HomeMy WebLinkAboutPO 7097: TAX AND REVENUE CERTIFICATES OF OBLIGATION P. O. NO. 7097
08/10/2022 DM/gt
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF PORT ARTHUR, TEXAS, AUTHORIZING
THE ISSUANCE AND SALE OF CITY OF PORT ARTHUR, TEXAS,
COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION,
SERIES 2022 IN THE AGGREGATE PRINCIPAL AMOUNT OF $10,000,000;
LEVYING A TAX IN PAYMENT THEREOF; MAKING OTHER PROVISIONS
REGARDING SUCH CERTIFICATES OF OBLIGATION, INCLUDING
AUTHORIZING THE PREPARATION AND DISTRIBUTION OF ONE OR MORE
PRELIMINARY OFFICIAL STATEMENTS AND AUTHORIZING THE
PREPARATION AND DISTRIBUTION OF ONE OR MORE OFFICIAL
STATEMENTS AND MATTERS INCIDENT THERETO; AWARDING THE SALE
OF THE CERTIFICATES; AUTHORIZING THE EXECUTION AND DELIVERY
OF ONE OR MORE PURCHASE AGREEMENTS; AUTHORIZING BOND
INSURANCE; AUTHORIZING THE EXECUTION AND DELIVERY OF A
PAYING AGENT/REGISTRAR AGREEMENT; AUTHORIZING AND
CONFIRMING THE ENGAGEMENT OF CERTAIN PROFESSIONALS IN
CONNECTION WITH THE ISSUANCE OF THE CERTIFICATES OF
OBLIGATION; FINDING AND DETERMINING THAT THE MEETING AT
WHICH THIS ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS
REQUIRED BY LAW; AND ENACTING OTHER PROVISIONS RELATING
THERETO.
WHEREAS, under the provisions of Subchapter C, Chapter 271, Texas Local
Government Code, as amended (the "Act"), the City of Port Arthur, Texas, is authorized to issue
certificates of obligation for the purposes specified in this Ordinance and for the payment of all
or a portion of the contractual obligations for professional services, including that of engineers,
attorneys, and financial advisors in connection therewith, and to sell the same for cash as herein
provided; and
WHEREAS, the City is authorized to provide that such obligations will be payable from
and secured by the levy of a direct and continuing ad valorem tax, within the limits prescribed by
law, against all taxable property within the City, in combination with a limited pledge of a
subordinate lien on the net revenues of the City's waterworks and sewer system in an amount
not to exceed $10,000 as authorized by the Act and Chapter 1502, Texas Government Code;
and
WHEREAS, the City Council has found and determined that it is necessary and in the
best interests of the City and its citizens that it issue such certificates of obligation authorized by
this Ordinance; and
WHEREAS, pursuant to a resolution heretofore passed by this governing body, notice of
intention to issue certificates of obligation of the City payable as provided in this Ordinance was
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published in the Port Arthur News, a newspaper of general circulation of the City in accordance
with the laws of the State of Texas; and
WHEREAS, no petition of any kind has been filed with the City Secretary, any member
of the City Council or any other official of the City, protesting the issuance of such certificates of
obligation; and
WHEREAS, this City Council is now authorized and empowered to proceed with the
issuance of said certificates of obligation and to sell the same for cash; and
WHEREAS, the meeting at which this Ordinance is considered is open to the public as
required by law, and public notice of the time, place, and purpose of said meeting was given as
required by Chapter 551, Texas Government Code, as amended; now therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR,
TEXAS:
ARTICLE I.
DEFINITIONS AND OTHER PRELIMINARY MATTERS
Section 1.01 Definitions.
Unless otherwise expressly provided or unless the context clearly requires otherwise in
this Ordinance, the following terms shall have the meanings specified below:
"Business Day" means any day which is not a Saturday, Sunday or legal holiday, or day
on which banking institutions in the State of Texas or the city in which the Designated
Payment/Transfer Office is located are generally authorized or obligated by law or executive
order to close.
"Certificate" means any of the Certificates.
"Certificate Date" means the date designated as the initial date of the Certificates by
Section 3.02(a) of this Ordinance.
"Certificates" mean the certificates of obligation authorized to be issued by Section 3.01
of this Ordinance and designated as "City of Port Arthur. Texas, Combination Tax and Revenue
Certificates of Obligation, Series 2022."
"City" means the City of Port Arthur, Texas.
"Closing Date" means the date of the initial delivery of and payment for the Certificates.
"Code" means the Internal Revenue Code of 1986, as amended, including applicable
regulations, published rulings, and court decisions.
"Dated Date" means September 1, 2022.
"Delivery Date" means September 13, 2022.
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"Designated Payment/Transfer Office" means (i) with respect to the initial Paying
Agent/Registrar named herein, its office in Austin, Texas, or at such other location designated by
the Paying Agent/Registrar and (ii) with respect to any successor Paying Agent/Registrar, the
office of such successor designated and located as may be agreed upon by the City and such
successor.
"DTC" means The Depository Trust Company of New York, New York, or any successor
securities depository.
"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.
"Event of Default" means any event of default as defined in Section 11.01 of this
Ordinance.
"Fiscal Year" means such fiscal year as shall from time to time be set by the City
Council.
"Initial Certificate" means the initial certificate authorized by Section 3.04 of this
Ordinance.
"Interest and Sinking Fund" means the interest and sinking fund established by Section
2.02 of this Ordinance.
"Interest Payment Date" means the date or dates on which interest on the Certificates is
scheduled to be paid until their respective dates of maturity or prior redemption, such dates
being February 15 and August 15, commencing February 15, 2023.
"MSRB" means the Municipal Securities Rulemaking Board.
"Net Revenues" means the gross revenues of the System less the expenses of
operation and maintenance as said expenses are defined in Chapter 1502, Texas Government
Code, as amended.
"Ordinance" as used herein and in the Certificates means this ordinance authorizing the
Certificates.
"Owner" means the person who is the registered owner of a Certificate or Certificates, as
shown in the Register.
"Paying Agent/Registrar" means initially UMB Bank, Austin, Texas, or any successor
thereto as provided in this Ordinance.
"Paying Agent/Registrar Agreement" means the Paying Agent/Registrar Agreement
between the Paying Agent/Registrar and the City relating to the Certificates.
"Project" means the purposes for which the Certificates are issued as set forth in Section
3.01.
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"Record Date" means the last business day of the month preceding such interest
payment date.
"Register" means the bond register specified in Section 3.06(a) of this Ordinance.
"Representation Letter" means the Blanket Letter of Representations between the City
and DTC.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"Special Payment Date" means the Special Payment Date prescribed by Section 3.03(b)
of this Ordinance.
"Special Record Date" means the Special Record Date prescribed by Section 3.03(b) of
this Ordinance.
"Surplus Revenues" means the revenues of the System in an amount not to exceed
$10,000 remaining after payment of all operation and maintenance expenses thereof.
"System" as used in this Ordinance means the City's combined waterworks and sewer
system, including all present and future additions, extensions, replacements, and improvements
thereto.
"Unclaimed Payments" means money deposited with the Paying Agent/Registrar for the
payment of principal of, redemption premium, if any, or interest on the Certificates as the same
becomes due and payable or money set aside for the payment of Certificates duly called for
redemption prior to maturity and remaining unclaimed by the Owners of such Certificates for 90
days after the applicable payment or redemption date.
"Underwriters" means [ ].
Section 1.02 Findings.
The declarations, determinations and findings declared, made and found in the preamble
to this Ordinance are hereby adopted, restated and made a part of the operative provisions
hereof.
Section 1.03 Titles and Headings.
The titles and headings of the Articles and 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 and shall never be
considered or given any effect in construing this Ordinance or any provision hereof or in
ascertaining intent, if any question of intent should arise.
Section 1.04 Interpretation.
(a) Unless the context requires otherwise, words of the masculine gender
shall be construed to include correlative words of the feminine and neuter genders and
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vice versa, and words of the singular number shall be construed to include correlative
words of the plural number and vice versa.
(b) This Ordinance and all the terms and provisions hereof shall be liberally
construed to effectuate the purposes set forth herein.
ARTICLE II.
SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND
Section 2.01 Tax Levy.
(a) Pursuant to the authority granted by the Texas Constitution and the laws
of the State of Texas, there shall be levied and there is hereby levied for the current year
and for each succeeding year thereafter while any of the Certificates or any interest
thereon is outstanding and unpaid, an ad valorem tax on each one hundred dollars
valuation of taxable property within the City, at a rate sufficient, within the limit
prescribed by law, to pay the debt service requirements of the Certificates, being (i) the
interest on the Certificates, and (ii) a sinking fund for their redemption at maturity or a
sinking fund of 2% per annum (whichever amount is greater), when due and payable, full
allowance being made for delinquencies and costs of collection.
(b) The ad valorem tax thus levied shall be assessed and collected each year
against all property appearing on the tax rolls of the City most recently approved in
accordance with law, and the money thus collected shall be deposited as collected to the
Interest and Sinking Fund.
(c) Said ad valorem tax, the collections therefrom, and all amounts on
deposit in or required hereby to be deposited to the Interest and Sinking Fund are
hereby pledged and committed irrevocably to the payment of the principal of and interest
on the Certificates when and as due and payable in accordance with their terms and this
Ordinance.
(d) The City hereby covenants and agrees that the Surplus Revenues are
hereby irrevocably pledged equally and ratably to the payment of the principal of and
interest on the Certificates, as the same become due. The Surplus Revenues shall be
deposited to the Interest and Sinking Fund at such time as the Surplus Revenues are to
be applied to the payment of the Certificates.
(e) If the liens and provisions of this Ordinance shall be released in a manner
permitted by Article XIII hereof, then the collection of such ad valorem tax may be
suspended or appropriately reduced, as the facts may permit, and further deposits to the
Interest and Sinking Fund may be suspended or appropriately reduced, as the facts may
permit. In determining the aggregate principal amount of outstanding Certificates, there
shall be subtracted the amount of any Certificates that have been duly called for
redemption and for which money has been deposited with the Paying Agent/Registrar for
such redemption.
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Section 2.02 Interest and Sinking Fund.
(a) The City hereby establishes special funds or accounts to be designated
"City of Port Arthur, Texas, Combination Tax and Revenue Certificates of Obligation,
Series 2022" Interest and Sinking Fund" (the "Interest and Sinking Fund"), said funds to
be maintained at an official depository bank of the City separate and apart from all other
funds and accounts of the City.
(b) Money on deposit in or required by this Ordinance to be deposited to the
Interest and Sinking Fund shall be used solely for the purpose of paying the interest on
and principal of the Certificates when and as due and payable in accordance with their
terms and this Ordinance.
Section 2.03 Pledge of Revenues.
