodium hydroxide and phosphate. The chemicals are used to disinfect and purify the water supply. Bid notices were provided to 16 vendors with six (6) responding with bids as reflected in the attached bid tabulation. The products of each bidder recommended for award meet all specifications. The apparent low bidder on the phosphate, Shannon Chemical Corp., bid a product which does not meet the specification regarding orthophosphate content, and would subsequently not perform adequately. The contract provides for various vendors to furnish water treatment chemicals at the following fixed unit prices: Sig(6)Month Contract for Water Treatment Chemicals May 18,2005 Page 2 Vendor Chemical Estimated Current Price Quantity DXI Industries, Inc. Liquid Chlorine 70 tons $610 /ton Houston, Texas FSTI Sodium Hydroxide 150 tons $368.50 /ton Manor, Texas Calciquest Phosphate 15 tons $1,360 /ton Belmont, North Carolina BUDGETARY IMPACT Funds are available for this expenditure in the Water Utilities Division's operating budget. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager, Internal Services Director and Public Works Director. BID TABULATION FOR LIQUID CHLORINE,SODIUM HYDROXIDE AND PHOSPHATE BID NO.: RF0305-22 BID OPENING DATE: 4/28/05 a A sM - annon chemical Corp. I FSTI DXI Industfles,Inc. nivar nc. arus hemlca o. { Malvern,Pennsylvania Manor,Texas Houston,Texas Houston,Texas Peru,Illinois Daniel C.Flynn Brady Hamilton Jamey Deloney Jackie Lowe Dennis Clark BID`DESCRfp A Nx .K Q g,�. � �� :COSTa h3r 770T,AL', k ., ti COST" ,, .. �r tQT EGOS. TO/ � „` . .0 S,.:<, ., TATAL' LIQUID G� RI 7 B N/B I llitillq;QU: , N/B /B TONS SODIUM HYDROXIDE 150 N/B N/B $368.50 $55,275.00 $416.00 $62,400.00 $412.00 $61,800.00 N/B N/B TONS PHOSPHATE 15 $1,344.00 $20,160.00 N/B N/B N/B N/B N/B N/B $1,565.80 $23,487.00 TONS Inc.1. Belmont,North Carolina s, A Craig Princi i 3 •w. eiDIDESCRIFTIQ Q7Y+..Krc �.yCOS..T, . ). SOTAL 7 /B TONS SODIUM HYDROXIDE 150 N/B N/B TONS PHOSPHATE 15 $1,360.00 $20,400.00 TONS 5 May 24,2005 Consider approving a request to change the name of Fletcher Mini Park to Cesar E. Chavez Park V~-1W--- City of Beaumont U79 Council Agenda Item M - K TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Kirby Richard, Internal Services Director MEETING DATE: May 24, 2005 AGENDA MEMO DATE: May 19, 2005 REQUESTED ACTION: Council consider a request to change the name of Fletcher Mini Park to Cesar E. Chavez Park. RECOMMENDATION At the request of Councilmember Audwin Samuel, Council is asked to consider changing the name of Fletcher Mini Park to Cesar E. Chavez Park. BACKGROUND Fletcher Park is located at the northwest corner of the Avenue C and Milam Street intersection. The "pocket park" encompasses approximately .20 acres and contains a creative play area, a concrete performance platform, sidewalks, seating area with benches and a drinking fountain. Approximately $62,000 was spent last year updating the park's facilities. A search of the City Clerk's records reveals no specific dedication of the park. The property was purchased in 1980 from M. A.Widner for$4,500. Two lots were purchased to construct what was then referred to as a"vest pocket" park. Community Development Block Grant funds were used to construct the creative playground and other facilities at the site. It is not exactly clear as to how the park came to be named Fletcher Mini Park. Many believe that it is named after the Fletcher Neighborhood, as the area was then called,or after Emmett A.Fletcher Elementary School (named after the son of W. A. Fletcher and mayor of Beaumont from 1906 through 1918 and again from 1930 through 1934). Mr.W. A.Fletcher was a prominent lumberman, Civil War soldier and author that moved to Beaumont in 1859. Mr. Roberto Flores appeared before the Parks and Recreation Advisory Committee on January 10, 2005 to request renaming the park to recognize Mr. Cesar E. Chavez. No formal recommendation Fletcher Mini Park May 19, 2005 Page 2 was made by the committee during this meeting. However,the Committee requested that Mr.Flores obtain a letter from the area's neighborhood associations in support of his endeavor and that the City publish a notice of the potential name change which would allow citizens an opportunity to express their opinions by mail. There is currently no formal policy stating the criteria for naming or renaming a park within the City. Following the direction of the Committee, notice was posted in the Beaumont Enterprise. An overwhelming response was received in support of retaining the Fletcher family name for the park, copies of which have previously been forwarded to Council. No letter of support was received from a neighborhood association concerning this matter. On February 14, 2005, the Parks and Recreation Advisory Committee met and voted unanimously to recommend that no affirmative action be taken toward changing the name of Fletcher Mini Park to Cesar E. Chavez Park. BUDGETARY IMPACT If the name is changed,a minimal expense would be associated with park signage. The funds would be expended from the Capital Reserve Fund. PREVIOUS ACTION Renaming of the park was placed on the January 25, 2005 City Council meeting agenda; however, the item was deferred. SUBSEQUENT ACTION None.