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Ordinance No. 6,000910918 -1 ORDINANCE NO. 6000 ORDINANCE AUTHORIZING THE ISSUANCE OF $2,650,000 CITY OF BAYTOWN, TEXAS, GENERAL OBLIGATION BONDS, SERIES 1991; AND APPROPRIATING THE PROCEEDS OF SALE THEREOF FOR MARINA, PARK, AND STREET IMPROVEMENTS THE STATE OF TEXAS § COUNTIES OF HARRIS AND CHAMBERS § CITY OF BAYTOWN § WHEREAS, at an election held in and throughout the City of Baytown, Texas, on the 4th of May, 1991, there were duly and favorably voted the following tax bonds of said City: (1) $3,000,000 public works maintenance facility bonds; (2) $5,200,000 public building bonds; (3) $4,700,000 public marina bonds; (4) $1,800,000 Goose Creek Stream and park improvement bonds; and (5) $12,700,000 street improvement bonds; and WHEREAS, the City Council of the City does hereby determine that $510,000 of the public marina bonds, $430,000 of the Goose Creek stream and park bonds, and $1,710,000 of the street improvement bonds should be issued, as a portion and the first installment of the bonds voted at the election mentioned above, leaving the remaining bonds voted at said election to be issued, sold and delivered at a later date; Now, Therefore BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN: 1. Definitions. Throughout this ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term "Act" shall mean Article 823, Vernon's Texas Civil Statutes, as amended. The term "Bond" or "Bonds" shall mean any bond or all bonds, as the case may be, of the Series 1991 Bonds authorized in this Ordinance, unless the context clearly indicates otherwise. The term "Business Day" shall mean any day which is not a Saturday, Sunday, a day on which banking institutions in the city where the principal corporate trust office of the Registrar is located are authorized by law or executive order to close, or a legal holiday. The term "City" shall mean the City of Baytown, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 18 of this Ordinance. The term "Interest Payment Date", when used in connection with any Bond, shall mean February 1, 1992, and each August 1 and February 1 thereafter until maturity or earlier redemption. The term "Ordinance" as used herein and in the Bonds shall mean this ordinance authorizing the Bonds. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Bond. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the fifteenth (15th) calendar day of the month next preceding each Interest Payment Date. The term "Register" shall mean the books of registration kept by the'Regi.strar, in which are maintained the names and addresses of, and the principal amounts of the Bonds registered to, each Owner. The term "Registrar" shall mean First Interstate Bank of Texas, N.A., Houston, Texas, and its successors in that capacity. 2. Authorization. The Bonds shall be issued pursuant to the Act in fully registered form, without coupons, in the aggregate amount of Two Million Six Hundred Fifty Thousand Dollars ($2,650,000). The estimated maximum costs, the amount appropriated, and the purposes for which the Bonds are issued are: $510,000 for constructing a public marina; $430,000 for improving lands for park purposes, including improvements along Goose Creek stream; and $1,710,000 for the construction and improvement of City streets. 3. Designation. Date, and Interest Payment Dates. The Bonds shall be designated as the "CITY OF BAYTOWN, TEXAS, GENERAL OBLIGATION BONDS, SERIES 199111, and shall be dated September 1, 1991. The Bonds shall bear interest at the rates set forth below from the later of September 1, 1991, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, -2- interest payable on February 1, 1992, and semiannually thereafter on August 1 and February 1 of each year until maturity or earlier redemption. 4. Initial Bonds; Numbers and Denominations. The Bonds shall be issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Bonds shall mature on February 1 in each of the years and in the amounts set out in such schedule. Bonds delivered on transfer of or in exchange for other Bonds shall be numbered in order of their authentication by the Registrar, shall be in the denomination of $5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered. Bond Principal Number Year Amount Interest Rate R- 1 1992 $ 25,000 7.90% R- 2 1993 25,000 7.90% R- 3 1994 25,000 7.90% R- 4 1995 25,000 7.90% R- 5 1996 25,000 7.90% R- 6 1997 25,000 7.90% R- 7 1998 25,000 7.90% R- 8 1999 25,000 7.90% R- 9 2000 25,000 7.90% R -10 2001 25,000 7.90% R -11 2002 25,000 7.90% R -12 2003 25,000 7.90% R -13 2004 700,000 6.40% R -14 2005 750,000 6.45% R -15 2006 900,000 6.50% 5. Execution of Bonds: Seal. The Bonds shall be signed by the Mayor of the City and countersigned by the City Clerk of the City, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. If any officer of the City whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. -3- 6. Approval by Attorney General: Registration by Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller. The manually executed registration certificate of the Comptroller substantially in the form provided in Section 16 of this Ordinance shall be attached or affixed to the Bonds to be initially issued. 7. Authentication. Except for the Bonds to be initially issued, which need not be authenticated by the Registrar, only such Bonds which bear thereon a certificate of authentication, substantially in the form provided in Section 16 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Bonds so authenticated were delivered by the Registrar hereunder. 8. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Bonds. The principal of the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register, or by such other method acceptable to the Registrar, requested by and at the risk and expense of the Owner. If the date for payment of the principal of or interest on any Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day with the same force and effect as if made on the date such payment was originally due. 9. Successor Registrars. The City covenants that at all times while any Bonds are outstanding it will provide a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of the Registrar and Paying Agent for the Bonds. The City reserves the right to change the Registrar for the Bonds on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Bonds. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the -4- Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 10. SRecial Record Date. If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 11. ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute Owner of such Bond for the purpose of making and receiving payment of principal or interest on such Bond, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Bond in accordance with this Section 11 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Bond to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. 12. Registration, Transfer, and Exchange. So long as any Bonds remain outstanding, the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an -5- assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond in proper form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds of like maturity and interest rate and in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions of this Section 12. Each Bond delivered in accordance with this Section 12 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. The City or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. The Registrar shall not be required to transfer or. exchange any Bond called for redemption during the period beginning 45 days prior to the date fixed for redemption and ending on the date fixed for redemption; provided, however, that this limitation shall not apply to the exchange by the Owner of the unredeemed portion of a Bond called for redemption in part. 13. Mutilated. Lost, or stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall authorize and the Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Bond, before any replacement Bond is issued, to: (1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Bond; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the City and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Bond, authorize the Registrar to pay such Bond. Each replacement Bond delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. 14. Cancellation of Bonds. All Bonds paid in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds. -7- 15. optional Redemption. The City reserves the right, at its option, to redeem prior to maturity the Bonds maturing on and after February 1, 2002, in whole or from time to' time in part, on February 1, 2001, or any date thereafter, at par plus accrued interest on the amounts called for redemption to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the City shall determine the Bonds or portions thereof to be redeemed. Principal amounts may be redeemed only in integral multiples of $5,000. If a Bond subject to redemption is in a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with Section 12 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Notice of any redemption identifying the Bonds to be redeemed in whole or in part shall be given by the Registrar at least thirty days prior to the date fixed for redemption by sending written notice by first class mail, postage prepaid, to the Owner of each Bond to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all Bonds outstanding of a particular maturity are to be redeemed, the numbers of the Bonds or portions thereof of such maturity to be redeemed. Any notice given as provided in this Section 15 shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Bonds have been called for redemption in whole or in part and due provision has been made to redeem the same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. 16. Forms. The form of the Bonds, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Bonds initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may -8- be necessary or desirable and not prohibited by this Ordinance, including any legend regarding bond insurance if such insurance is obtained by the purchaser: NUMBER R- REGISTERED INTEREST RATE: REGISTERED OWNER: PRINCIPAL AMOUNT: (Face of Bond) UNITED STATES OF AMERICA STATE OF TEXAS COUNTIES OF HARRIS AND CHAMBERS DENOMINATION REGISTERED CITY OF BAYTOWN, TEXAS GENERAL OBLIGATION BOND SERIES 1991 MATURITY DATE: ISSUE DATE: CUSIP September 1, 1991 h:•]40;,% -� The City of Baytown, Texas .(the "City ") promises to pay to the registered owner identified above, or registered assigns, on the maturity date specified above, upon presentation and surrender of this Bond at the principal corporate trust office of First Interstate Bank of Texas, N.A., Houston, Texas (the "Registrar "), the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30.day months, from the later of September 1, 1991, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Bond is payable by check on February 1 and August 1, beginning on February 1, 1992, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the fifteenth (15th) calendar day of the month next preceding each interest payment date, or by such other method acceptable to the Registrar, requested by and at the risk and expense of the registered owner. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE. mm IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Clerk of the City, and the official seal of the City has been duly impressed, or placed in facsimile, on this Bond. (AUTHENTICATION CERTIFICATE) (SEAL) CITY OF BAYTOWN, TEXAS Mayor City Clerk (Back Panel of Bond) THIS BOND is one of a duly authorized issue of Bonds, aggregating $2,650,000 (the "Bonds "), issued for the purpose of constructing marina, park, and street improvements in the City, authorized at an election held in the City on May 4, 1991, and pursuant to an ordinance adopted by the City on September 18, 1991 (the "Ordinance "). THE CITY RESERVES THE RIGHT to redeem Bonds maturing on and after February 1, 2002, in whole or from time to time in part, in integral multiples of $5,000, on February 1, 2001, or any date thereafter at par plus accrued interest on the principal amounts called for redemption to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the registered owner of each Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Bonds or portions thereof have been called for redemption, and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS BOND IS TRANSFERABLE only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. -10- THIS BOND IS EXCHANGEABLE at the principal corporate trust office of the Registrar for bonds in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THE REGISTRAR shall not be required to transfer or exchange any Bond called for redemption during the period beginning 45 days prior to the date fixed for redemption and ending on the date fixed for redemption; provided, however, that this limitation shall not apply to the exchange by the Owner of the unredeemed portion of a Bond called for redemption in part. THIS BOND shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Bond is either (i) registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Bond, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Bonds and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes, within the limits prescribed by law, sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the City and have been pledged irrevocably for such payment. Form of Registration Certificate Of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. -11- WITNESS MY SIGNATURE AND SEAL this xxxxxxxxxx Comptroller of Public Accounts (SEAL) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been delivered pursuant to the Ordinance described in the text of this Bond. First Interstate Bank of Texas, N.A. By Authorized Signature Date of Authentication Form of Assignment ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said Bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. -12- Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown on the face of this Bond in every particular, without any alteration, enlargement or change whatsoever. 17. Legal opinion; Cusi • Bond Insurance. The approving opinion of Vinson & Elkins, Houston, Texas, and CUSIP Numbers may be printed on the Bonds, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Bonds. If bond insurance is obtained by the purchaser, the Bonds may bear an appropriate legend as provided by the insurer. 18. Interest and Sinkin Fund; Tax Levy. The proceeds from all taxes levied, assessed and collected for and on account of the Bonds authorized by this Ordinance shall be deposited, as collected, in a special fund to be designated "City of Baytown, Texas, General Obligation Bonds, Series 1991, Interest and Sinking Fund". While the Bonds or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax, within the limits prescribed by law, upon all taxable property in the City sufficient to pay the current interest on said Bonds as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Bonds as such principal matures but never less than two percent (2 %) of the original principal amount of the Bonds each year, full allowance being made for delinquencies and costs of collection, and said taxes when collected shall be applied to the payment of the interest on and principal of the Bonds and to no other purpose. 19. Further Proceedings. After the Bonds to be initially issued shall have been executed, it shall be the duty of the Mayor of the City and other appropriate officials and agents of the City to deliver the Bonds to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas, for examination and approval. After the Bonds to be initially issued shall have been approved by the Attorney General, they shall be delivered to the Comptroller for registration. upon registration of the Bonds to be initially issued, the Comptroller (or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. 20. Sale. The sale and delivery of the Bonds to Prudential - Securities Incorporated & Associates (herein referred to as the "Purchaser ") at a price of $2,650,000, plus accrued interest thereon to date of delivery, is hereby authorized, approved, ratified and confirmed, subject to the approving opinion as to the legality of the Bonds of the Attorney General of the State of 0 *-c Texas, and of Vinson & Elkins, Houston, Texas, bond counsel. It is hereby found and declared that such price is the best obtainable by the City for the Bonds. Accrued interest and any premium received from the Purchaser shall be deposited into the Interest and Sinking Fund. The remaining proceeds of sale of the Bonds, and any interest earnings on investment of such proceeds are hereby appropriated for and shall be used, to the extent needed, for the purposes set out in Section 2 of this Ordinance and to pay the costs of issuing the Bonds. Any money remaining thereafter shall be deposited into the Interest and Sinking Fund. 21. Tax Exemption. (a) GENERAL TAX COVENANT. The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Code, and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in section 61 of the Code, of the Owners thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 21; provided, however, that the City shall not be required to comply with any particular requirement of this Section 21 if the City has received an opinion of nationally recognized bond counsel ( "Counsel's Opinion ") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 21 will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Section 