The Surplus Revenues to be derived from the operation of the System in an amount not
to exceed Ten Thousand Dollars ($10,000) are hereby pledged to the payment of the principal
of and interest on the Certificates as the same come due; provided, however, that such pledge
is and shall be junior and subordinate in all respects to the pledge of the Surplus Revenues to
the payment of all outstanding obligations of the City and any obligation of the City, whether
authorized heretofore or hereafter, which the City designates as having a pledge senior to the
pledge of the Surplus Revenues to the payment of the Certificates. 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 Surplus
Revenues, secured by a pledge of the Surplus Revenues that may be prior and superior in right
to, on a parity with, or junior and subordinate to the pledge of Surplus Revenues securing the
Certificates.
ARTICLE III.
AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE
CERTIFICATES
Section 3.01 Authorization.
(a) The City's certificates of obligation to be designated "City of Port Arthur,
Texas, Combination Tax and Revenue Certificates of Obligation, Series 2022," are
hereby authorized to be issued and delivered in accordance with the Constitution and
laws of the State of Texas, specifically §271.041-063, Local Government Code, V.T.C.A,
as amended, and principal amount of $10,000,000 for the purpose of paying contractual
obligations to be incurred for the following purposes, to wit: (1) [the construction of public
works, more specifically, the construction, reconstruction of City streets and other street
related improvements, including but not limited to drainage and sidewalks on such street
projects, and any items related thereto]; (2) payment of contractual obligations for
professional services incurred in connection with item (1); and (3) payment of the costs
incurred in connection with the issuance of the Certificates.
(b) The issuance of the Certificates is hereby authorized under and in
accordance with the provisions hereof, the officers of the City are each hereby
authorized to execute, attest, and affix the City's seal to the Certificates and to deliver
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the Certificates to the Attorney General of the State of Texas for approval, the
Comptroller of Public Accounts for registration and the Paying Agent/Registrar for
authentication, and thereafter to deliver such Certificates to the Underwriter pursuant to
the Purchase Agreement authorized in Section 7.01 herein.
Section 3.02 Date, Denomination, Maturities, and Interest.
(a) The Certificates shall be dated as of the Dated Date. The Certificates
shall be in fully registered form, without coupons, in the denomination of 5,000 or any
integral multiple thereof and shall be numbered separately from one upward, except the
Initial Certificate, which shall each be numbered T-1.
(b) The Certificates shall mature on February 15, in the years and in the
principal amounts and shall bear interest at the per annum rates set forth in the following
schedule:
Principal
Year Installments Interest Rate
2023 $
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
(c) Interest shall accrue and be paid on each Certificate respectively until its
maturity or prior redemption from the later of the date of initial delivery or the most recent
Interest Payment Date to which interest has been paid or provided for at the rates per
annum for each respective maturity specified in the schedule contained in subsection (b)
above. Such interest shall be payable semiannually on each Interest Payment Date until
maturity or prior redemption. Interest on the Certificates shall be computed on the basis
of a 360-day year consisting of twelve 30-day months.
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Section 3.03 Medium, Method, and Place of Payment.
(a) The principal of and interest on the Certificates shall be paid in lawful
money of the United States of America.
(b) Interest on the Certificates shall be payable to the Owners as shown in
the Register at the close of business on the Record Date; provided, however, that in the
event of nonpayment of interest on a scheduled Interest Payment Date, and for 30 days
thereafter, a new record date for such interest payment (a "Special Record Date") will be
established by the Paying Agent/Registrar if and when funds for the payment of such
interest have been received from the City. Notice of the Special Record Date and of the
scheduled payment date of the past due interest (the "Special Payment Date," which shall
be at least 15 days after the Special Record Date) shall be sent at least five Business
Days prior to the Special Record Date by United States mail, first class, postage prepaid,
to the address of each Owner of a Certificate appearing in the Register at the close of
business on the last Business Day next preceding the date of mailing of such notice.
(c) Interest shall be paid by check, dated as of and mailed on the Interest
Payment Date, and sent United States mail, first class, postage prepaid, by the Paying
Agent/Registrar to each Owner, at the address thereof as it appears in the Register, or
by such other customary banking arrangement acceptable to the Paying Agent/Registrar
and the Owner; provided, however, that the Owner shall bear all risk and expense of
such alternative banking arrangement. At the option of an Owner of at least $1,000,000
principal amount of Certificates, interest may be paid by wire transfer to the bank
account of such Owner on file with the Paying Agent/Registrar.
(d) The principal of each Certificate shall be paid to the Owner thereof on the
due date, whether at the maturity date or the date of prior redemption thereof, upon
presentation and surrender of such Certificate at the Designated Payment/Transfer
Office.
(e) If the date for the payment of the principal of or interest on the Certificates
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 and no additional interest shall be due by
reason of nonpayment on the date on which such payment is otherwise stated to be due
and payable.
(f) Unclaimed Payments of amounts due hereunder shall be segregated in a
special escrow account and held in trust, uninvested by the Paying Agent/Registrar, for
the account of the Owner of the Certificates to which such Unclaimed Payments pertain.
Subject to Title 6 of the Texas Property Code, any Unclaimed Payments remaining
unclaimed by the Owners entitled thereto for three years after the applicable payment or
redemption date shall be applied to the next payment or payments on the Certificates
thereafter coming due and, to the extent any such money remains three years after the
retirement of all outstanding Certificates, such money shall be paid to the City to be used
for any lawful purpose. Thereafter, neither the City, the Paying Agent/Registrar, nor any
other person shall be liable or responsible to any Owners of such Certificates for any
further payment of such unclaimed moneys or on account of any such Certificates,
subject to Title 6 of the Texas Property Code.
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Section 3.04 Execution and Registration of Certificates.
(a) The Certificates shall be executed on behalf of the City by the Mayor and
the City Secretary, by their manual or facsimile signatures, and the official seal of the
City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the
Certificates shall have the same effect as if each of the Certificates had been signed
manually and in person by each of said officers, and such facsimile seal on the
Certificates shall have the same effect as if the official seal of the City had been
manually impressed upon each of the Certificates.
(b) In the event that any officer of the City whose manual or facsimile
signature appears on the Certificates ceases to be such officer before the authentication
of such Certificates or before the delivery thereof, such manual or facsimile signature
nevertheless shall be valid and sufficient for all purposes as if such officer had remained
in such office.
(c) Except as provided below, no Certificate shall be valid or obligatory for
any purpose or be entitled to any security or benefit of this Ordinance unless and until
there appears thereon the Certificate of Paying Agent/Registrar substantially in the form
provided herein, duly authenticated by manual execution by an officer or duly authorized
signatory of the Paying Agent/Registrar. It shall not be required that the same officer or
authorized signatory of the Paying Agent/Registrar sign the Certificate of Paying
Agent/Registrar on all of the Certificates. In lieu of the executed Certificate of Paying
Agent/Registrar described above, the Initial Certificate delivered at the Closing Date
shall have attached thereto the Comptroller's Registration Certificate substantially in the
form provided in the Form of Certificates, manually executed by the Comptroller of
Public Accounts of the State of Texas (the "Comptroller"), or by his duly authorized
agent, which certificate is evidence that such Initial Certificate has been duly approved
by the Attorney General of the State of Texas (the "Attorney General") and that it is a
valid and binding obligation of the City, and has been registered by the Comptroller.
(d) On the Closing Date, one Initial Certificate representing the entire
principal amount of all Certificates, payable in stated installments to the Initial Purchaser,
or its designee, executed by the manual or facsimile signatures of the Mayor and City
Secretary of the City, approved by the Attorney General, and registered and manually
signed by the Comptroller, will be delivered to the Initial Purchaser or its designee.
Upon payment for the Initial Certificate, the Paying Agent/Registrar shall cancel the
Initial Certificate and deliver to DTC on behalf of the Initial Purchaser one registered
definitive Certificate for each year of maturity of the Certificates in the aggregate
principal amount of all Certificates for such maturity, registered in the name of Cede &
Co., as nominee of DTC.
Section 3.05 Ownership.
(a) The City, the Paying Agent/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 and receiving payment of the principal thereof, for
the further purpose of making and receiving payment of the interest thereon, and for all
other purposes (except interest will be paid to the person in whose name such certificate
is registered on the Record Date or Special Record Date, as applicable), whether or not
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such Certificate is overdue, and neither the City nor the Paying Agent/Registrar shall be
bound by any notice or knowledge to the contrary.
(b) All payments made to the Owner of a Certificate shall be valid and
effectual and shall discharge the liability of the City and the Paying Agent/Registrar upon
such Certificate to the extent of the sums paid.
Section 3.06 Registration, Transfer and Exchange.
(a) So long as any Certificates remain outstanding, the City shall cause the
Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a register
(the "Register") in which, subject to such reasonable regulations as it may prescribe, the
Paying Agent/Registrar shall provide for the registration and transfer of Certificates in
accordance with this Ordinance.
(b) The ownership of a Certificate may be transferred only upon the
presentation and surrender of the Certificate at the Designated Payment/Transfer Office
with such endorsement or other evidence of transfer as is acceptable to the Paying
Agent/Registrar. No transfer of any Certificate shall be effective until entered in the
Register.
(c) The Certificates shall be exchangeable upon the presentation and
surrender thereof at the Designated Payment/Transfer Office for a Certificate or
Certificates of the same maturity and interest rate and in any denomination or
denominations of any integral multiple of $5,000 and in an aggregate principal amount
equal to the unpaid principal amount of the Certificates presented for exchange. The
Paying Agent/Registrar is hereby authorized to authenticate and deliver Certificates
exchanged for other Certificates in accordance with this Section.
(d) Each exchange Certificate delivered by the Paying Agent/Registrar in
accordance with this Section shall constitute an original contractual obligation of the City
and 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 exchange Certificate is delivered.
(e) No service charge shall be made to the Owner for the initial registration,
subsequent transfer, or exchange for a different denomination of any of the Certificates.
The Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to
cover any tax or other governmental charge that is authorized to be imposed in
connection with the registration, transfer, or exchange of a Certificate.
(f) Neither the City nor the Paying Agent/Registrar shall be required to issue,
transfer, or exchange any Certificate called for redemption, in whole or in part, within 45
calendar days prior to the date fixed for redemption; provided, however, such limitation
shall not be applicable to an exchange by the Owner of the uncalled principal balance of
a Certificate.
Section 3.07 Cancellation.
All Certificates paid or redeemed before scheduled maturity in accordance with this
Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates
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are authenticated and delivered in accordance with this Ordinance, shall be cancelled and
proper records shall be made regarding such payment, redemption, exchange or replacement.
The Paying Agent/Registrar shall dispose of cancelled Certificates in accordance with the
Securities Exchange Act of 1934.
Section 3.08 Replacement Certificates.
(a) Upon the presentation and surrender to the Paying Agent/Registrar of a
mutilated Certificate, the Paying Agent/Registrar shall authenticate and deliver in
exchange therefor a replacement Certificate of like tenor and principal amount, bearing a
number not contemporaneously outstanding. The City or the Paying Agent/Registrar
may require the Owner of such Certificate to pay a sum sufficient to cover any tax or
other governmental charge that is authorized to be imposed in connection therewith and
any other expenses connected therewith.
(b) In the event that any Certificate is lost, apparently destroyed or wrongfully
taken, the Paying Agent/Registrar, 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 authenticate and deliver a replacement Certificate of like tenor
and principal amount, bearing a number not contemporaneously outstanding, provided
that the Owner first:
(i) furnishes to the Paying Agent/Registrar satisfactory evidence of
his or her ownership of and the circumstances of the loss, destruction or theft of
such Certificate;
(ii) furnishes such security or indemnity as may be required by the
Paying Agent/Registrar to save it and the City harmless;
(iii) pays all expenses and charges in connection therewith, including,
but not limited to, printing costs, legal fees, fees of the Paying Agent/Registrar
and any tax or other governmental charge that is authorized to be imposed; and
(iv) satisfies any other reasonable requirements imposed by the City
and the Paying Agent/Registrar.
(c) 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 Paying
Agent/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 Paying
Agent/Registrar in connection therewith.
(d) In the event that any such mutilated, lost, apparently destroyed or
wrongfully taken Certificate has become or is about to become due and payable, the
Paying Agent/Registrar, in its discretion, instead of issuing a replacement Certificate,
may pay such Certificate if it has become due and payable or may pay such Certificate
when it becomes due and payable.
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(e) Each replacement Certificate delivered in accordance with this Section
shall constitute an original additional contractual obligation of the City and 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.
Section 3.09 Book-Entry Only System.
(a) The definitive Certificates shall be initially issued in the form of a separate
single fully registered Certificate for each maturity. Upon initial issuance, the ownership
of each such Certificate shall be registered in the name of Cede & Co., as nominee of
DTC, and except as provided in Section 3.10 hereof, all of the outstanding Certificates
shall be registered in the name of Cede & Co., as nominee of DTC.
(b) With respect to Certificates registered in the name of Cede & Co., as
nominee of DTC, the City and the Paying Agent/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, except as provided in this Ordinance.
Without limiting the immediately preceding sentence, the City and the Paying
Agent/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, 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, 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
Paying Agent/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 giving notices of redemption and other matters with
respect to such Certificate, for the purpose of registering transfer with respect to such
Certificate, and for all other purposes whatsoever. The Paying Agent/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 evidencing the obligation of the City to make payments of amounts
due pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of
written notice to the effect that DTC has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions in this Ordinance with respect to
interest checks or drafts being mailed to the registered Owner at the close of business
on the Record Date, the word "Cede & Co." in this Ordinance shall refer to such new
nominee of DTC.
(c) The Representation Letter previously executed and delivered by the City,
and applicable to the City's obligations delivered in book entry only form to DTC as
securities depository, is hereby ratified and approved for the Certificates.
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Section 3.10 Successor Securities Depository; Transfer Outside Book-Entry-Only
System.
In the event that the City determines that it is in the best interest of the City and the
beneficial owners of the Certificates that they be able to obtain certificated Certificates, 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, notify DTC and DTC Participants of the appointment of
such successor securities depository and transfer one or more separate Certificates to such
successor securities depository; or (ii) notify DTC and DTC Participants of the availability
through DTC of certificated Certificates and cause the Paying Agent/Registrar to transfer one or
more separate registered 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.
Section 3.11 Payments to Cede & Co.
Notwithstanding any other provision of this Ordinance to the contrary, so long as the
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 such Certificates, and all notices with
respect to such Certificates shall be made and given, respectively, in the manner provided in the
Representation Letter of the City to DTC.
Section 3.12 Successor Securities Depository; Transfer Outside Book-Entry Only
System.
In the event that the City or the Paying Agent/Registrar determines that DTC is
incapable of discharging its responsibilities described herein and in the representation letter of
the City to DTC, and that it is in the best interest of the beneficial owners of the Certificates that
they be able to obtain certificated Certificates, or in the event DTC discontinues the services
described herein, the City or the Paying Agent/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, notify DTC and DTC Participants of the appointment of such successor
securities depository and transfer one or more separate Certificates to such successor
securities depository or (ii) notify DTC and DTC Participants 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.
Section 3.13 Payments to Cede & Co.
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 such Certificates, and all notices with
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respect to such Certificates, shall be made and given, respectively, in the manner provided in
the representation letter of the City to DTC.
ARTICLE IV.
REDEMPTION OF CERTIFICATES BEFORE MATURITY
Section 4.01 Redemption Before Maturity.
The Certificates shall be subject to redemption before their scheduled maturity only as
provided in this article.
Section 4.02 Optional Redemption.
(a) The Certificates maturing on or after February 15, [20 ] are subject to
redemption at the option of the City on February 15, [20 ] or on any date thereafter,
in whole or in part, at a redemption price of par plus accrued interest to the date of
redemption.
(b) The City, at least 45 days before the redemption date, unless a shorter
period shall be satisfactory to the Paying Agent/Registrar, shall notify the Paying
Agent/Registrar of such redemption date and of the principal amount of Certificates to be
redeemed.
Section 4.03 Partial Redemption.
(a) If less than all of the Certificates are to be redeemed pursuant to Section
4.02, the City shall determine the maturity or maturities and the amounts thereof to be
redeemed and shall direct the Paying Agent/Registrar to call by lot the Certificates, or
portions thereof. within such maturity or maturities and in such principal amounts for
redemption at the close of business on the Business Day next preceding the date of
mailing such notice.
(b) A portion of a single Certificate of a denomination greater than $5,000
may be redeemed, but only in a principal amount equal to $5,000 or any integral multiple
thereof. If such a Certificate is to be partially redeemed, the Paying Agent/Registrar shall
treat each $5,000 portion of a Certificate as though it were a single certificate for
purposes of selection for redemption.
(c) Upon surrender of any Certificate for redemption in part, the Paying
Agent/Registrar, in accordance with Section 3.06 of this Ordinance, shall authenticate
and deliver an exchange Certificate or Certificates in an aggregate principal amount
equal to the unredeemed portion of the Certificate so surrendered, such exchange being
without charge, notwithstanding any provision of Section 3.06 to the contrary.
Section 4.04 Notice of Redemption to Owners.
(a) The Paying Agent/Registrar shall give notice of any redemption of
Certificates by sending notice by United States mail, first class, postage prepaid, not
less than 30 days before the date fixed for redemption, to the Owner of each Certificate
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(or part thereof) to be redeemed, at the address shown in the Register at the close of
business on the Business Day next preceding the date of mailing such notice.
(b) The notice shall state the redemption date, the redemption price, the
place at which the Certificates are to be surrendered for payment, and, if less than all the
Certificates outstanding are to be redeemed, an identification of the Certificates or
portions thereof to be redeemed.
(c) The City reserves the right to give notice of its election or direction to
redeem Certificates under Section 4.02 conditioned upon the occurrence of subsequent
events. Such notice may state (i) that the redemption is conditioned upon the deposit of
moneys and/or authorized securities, in an amount equal to the amount necessary to
effect the redemption, with the Paying Agent/Registrar, or such other entity as may be
authorized by law, no later than the redemption date or (ii) that the City retains the right to
rescind such notice at any time on or prior to the scheduled redemption date if the City
delivers a certificate of the City to the Paying Agent/Registrar instructing the Paying
Agent/Registrar to rescind the redemption notice, and such notice and redemption shall
be of no effect if such moneys and/or authorized securities are not so deposited or if the
notice is rescinded. The Paying Agent/Registrar shall give prompt notice of any such
rescission of a conditional notice of redemption to the affected Owners. Any Certificates
subject to conditional redemption where redemption has been rescinded shall remain
Outstanding, and the rescission of such redemption shall not constitute an Event of
Default. Further, in the case of a conditional redemption, the failure of the City to make
moneys and/or authorized securities available in part or in whole on or before the
redemption date shall not constitute an Event of Default.
(d) Any notice given as provided in this Section shall be conclusively
presumed to have been duly given, whether or not the Owner receives such notice.
Section 4.05 Payment Upon Redemption.
(a) Before or on each redemption date, the City shall deposit with the Paying
Agent/Registrar money sufficient to pay all amounts due on the redemption date and the
Paying Agent/Registrar shall make provision for the payment of the Certificates to be
redeemed on such date by setting aside and holding in trust an amount from the Interest
and Sinking Fund or otherwise received by the Paying Agent/Registrar from the City and
shall use such funds solely for the purpose of paying the principal of, and accrued
interest on the Certificates being redeemed.
(b) Upon presentation and surrender of any Certificate called for redemption
at the Designated Payment/Transfer Office on or after the date fixed for redemption, the
Paying Agent/Registrar shall pay the principal of, redemption premium, if any, and
accrued interest on such Certificate to the date of redemption from the money set aside
for such purpose.
Section 4.06 Effect of Redemption.
(a) Notice of redemption having been given as provided in Section 4.05 of
this Ordinance and, subject, in the case of an optional redemption under Section 4.02, to
any conditions or rights reserved by the City under Section 4.05(c), the Certificates or
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portions thereof called for redemption shall become due and payable on the date fixed
for redemption and, unless the City fails to make provision for the payment of the
principal thereof, or accrued interest thereon, such Certificates or portions thereof shall
cease to bear interest from and after the date fixed for redemption, whether or not such
Certificates are presented and surrendered for payment on such date.
(b) If the City shall fail to make provision for payment of all sums due on a
redemption date, then any Certificate or portion thereof called for redemption shall
continue to bear interest at the rate stated on the Certificate until due provision is made
for the payment of same.
ARTICLE V.
PAYING AGENT/REGISTRAR
Section 5.01 Appointment of Initial Paying Agent/Registrar.
[UMB Bank, Austin, Texas], is hereby appointed as the initial Paying Agent/Registrar for
the Certificates. The Paying Agent/Registrar Agreement submitted to this City Council, the form
of which is attached hereto as Exhibit A, is hereby approved. The Mayor is hereby authorized to
amend, complete or modify such agreement as necessary and is further authorized to execute
such agreement and the City Secretary is hereby authorized to attest such agreement.
Section 5.02 Qualifications.
Each Paying Agent/Registrar shall be a commercial bank, a trust company organized
under the laws of the State of Texas, or any other entity duly qualified and legally authorized to
serve as and perform the duties and services of paying agent and registrar for the Certificates.
Section 5.03 Maintaining Paying Agent/Registrar.
(a) At all times while any of the Certificates are outstanding, the City will
maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance.
The Mayor is hereby authorized and directed to execute an agreement with the Paying
Agent/Registrar specifying the duties and responsibilities of the City and the Paying
Agent/Registrar. The signature of the Mayor shall be attested by the City Secretary of
the City.
(b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as
such, the City will promptly appoint a replacement, provided, that no such resignation
shall be effective until a successor Paying Agent/Registrar has been appointed and has
accepted the duties of Paying Agent/Registrar for the Certificates.
Section 5.04 Termination.
The City, upon not less than sixty (60) days notice, reserves the right to terminate the
appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to
be terminated written notice of such termination, provided, that no such termination shall be
effective until a successor Paying Agent/Registrar has been appointed and has accepted the
duties of Paying Agent/Registrar for the Certificates.
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Section 5.05 Notice of Change to Owners.