21. (b) USE OF PROCEEDS. The City covenants and agrees that its use of the Net Proceeds of the Bonds will at all times satisfy the following requirements: (i) The City will limit the amount of original or investment proceeds of the Bonds to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than ten percent of the Net Proceeds of the Bonds ( "private -use proceeds ") . For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" -14- means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Bonds in any manner contrary to the guidelines set forth in Revenue Procedures 82 -14, 1982 -1 C.B. 459, and 82 -15, 1982 -1 C.B. 460, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City will not permit more than five percent of the Net Proceeds of the Bonds to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Bonds. Further, the amount of private -use proceeds of the Bonds in excess of five percent of the Net Proceeds of the Bonds ( "excess private -use proceeds ") will not exceed the proceeds of the Bonds expended for the governmental purpose of the Bonds to which such excess private -use proceeds relate; (iii) The City will not permit an amount of proceeds of the Bonds exceeding the lesser of (a) $5,000,000 or (b) five percent of the Net Proceeds of the Bonds to be used, directly or indirectly, to finance loans to persons other than governmental units. When used in this Section 21, the term Net Proceeds of the Bonds shall mean the proceeds from the sale of the Bonds, including investment earnings on such proceeds, less accrued interest. (c) NO FEDERAL GUARANTY. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code and applicable regulations thereunder, except as permitted by section 149(b)(3) of the Code and such regulations. (d) BONDS ARE NOT HEDGE BONDS. The City covenants and agrees that not more than 50 percent of the proceeds of the Bonds will be invested in nonpurpose investments (as defined in section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of section 149 (g) (3) (A) (ii) of the Code, and the City reasonably expects that at least 85 percent of the spendable proceeds of the Bonds will be used to carry out the governmental purposes of the Bonds within the three -year period beginning on the date the Bonds are issued. -15- (e) NO-ARBITRAGE OVEN The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds including interest or other investment income derived from Bond proceeds, regulate investments of proceeds of the Bonds, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. (f) ARBITRAGE REBATE. The City will take all necessary steps to cor,-Iy with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the meaning of section 148(f)(6)(B) of the Code) , be rebated to the federal government. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Bonds which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Bonds or on such other dates as may be permitted by applicable regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or 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 Bonds are issued, an information statement concerning the .Bonds, all under and in accordance with section 149(e) of the Code and applicable regulations thereunder. -16- 22. Qualified Tax - Exempt Obligations. The City hereby designates the Bonds as "qualified tax - exempt obligations" for purposes of section 265(b) of the Code. In connection therewith, the City represents (a) that the aggregate amount of tax - exempt obligations issued by the City during calendar year 1991, including the Bonds, which have been designated as "qualified tax - exempt obligations" under section 265(b)(3) of the Code does not exceed $10,000,000, and (b) that the reasonably anticipated amount of tax - exempt obligations which will be issued by the City during calendar year 1991, including the Bonds, will not exceed $10,000,000. For purposes of this Section 22, the term "tax- exempt obligation" does not include "private activity bonds" within the meaning of section 141 of the Code, other than "qualified 501(c) (3) bonds" within the meaning of section 145 of the Code. In addition, for purposes of this Section 22, the City includes all governmental units which are aggregated with the City under the Code. 23. Official Statement. The City ratifies and confirms its prior approval of the form and content of the Preliminary Official Statement prepared in the initial offering and sale of the Bonds and hereby authorizes the preparation of a final Official Statement reflecting the terms of the Purchaser's bid and other relevant information. The use of such Official Statement in the reoffering of the Bonds by the Purchaser is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed" therein, dated as of the date of payment for and delivery of the Bonds. 23. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the Mayor, City Manager, City Clerk, 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 to carry out the terms and purposes of this Ordinance. 24. Severability. 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. 25. Registrar. The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. 26. Ka -Personal Liability. No recourse shall be had for payment of the principal of or interest on any Bonds or for any -17- claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Bonds. 27. Open Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and that public notice of the time, place and purpose of said meeting was given, all as required by Article 6252 -17, Vernon's Texas Civil Statutes, as amended. 28. Repealer. All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. 29. Effective Date. This Ordinance shall become effective immediately upon passage by this City Council and signature of the Mayor. PASSED AND APPROVED this 18th day of September, 1991. ATTEST: City clack CITY OF BA.YTOWN, TEXAS (SEAL) -18- ayor CITY OF BAYTOWN, TEXAS