Promptly upon each change in the entity serving as Paying Agent/Registrar, the City will
cause notice of the change to be sent to each Owner by United States mail, first class, postage
prepaid, at the address thereof in the Register, stating the effective date of the change and the
name and mailing address of the replacement Paying Agent/Registrar.
Section 5.06 Agreement to Perform Duties and Functions.
By accepting the appointment as Paying Agent/Registrar and executing the Paying
Agent/Registrar Agreement, the Paying Agent/Registrar is deemed to have agreed to the
provisions of this Ordinance and that it will perform the duties and functions of Paying
Agent/Registrar prescribed thereby.
Section 5.07 Delivery of Records to Successor.
If a Paying Agent/Registrar is replaced, such Paying Agent/Registrar, promptly upon the
appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent
books and records relating to the Certificates to the successor Paying Agent/Registrar.
ARTICLE VI.
FORM OF THE CERTIFICATES
Section 6.01 Form Generally.
(a) The Certificates, including the Registration Certificate of the Comptroller
of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar,
and the Assignment form to appear on each of the Certificates, (i) shall be substantially
in the form set forth in this Article, with such appropriate insertions, omissions,
substitutions, and other variations as are permitted or required by this Ordinance, and (ii)
may have such letters, numbers, or other marks of identification (including identifying
numbers and letters of the Committee on Uniform Securities Identification Procedures of
the American Bankers Association) and such legends and endorsements (including any
reproduction of an opinion of counsel) thereon as, consistently herewith, may be
determined by the City or by the officers executing such Certificates, as evidenced by
their execution thereof.
(b) Any portion of the text of any Certificates may be set forth on the reverse
side thereof, with an appropriate reference thereto on the face of the Certificates.
(c) The definitive Certificates, if any, shall be typewritten, photocopied,
printed, lithographed, or engraved, and may be produced by any combination of these
methods or produced in any other similar manner, all as determined by the officers
executing such Certificates, as evidenced by their execution thereof.
(d) The Initial Certificate submitted to the Attorney General of the State of
Texas may be typewritten and photocopied or otherwise reproduced.
Section 6.02 Form of the Certificates.
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The form of the Certificates, including the form of the Registration Certificate of the
Comptroller of Public Accounts of the State of Texas, the form of Certificate of the Paying
Agent/Registrar and the form of Assignment appearing on the Certificates, shall be substantially
as follows:
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(a) Form of Certificates.
REGISTERED REGISTERED
No. $
United States of America
State of Texas
CITY OF PORT ARTHUR, TEXAS
COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION
SERIES 2022
INTEREST RATE: MATURITY DATE: CERTIFICATE DATE: CUSIP NUMBER:
February 15, September 1, 2022
The City of Port Arthur, Texas (the "City"), in Jefferson County, State of Texas, for value
received, hereby promises to pay to
[ 1
or registered assigns, on the Maturity Date specified above, the sum of
DOLLARS
unless this Certificate shall have been sooner called for redemption and the payment of the
principal hereof shall have been paid or provided for, and to pay interest on such principal
amount from the later of the Delivery Date or the most recent interest payment date to which
interest has been paid or provided for until payment of such principal amount has been paid or
provided for, at the per annum rate of interest specified above, computed on the basis of a 360-
day year of twelve 30-day months, such interest to be paid semiannually on February 15 and
August 15 of each year, commencing February 15, 2023.
The principal of this Certificate shall be payable without exchange or collection charges
in lawful money of the United States of America upon presentation and surrender of this
Certificate at the corporate trust office in [Dallas, Texas] (the "Designated Payment/Transfer
Office"), of UMB Bank, as Paying Agent/Registrar, or, with respect to a successor paying
agent/registrar, at the Designated Payment/Transfer Office of such successor. Interest on this
Certificate is payable by check dated as of the interest payment date, and will be mailed on or
before such interest payment date, by United States mail, first class, postage prepaid, by the
Paying Agent/Registrar to the registered owner at the address shown on the registration books
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kept by the Paying Agent/Registrar, or by such other customary banking arrangements
acceptable to the Paying Agent/Registrar and the person to whom interest is to be paid;
provided, however, that such person shall bear all risk and expense of such other customary
banking arrangements. For the purpose of the payment of interest on this Certificate, the
registered owner shall be the person in whose name this Certificate is registered at the close of
business on the "Record Date," which shall be the last business day of the month preceding
such interest payment date; provided, however, that in the event of nonpayment of interest on a
scheduled interest payment date, and for thirty (30) days thereafter, a new record date for such
interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if
and when funds for the payment of such interest have been received from the City. Notice of
the Special Record Date and of the scheduled payment date of the past due interest (the
"Special Payment Date," which date shall be fifteen (15) days after the Special Record Date)
shall be sent at least five (5) Business Days (as hereinafter defined) prior to the Special Record
Date by United States mail, first class, postage prepaid, to the address of each registered owner
of a Certificate appearing on the books of the Paying Agent/Registrar at the close of business
on the last Business Day next preceding the date of mailing of such notice.
If the date for the payment of the principal of or interest on this Certificate is not a
Business Day, the date for such payment shall be the next succeeding day which is not a
Saturday, Sunday or legal holiday, or day on which banking institutions in the State of Texas or
the city in which the Designated Payment/Transfer Office of the Paying Agent/Registrar is
located are generally authorized or obligated by law or executive order to close (a "Business
Day"), and payment on such date shall for all purposes be deemed to have been made on the
original date payment was due.
This Certificate is one of a series of fully registered Certificates specified in the title
hereof issued in the aggregate principal amounts of $[10,000,000] (herein referred to as the
"Certificates"), issued pursuant to a certain ordinance of the City (the "Ordinance") for the
purpose of (1) the construction of public works, more specifically, the construction,
reconstruction of City streets and other street related improvements, including but not limited to
drainage and sidewalks on such street projects, and any items related thereto, (2) professional
services incurred in connection with item (1), and (3) payment of the costs incurred in
connection with the issuance of the Certificates.
The Certificates maturing on and after February 15, [20 1 are subject to redemption at
the option of the City on February 15, [20 1 or on any date thereafter at a price of par plus
interest accrued to the date of redemption. If less than all of the Certificates are to be redeemed
pursuant to an optional redemption, the City shall determine the maturity or maturities and the
amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot the
Certificates, or portions thereof, within such maturity or maturities and in such principal amounts,
for redemption.
Notice of such redemption or redemptions shall be given by United States mail, first
class, postage prepaid, not less than 30 days before the date fixed for redemption, to the
registered owner of each of the Certificates to be redeemed in whole or in part. In the Ordinance,
the City reserves the right in the case of an optional redemption to give notice of its election or
direction to redeem Certificates conditioned upon the occurrence of subsequent events. Such
notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or
authorized securities, in an amount equal to the amount necessary to effect the redemption, with
the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the
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redemption date or (ii) that the City retains the right to rescind such notice at any time prior to
the scheduled redemption date if the City delivers a certificate of the City to the Paying
Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice, and
such notice and redemption shall be of no effect if such moneys and/or authorized securities are
not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall give prompt
notice of any such rescission of a conditional notice of redemption to the affected Owners. Any
Certificates subject to conditional redemption where redemption has been rescinded shall remain
Outstanding, and the rescission of such redemption shall not constitute an event of default.
Further, in the case of a conditional redemption, the failure of the City to make moneys and/or
authorized securities available in part or in whole on or before the redemption date shall not
constitute an event of default.
Any notice so mailed shall be conclusively presumed to have been duly given, whether or
not the registered owner receives such notice. Notice having been so given and subject, in the
case of an optional redemption, to any rights or conditions reserved by the City in the notice, the
Certificates called for redemption shall become due and payable on the specified redemption
date, and notwithstanding that any Certificate or portion thereof has not been surrendered for
payment, interest on such Certificate or portion thereof shall cease to accrue.
As provided in the Ordinance, and subject to certain limitations therein set forth, this
Certificate is transferable upon surrender of this Certificate for transfer at the Designated
Payment/Transfer Office of the Paying Agent/Registrar with such endorsement or other evidence
of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully
registered Certificates of the same stated maturity, of authorized denominations, bearing the
same rate of interest, and for the same aggregate principal amount will be issued to the
designated transferee or transferees.
Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or
exchange any Certificate called for redemption, in whole or in part, within 45 calendar days prior
to the date fixed for redemption; provided, however, such limitation shall not be applicable to an
exchange by the owner of the uncalled principal balance of a Certificate.
The City, the Paying Agent/Registrar, and any other person may treat the person in
whose name this Certificate is registered as the owner hereof for the purpose of receiving
payment as herein provided (except interest shall be paid to the person in whose name this
Certificate is registered on the Record Date or Special Record Date, as applicable) and for all
other purposes, whether or not this Certificate be overdue, and neither the City nor the Paying
Agent/Registrar shall be affected by notice to the contrary.
[ (" ")], [New York, New York], has delivered its municipal bond insurance
policy (the "Policy") with respect to the scheduled payments due of principal of and interest on
this Certificate to [ ], [Houston, Texas], or its successor, as paying agent for the
Certificate (the "Paying Agent"). Said Policy is on file and available for inspection at the
principal office of the Paying Agent and a copy thereof may be obtained from [ ] or the
Paying Agent. All payments required to be made under the Policy shall be made in accordance
with the provisions thereof. The owner of this Certificate acknowledges and consents to the
subrogation rights of [ ] as more fully set forth in the Policy.
IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Certificate and the
series of which it is a part is duly authorized by law; that all acts, conditions, and things required
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to be done precedent to and in the issuance of the Certificates have been properly done and
performed and have happened in regular and due time, form, and manner as required by law;
and that ad valorem taxes upon all taxable property in the City have been levied for and pledged
to the payment of the debt service requirements of the Certificates within the limit prescribed by
law; that, in addition to said taxes, further provisions have been made for the payment of the
debt service requirements of the Certificates by pledging to such purpose Surplus Revenues, as
defined in the Ordinance, derived by the City from the operation of its combined waterworks and
sewer system in an amount limited to $10,000; that when so collected, such taxes and Surplus
Revenues shall be appropriated to such purposes; and that the total indebtedness of the City,
including the Certificates, does not exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF, the City has caused this Certificate to be executed by the
manual or facsimile signature of the Mayor of the City and countersigned by the manual or
facsimile signature of the City Secretary of the City, and the official seal of the City has been
duly impressed or placed in facsimile on this Certificate.
Mayor,
City of Port Arthur, Texas
City Secretary,
City of Port Arthur, Texas
[SEAL]
(b) Form of Comptroller's Registration Certificate. The following
Comptroller's Registration Certificate may be deleted from the definitive Certificates if
such certificate on the Initial Certificate is fully executed.
OFFICE OF THE COMPTROLLER §
OF PUBLIC ACCOUNTS § REGISTER NO.
OF THE STATE OF TEXAS §
I hereby certify that there is on file and of record in my office a certificate of the Attorney
General of the State of Texas to the effect that this Certificate has been examined by him as
required by law, that he finds that it has been issued in conformity with the Constitution and laws
of the State of Texas, and that it is a valid and binding obligation of the City of Port Arthur,
Texas. and that this Certificate has this day been registered by me.
Witness my hand and seal of office at Austin, Texas,
Comptroller of Public Accounts
of the State of Texas
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[SEAL]
(c) Form of Certificate of Paying Agent/Registrar. The following Certificate of
Paying Agent/Registrar may be deleted from the Initial Certificate if the executed
Comptroller's Registration Certificate appears thereon.
CERTIFICATE OF PAYING AGENT/REGISTRAR
The records of the Paying Agent/Registrar show that the Initial Certificate of this series
of Certificates was approved by the Attorney General of the State of Texas and registered by
the Comptroller of Public Accounts of the State of Texas, and that this is one of the Certificates
referred to in the within-mentioned Ordinance.
[UMB Bank], as Paying Agent/Registrar
By:
Dated: Authorized Signatory
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(d) Form of Assignment.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns. and transfers unto
(print or typewrite name, address and Zip Code of transferee):
(Social Security or other identifying number: ) the within Certificate and all rights
hereunder and hereby irrevocably constitutes and appoints _ attorney
to transfer the within Certificate on the books kept for registration hereof, with full power of
substitution in the premises.
Dated:
NOTICE: The signature on this Assignment
must correspond with the name of the
registered owner as it appears on the face of
the within Certificate in every particular and
must be guaranteed in a manner acceptable to
the Paying Agent/Registrar.
Signature Guaranteed:
Authorized Signatory
(e) The Initial Certificate shall be in the form set forth in paragraphs (a), (b)
and (d) of this Section, except for the following alterations:
(i) immediately under the name of the Certificate, the headings
"INTEREST RATE" and "MATURITY DATE" shall both be completed with the
words "As shown below" and the words "CUSIP NUMBER" deleted; and
(ii) in the first paragraph of the Certificate, the words "on the Maturity
Date specified above," shall be deleted and the following will be inserted: "on [
] in each of the years, in the principal installments and bearing interest at the per
annum rates in accordance with the following schedule:
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Principal Interest
Years Installments Rate
(Information to be inserted from
schedule in Section 3.02 of this Ordinance)
Section 6.03 CUSIP Registration.
The City may secure identification numbers through the CUSIP Service Bureau Division
of Standard & Poor's Corporation, New York, New York, and may authorize the printing of such
numbers on the face of the Certificates. It is expressly provided, however, that the presence or
absence of CUSIP numbers on the Certificates shall be of no significance or effect as regards
the legality thereof and neither the City nor the attorneys approving said Certificates as to
legality are to be held responsible for CUSIP numbers incorrectly printed on the Certificates.
Section 6.04 Legal Opinion.
The approving legal opinion of Holland & Knight, Bond Counsel, may be printed on the
reverse side of or attached to each Certificate over the certification of the City Secretary of the
City, which may be executed in facsimile.
Section 6.05 Statement of Insurance.
A statement relating to a municipal bond insurance policy, if any, to be issued for the
Certificates may be printed on or attached to each Certificate.
ARTICLE VII.
SALE AND DELIVERY OF CERTIFICATES, DEPOSIT OF PROCEEDS; OFFICIAL
STATEMENT
Section 7.01 Sale of Certificates and Official Statement.
(a) The Certificates are hereby officially sold and awarded to and shall be
delivered to the Underwriters at the price and on the terms specified in the Purchase
Contract. The form, terms and provisions of the Purchase Contract are hereby approved
and the City Manager is hereby authorized and directed to execute and deliver such
Purchase Contract upon completion of the terms thereof. It is hereby officially found,
determined and declared that the terms of this sale are the most advantageous
reasonably obtainable. The Certificates shall initially be registered in the name of the
representative of the Underwriters, or its designee. The Mayor and all other officers,
agents and representatives of the City are hereby authorized to do any and all things
necessary or desirable to satisfy the conditions to and to provide for the issuance and
delivery of the Certificates.
(b) The form and substance of the Preliminary Official Statement, and any
addenda, supplement or amendment thereto, and the final Official Statement (the
"Official Statement") presented to and considered at this meeting, are hereby in all
respects approved and adopted, and the Preliminary Official Statement is hereby
deemed final as of its date (except for the omission of pricing and related information)
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within the meaning and for the purposes of paragraph (b)(1) of Rule 15c2-12 under the
Securities Exchange Act of 1934, as amended. The Mayor and City Secretary of the
City are hereby authorized and directed to execute the same and deliver appropriate
numbers of copies thereof to the Underwriters. The Official Statement as thus approved
and delivered, with such appropriate variations as shall be approved by the Mayor of the
City and the Underwriters, may be used by the Underwriters in the public offering and
sale thereof. The use and distribution of the Preliminary Official Statement in the public
offering of the Certificates by the Underwriters is hereby ratified, approved and
confirmed. The City Secretary is hereby authorized and directed to include and maintain
a copy of the Official Statement and any addenda, supplement or amendment thereto
thus approved among the permanent records of this meeting. The use and distribution
of the Official Statement and the preliminary public offering of the Certificates by the
Underwriters is hereby ratified, approved and confirmed.
(c) All officers of the City are authorized to execute such documents,
certificates and receipts, and to make such elections with respect to the tax-exempt
status of the Certificates, as they may deem appropriate in order to consummate the
delivery of the Certificates.
(d) The obligation of the Underwriters to accept delivery of the Certificates is
subject to the Underwriters being furnished with the final, approving opinion of Bond
Counsel for the City, which opinion shall be dated and delivered the
Section 7.03 Control and Delivery of Certificates.
(a) The Mayor of the City is hereby authorized to have control of the Initial
Certificate and all necessary records and proceedings pertaining thereto pending
investigation, examination, and approval of the Attorney General of the State of Texas,
registration by the Comptroller and registration with, and initial exchange or transfer by,
the Paying Agent/Registrar.
(b) After registration by the Comptroller, delivery of the Certificates shall be
made to the Underwriter under and subject to the general supervision and direction of
the Mayor, against receipt by the City of all amounts due to the City under the terms of
sale.
(c) All officers of the City are authorized to execute such documents,
certificates and receipts and to make such elections with respect to the tax-exempt
status of the Certificates, as they may deem necessary to consummate the delivery of
the Certificates.
Section 7.04 Deposit of Proceeds.
The proceeds of the Certificates shall be applied as follows (the sale of the Certificates
generated a cash premium in the amount of$[ ] which is allocated as follows: $[
to the construction fund for the Project and $[ ] to the cost of issuance of the Certificates):
The amount of $[ ] shall be deposited in the construction
fund for the Project; and
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ii. Any amounts remaining following payment of the costs of issuing
the Certificates shall be deposited to the interest and sinking fund for the Certificates.
Section 7.05 Official Statement.
The form and substance of the Preliminary Official Statement and any addenda,
supplement or amendment thereto, is hereby ratified and approved, and is confirmed as
deemed final within the meaning and for the purposes of paragraph (b)(1) of Rule 15c2-12
under the Securities Exchange Act of 1934. The City hereby authorizes the preparation of a final
Official Statement to add the terms of the Initial Purchaser's bid and other relevant information.
The use of such final Official Statement in the reoffering of the Certificates by the Initial
Purchaser is hereby approved and authorized. The proper officials of the City are authorized to
execute and deliver a certificate pertaining to such Official Statement as prescribed therein,
dated as of the date of payment for and delivery of the Certificates.
ARTICLE VIII.
INVESTMENTS
Section 8.01 Investments.
(a) Money in the Interest and Sinking Fund created by this Ordinance and
any of the funds to be deposited pursuant to Section 7.03(b) hereof, at the option of the
City, may be invested in such securities or obligations as permitted under applicable law
as in effect on the date of the investment.
(b) Any securities or obligations in which such money is so invested shall be
kept and held in trust for the benefit of the Owners and shall be sold and the proceeds of
sale shall be timely applied to the making of all payments required to be made from the
fund from which the investment was made.
Section 8.02 Investment Income.
(a) Interest and income derived from investment of the Interest and Sinking
Fund shall be credited to such fund.
(b) Interest and income derived from investment of the funds to be deposited
pursuant to Section 7.03(b) hereof shall be credited to the account where deposited until
the acquisition or construction of the Projects is completed and thereafter, to the extent
such interest and income are present, such interest and income shall be deposited to the
Interest and Sinking Fund.
Section 8.03 Engagement of Professionals.
The City Council hereby confirms the prior engagement of (1) Holland & Knight LLP, as
Bond Counsel to the City and (2) Hilltop Securities Inc., as Financial Advisor, to the City, in
connection with the issuance and sale of the Certificates and (3) approves the engagement of
, as the underwriters.
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ARTICLE IX.
PARTICULAR REPRESENTATIONS AND COVENANTS
Section 9.01 Payment of the Certificates.
On or before each Interest Payment Date or any redemption date for the Certificates and
while any of the Certificates are outstanding and unpaid, there shall be made available to the
Paying Agent/Registrar, out of the Interest and Sinking Fund, money sufficient to pay such
interest on and principal of the Certificates as will accrue or mature on the applicable Interest
Payment Date, maturity date or date of prior redemption. Such transfer of funds shall be made in
such manner as will cause immediately available funds to be deposited with the Paying
Agent/Registrar not later than the close of business on the Business Day next preceding the date
of payment for the Certificates.
Section 9.02 Other Representations and Covenants.
(a) The City will faithfully perform, at all times, any and all covenants,
undertakings, stipulations, and provisions contained in this Ordinance and in each
Certificate; the City will promptly pay or cause to be paid the principal of and interest on
each Certificate on the dates and at the places and manner prescribed in such Certificate;
and the City will, at the times and in the manner prescribed by this Ordinance, deposit or
cause to be deposited the amounts of money specified by this Ordinance.
(b) The City is duly authorized under the laws of the State of Texas to issue
the Certificates; all action on its part for the creation and issuance of the Certificates has
been duly and effectively taken; and the Certificates in the hands of the Owners thereof
are and will be valid and enforceable obligations of the City in accordance with their
terms.
ARTICLE X.
PROVISIONS CONCERNING FEDERAL INCOME TAX EXCLUSION
Section 10.01 Provisions Concerning Federal Income Tax.
(a) General. The City intends that the interest on the Certificates be
excludable from gross income for federal income tax purposes pursuant to sections 103
and 141 through 150 of the Internal Revenue Code of 1986, as amended (the "Code"),
and the applicable Treasury Regulations (the "Regulations"). The City covenants and
agrees not to take any action, or omit to take any action within its control, that if taken or
omitted, respectively, would (i) cause the interest on the Certificates to be includable in
gross income, as defined in section 61 of the Code, for federal income tax purposes or
(ii) result in the violation of or failure to satisfy any provision of Section 103 and 141
through 150 of the Code and the applicable Regulations. In particular, the City
covenants and agrees to comply with each requirement of this Article X; provided,
however, that the City will not be required to comply with any particular requirement of
this Article X if the City has received an opinion of nationally recognized bond counsel
("Counsel's Opinion") that (i) such noncompliance will not adversely affect the exclusion
from gross income for federal income tax purposes of interest on the Certificates or (ii)
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compliance with some other requirement set forth in this Article X will satisfy the
applicable requirements of the Code and the Regulations, in which case compliance with
such other requirement specified in such Counsel's Opinion will constitute compliance
with the corresponding requirement specified in this Article X.
(b) No Private Use or Payment and No Private Loan Financing. 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 Certificates 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 Certificates will not be
"private activity bonds" within the meaning of section 141 of the Code and the
Regulations promulgated thereunder. Moreover, the City will certify, through an
authorized officer, employee or agent, based upon all facts and estimates known or
reasonably expected to be in existence on the date the Certificates are delivered, that
the proceeds of the Certificates will not be used in a manner that would cause the
Certificates to be "private activity bonds" within the meaning of section 141 of the Code
and the Regulations promulgated thereunder.
(c) No Federal Guarantee. 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 the applicable Regulations thereunder,
except as permitted by section 149(b)(3) of the Code and such Regulations.
(d) No Hedge Bonds. 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 "hedge bonds" within the meaning of
section 149(g) of the Code and the applicable Regulations thereunder.
(e) No Arbitrage. 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 Certificate proceeds, regulate investments of proceeds of the Certificates, 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 the applicable
Regulations promulgated thereunder. Moreover, the City will certify, through an
authorized officer, employee or agent, based upon all facts and estimates known or
reasonably expected to be in existence on the date the Certificates are delivered, 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
the applicable Regulations promulgated thereunder.
(f) Arbitrage Rebate. If the City does not qualify for an exception to the
requirements of section 148(f) of the Code relating to the required 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 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
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bond issues of the City or moneys that do not represent gross proceeds of any bonds of
the City, (ii) determine 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
fifth anniversary date of the delivery of the Certificates, or on such other dates as may be
permitted under applicable Regulations, all amounts required to be rebated to the federal
government. Further, the City will not indirectly pay any amount otherwise payable to
the federal government pursuant to the foregoing requirements to any person other than
the federal government by entering into any investment arrangement with respect to the
gross proceeds of the 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 a larger loss than would have resulted if the arrangement had been at arm's
length and had the yield on the issue not been relevant to either party.
(g) Information Reporting. The City covenants and agrees to file or cause to
be filed with the Secretary of the Treasury, not later than the 15th day of the second
calendar month after the close of the calendar quarter in which the Certificates are
issued, an information statement concerning the Certificates, all under and in
accordance with section 149(e) of the Code and the applicable Regulations promulgated
thereunder.
(h) Record Retention. The City will retain all pertinent and material records
relating to the use and expenditure of the proceeds of the Certificates until three years
after the last Certificate is redeemed, or such shorter period as authorized by
subsequent guidance issued by the Department of Treasury, if applicable. All records
will be kept in a manner that ensures their complete access throughout the retention
period. For this purpose, it is acceptable that such records are kept either as hardcopy
books and records or in an electronic storage and retrieval system, provided that such
electronic system includes reasonable controls and quality assurance programs that
assure the ability of the City to retrieve and reproduce such books and records in the
event of an examination of the Certificates by the Internal Revenue Service.
(i) Registration. The Certificates will be issued in registered form.
(j) Deliberate Actions. The City will not take a deliberate action (as defined
in section 1.141-2(d)(3) of the Regulations) that causes the Certificates to fail to meet
any requirement of section 141 of the Code after the issue date of the Certificates unless
an appropriate remedial action is permitted by section 1.141-12 of the Regulations and
an opinion of Bond Counsel is obtained that such remedial action cures any failure to
meet the requirements of section 141 of the Code.
(k) Continuing Obligation. Notwithstanding any other provision of this
Ordinance, the City obligations under the covenants and provisions of this Article X will
survive the defeasance and discharge of the Certificates for as long as such matters are
relevant to the exclusion from gross income of interest on the Certificates for federal
income tax purposes.
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ARTICLE XI.
DEFAULT AND REMEDIES
Section 11.01 Events of Default.
Each of the following occurrences or events for the purpose of this Ordinance is hereby
declared to be an Event of Default:
(a) the failure to make payment of the principal of, redemption premium, if
any, or interest on any of the Certificates when the same becomes due and payable; or
(b) default in the performance or observance of any other covenant,
agreement, or obligation of the City, which default materially and adversely affects the
rights of the Owners, including but not limited to their prospect or ability to be repaid in
accordance with this Ordinance, and the continuation thereof for a period of sixty (60)
days after notice of such default is given by any Owner to the City.
Section 11.02 Remedies for Default.
(a) Upon the happening of any Event of Default, any Owner or an authorized
representative thereof, including but not limited to a trustee or trustees therefor, may
proceed against the City for the purpose of protecting and enforcing the rights of the
Owners under this Ordinance by mandamus or other suit, action or special proceeding in
equity or at law in any court of competent jurisdiction for any relief permitted by law,
including the specific performance of any covenant or agreement contained herein, or
thereby to enjoin any act or thing that may be unlawful or in violation of any right of the
Owners hereunder or any combination of such remedies.
(b) It is provided that all such proceedings shall be instituted and maintained
for the equal benefit of all Owners of Certificates then outstanding.
Section 11.03 Remedies Not Exclusive.
(a) No remedy herein conferred or reserved is intended to be exclusive of
any other available remedy, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or under the Certificates or
now or hereafter existing at law or in equity; provided, however, that notwithstanding any
other provision of this Ordinance, the right to accelerate the debt evidenced by the
Certificates shall not be available as a remedy under this Ordinance.
(b) The exercise of any remedy herein conferred or reserved shall not be
deemed a waiver of any other available remedy.
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ARTICLE XII.
DISCHARGE
Section 12.01 Discharge.
The Certificates may be defeased, refunded or discharged in any manner permitted by
applicable law.
ARTICLE XIII.
CONTINUING DISCLOSURE UNDERTAKING
Section 13.01 Annual Reports. The City shall provide annually to the MSRB, within six
(6) 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, being the
information described in Exhibit B hereto. Any financial statements so to be provided shall be
(i) prepared in accordance with the accounting principles described in Exhibit B hereto, and (ii)
audited, if the City commissions an audit of such statements and the audit is completed within
the period during which they must be provided. If the audit of such financial statements is not
complete within such period, then the City shall provide notice that audited financial statements
are not available and shall provide unaudited financial statements for the applicable Fiscal Year
to the MSRB. Thereafter, when and if audited financial statements become available, the City
shall provide such audited financial statements as required to the MSRB.
(a) If the City changes its Fiscal Year, it will notify each the MSRB 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.
(b) 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) that theretofore has been provided to the MSRB or filed with the SEC.
Section 13.02 Material Event Notices
(a) The City shall notify the MSRB, in a timely manner, of any of the following
events with respect to the Certificates, if such event is material within the meaning of the
federal securities laws:
(i) principal and interest payment delinquencies;
(ii) nonpayment related defaults;
(iii) unscheduled draws on debt service reserves reflecting financial
difficulties;
(iv) unscheduled draws on credit enhancements reflecting financial
difficulties;
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(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 Owners;
(viii) bond calls;
(ix) defeasance;
(x) release, substitution, or sale of property securing repayment of the
Certificates;
(xi) rating changes;
(xii) bankruptcy, insolvency, receivership, or similar event of the
obligated person;
Note to paragraph (xii): For the purposes of the event identified in paragraph (xii)
of this section, the event is considered to occur when any of the following occur:
the appointment of a receiver, fiscal agent or similar officer for an obligated
person in a proceeding under the U.S. Bankruptcy Code or in any other
proceeding under state or federal law in which a court or governmental authority
has assumed jurisdiction over substantially all of the assets or business of the
obligated person, or if such jurisdiction has been assumed by leaving the existing
governing body and officials or officers in possession but subject to the
supervision and orders of a court or governmental authority, or the entry of an
order confirming a plan of reorganization, arrangement or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of
the assets or business of the obligated person.
(xiii) the consummation of a merger, consolidation, or acquisition
involving an obligated person or the sale of all or substantially all of the assets of
the obligated person, other than in the ordinary course of business, the entry into
a definitive agreement to undertake such an action, or the termination of a
definitive agreement relating to any such actions, other than pursuant to its
terms, if material;
(xiv) the appointment of a successor or additional trustee or the change
in the name of the trustee, if material;
(xv) the incurrence of a financial obligation of the City, if material, or
an agreement to covenants, events of default, remedies, priority rights, or other
similar terms of a financial obligation of the City, any of which affect security
holders, if material; and
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(xvi) a default, event of acceleration, termination event, modification of
terms, or other similar events under the terms of a financial obligation of the City,
any of which reflect financial difficulties.
(b) The City shall notify the MSRB, in a timely manner, of any failure by the
City to provide financial information or operating data in accordance with Section 13.01
of this Ordinance by the time required by such Section.
(c) The City reserves the right to file all information and notices required
under this Article through the facilities of DisclosureUSA or any other central post office
approved by the SEC for such purpose.
Section 13.03 Limitations, Disclaimers and Amendments.
The City shall be obligated to observe and perform the covenants specified in this Article
for so long as, but only for so long as the City remains an "obligated person" with respect to the
Certificates within the meaning of the Rule, except that the City in any event will give notice of
any redemption calls and any defeasances that cause the City to be no longer an "obligated
person."
The provisions of this Article are for the sole benefit of the Owners and beneficial owners
of the Certificates, and nothing in this Article, 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 Article 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 Article 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 Certificates at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER OR
BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE
CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT
SPECIFIED IN THIS ARTICLE, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON,
IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE
LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
(a) No default by the City in observing or performing its obligations under this
Article shall constitute a breach of or default under the Ordinance for purposes of any
other provisions of this Ordinance.
(b) Nothing in this Article is intended or shall act to disclaim, waive, or
otherwise limit the duties of the City under federal and state securities laws.
(c) The provisions of this Article 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, but only if (i) the provisions of this Article, as so amended, would have permitted an
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underwriter to purchase or sell Certificates in the primary offering of the Certificates in
compliance with the Rule, taking into account any amendments or interpretations of the
Rule to the date of such amendment, as well as such changed circumstances, and (ii)
either (A) the Owners of a majority in aggregate principal amount (or any greater amount
required by any other provisions of this Ordinance that authorizes such an amendment) of
the Outstanding Certificates consent to such amendment or (B) an entity or individual
person that is unaffiliated with the City (such as nationally recognized bond counsel)
determines that such amendment will not materially impair the interests of the Owners
and beneficial owners of the Certificates. The provisions of this Article may also be
amended from time to time or repealed by the City if the SEC amends or repeals the
applicable provisions of the Rule or a court of final jurisdiction determines that such
provisions are invalid, but only if and to the extent that reservation of the City's right to do
so would not prevent underwriters of the initial public offering of the Certificates from
lawfully purchasing or selling Certificates in such offering. If the City so amends the
provisions of this Article, it shall include with any amended financial information or
operating data next provided in accordance with Section 13.01 an explanation, in
narrative form, of the reasons for the amendment and of the impact of any change in the
type of financial information or operating data so provided.
ARTICLE XIV.
BOND INSURANCE
In order to obtain the lowest attainable interest rates on the Certificates, the Mayor is
authorized to enter into a credit agreement with one or more Insurers to obtain one or more
bond insurance policies with respect to all or a portion of the Certificates. The Mayor is
authorized to execute and the City Secretary or City Secretary is authorized to attest and affix
the City's seal to any documents required in connection with the purchase of any such policy or
policies. The City hereby agrees to the following:
(a) "Insurance Policy" shall be defined as follows: "the insurance
policy issued by the Insurer guaranteeing the scheduled payment of principal of and
interest on the Certificates when due". "Insurer" shall be defined as follows: ["Assured
Guaranty Municipal Corp., a New York stock insurance company, or any successor
thereto or assignee thereof'].
(b) The prior written consent of the Insurer shall be a condition
precedent to the deposit of any credit instrument provided in lieu of a cash deposit into
the Debt Service Reserve Fund, if any. Notwithstanding anything to the contrary set forth
in the Ordinance, amounts on deposit in the Debt Service Reserve Fund shall be applied
solely to the payment of debt service due on the Certificates.
(c) The Insurer shall be deemed to be the sole holder of the Insured
Certificates for the purpose of exercising any voting right or privilege or giving any
consent or direction or taking any other action that the holders of the Certificates insured
by it are entitled to take pursuant to the section or article of the Ordinance pertaining to
(i) defaults and remedies and (ii) the duties and obligations of the Paying Agent. In
furtherance thereof and as a term of the Ordinance and each Certificate, the Paying
Agent and each Bondholder appoint the Insurer as their agent and attorney-in-fact and
agree that the Insurer may at any time during the continuation of any proceeding by or
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against the Issuer under the United States Bankruptcy Code or any other applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency
Proceeding") direct all matters relating to such Insolvency Proceeding, including without
limitation, (A) all matters relating to any claim or enforcement proceeding in connection
with an Insolvency Proceeding (a "Claim"), (B) the direction of any appeal of any order
relating to any Claim, (C) the posting of any surety, supersedeas or performance bond
pending any such appeal, and (D) the right to vote to accept or reject any plan of
adjustment. In addition, the Paying Agent and each Bondholder delegate and assign to
the Insurer, to the fullest extent permitted by law, the rights of the Paying Agent and
each Bondholder in the conduct of any Insolvency Proceeding, including, without
limitation, all rights of any party to an adversary proceeding or action with respect to any
court order issued in connection with any such Insolvency Proceeding. Remedies
granted to the Bondholders shall expressly include mandamus.
(d) The security for the Certificates shall include a pledge of any
agreement with any underlying obligor that is a source of payment for the Certificates
and a default under any such agreement shall constitute an Event of Default under the
Ordinance. If acceleration is permitted under the Ordinance, the maturity of Certificates
insured by the Insurer shall not be accelerated without the consent of the Insurer and in
the event the maturity of the Certificates is accelerated, the Insurer may elect, in its sole
discretion, to pay accelerated principal and interest accrued on such principal to the date
of acceleration (to the extent unpaid by the Issuer) and the Paying Agent shall be
required to accept such amounts. Upon payment of such accelerated principal and
interest accrued to the acceleration date as provided above, the Insurer's obligations
under the Insurance Policy with respect to such Certificates shall be fully discharged. No
grace period for a covenant default shall exceed 30 days or be extended for more than
60 days, without the prior written consent of the Insurer. No grace period shall be
permitted for payment defaults.
(e) The Insurer shall be included as a third party beneficiary to the
Ordinance. Upon the occurrence of an extraordinary optional, special or extraordinary
mandatory redemption in part, the selection of Certificates to be redeemed shall be
subject to the approval of the Insurer. The exercise of any provision of the Ordinance
which permits the purchase of Certificates in lieu of redemption shall require the prior
written approval of the Insurer if any Certificate so purchased is not cancelled upon
purchase. Any amendment, supplement, modification to, or waiver of, the Ordinance or
any other transaction document, including any underlying security agreement (each a
"Related Document"), that requires the consent of Certificate owners or adversely affects
the rights and interests of the Insurer shall be subject to the prior written consent of the
Insurer.
(f) Unless the Insurer otherwise directs, upon the occurrence and
continuance of an Event of Default or an event which with notice or lapse of time would
constitute an Event of Default, amounts on deposit in the Construction Fund shall not be
disbursed, but shall instead be applied to the payment of debt service or redemption
price of the Certificates. The rights granted to the Insurer under the Ordinance or any
other Related Document to request, consent to or direct any action are rights granted to
the Insurer in consideration of its issuance of the Insurance Policy. Any exercise by the
Insurer of such rights is merely an exercise of the Insurer's contractual rights and shall
not be construed or deemed to be taken for the benefit, or on behalf, of the Bondholders
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and such action does not evidence any position of the Insurer, affirmative or negative, as
to whether the consent of the Certificate owners or any other person is required in
addition to the consent of the Insurer.
(g) Only (1) cash, (2) non-callable direct obligations of the United
States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in
future interest and principal payments on Treasuries held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest and has
the right to proceed directly and individually against the obligor and the underlying
Treasuries are not available to any person claiming through the custodian or to whom
the custodian may be obligated, (4) subject to the prior written consent of the Insurer,
pre-refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's,
respectively, or (5) subject to the prior written consent of the Insurer, securities eligible
for "AAA" defeasance under then existing criteria of S&P or any combination thereof,
shall be used to effect defeasance of the Certificates unless the Insurer otherwise
approves. Any obligations or securities deposited as provided in this paragraph, shall
qualify under Section 1207.062(b) of the Local Government Code, as amended. To
accomplish defeasance, the Issuer shall cause to be delivered (i) a report of an
independent firm of nationally recognized certified public accountants or such other
accountant as shall be acceptable to the Insurer ("Accountant") verifying the sufficiency
of the escrow established to pay the Certificates in full on the maturity or redemption
date ("Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in
form and substance to the Insurer), (iii) an opinion of nationally recognized bond counsel
to the effect that the Certificates are no longer "Outstanding" under the Ordinance and
(iv) a certificate of discharge of the Paying Agent with respect to the Certificates; each
Verification and defeasance opinion shall be acceptable in form and substance, and
addressed, to the Issuer, Paying Agent and Insurer. The Insurer shall be provided with
final drafts of the above-referenced documentation not less than five business days prior
to the funding of the escrow.
Certificates shall be deemed Outstanding under the Ordinance unless and until they are
in fact paid and retired or the above criteria are met.
Notwithstanding the above, in the event any provisions in this Section 30(1) conflict with
Section 1207.033 of the Texas Government Code, as amended ("Section 1207.033"), the
provisions of Section 1207.033 shall prevail.
(h) Amounts paid by the Insurer under the Insurance Policy shall not
be deemed paid for purposes of the Ordinance and the Certificates relating to such
payments shall remain Outstanding and continue to be due and owing until paid by the
Issuer in accordance with the Ordinance. The Ordinance shall not be discharged unless
all amounts due or to become due to the Insurer have been paid in full or duly provided
for.
(i) Each of the Issuer and Paying Agent covenant and agree to take
such action (including, as applicable, filing of UCC financing statements and
continuations thereof) as is necessary from time to time to preserve the priority of the
pledge of the Trust Estate under applicable law. Claims Upon the Insurance Policy and
Payments by and to the Insurer. If, on the third Business Day prior to the related
scheduled interest payment date or principal payment date ("Payment Date") there is not
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on deposit with the Paying Agent, after making all transfers and deposits required under
the Ordinance, moneys sufficient to pay the principal of and interest on the Certificates
due on such Payment Date, the Paying Agent shall give notice to the Insurer and to its
designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the
amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If,
on the second Business Day prior to the related Payment Date, there continues to be a
deficiency in the amount available to pay the principal of and interest on the Certificates
due on such Payment Date, the Paying Agent shall make a claim under the Insurance
Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any) by telephone
of the amount of such deficiency, and the allocation of such deficiency between the
amount required to pay interest on the Certificates and the amount required to pay
principal of the Certificates, confirmed in writing to the Insurer and the Insurer's Fiscal
Agent by 12:00 noon, New York City time, on such second Business Day by filling in the
form of Notice of Claim and Certificate delivered with the Insurance Policy.
The Paying Agent shall designate any portion of payment of principal on Certificates
paid by the Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other
advancement of maturity, on its books as a reduction in the principal amount of Certificates
registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall
issue a replacement Certificate to the Insurer, registered in the name of [Assured Guaranty
Municipal Corp.], in a principal amount equal to the amount of principal so paid (without regard
to authorized denominations); provided that the Paying Agent's failure to so designate any
payment or issue any replacement Certificate shall have no effect on the amount of principal or
interest payable by the Issuer on any Certificate or the subrogation rights of the Insurer.
The Paying Agent shall keep a complete and accurate record of all funds deposited by
the Insurer into the Policy Payments Account (defined below) and the allocation of such funds to
payment of interest on and principal of any Certificate. The Insurer shall have the right to inspect
such records at reasonable times upon reasonable notice to the Paying Agent.
Upon payment of a claim under the Insurance Policy, the Paying Agent shall establish a
separate special purpose trust account for the benefit of Bondholders referred to herein as the
"Policy Payments Account" and over which the Paying Agent shall have exclusive control and
sole right of withdrawal. The Paying Agent shall receive any amount paid under the Insurance
Policy in trust on behalf of Bondholders and shall deposit any such amount in the Policy
Payments Account and distribute such amount only for purposes of making the payments for
which a claim was made. Such amounts shall be disbursed by the Paying Agent to
Bondholders in the same manner as principal and interest payments are to be made with
respect to the Certificates under the sections hereof regarding payment of Certificates. It shall
not be necessary for such payments to be made by checks or wire transfers separate from the
check or wire transfer used to pay debt service with other funds available to make such
payments. Notwithstanding anything herein to the contrary, the Issuer agrees to pay to the
Insurer (i) a sum equal to the total of all amounts paid by the Insurer under the Insurance Policy
(the "Insurer Advances"); and (ii) to the extent permitted by law and subject to annual
appropriation, interest on such Insurer Advances from the date paid by the Insurer until payment
thereof in full, payable to the Insurer at the Late Payment Rate per annum (collectively, the
"Insurer Reimbursement Amounts"). "Late Payment Rate" means the lesser of (a) the greater of
(i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase
Bank at its principal office in The City of New York, as its prime or base lending rate (any
change in such rate of interest to be effective on the date such change is announced by
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JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the
Certificates and (b) the maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the actual number of
days elapsed over a year of 360 days. The Issuer hereby covenants and agrees that the Insurer
Advances are secured by a lien on and pledge of the Net Revenues and payable from such Net
Revenues on a parity with debt service due on the Certificates.
Funds held in the Policy Payments Account shall not be invested by the Paying Agent
and may not be applied to satisfy any costs, expenses or liabilities of the Paying Agent. Any
funds remaining in the Policy Payments Account following a Certificate payment date shall
promptly be remitted to the Insurer.
(j) The Insurer shall, to the extent it makes any payment of principal
of or interest on the Certificates, become subrogated to the rights of the recipients of
such payments in accordance with the terms of the Insurance Policy (which subrogation
rights shall also include the rights of any such recipients in connection with any
Insolvency Proceeding). Each obligation of the Issuer to the Insurer under the Related
Documents shall survive discharge or termination of such Related Documents. The
Issuer shall pay or reimburse the Insurer any and all charges, fees, costs and expenses
that the Insurer may reasonably pay or incur in connection with (i) the administration,
enforcement, defense or preservation of any rights or security in any Related Document;
(ii) the pursuit of any remedies under the Ordinance or any other Related Document or
otherwise afforded by law or equity, (iii) any amendment, waiver or other action with
respect to, or related to, the Ordinance or any other Related Document whether or not
executed or completed, or (iv) any litigation or other dispute in connection with the
Ordinance or any other Related Document or the transactions contemplated thereby,
other than costs resulting from the failure of the Insurer to honor its obligations under the
Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a
condition to executing any amendment, waiver or consent proposed in respect of the
Ordinance or any other Related Document. After payment of reasonable expenses of the
Paying Agent, the application of funds realized upon default shall be applied to the
payment of expenses of the Issuer or rebate only after the payment of past due and
current debt service on the Certificates and amounts required to restore the Debt
Service Reserve Fund to the Debt Service Reserve Requirement. The Insurer shall be
entitled to pay principal or interest on the Certificates that shall become Due for Payment
but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined
in the Insurance Policy) and any amounts due on the Certificates as a result of
acceleration of the maturity thereof in accordance with the Ordinance, whether or not the
Insurer has received a Notice of Nonpayment (as such terms are defined in the
Insurance Policy) or a claim upon the Insurance Policy. The notice address of the
Insurer is: Assured Guaranty Municipal Corp., 31 West 52nd Street, New York, New
York 10019, Attention: Managing Director — Surveillance, Re: Policy No. 216211-N,
Telephone: (212) 826-0100; Telecopier: (212) 339-3556. In each case in which notice or
other communication refers to an Event of Default, then a copy of such notice or other
communication shall also be sent to the attention of the General Counsel and shall be
marked to indicate "URGENT MATERIAL ENCLOSED."
(k) The Insurer shall be provided with the following information by the
Issuer or Paying Agent, as the case may be:
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(i) Annual audited financial statements within 180 days (or such
longer period agreed to by AGM) after the end of the Issuer's fiscal year (together
with a certification of the Issuer that it is not aware of any default or Event of
Default under the Ordinance), and the Issuer's annual budget within 30 days after
the approval thereof together with such other information, data or reports as the
Insurer shall reasonably request from time to time;
(ii) Notice of any draw upon the Debt Service Reserve Fund within
two Business Days after knowledge thereof other than (i) withdrawals of amounts
in excess of the Debt Service Reserve Requirement and (ii) withdrawals in
connection with a refunding of Certificates;
(iii) Notice of any default known to the Paying Agent or Issuer within
five Business Days after knowledge thereof;
(iv) Prior notice of the advance refunding or redemption of any of the
Certificates, including the principal amount, maturities and CUSIP numbers
thereof;
(v) Notice of the resignation or removal of the Paying Agent and
Registrar and the appointment of, and acceptance of duties by, any successor
thereto;
(vi) Notice of the commencement of any proceeding by or against the
Issuer or Obligor commenced under the United States Bankruptcy Code or any
other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(an "Insolvency Proceeding");
(vii) Notice of the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer of any
payment of principal of, or interest on, the Certificates;
(viii) A full original transcript of all proceedings relating to the execution
of any amendment, supplement, or waiver to the Related Documents; and
(ix) All reports, notices and correspondence to be delivered to
Bondholders under the terms of the Related Documents.
In addition, to the extent that the Issuer has entered into a continuing disclosure
agreement, covenant or undertaking with respect to the Certificates, all information furnished
pursuant to such agreements shall also be provided to the Insurer, simultaneously with the
furnishing of such information.
(I) The Insurer shall have the right to receive such additional
information as it may reasonably request. The Issuer will permit the Insurer to discuss
the affairs, finances and accounts of the Issuer or any information the Insurer may
reasonably request regarding the security for the Certificates with appropriate officers of
the Issuer and will use commercially reasonable efforts to enable the Insurer to have
access to the facilities, books and records of the Issuer on any business day upon
reasonable prior notice. The Issuer shall notify the Insurer of any failure of the Issuer to
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provide notices, certificates and other information under the transaction documents.
Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds
set forth in the Ordinance, no such issuance may occur (1) if an Event of Default (or any
event which, once all notice or grace periods have passed, would constitute an Event of
Default) exists unless such default shall be cured upon such issuance and (2) unless the
Debt Service Reserve Fund is fully funded at the Debt Service Reserve Requirement
(including the proposed issue) upon the issuance of such Additional Bonds, in either
case unless otherwise permitted by the Insurer. In determining whether any amendment,
consent, waiver or other action to be taken, or any failure to take action, under the
Ordinance would adversely affect the security for the Certificates or the rights of the
Bondholders, the Paying Agent shall consider the effect of any such amendment,
consent, waiver, action or inaction as if there were no Insurance Policy. No contract shall
be entered into or any action taken by which the rights of the Insurer or security for or
sources of payment of the Certificates may be impaired or prejudiced in any material
respect except upon obtaining the prior written consent of the Insurer. If the Certificates
are issued for refunding purposes, there shall be delivered an opinion of Bond Counsel
addressed to the Insurer (or a reliance letter relating thereto), or a certificate of
discharge of the Paying Agent for the Refunded Obligations, to the effect that, upon the
making of the required deposit to the escrow, the legal defeasance of the Refunded
Obligations shall have occurred. If the Refunded Obligations are insured by Assured
Guaranty Municipal Corp., at least three business days prior to the proposed date for
delivery of the Policy with respect to the Refunding Certificates, the Insurer shall also
receive (i) the verification letter, of which the Insurer shall be an addressee, by an
independent firm of certified public accountants which is either nationally recognized or
otherwise acceptable to the Insurer, of the adequacy of the escrow established to
provide for the payment of the Refunded Obligations in accordance with the terms and
provisions of the Escrow Deposit Agreement, and (ii) the form of an opinion of Bond
Counsel addressed to the Insurer (or a reliance letter relating thereto) to the effect that
the Escrow Deposit Agreement is a valid and binding obligation of the parties thereto,
enforceable in accordance with its terms (such Escrow Deposit Agreement shall provide
that no amendments are permitted without the prior written consent of the Insurer). An
executed copy of each of such opinion and reliance letter, if applicable, or Paying
Agent's discharge certificate, as the case may be, shall be forwarded to the Insurer prior
to delivery of the Certificates. Any interest rate exchange agreement ("Swap
Agreement") entered into by the Issuer shall meet the following conditions: (i) the Swap
Agreement must be entered into to manage interest costs related to, or a hedge against
(a) assets then held, or (b) debt then outstanding, or (iii) debt reasonably expected to be
issued within the next twelve (12) months, and (ii) the Swap Agreement shall not contain
any leverage element or multiplier component greater than 1.0x unless there is a
matching hedge arrangement which effectively off-sets the exposure from any such
element or component. Unless otherwise consented to in writing by the Insurer, any
uninsured net settlement, breakage or other termination amount then in effect shall be
subordinate to debt service on the Certificates and on any debt on parity with the
Certificates. The Issuer shall not terminate a Swap Agreement unless it demonstrates to
the satisfaction of the Insurer prior to the payment of any such termination amount that
such payment will not cause the Issuer to be in default under the Related Documents,
including but not limited to, any monetary obligations thereunder. All counterparties or
guarantors to any Swap Agreement must have a rating of at least "A-" and "A3" by
Standard & Poor's (`S&P") and Moody's Investors Service ("Moody's"). If the
counterparty or guarantor's rating falls below "A-" or "A3" by either S&P or Moody's, the
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counterparty or guarantor shall execute a credit support annex to the Swap Agreement,
which credit support annex shall be acceptable to the Insurer. If the counterparty or the
guarantor's long term unsecured rating falls below "Baal" or "BBB+" by either Moody's
or S&P, a replacement counterparty or guarantor, acceptable to the Insurer, shall be
required. Any consent, approval or permit required herein by the Insurer shall not be
unreasonably withheld.
ARTICLE XV.
MISCELLANEOUS
Section 15.01 Changes to Ordinance.
Bond Counsel is hereby authorized to make any changes to the terms of this Ordinance
if necessary or desirable to carry out the purposes hereof or in connection with the approval of
the issuance of the Certificates by the Attorney General of Texas.
Section 15.02 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.
Section 15.03 Repealer.
All ordinances or resolutions, or parts thereof, heretofore adopted by the City and
inconsistent with the provisions of this Ordinance are hereby repealed to the extent of such
conflict.
Section 15.04 Individuals Not Liable.
No covenant, stipulation, obligation or agreement herein contained shall be deemed to
be a covenant, stipulation, obligation or agreement of any member of City Council or agent or
employee of City Council or of the City in his or her individual capacity and neither the members
of City Council nor any officer thereof, nor any agent or employee of City Council or of the City,
shall be liable personally on the Certificates, or be subject to any personal liability or
accountability by reason of the issuance thereof.
Section 15.05 Related Matters.
To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor
or Mayor Pro Tern, the City Secretary and all other appropriate officers and agents of the City
are hereby authorized and directed to do any and all things necessary and/or convenient in
order to consummate the delivery of the Certificates, pay the costs of issuance on the
Certificates, and effectuate the terms and purposes of this Ordinance.
Section 15.06 Force and Effect.
This Ordinance shall be in full force and effect from and after its final passage, and it is
so ordained.
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READ, ADOPTED AND APPROVED on this day of , A.D. 2022,
at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote:
AYES:
Mayor:
Councilmembers:
NOES:
Thurman Bill Bartle, Mayor
ATTEST:
Sherri Bellard, City Secretary
APPROVED AS TO FORM:
Valecia Tizeno, City Attorney
APPROVED AS TO ADMINISTRATION:
Ronald Burton, City Manager
Kandy Daniel,rterim Finance Director
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EXHIBIT A
Paying Agent/Registrar Agreement
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EXHIBIT B
DESCRIPTION OF ANNUAL DISCLOSURE OF FINANCIAL INFORMATION
The following information is referred to in Article XIII of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Article are as specified (and included in the Appendix or other
headings of the Official Statement referred to) below:
1. The portions of the financial statements of the City appended to the Official
Statement as Appendix B, but for the most recently concluded Fiscal Year.
2. The quantitative financial information and operating data with respect to the City
of the general type included in the main text of the Official Statement is numbered
Tables 1 through 6 and 8 through 16, both inclusive.
Accounting Principles
The accounting principles referred to in such Article are the accounting principles
described in the notes to the financial statements referred to in Paragraph 1 above, as such
principles may be changed from time to time to comply with State law.
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